UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

[  ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934  

For the quarterly period ending April 30, 2011

OR

[ X  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

For the transition period from _____________ to   _____________

Commission file number:      001-05970

Silver Butte Company

(Exact name of registrant as specified in its charter)

NEVADA		82-0263301
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

45 NE Loop 410, Ste. 495, San Antonio, TX		78216
(Address of principal executive offices)		(Zip Code)

210-524-9724

(Issuer's telephone number, including area code)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.  Yes    [X]     No   [   ]     

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes    [  ]     No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange:

Large accelerated filer [   ]	Accelerated filer                  [   ]
Non-accelerated filer   [   ]	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.)  

Yes    [   ]     No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:   At June 14, 2011, 27,292,011¹ shares of the Company’s common stock were outstanding.

Note 1.   This figure represents the number of common shares issued and outstanding assuming the reverse stock split had been implemented.  The reverse stock split has not been implemented.  (See Part II, Item 5. Other Information)

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SILVER BUTTE COMPANY

FORM 10-Q

For the Quarter Ended April 30, 2011

TABLE OF CONTENTS

			Page #
PART I - Financial Information
	Item 1	Financial Information	3
		Consolidated Balance Sheets at April 30, 2011 (Unaudited) and October 31, 2010	3
		Consolidated Statement of Operations for The Three and Six Month Periods Ended April 30, 2011 (Unaudited)	4
		Consolidated Statement of Cash Flows for The Six Month Period Ended April 30, 2011 (Unaudited)	5
		Notes to Consolidated Financial Statements (Unaudited)	6, 7, 8
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9, 10
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	10
	Item 4	Controls and Procedures	10, 11,12
PART II
	Item 1	Legal Proceedings	12
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	12
	Item 3	Defaults Upon Senior Securities	12
	Item 4	Removed and Reserved	12
	Item 5	Other Information	12, 13
	Item 6	Exhibits	13

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PART I.

ITEM 1. FINANCIAL INFORMATION

		SILVER BUTTE COMPANY
		CONSOLIDATED BALANCE SHEETS
							(Unaudited)
							At April 30,		At October 31,
							2011		2010
	ASSETS
	CURRENT ASSETS:
		Cash				$	62,467	$	48,225
		Prepaid expenses					8,750		8,750
		TOTAL CURRENT ASSETS					71,217		56,975
	PROPERTY, PLANT, AND EQUIPMENT (Net of depreciation
		of $ 436,555 and $ 386,619 respectively)					673,408		713,855
	OTHER ASSETS: Oil lease						49,489		-
		TOTAL ASSETS				$	794,114	$	770,830
	LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
	CURRENT LIABILITIES:
		Accounts payable and accrued liabilities				$	135,302	$	9,225
		Payable to related party					281,987		6,041
		Current portion of long term debt					207,399		162,834
		Total current liabilities					624,688		178,100
	CONVERTIBLE NOTES PAYABLE						65,000		-
	LONG TERM DEBT						86,747		171,166
	STOCKHOLDER NOTE PAYABLE						210,100		210,100
		TOTAL LIABILITIES					986,535		559,366
	STOCKHOLDERS’ (DEFICIT) EQUITY:
		Preferred stock, $.001 par, 50,000,000 authorized,
		11,000,000 issued and outstanding					11,000		11,000
		Common stock, $.001 par, 1,100,000,000 authorized
		27,292,011 and 26,950,000 shares issued and
		outstanding respectively					27,292		26,950
		Additional paid-in capital					162,018		196,483
		Accumulated deficit					(392,881)		(22,969)
		Non controlling interest					150		-
		TOTAL STOCKHOLDERS' (DEFICIT) EQUITY					(192,421)		211,464
		TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY				$	794,114	$	770,830
		The accompanying notes are an integral part of these unaudited financial statements

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SILVER BUTTE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDING APRIL 30, 2011
(UNAUDITED)
			For the Three		For the Six
			Months Ending		Months Ending
			April 30, 2011		April 30, 2011
REVENUE		$	80,362	$	197,135
OPERATING EXPENSES:
	Wage expense		87,139		248,472
	Drilling expenses		64,873		166,235
	Administrative expenses		34,645		94,887
	Depreciation expense		22,583		49,936
	Total Operating Expenses		209,240		559,530
OPERATING LOSS			(128,878)		(362,395)
OTHER (EXPENSE): Interest			(3,412)		(7,517)
NET LOSS		$	(132,290)	$	(369,912)
NET LOSS PER COMMON SHARE		$	(0.00)	$	(0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -			27,292,011		27,292,011
			-
The accompanying notes are an integral part of these unaudited financial statements

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SILVER BUTTE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDING APRIL 30, 2011
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss			$	(369,912)
	Adjustments to reconcile net loss to net cash
		used in operating activities:
		Depreciation			49,936
	Changes in assets and liabilities:
		Accounts payable and accrued liabilities			126,077
		Payable to related party			226,457
			Net cash provided by operating activities		32,558
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of equipment				(9,489)
	Net liabilities assumed in reverse merger				(33,973)
			Net cash (used) by investing activities		(43,462)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Payments on long term debt				(39,854)
	Issuance of convertible notes				65,000
			Net cash provided by financing activities		25,146
			NET DECREASE IN CASH		14,242
			CASH AT BEGINNING OF PERIOD		48,225
			CASH AT END OF PERIOD	$	62,467
SUPPLEMENTAL CASH FLOW DISCLOSURES:
	Cash paid during the period for:
		Interest		$	4,105
		Income taxes		$	-
	Non-cash investing and financing activities:
		Acquisition of oil lease		$	49,489
		Assumption of related party debt to acquire oil lease		$	(49,489)
The accompanying notes are an integral part of these unaudited financial statements

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SILVER BUTTE COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of Silver Butte Company (“The Company”) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Although certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended October 31, 2010 of Gulfmark Energy Group, Inc. and the proforma consolidated financial statements (combining Silver Butte Company and Gulfmark Energy Group, Inc.) which were filed in an 8-K in January, 2011 pursuant to a share exchange agreement between Silver Butte Company and Gulfmark Energy Group, Inc.

Prior to the share exchange agreement, Silver Butte Company had a fiscal year end of August 31^st. Pursuant to the share exchange agreement; Silver Butte Company adopted the fiscal year end of Gulfmark Energy Group, Inc., which is October 31^st. These consolidated financial statements for this 10-Q report include financial activity of Silver Butte Company and Gulfmark Energy Group, Inc. from February 1, 2011 through April 30, 2011. Comparative prior year financial statement information has not been presented in the consolidated statements of operations or the consolidated statement of cash flows as Gulfmark Energy Group, Inc. (which also includes its two wholly owned subsidiary corporations) did not commence business operations until August 9, 2011.

The consolidated financial statements included herein reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year ended October 31, 2011.

NOTE 2 – GOING CONCERN

During the three months ended April 30, 2011, Silver Butte Company incurred a net loss of $132,290, and as of April 30, 2011, had a negative net working capital balance of $553,471. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

In April, 2011, the Company commenced to raise cash through the issuance of convertible promissory notes in a private placement offering to accredited investors. The terms of the promissory notes are summarized as follows:

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·

Available to select accredited investors.

·

Original closing date was set for April 30, 2011. However, that close date has been extended to June, 30, 2011.

·

Total aggregate amount of cash to be raised would not exceed $250,000. However, this “ceiling” was raised to $400,000 subsequent to April 30^th.

·

Interest rate of 4% per annum. The Company has the option to pay interest in cash or to pay interest in kind.

·

The proceeds will be used for basic working capital requirements.

·

The notes have a 24-month maturity. At the holder’s option, repayment shall be in cash or in shares of the Company’s common stock at the rate of $0.42 per share after giving effect to the Company’s proposed reverse stock split of 40 to 1.

·

The Company grants to the note holders piggyback registration rights for the shares of common stock underlying the convertible promissory notes. These registration rights will not apply to any “qualified financing” that prohibits the Company from adding the note holders to the registration statement.

·

In the event of any equity related issuance below the $0.42 conversion price (post reverse split), the conversion price will be reduced to the lowest price at which common stock is sold in a “qualified financing”. A “qualified financing” means an equity financing or series of related equity financings in which the Company receives at least $2,500,000 in gross aggregate cash proceeds (before commissions or other transaction related expenses, and including proceeds resulting from any conversion of the Silver Butte Company convertible promissory notes). As of April 30, 2011 the Company had raised $65,000 in cash from the issuance of these convertible promissory notes.

The Company is aware that in order to be fully operational and profitable, it will have to raise substantial capital. This needed capital could be raised through a combination of debt financing, sale of common stock, or direct joint venture participation in various drilling sites. The Company has no assurance that future financing will be available. If this additional financing is not available, the Company may be unable to continue its operations. In addition, any equity financing or convertible debt financing could result in additional dilution to existing shareholders.

NOTE 3 – STOCKHOLDERS’ EQUITY

On January 12, 2011, Silver Butte Company entered into a share exchange agreement with Gulfmark Energy Group, Inc. whereby Silver Butte Company committed to issue 1,072,000,027 shares of common stock and 11,000,000 shares of series “A” preferred stock to the shareholders of Gulfmark Energy Group, Inc. in exchange for 26,800,000 shares of Gulfmark Energy Group, Inc. common stock (there were a total of 26,950,000 shares of common stock outstanding prior to the share exchange agreement, and a shareholder representing 150,000 shares of common stock elected not to participate in the share exchange agreement) and 11,000,000 shares of preferred stock. After the issuance of 1,072,000,027 shares of common stock (Silver Butte Company has only 300,000,000 authorized shares of common stock. Therefore, the articles of incorporation need to be amended in order to increase the authorized common stock to 1,100,000,000 shares.), Silver Butte Company plans to implement a forty to one reverse stock split. After this proposed reverse stock split is approved and implemented, there will be

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27,292,011 shares of Silver Butte Company’s stock outstanding. The Company also plans to increase the authorized preferred shares from 10,000,000 to 50,000,000 authorized shares.

The Company’s financial statements assume that the articles of incorporation has been implemented and the corporate reorganization has been completed and that the company has 1,100,000,000 authorized common shares, with 27,292,011 shares issued and outstanding and 50,000,000 authorized preferred shares, with 11,000,000 series “A” preferred shares outstanding.

Following is a schedule of the common stock activity pursuant to the share exchange agreement:

Balance of shares outstanding prior to the share exchange agreement		19,680,412
Issuance of shares pursuant to the share exchange agreement		1,072,000,027
Balance prior to the reverse split		1,091,680,439
Balance adjusted for the 40:1 reverse split		27,292,011

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management’s discussion and analysis of financial condition and results of operations

Forward Looking Statements

Some of the statements contained in this Current Report that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Current Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

·

our ability to raise capital when needed and on acceptable terms and conditions;

·

our ability to attract and retain management, and to integrate and maintain technical information and management information systems;

·

the intensity of competition; and

·

general economic conditions.

All written and oral forward-looking statements made in connection with this Current Report that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements. 

Revenues

Revenues for the quarter ended April 30, 2011 were $80,362, compared to revenues of $116,773 for the prior quarter ended January 31, 2011. For both quarters, the source of revenues was derived from drilling operations of a wholly owned subsidiary, which is Blanco Drilling, Inc. Due to the facts that there has been increased competition among oil well drilling contractors in Southwest Texas, and the contract price per foot drilled is only around $17 to $18, Blanco Drilling has decided to put up its drilling rig for sale at an auction in the near future. Any future drilling on the Kiefer Lease (owned by another wholly owned subsidiary, Gulfmark Resources, Inc.) would be performed by outside oil and gas well drilling contractors. It was originally anticipated that Blanco Drilling, Inc. would perform potential contract drilling operations on the Kiefer Lease.

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Expenses

The total operating expenses for the quarter ended April 30, 2011 were $209,240, and were primarily related to drilling operations (wages of $87,139, direct expenses to operate the drilling rig of $64,873, and depreciation of the drilling rig of $22,583). Direct drilling expenses will cease because the company does not envision contract drilling jobs as being profitable.

Liquidity and Capital Resources

As of April 30, 2011, the Company had a cash balance of $62,467 and a current liability balance of $624,688, of which $281,987 is owed to the president of the Company, and $207,399 represents the current portion of a contract payable on a drilling rig. On April 30, 2011, the Company was three months delinquent on monthly payments ($14,653 due per month) on the contract for the drilling rig. The total amount due on this contract payable on April 30^th was $294,146.

During the quarter ended April 30, 2011, the Company started to raise cash through the issuance of convertible promissory notes (see Note 2 – Going Concern). As of April 30^th, the Company had raised $65,000 through the issuance of these notes. Subsequent to April 30^th, the Company has continued to raise funds through the issuance of these promissory notes.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Inflation

It is our opinion that inflation has not had a material effect on our operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for smaller reporting companies.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time

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periods specified in the rules and forms of the Securities and Exchange Commission (the “ SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Principal Financial Officer (Chairman of the Board), of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, management concluded that our disclosure controls and procedures are effective at a reasonable assurance level as of April 30, 2011 to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial Officer (Chairman of the Board), as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal controls over financial reporting identified in connection with the requisite evaluation that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations

Our management, including our Chief Executive Officer and Principal Financial Officer (Chairman of the Board), does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of

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controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We had no unregistered sales of equity securities during the quarter ending April 30, 2011.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

REMOVED AND RESERVED

ITEM 5.

OTHER INFORMATION

(a)

Securities and Exchange Commission (SEC) Staff Comments:

To date, the Company has not completed its corporate reorganization because the Preliminary Information Statement filed on Schedule 14C on January 14, 2011 had been subject to review by the SEC staff.   On June 2, 2011, the SEC completed a review of the Company's Form 10-K for the fiscal year ending August 31, 2010,  Form 10-Q for the fiscal quarter ending November 30, 2010, Form 8-K originally filed on January 14, 2011, as subsequently amended and Schedule Preliminary 14C originally filed on January 14, 2011, as amended.   

Clearance of the Schedule 14C permits the Company to proceed with the completion of the corporate reorganization.  

(b)

Stockholders' Equity:

This report reflects stockholders' equity as though the articles of incorporation had been amended,  the balance of the 1,072,000,027 shares issued to the Gulfmark shareholders and the reverse stock split implemented.   After the issuance of 1,072,000,027 shares of its common stock for the reverse acquisition, Silver Butte will implement a 40 to 1 reverse stock split of the total 1,091,680,439 common shares outstanding.  After the reverse stock, split there will be approximately 27, 292,011 outstanding shares of common stock.

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For comparative purposes, the issued and outstanding number of shares of common stock in the financial statements included in this report have been given the effect and adjusted for the 40 to 1 reverse stock split as previously reported in the Pro Forma Consolidated Financial Statements at October 31, 2010.

ITEM 6.

EXHIBITS

Exhibit 31.1 – Certification required by Rule 13a-14(a) or Rule 15d-14(a)

Exhibit 32.1 – Certification required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SILVER BUTTE COMPANY

(Registrant)

         /s/ Michael R. Ward

By:________________________________

Michael R. Ward, President

Principal Executive Officer and Chief Financial Officer

Date:  June 16, 2011  

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