The following discussion of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes to the condensed consolidated financial statements, which are included elsewhere in this report.

RESULTS OF OPERATIONS

The factors that most significantly affect the Company's results of operations are (i) the sale prices of crude oil and natural gas, (ii) the amount of production sales, (iii) the amount of lease operating expenses, and (iv) the level of interest rates on, and amount of, borrowings. Sales of production and level of borrowings are significantly impacted by the Company's ability to maintain or increase its production from existing oil and gas properties through its exploration and development activities.

Prices received by the Company for sales of crude oil and natural gas have fluctuated significantly from period to period. The fluctuations in oil prices during these periods reflect market uncertainty regarding the inability of the Organization of Petroleum Exporting Countries ("OPEC") to control the production of its member countries, as well as concerns related to the global supply and demand for crude oil. Gas prices received by the Company fluctuate with changes in the spot market price for gas.

Changes in natural gas and crude oil prices will significantly affect the revenues and cash flow of the wells and the value of the oil and gas properties. Declines in the prices of crude oil and natural gas could have a material adverse effect on the success of the Company's operations and activities, recoupment of the costs of acquiring, developing and producing the wells and profitability. The Company is unable to predict whether the prices of crude oil and natural gas will rise, stabilize or decline in the future.

SIGNIFICANT TRANSACTIONS

In January 2007 the Company entered into an agreement with an unrelated third party for the sale of all its Pulaski County, Kentucky properties, gathering systems and equipment for $1,735,000. As of January 31, 2007 the Company had received cash payments of $557,000 from the third party of which $200,000 was for the sale of certain royalty rights held by the Company and $357,000 represented a deposit on the sale of the remainder of properties, gathering systems, and equipment. The sale of the royalties was completed on January 25, 2007 and the sale was treated as a reduction in the carrying amount of the oil and gas properties in accordance with the full cost method of accounting for oil and gas properties. The remainder of the sale closed on June 1, 2007.

In January 2008 the company sold its remaining oil and gas properties in Kentucky, as well as its gathering systems, pipelines and equipment, for $2,300,000. For sale of these assets, the Company received a $100,000 deposit and a non-recourse promissory note for $2,200,000. Prior to December 2008 the Company received principal payments totaling $87,980. In December 2008 the purchaser of the properties filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As a result of the Bankruptcy filing, the Company recorded a bad debt expense of $1,117,230 as of October 31, 2008. See Note 5 to the financial statements included as part of this report for further information.

On April 11, 2008 the Company sold its interest in the Ainsworth #1-33 well for $615,000 and incurred sales expenses of $24,600. The carrying value of the full cost pool was reduced by the net proceeds from the sale and no gain or loss was recognized for financial reporting purposes.

On February 15, 2008 the Company sold all the outstanding stock in its subsidiary, TGC, for $10,000. The Company retained outstanding liabilities of approximately $75,000 some of which are disputed. This sale resulted in the recognition of a $7,115 gain for financial reporting purposes.

During the nine months ended October 31, 2008 the Company advanced a total of $660,826 to a third party for drilling and completing a well in Niobrara County, Wyoming.

Other than the foregoing, the Company does not know of any trends, events or uncertainties that have had or are reasonably expected to have a material impact on the Company's net sales, revenues or expenses.

RESULTS OF OPERATIONS

Three and Nine Months Ended October 31, 2008

    Material changes of certain items in the Company's Statement of Operations
for the three and nine months ended October 31, 2008, as compared to the three
and nine months ended October 31, 2007, are discussed below:

                        Increase (I)
Item                   or Decrease (D) Reason
----                   --------------- ------

Oil and gas sales             D        Sale of Company's  Kentucky  oil and gas
                                       properties, sale of Ainsworth  #1-33
                                       well, and decrease in production.

Lease                                  operating expense D Sale of Company's
                                       Kentucky oil and gas properties and sale
                                       of Ainsworth #1-33 well.

General and administrative    D        Sale of Kentucky oil and gas properties
     expense                           and decrease in staff.

Bad debt expense              I        In January  2008 the Company sold its
                                       remaining oil and gas properties in
                                       Kentucky, as well as its gathering

                                       systems,   pipelines  and  equipment,
                                       for $2,300,000.  For sale of these
                                       assets, the Company received a  $100,000
                                       deposit and a non-recourse promissory
                                       note for $2,200,000.  Prior to  December
                                       2008 the  Company  received   principal
                                       payments totaling $87,980.  In December
                                       2008 the purchaser of the properties
                                       filed a petition for  reorganization
                                       under Chapter 11 of the U.S. Bankruptcy
                                       Code. As a result of the Bankruptcy
                                       filing, the Company recorded a bad debt
                                       expense of $1,117,230 as of October 31,
                                       2008.  See Note 5 to the financial
                                       statements included as part of this
                                       report for further information.

Depreciation, depletion       D        Sale of Company's Kentucky oil and gas
     and amortization                  properties and sale of Ainsworth #1-33
                                       well.

Capital Resources and Liquidity

     The Company's material sources and (uses) of cash during the nine months
ended October 31, 2008 and 2007 were:

                                                            2008        2007

      Cash used in operations                           $ (42,305)  $(580,024)
      Acquisition and development of oil and gas
         properties                                      (663,442)   (129,632)
      Sale of oil and gas properties                      590,400   1,067,500
      Collection of notes receivable                       87,980          --
      Loans from (repayment of loans to) related parties   21,000    (142,750)
      Repayment of notes                                       --    (699,853)
      Increase (decrease) in cash                          (6,367)   (484,759)

As a result of the Company's continued losses and lack of cash there is substantial doubt as to the Company's ability to continue operations. The Company plans to generate profits by drilling productive oil or gas wells. However, the Company will need to raise the funds required to drill new wells from third parties willing to pay the Company's share of drilling and completing the wells. The Company may also attempt to raise needed capital through the private sale of its securities or by borrowing from third parties. The Company may not be successful in raising the capital needed to drill oil or gas wells. In addition, any future wells which may be drilled by the Company may not be productive of oil or gas. The inability of the Company to generate profits may force the Company to curtail or cease operations.

Contractual Obligations

The Company's officers are occupied under a one year lease expiring April 1, 2009, requiring rental payments of $4,000 per month to George G. Shaw, the Company's President and owner of the building.

The Company has two office equipment leases through October 2012. The minimum annual rental commitments as of October 31, 2008 under these leases are as follows: 2009 - $6,846; 2010 - $6,846; 2011 - $3,917; 2012 - $2,940 and 2012
- $2,205.

As of October 31, 2008 the Company did not have any material capital commitments, other than funding its operating expenses. It is anticipated that any capital commitments that may occur will be financed principally through

borrowings from institutional and private lenders (although such additional financing has not been arranged) and the sale of shares of the Company's common stock or other equity securities. However, there can be no assurance that additional capital resources and financings will be available to the Company on a timely basis, or if available, on acceptable terms.