The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended July 31, 2011 contained in our Registration Statement on Form 10, as filed with the U.S. Securities and Exchange Commission (or SEC).

As used below, unless the context otherwise requires, the terms "the Company," "Genie," "we," "us," and "our" refer to Genie Energy Ltd., a Delaware corporation, and its subsidiaries, collectively.

On January 30, 2012, our Board of Directors changed our fiscal year end from July 31 to December 31. This change better aligns our financial reporting with our operational and budgeting cycle and with other industry participants. We reported the results for our transitional period in a Transition Report on Form 10-Q for the five months from August 1, 2011 to December 31, 2011. Going forward, our fiscal quarters will end on the last day of March, June, September and December each year.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words "believes," "anticipates," "expects," "plans," "intends," and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under "Risk Factors" in our Registration Statement on Form 10 as well as under Item 1A to Part II "Risk Factors" in this Quarterly Report on Form 10-Q. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities Exchange Act of 1934, including our Registration Statement on Form 10, which included our consolidated financial statements for the year ended July 31, 2011.

Overview

We own 99.3% of our subsidiary, Genie Energy International Corporation, or GEIC, which owns 98.9% of IDT Energy and 92% of Genie Oil and Gas, Inc., or GOGAS. Our principal businesses consist of:

· IDT Energy, a retail energy provider, or REP, supplying electricity and natural gas to residential and small business customers in the Northeastern United States; and

· Genie Oil and Gas, which is pioneering technologies to produce clean and affordable transportation fuels from the world's abundant oil shales and other unconventional fuel resources, which consists of (1) American Shale Oil Corporation, or AMSO, which holds and manages a 50% interest in American Shale Oil, L.L.C., or AMSO, LLC, our oil shale initiative in Colorado, and (2) an 89% interest in Israel Energy Iniatives, Ltd., or IEI, our oil shale initiative in Israel.

Genie was incorporated in January 2011. References to us in the following discussion are made on a consolidated basis as if we existed and owned IDT Energy and Genie Oil and Gas in all periods discussed.

We were formerly a subsidiary of IDT Corporation, or IDT. On October 28, 2011, we were spun-off by IDT and became an independent public company through a pro rata distribution of our common stock to IDT's stockholders (the "Spin-Off"). As a result of the Spin-Off, each of IDT's stockholders received: (i) one share of our Class A common stock for every share of IDT's Class A common stock held of record on October 21, 2011 (the "Record Date"), and (ii) one share of our Class B common stock for every share of IDT's Class B common stock held of record on the Record Date. On October 28, 2011, 1.6 million shares of our Class A common stock, and 21.1 million shares of our Class B common stock were issued and outstanding.

Prior to the Spin-Off, IDT made a capital contribution of $82.2 million to us. In addition, in connection with the capital contribution received from IDT, the amount due from IDT as of the date of the Spin-Off of $2.1 million was forgiven.

We entered into various agreements with IDT prior to the Spin-Off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with IDT after the Spin-Off, and a Transition Services Agreement, which provides for certain, services to be performed by us and IDT to facilitate our transition into a separate publicly-traded company. These agreements provide for, among other things, (1) the allocation between us and IDT of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the Spin-Off, (2) transitional services to be provided by IDT relating to human resources and employee benefits administration, (3) the allocation of responsibilities relating to employee compensation and benefit plans and programs and other related matters,
(4) finance, accounting, tax, internal audit, facilities, investor relations and legal services to be provided by IDT to us following the Spin-Off and
(5) specified administrative services to be provided by us to certain of IDT's foreign subsidiaries. We expect to incur quarterly incremental costs (including for services to be provided by IDT and others) of approximately $1.5 million, including stock-based compensation, as a result of operating as a separate public company.

In addition, we entered into a Tax Separation Agreement with IDT, which sets forth the responsibilities of us and IDT with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the Spin-Off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods.

Seasonality and Weather

IDT Energy's revenues are impacted by, among other things, the weather and the seasons. Weather conditions have a significant impact on the demand for natural gas for heating and electricity for air conditioning. Typically, colder winters and hotter summers create higher demand and consumption for natural gas and electricity, respectively. Milder winters and/or summers will reduce the demand for natural gas and electricity, respectively. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 50% and 53% of IDT Energy's natural gas revenues were generated in the first quarter of 2011 and 2010, respectively, when demand for heating is highest. Although the demand for electricity is not as seasonal as natural gas, approximately 35% and 36% of IDT Energy's electricity revenues were generated in the third quarter of 2011 and 2010, respectively. As a result, our revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financials results for the full year.

Concentration of Customers and Associated Credit Risk

IDT Energy reduces its customer credit risk through its participation in purchase of receivable, or POR, programs for a significant portion of its receivables. Under these programs, utility companies provide billing and collection services, purchase IDT Energy's receivables and assume all credit risk without recourse to IDT Energy. IDT Energy's primary credit risk is therefore nonpayment by the utility companies. Certain of the utility companies represent significant portions of our consolidated revenues and consolidated gross trade accounts receivable balance and such concentrations increase our risk associated with nonpayment by those utility companies. We monitor the timely collections from our significant utility companies in an effort to reduce our credit risk.

The following table summarizes the percentage of consolidated revenues from utility companies that equal or exceed 10% of our consolidated revenues in the period presented (no other single customer accounted for more than 10% of our consolidated revenues in these periods):

                                                                      Three Months Ended
                                                                           March 31,
                                                                    2012               2011
Con Edison                                                              29.7 %             35.8 %
National Grid USA                                                       15.3 %             18.9 %
National Grid dba Keyspan                                               10.1 %             15.3 %

The following table summarizes the percentage of consolidated gross trade accounts receivable by utility companies that equal or exceed 10% of our consolidated gross trade accounts receivable at March 31, 2012 and December 31, 2011:

                                      March 31, 2012       December 31, 2011
         Con Edison                              33.3 %                  33.8 %
         National Grid USA                       14.4 %                  17.2 %
         National Grid dba Keyspan               10.3 %                  11.1 %

Investment in American Shale Oil, LLC

We account for our 50% ownership interest in AMSO, LLC using the equity method since we have the ability to exercise significant influence over its operating and financial matters, although we do not control AMSO, LLC. AMSO, LLC is a variable interest entity, however, we have determined that we are not the primary beneficiary.

AMSO has agreed to fund AMSO, LLC's expenditures as follows: 20% of the initial $50 million of expenditures, 35% of the next $50 million in approved expenditures and 50% of approved expenditures in excess of $100 million. AMSO has also agreed to fund 40% of the costs of the one-time payment for conversion of AMSO, LLC's research, development and demonstration lease to a commercial lease, in the event AMSO, LLC's application for conversion is approved. The remaining amounts are to be funded by Total S.A., or Total. Through December 31, 2011, AMSO was allocated 20% of the net loss of AMSO, LLC. AMSO's portion in the loss of AMSO, LLC increased in December 2011 from 20% to 35%, per our agreement with Total. AMSO's allocated share of the net loss of AMSO, LLC is included in "Equity in the net loss of AMSO, LLC" in the accompanying consolidated statements of operations.

In accordance with the agreement between the parties, AMSO was committed to a total investment of $10.0 million in AMSO, LLC, all of which, as of March 31, 2012, has been invested. AMSO remains obligated to fund its share of the expenditures it approves beyond the initial $10.0 million investment. AMSO's share of AMSO, LLC's budget for the year ending December 31, 2012 is $3.2 million. At March 31, 2012, AMSO had funded $1.0 million of its share of the 2012 budget. There are also a number of other situations where AMSO's funding obligation could increase further.

Total can increase AMSO's initial required funding commitment of $10.0 million up to an additional $8.75 million if Total notifies AMSO of its commitment to continue to fund the pilot test up to an agreed upon commitment level. To date, AMSO has not received such notification from Total. Additionally, even if AMSO were to withdraw its interest in AMSO, LLC, it will remain liable for its share of expenditures for safety and environmental preservation related to events occurring prior to its withdrawal.

Total may terminate its obligations to make capital contributions and withdraw as a member of AMSO, LLC. If Total withdraws as a member of AMSO, LLC, AMSO may also terminate its obligations to make capital contributions and withdraw as a member of AMSO, LLC. Although, subject to certain situations, AMSO and Total are not obligated to make additional contributions beyond their respective shares, they could dilute or forfeit their ownership interests in AMSO, LLC if they fail to contribute their respective shares for additional funding.

At March 31, 2012, our maximum exposure to additional loss as a result of our required investment in AMSO, LLC was $1.8 million, based on AMSO, LLC's 2012 budget. Our maximum exposure to additional loss could increase based on the situations described above. The maximum exposure at March 31, 2012 was determined as follows:

                                                                   (in millions)
 AMSO's total committed investment in AMSO, LLC                   $          13.2
 Less: cumulative capital contributions to AMSO, LLC                        (11.0 )
 Less: liability for equity loss in AMSO, LLC at March 31, 2012              (0.4 )

 Maximum exposure to additional loss                              $           1.8

Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Registration Statement on Form 10, which includes our financial statements for the year ended July 31, 2011. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management's most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Registration Statement on Form 10, as filed with the SEC.

Results of Operations

We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

IDT Energy Segment


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                                            Three months ended
                                                 March 31,                  Change
                                            2012           2011          $           %
                                                          (in millions)
    Revenues:
           Electric                       $    31.7       $  31.4     $  0.3         1.1 %
           Natural gas                         25.8          32.0       (6.2 )     (19.5 )

    Total revenues                             57.5          63.4       (5.9 )      (9.3 )
    Direct cost of revenues                    39.5          46.3       (6.8 )     (14.7 )

    Gross profit                               18.0          17.1        0.9         5.1
    Selling, general and administrative        10.6           7.2        3.4        45.9

    Income from operations                $     7.4       $   9.9     $ (2.5 )     (25.2 )%

Revenues. IDT Energy's electricity revenues increased in the three months ended March 31, 2012 compared to the same period in 2011 as a result of a significant increase in consumption, partially offset by a decrease in the average rate charged to customers. Electric consumption increased 44.5%, and the average electric rate charged to customers decreased 30.0%. The increase in electric consumption was the result of an increase in meters enrolled coupled with an increase in average consumption per meter. The decrease in the average electric rate charged to customers was primarily the result of a decrease in the underlying commodity cost.

IDT Energy's natural gas revenues decreased in the three months ended March 31, 2012 compared to the same period in 2011 primarily due to unusually warm weather in the three months ended March 31, 2012 which reduced the demand for natural gas for heat. As measured by heating degree days, a measure of outside air temperature designed to reflect the energy required for heating, New York State was 24% warmer in the three months ended March 31, 2012 than in the same period in 2011. The unseasonably warm weather contributed to decreases in both the per unit rate charged and in consumption per meter, which decreased 14.4% and 16.7%, respectively. The decline in demand for heat as well as increased domestic production of natural gas and relatively high storage gas inventories caused a decrease in the underlying natural gas cost, which allowed us to decrease the average natural gas rate charged to customers. The decline in the average natural gas rate charged to customers was also the result of discounted promotional rates for new customers. The decline in consumption was partially offset by an increase in meters served.

IDT Energy's customer base as measured by meters enrolled consisted of the following:

                              March 31,       December 31,       September 30,
                                2012              2011               2011            June 30, 2011       March 31, 2011
                                                                   (in thousands)
Meters at end of quarter:
Electricity customers                 289               254                 247                 224                  210
Natural gas customers                 186               184                 183                 172                  167

Total meters                          475               438                 430                 396                  377

Gross meter acquisitions in the three months ended March 31, 2012 were 108,000 compared to 49,000 in the same period in 2011. Net meters enrolled increased by 37,000 or 8.6% in the three months ended March 31, 2012, compared to an increase of 9,000 meters or 2.5% in the three months ended March 31, 2011, as gross meter acquisitions were partially offset by customer churn. Average monthly churn increased from 4.6% in the three months ended March 31, 2011 to 6.4% in the three months ended March 31, 2012 primarily because of the continued acceleration in customer acquisitions and increased competition in some key utility markets.

The average rates of annualized energy consumption, as measured by residential customer equivalents, or RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base. The 23.9% RCE increase at March 31, 2012 compared to March 31, 2011 reflects primarily the increase in electric meters enrolled as well as, to a lesser degree, a shift in IDT Energy's electricity customer base to customers with higher consumption per meter. A significant portion of IDT Energy's incremental growth in RCEs was from recent expansion into electric-only utilities' territories, with higher electric consumption per meter than IDT Energy's legacy customer base. This increase was partially offset by decreases in natural gas RCEs due to consumption declines associated with the warmer than normal weather over the measurement period.

                            March 31,       December 31,       September 30,
                              2012              2011               2011            June 30, 2011       March 31, 2011
                                                                 (in thousands)
RCEs at end of quarter:
Electricity customers               176               153                 142                 135                  119
Natural gas customers                82                95                 100                  99                   89

Total RCEs                          258               248                 242                 234                  208

Direct Cost of Revenues. IDT Energy's direct cost of revenues consisted of electricity cost of $20.2 million and $20.7 million in the three months ended March 31, 2012 and 2011, respectively, and the cost of natural gas of $19.3 million and $25.6 million in the three months ended March 31, 2012 and 2011, respectively. Direct cost of revenues for electricity decreased 2.8% in the three months ended March 31, 2012 compared to the same period in 2011 as the 32.7% decrease in the average unit cost was partially offset by an increase of 44.5% in consumption. Direct cost of revenues for natural gas decreased 24.3% in the three months ended March 31, 2012 compared to the same period in 2011 primarily due to the 19.5% decrease in the average unit cost as well as the 6.0% decrease in consumption.

IDT Energy's gross margins increased to 31.4% in the three months ended March 31, 2012 compared to 27.1% in the same period in 2011. Comprising these figures were gross margins on electricity sales of 36.5% in the three months ended March 31, 2012 compared to 34.0% in the same period in 2011 and gross margins on natural gas sales of 25.0% in the three months ended March 31, 2012 compared to 20.3% in the same period in 2011. Gross margins on both electricity and natural gas sales increased as the cost of the underlying commodity declined more sharply than the decrease in the average rate charged to customers. In both cases gross margin was helped by IDT Energy's ability to lag decreases in its average rate charged to customers as the cost of the commodity declined. IDT Energy's gross margins fluctuate with the commodity price environment and IDT Energy does not expect the current level to be sustainable in the long run.

Selling, General and Administrative. The increase in selling, general and administrative expenses in the three months ended March 31, 2012 compared to the same period in 2011 was primarily due to an increase in customer acquisition costs. These costs increased an aggregate of $2.7 million, representing 79.3% of the total increase in selling, general and administrative expenses. Customer acquisition costs increased primarily due to the significant increase in the number of new customers acquired as a result of the expansion into new territories. As a percentage of total IDT Energy revenues, selling, general and administrative expenses increased from 11.5% in the three months ended March 31, 2011 to 18.5% in the three months ended March 31, 2012 primarily because of the significant increase in costs related to customer acquisitions mentioned above coupled with the decline in revenues.

Genie Oil and Gas Segment

Genie Oil and Gas does not currently generate any revenues, nor does it incur
any direct cost of revenues.

                                            Three months ended
                                                 March 31,                          Change
                                          2012               2011              $                %
                                                               (in millions)
General and administrative            $        0.2       $        0.1     $       0.1             5.5 %
Research and development                       2.1                2.3            (0.2 )          (9.1 )
Equity in the net loss of AMSO,
LLC                                            0.8                0.7             0.1            25.4

Loss from operations                  $       (3.1 )     $       (3.1 )   $         -            (1.0 )%

General and Administrative. General and administrative expenses in the three months ended March 31, 2012 increased slightly compared to the same period in 2011 as a result of increases in depreciation expense and stock-based compensation.

Research and Development. Research and development expenses in the three months ended March 31, 2012 and 2011 were related to the operations of IEI in Israel and our global exploration and technology development efforts. IEI completed its two-year resource appraisal study in 2011, the results of which support our expectations about the commercial potential of the oil shale in our Shfela basin license area. The findings from across the license area are consistent with previous estimates of oil equivalent in place within the Basin and indicate that the oil shale deposit is well suited for commercial development. Research and development expenses in the three months ended March 31, 2012 decreased compared to the same period in 2011 as the reduction in drilling activity in IEI was partially offset by an increase in other development efforts.

IEI made significant progress on the design and other preparatory work required for pilot plant construction, while continuing to work with regulatory authorities to obtain the permits required before pilot construction can begin. IEI believes that those permits will be issued during the current calendar year, and continues to plan for pilot test construction to begin next year if not delayed by permitting, regulatory action or pending litigation. The pilot test will provide a basis for determining the technical, environmental and economic viability of IEI's proposed process for extracting oil and gas from the oil shale resource. The basic design of the pilot plant has been completed, and detailed engineering work has begun. Pilot test operations could begin as early as 2013, barring additional delays related to permitting, regulatory action or pending litigation. We expect continued, significant increases in the expenses reflecting the costs of facility construction, drilling and operations of the IEI pilot test as well as further staffing to support engineering and scientific operations and business development activities. We expect IEI's pilot test to require approximately $25 million to $30 million over the next two to three years.

Equity in the Net Loss of AMSO, LLC. In the three months ended March 31, 2012, AMSO, LLC continued with late-stage preparations for its pilot test. The pilot test is intended to confirm the accuracy of several of the key underlying assumptions of AMSO, LLC's proposed in-situ heating and retorting process. In January 2012, AMSO, LLC initiated a fully integrated commissioning test of the . . .