Gulf United Energy, Inc. - FORM 10-Q

Attached files

file	filename
EX-10.9 - Gulf United Energy, Inc.	ex10-9.htm
EX-31.1 - Gulf United Energy, Inc.	ex31-1.htm
EX-10.7 - Gulf United Energy, Inc.	ex10-7.htm
EX-10.6 - Gulf United Energy, Inc.	ex10-6.htm
EX-32.1 - Gulf United Energy, Inc.	ex32-1.htm
EX-10.8 - Gulf United Energy, Inc.	ex10-8.htm
EX-10.10 - Gulf United Energy, Inc.	ex10-10.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC20549

FORM 10-Q

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended May 31, 2011

[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___________________ to ___________________

Commission File Number 000-52322

Gulf United Energy, Inc.

(Exact name of small Business Issuer as specified in its charter)

Nevada	20-5893642
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

P.O Box 22165;Houston, Texas77227-2165

(Address of principal executive offices) (Postal or Zip Code)

(713) 942-6575

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed sincelast report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 the past 90 days [X ] 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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 in Rule 12b-2 of the Exchange Act) [ ] Yes [ X ] No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of July 15, 2010, there were approximately 454,667,726 shares of $0.001 par value common stock issued and outstanding.

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

TABLE OF CONTENTS

Part I. Financial Information		Page

Item 1	Financial Statements

	Consolidated Balance Sheets - May 31, 2011 (unaudited) and August 31, 2010	5

	Consolidated Statements of Operations (unaudited) - For the Three Months and Nine Months Ended May 31, 2011 and 2010 and the Period From Inception (September 19, 2003) to May 31, 2011	6

	Consolidated Statements of Cash Flows (unaudited) - For the Nine Months Ended May 31, 2011 and 2010 and the Period from Inception (September 19, 2003) through May 31, 2011	7

	Consolidated Statements of Changes in Shareholders' Equity (Deficit) (unaudited) for the Period from Inception (September 19, 2003) to May 31, 2011	8

	Notes to the Consolidated Financial Statements (Unaudited)	10

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4	Controls and Procedures	28

	Part II. Other Information

Item 1	Legal Proceedings	30

Item 1A	Risk Factors	30

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3	Defaults Upon Senior Securities	32

Item 4	(Removed and Reserved)	32

Item 5	Other Information	32

Item 6	Exhibits	34

	Signatures	35

Statement Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts included in this Report including, without limitation, statements in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Report, regarding our financial condition, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe”, “expects”, “anticipates”, “intends”, “estimates”, “projects”, “target”, “goal”, “plans”, “objective”, “should”, or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements including, but not limited to, our ability to identify and exploit available corporate acquisitions, farm-in and/or joint venture opportunities in the energy sector in Latin America, , our ability to obtain the requisite consents and approvals of the assignments of rights to us in our oil and gas properties, our ability to legally protect or enforce our rights to our oil and gas properties,our ability to establish technical and managerial infrastructure, our ability to raise required capital on acceptable terms and conditions, our ability to take advantage of, and successfully participate in such opportunities, our ability to successfully operate, or influence our joint venture partners’ operation of, the projects in which we participate in a cost effective and efficient way; future economic conditions, political and regulatory stability and changes and volatility in energy prices. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this Quarterly Report on Form 10-Q appears in the section captioned “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on December 7, 2010.

Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

-3-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

THIRD QUARTER

FINANCIAL STATEMENTS

May 31, 2011

(Unaudited)

-4-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

ConsolidatedBalance Sheets

	May 31,			August 31,
	2011			2010
	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash	$	9,830,873		$	19,679
Deposit		4,668			-
Payroll taxes receivable		-			39,153
Pre-paid expenses		306,664			20,000
Total Current Assets		10,142,205			78,832

Fixed Assets:
Computer Equipment		9,928			3,300
Software License		62,563			62,563
Less: Accumulated Depreciation		(29,736	)		(13,727	)
Net Fixed Assets		42,755			52,136

Other Assets
Investment in oil and gas properties (Note 3)		18,235,871			7,574,581
Total Other Assets		18,235,871			7,574,581

Total Assets	$	28,420,831		$	7,705,549

LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities	$	1,044,493		$	387,692
Accounts payable to operators of working interests		-			1,150,000
Loans payable related parties (Note 6)		26,574			26,574
Shareholder loans payable and accrued interest (Net of note discount -
$286,114 at May 31, 2011 and $856,433 at August 31, 2010) (Note 7)		1,613,171			3,223,516
Total Current Liabilities		2,684,238			4,787,782

Total Liabilities		2,684,238			4,787,782
STOCKHOLDERS' EQUITY
Preferred stock, 50,000,000 shares authorized, none issued or outstanding
Common Stock
Authorized:
700,000,000 shares with a par value of $0.001
Issued and Outstanding:
454,667,726 as of May 31, 2011 and		454,668			293,700
293,700,000 as of August 31, 2010
Additional paid-in capital		42,454,093			6,992,910
Accumulated other comprehensive income		346			-
Deficit Accumulated During The Development Stage		(17,172,514	)		(4,368,843	)
Total Stockholders' Equity		25,736,593			2,917,767
Total Liabilities and Stockholders' Equity	$	28,420,831		$	7,705,549

The accompanying notes are an integral part of these consolidated financial statements.

-5-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

ConsolidatedStatements of Operations

(Unaudited)

													Period From
													Inception
	Three Months Ended												(September 19, 2003)
	May 31,						May 31,						through
	2011			2010			2011			2010			May 31, 2011
Revenue	$	-		$	-		$	-		$	-		$	-
Expenses:
Office and sundry		2,343			440			4,910			515			21,413
Business license and fees		1,000			(1,910	)		2,991			3,160			5,333
Depreciation expense		5,582			5,489			16,009			6,039			29,736
Insurance		19,158			-			25,220						25,220
Salary		1,148,276			-			1,737,800			-			1,895,800
Payroll tax expense		25,483			-			56,407			-			65,319
Professional fees		317,030			143,442			1,082,714			305,544			1,959,491
Consulting		355,000			115,000			8,654,000			115,000			8,664,455
Referral fees		-			18,000			-			18,000			45,000
Rent and lease expense		(4,668	)		-			(4,668	)		-			125,028
Public relations		-			-			925			-			2,190
Subsidiary formation cost		-			9,600			-			9,600			9,600
Travel		35,388			2,154			52,135			5,677			81,191
Utilities		1,791			506			2,311			1,314			20,534
Shareholder loans and other loan interest		234,519			118,960			1,531,542			228,499			2,617,445
Total expenses		2,140,902			411,681			13,162,296			693,348			15,567,755
Operating Loss		(2,140,902	)		(411,681	)		(13,162,296	)		(693,348	)		(15,567,755	)

Other (Income) and Expense
Gain on settlement of debt		-			-			-			-			(3,333	)
Interest income		7,811			-			8,625			-			8,625
Loss from continuing operations		(2,133,091	)		(411,681	)		(13,153,671	)		(693,348	)		(15,555,797	)

Income (Loss) from discontinued operations		30,000			(940,240	)		350,000			(940,240	)		(1,616,717	)
Net Loss	$	(2,103,091	)	$	(1,351,921	)	$	(12,803,671	)	$	(1,633,588	)	$	(17,172,514	)

Basic And Diluted Loss per share
from continuing operations	$	(0.005	)	$	(0.003	)	$	(0.035	)	$	(0.011	)	$	(0.218	)

Basic And Diluted Loss per share
from discontinued operations	$	0.000		$	(0.006	)	$	0.001		$	(0.014	)	$	(0.023	)

Basic And Diluted Net Loss per share	$	(0.005	)	$	(0.009	)	$	(0.034	)	$	(0.025	)	$	(0.241	)

Weighted Average Shares Outstanding		454,389,948			145,863,333			374,967,587			65,758,974			71,232,267

The accompanying notes are an integral part of these consolidated financial statements.

-6-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

ConsolidatedStatements of Cash Flows

(Unaudited)

							Period From
							Inception
	Nine Months Ended						(September 19, 2003)
	May 31,			May 31,			Through
	2011			2010			May 31, 2011
Cash Flows From Operating Activities
Net loss for the period	$	(12,803,671	)	$	(1,633,588	)	$	(17,172,514	)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation expense		16,009			6,039			29,736
Increase in deposit		(4,668	)		-			(4,668	)
Expenses paid by issuance of common stock or common stock
subscribed		9,086,800			145,600			9,279,400
Accrued interest added to shareholder loans		9,021			156,821			730,729
Loan discount amortization		1,193,551			71,194			1,522,909
Non-cash portion of interest expense		-			-			3,333
Gain on settlement of debt		-			-			(3,333	)
Forien currency translation gain		346			-			346
Impairment of investment in joint venture projects		-			940,240			1,951,210
Change in operating assets and liabilities
Payroll taxes receivable		39,153			-			-
Pre-paid expenses		(286,664	)		-			(286,664	)
Accounts payable and accrued liabilities		(493,199	)		7,620			(105,507	)
Net Cash Used By Operating Activities		(3,243,322	)		(306,074	)		(4,055,023	)
Cash Flows From Investing Activities
Capital Expenditures		(6,628	)		(15,641	)		(72,491	)
Investment in oil and gas properties		(10,571,290	)		(2,274,582	)		(13,439,871	)
Advances to and investment in joint venture projects		-			-			(250,000	)
Net cash used by investing activities		(10,577,918	)		(2,290,223	)		(13,762,362	)

Cash Flows From Financing Activities
Proceeds from sale of common stock		25,822,119			587,500			26,435,669
Increase in loans payable to related parties		-			-			226,574
Proceeds from bridge financing		3,800,000			-			3,800,000
Principal payment on bridge financing		(3,800,000	)		-			(3,800,000	)
Principal payment on shareholder loan		(1,089,685	)		(150,000	)		(1,239,685	)
(Principal payments on) Proceeds from shareholder loans payable		(1,100,000	)		2,250,500			2,225,700
Net cash provided by financing activities		23,632,434			2,688,000			27,648,258
Increase In Cash During The Period		9,811,194			91,703			9,830,873
Cash, Beginning Of Period		19,679			516			-

Cash, End Of Period	$	9,830,873		$	92,219		$	9,830,873

The accompanying notes are an integral part of these consolidated financial statements.

-7-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

ConsolidatedStatements ofChanges inStockholders’ Equity (Deficit)

Period fromInception (September 19, 2003) to May 31, 2011

(Unaudited)

												DEFICIT
										ACCUMULATED		ACCUMULATED
	COMMON SHARES				ADDITIONAL			COMMON		OTHER		DURING THE
			PAR		PAID-IN			SHARES		COMPREHENSIVE		DEVELOPMENT
	NUMBER		VALUE		CAPITAL			SUBSCRIBED		INCOME		STAGE			TOTAL
Balance, September 19,
2003 (date of inception)		-	$	-	$	-		$	-	$	-	$	-		$	-
Capital stock issued for cash:
October 2003 at $0.001		2,500,000		2,500		-			-		-		-			2,500
November 2003 at $0.005		160,000		160		640			-		-		-			800
December 2003 at $0.005		1,400,000		1,400		5,600			-		-		-			7,000
June 2004 at $0.01		1,000,000		1,000		9,000			-		-		-			10,000
July 2004 at $0.25		23,000		23		5,727			-		-		-			5,750
Net loss for the period		-		-		-			-		-		(15,880	)		(15,880	)
Balance, August 31, 2004		5,083,000		5,083		20,967			-		-		(15,880	)		10,170
Net loss for the year		-		-		-			-		-		(16,578	)		(16,578	)
Balance, August 31, 2005		5,083,000		5,083		20,967			-		-		(32,458	)		(6,408	)
November 10, 2005 Stock
Split Adjustment		20,332,000		20,332		(20,332	)		-		-		-			-
Net loss for the year		-		-		-			-		-		(31,577	)		(31,577	)
Balance, August 31, 2006		25,415,000		25,415		635							(64,035	)		(37,985	)
Capital stock issued for investment:
January 2007 at $0.735 per share		185,000		185		135,790			-		-		-			135,975
July 2007 at $0.735 per share		750,000		750		550,500			-		-		-			551,250
Net loss for the year		-		-		-			-		-		(257,804	)		(257,804	)
Balance, August 31, 2007		26,350,000		26,350		686,925							(321,839	)		391,436
Net loss for the year		-		-		-			-		-		(378,039	)		(378,039	)
Balance, August 31, 2008		26,350,000		26,350		686,925							(699,878	)		13,397
Net loss for the year		-		-		-			-		-		(1,353,766	)		(1,353,766	)
Balance, August 31, 2009		26,350,000		26,350		686,925			-		-		(2,053,644	)		(1,340,369	)

Capital stock issued for settlement
of name issue:
January 2010 at $0.01 per share		50,000		50		450			-		-		-			500
Capital stock issued to buy
subsidiary:
March 2010 at $0.032 per share		300,000		300		9,300			-		-		-			9,600
Capital stock issued for cash:
March 2010 at $0.01 per share		59,750,000		59,750		527,750			-		-		-			587,500
Capital stock issued for services:
March 2010 at $0.01 per share		20,750,000		20,750		186,750			-		-		-			207,500
April 2010 at $0.01 per share		1,500,000		1,500		13,500			-		-		-			15,000
Capital stock issued for oil and
gas properties:
March 2010 at $0.01 per share		40,000,000		40,000		384,000			200,000		-		-			624,000
Capital stock issued for loan
conversion:
March 2010 at $0.01 per share		20,000,000		20,000		180,000			200,000		-		-			400,000
Shareholder loan interest forgiven		-		-		631,444			-		-		-			631,444
Capital stock issued with short-
term debt:
April 2010 at $0.065 per share		17,500,000		17,500		671,894			-		-		-			689,394
May 2010 at $0.065 per share		5,000,000		5,000		191,970			-		-		-			196,970
June 2010 at $0.087 per share		2,500,000		2,500		113,810			-		-		-			116,310
July 2010 at $0.075 per share		3,000,000		3,000		125,571			-		-		-			128,571
July 2010 at $0.120 per share		500,000		500		26,773			-		-		-			27,273
August 2010 at $0.120 per share		500,000		500		26,773			-		-		-			27,273

The accompanying notes are an integral part of these consolidated financial statements.

-8-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

ConsolidatedStatements ofChanges inStockholders’ Equity (Deficit)

Period fromInception (September 19, 2003) to May 31, 2011

(Unaudited)

												DEFICIT
										ACCUMULATED		ACCUMULATED
	COMMON SHARES				ADDITIONAL		COMMON			OTHER		DURING THE
			PAR		PAID-IN		SHARES			COMPREHENSIVE		DEVELOPMENT
	NUMBER		VALUE		CAPITAL		SUBSCRIBED			INCOME		STAGE			TOTAL
Capital stock issued for oil and
gas properties:
June 2010 at $0.01 per share		20,000,000		20,000		180,000		(200,000	)		-		-			-
July 2010 at $0.052 per share		56,000,000		56,000		2,856,000		-			-		-			2,912,000
Capital stock issued for loan
conversion:
June 2010 at $0.01 per share		20,000,000		20,000		180,000		(200,000	)		-		-			-
Net loss for the period		-		-		-		-			-		(2,315,199	)		(2,315,199	)
Balance, August 31, 2010		96,000,000		96,000		3,216,000		-			-		(2,315,199	)		596,801

Capital stock issued for services:
September 2010 at $0.06 per share		2,500,000		2,500		147,500		-			-		-			150,000
October 2010 at $0.057 per share		1,200,000		1,200		67,200		-			-		-			68,400
December 2010 at $0.20 per share		40,000,000		40,000		7,960,000		-			-		-			8,000,000
January 2011 at $0.063 per share		2,700,000		2,700		167,400		(170,100	)		-		-			-
February 2011 at $0.15 per share		304,000		304		60,496		-			-		-			60,800
March 2011 at $0.30 per share		125,000		125		37,375		(37,500	)		-		-			-
March 2011 at $0.30 per share		2,000,000		2,000		598,000							-			600,000
Capital stock issued for cash:
December 2010 at $0.20 per share		3,875,000		3,875		755,025		-			-		-			758,900
January 2011 at $0.20 per share		9,750,000		9,750		1,885,642		25,000			-		-			1,895,392
February 2011 at $0.30 per share		83,388,726		83,389		23,059,438		-			-		-			23,142,827
March 2011 at $0.20 per share		125,000		125		24,875		(25,000	)		-					-
Capital stock subscribed for services:
September 2010 at $0.063 per share		-		-		-		170,100			-		-			170,100
February 2011 at $0.30 per share		-		-		-		37,500			-		-			37,500
Capital stock issued with short-
term debt:
September 2010 at $0.043 per share		6,500,000		6,500		272,073		-			-		-			278,573
October 2010 at $0.047 per share		1,000,000		1,000		45,524		-			-		-			46,524
October 2010 at $0.043 per share		1,500,000		1,500		62,787		-			-		-			64,287
November 2010 at $0.047 per share		1,500,000		1,500		68,286		-			-		-			69,786
Januuary 2011 at $0.047 per share		1,500,000		1,500		68,286		(69,786	)		-		-			-
February 2011 at $0.047 per share		1,000,000		1,000		45,524		(46,524	)		-		-			-
March 2011 at $0.047 per share		1,000,000		1,000		46,752		(47,752	)		-		-			-
Capital stock subscribed with
short-term debt:
November 2010 at $0.047 per share		-		-		-		139,572			-		-			139,572
November 2010 at $0.049 per share		-		-		-		24,490			-		-			24,490
Capital stock issued for oil and
gas properties:
November 2010 at $0.09 per share		1,000,000		1,000		89,000		-			-		-			90,000
Comprehensive loss:
Net loss		-		-		-		-			-		(12,803,671	)		(12,803,671	)
Other comprehensive income -
Currency translation adjustment		-		-		-		-			346		-			346
Total comprehensive loss		-		-		-		-			-		-			(12,803,325	)
Balance, May 31, 2011		454,667,726	$	454,668	$	42,454,093	$	-		$	346	$	(17,172,514	)	$	25,736,593

The accompanying notes are an integral part of these consolidated financial statements.

-9-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

1.	ORGANIZATION AND BASIS OF PRESENTATION

Gulf United Energy, Inc. (“Gulf United” or the “Company”) is an early-stage oil and gas exploration and production company with operations in South America. The Company currently has limited operations and is a development stage company as defined by the Financial Accounting Standards Board (FASB) Accounting Standards for Development Stage Entities. Gulf United’s current asset portfolio includes participation in two hydrocarbon exploration blocks operated by SK Energy Co. Ltd. (“SK Energy”). SK Energy is a subsidiary of SK Energy Group, one of South Korea’s top five industrial conglomerates. SK Energy is Korea’s largest petroleum refiner and is currently active in 34 blocks in 19 countries.

In Colombia, we acquired, subject to regulatory approval, a 12.5% working interest in the 345,592 acre CPO-4 block inthe Llanos Basin. Block CPO-4 is near existing production and immediately adjacent to and on trend with the Guatiquia blockoperated by Petrominerales Ltd. (TSX:PMG). Block CPO-4 is the near-term focus of the Company and SK Energy, with drilling commencing in July, 2011. We spudded one well on Block CPO-4 on July 12, 2011

In Peru, we acquired, subject to regulatory approval, a 40% working interest in the 2,803,411 acre Z-46 offshore blockin the Trujillo Basin. Recently re-processed 2-D seismic data suggests a submarine fan deposition on the block and multiple leads havebeen identified. Two wells previously drilled on the block by Repsol reported oil, indicating an active hydrocarbon system. TheCompany and SK Energy began the acquisition of additional infill 2-D seismic data in December 2010; additional acquisition and analysis of data is ongoing.

Also in Peru, we acquired, subject to regulatory approval, a 5% participating interest in Block XXIV, an approximately276,137 gross acre concession, and a 2% participating interest in the Peru Technical Evaluation Area (the “Peru TEA”). The PeruTEA consists of four contiguous blocks totaling approximately 40 million gross acres onshore on the western flank of the AndesMountains. Block XXIV and Peru TEA are both operated by Upland Oil & Gas, LLC (“Upland”). Two exploratory wells have beendrilled on Block XXIV and both wells are considered dry holes. There are no current plans to drill additional wells or to reworkexisting wells in the short term on Block XXIV, although future drilling has been planned on this concession by Upland. Similarly,there are no current plans to develop the Peru TEA.

We have begun the process of obtaining the necessary approvals described above. While we believe that we will be successful in obtaining the necessary approvals, if we do not receive such approvals or are not able to work out a favorable alternative arrangement with the parties to our agreements, then we may not be able to legally protect or enforce our rights to the affected oil and gas interests. As we do not currently have recordable title to any of our oil and gas interests, our business would be materially adversely affected if we are unable to protect or enforce our rights to maintain our rights to our oil and gas interests. Moreover, while we believe that we would have rights to receive or be refunded all amounts paid under our agreements, there is no assurance that our operating partners would have readily available funds from which to reimburse our advances.

We expect to engage in additional investment opportunities in oil and gas exploration and development as our resources permit. The scope of our activities in this regard may include, but may not be limited to, the acquisition or assignment of rights to develop exploratory acreage under concessions with government authorities and other private or public exploration and production companies, the purchase of oil and gas producing properties, farm-in and farmout opportunities (i.e., the assumption or assignment of obligations to fund the cost of drilling and development).We may turn to opportunities in other countries if we deem the relevant considerations merit our investment. We plan to focus on early-stage exploration of hydrocarbons through a variety of transactions aimed at building a resource base. An integral part of our strategy is to build a competent and professional management and operations team to enable us to successfully carry out our business plan.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Interim Financial Statements

In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented.

The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosures needed for a fair presentation may be determined in that context. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. These consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2010.

The results of operations presented for the three months or nine months ended May 31, 2011 are not necessarily indicative of the results to be expected for the year. Interim financial data presented herein are unaudited.

These financial statements have been prepared on a going-concern basis. The Company has incurred losses since inception resulting in an accumulated deficit of $17,172,514 and further losses are anticipated in the development of our business raising substantial doubt about the Company’s ability to continue as a going concern. Our ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.During the quarter ended May 31, 2011, the Company issued 2,125,000 shares of common stock to consultants for services rendered or to be rendered and for the nine months ended May 31, 2011, the Company has sold 97,138,726 shares of common stock for net cash proceeds of $25,797,119. As additional consideration, the company issued five-year warrants to purchase up to 1,000,000 shares of common stock at a $0.30 exercise price per share.As additional consideration for $100,000 in previously issued short-term notes, the Company issued 1,000,000 shares of common stock. While the Company has sufficient cash available for immediate obligations, we will need to raise additional funds, beginning as early as September, 2011, to meet our contractual obligations and there is no assurance that the Company will be successful in its efforts. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Company maintains its accounts on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments necessary for a fair presentation of consolidated financial position and the results of operations have been reflected herein.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk at this time consist principally of cash. The Company places its cash with high credit quality financial institutions. At times, such amounts may exceed FDIC limits; however, these deposits typically may be redeemed upon demand and therefore bear minimal risk. In monitoring this credit risk, the Company periodically evaluates the stability of the financial institutions.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain of our more critical accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, and our observance of trends in the industry and information available from other outside sources, as appropriate. Different, reasonable estimates could have been used in the current period. Additionally, changes in accounting estimates are reasonably likely to occur from period to period. These, and other, factors could have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.

Cash

Cash includes cash in a demand deposit account and a money market account with a Houston bank. In addition, the Company has established a cash account in Bogota, Colombia as required by local regulations. This account is maintained in Colombian pesos.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, payroll taxes receivable from shareholder, accounts payable, accrued liabilities and debt. It is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these instruments. The fair value of these financial instruments approximates their carrying values.

The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest and discount rates that approximate prevailing market rates. In determining fair values, there are three levels of inputs used to determine value. Level 1 inputs are quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs which include risk inherent in the asset or liability.

Software License and Fixed Assets

The value of the software license and computer equipment is stated at cost. Depreciation is computed using the straight-line method over the thirty six-month estimated useful life of the software and equipment. Any costs associated with maintenance and upgrades will be charged to expense as incurred. When an asset is retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period; significant renewals and betterments are capitalized.

Impairment of Long-lived Assets

The Company evaluates impairment when events or circumstances indicate that a long-lived asset’s carrying value may not be recovered. These events include market declines, decisions to sell an asset and adverse changes in the legal or business environment. If events or circumstances indicate that a long-lived asset’s carrying value may not be recoverable, the Company estimates the future undiscounted cash flows from the asset for which the lowest level of separate cash flows may be determined, to determine if the asset is impaired. If the total undiscounted future cash flows are less than the carrying amount for the asset, the Company estimates the fair value of the asset through reference to sales data for similar assets, or by using a discounted cash flow approach. The asset’s carrying value is then adjusted downward to the estimated fair value. These cash flow estimates and assumptions could change significantly either positively or negatively. At May 31, 2011, management did not believe that any impairment exists with respect to its long-lived assets.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Inflation

The Company's results of operations have not been significantly affected by inflation and management does not expect inflation to have a significant effect on its operations in the foreseeable future.

Oil and gas properties

The Company follows the full cost method of accounting for its oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reservesare capitalized. Such costs include costs of acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Sales or other dispositions of oil and gas properties will be accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of capitalized costs to proven reserves would significantly change, or to the extent that the sales proceeds exceed our capitalized costs. As of May 31, 2011, the Company had oil and gas propertyinvestments in the amount of $18,235,871 that are excluded from depletion because reserves have not been proven to be associated with those properties. If proved reserves, if any, are found and when its quantity can be estimated, costs in excess of the present value of estimated future net revenues will be charged toimpairment expense. The Company will apply the full cost ceiling test on a quarterly basis on the date of the latest consolidated balance sheet presented. It is not known at this time if any recoverable reserves of oil and gas exist. As of the date of this report and based upon all the known facts and circumstances, management does not believe that any impairment exists with respect to oil and gas properties.

Asset retirement costs will be recognized when an asset is placed in service and will be included in the amortization base and will be amortized over proved reserves, if any, using the units of production method. Depletion of proved oil and gas properties will be calculated on the units-of-production method based upon estimates of proved reserves, if any. Such calculations include the estimated future costs to develop proved reserves, if any. Costs of unproved properties are not included in the costs subject to depletion. These costs will also be assessed quarterly for impairment.

Asset Retirement Obligation

GAAP requires that an asset retirement obligation (ARO) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable. Under this method, when liabilities for dismantlement and abandonment costs, excluding salvage values, are initially recorded, the carrying amount of the related oil and natural gas properties is increased. The fair value of the ARO asset and liability is measured using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. Accretion of the liability is recognized each period using the interest method of allocation, and the capitalized cost is depleted using the units of production method. Should either the estimated life or the estimated abandonment costs of a property change materially upon the Company’s quarterly review, a new calculation is performed using the same methodology of taking the abandonment cost and inflating it forward to its abandonment date and then discounting it back to the present using the Company’s credit-adjusted-risk-free rate.

The carrying value of the asset retirement obligation is adjusted to the newly calculated value, with a corresponding offsetting adjustment to the asset retirement cost related to oil and gas property accounts. At May 31, 2011, the Company has no asset retirement obligations.

Basic Loss per Share

The Company is required to provide basic and diluted earnings (loss) per common share information. The basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. During the period ended May 31, 2011, the Company issued five-year warrants to purchase up to 1 million shares of common stock at an exercise price of $0.30 per share as described in Note 4.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Potential dilutive securities (stock warrants) have been considered, but the potential dilutive effect of these securities is not believed to be material and would be anti-dilutive. The Company reported net losses in the three and nine month periods ended May 31, 2011 of $2,103,091and $12,803,671; accordingly, the effects of any additional shares would be anti-dilutive. The weighted average number of common and common equivalent shares outstanding was 454,389,948 and 145,863,333 for the quarters ended May 31, 2011 and 2010, respectively and 374,967,587 and 65,758,974 for the nine month periods ended May 31, 2011 and 2010, respectively.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Gulf United Energy, Inc. and its wholly-owned subsidiaries, Gulf United Energy del Peru, Ltd., Gulf United Energy Cuenca Trujillo, Ltd. and Gulf United Energy de Colombia, Ltd. as of May 31, 2011 and August 31, 2010. All significant inter-company transactions and balances have been eliminated in the consolidation.

Accounting for Uncertain Tax Positions

GAAP provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an entity’s financial statements. GAAP requires an entity to recognize the financial statement impact of a tax position when it is more likely that not that the position will be sustained upon examination. The Company believes that all significant tax positions utilized by the Company will more likely than not be sustained upon examination. As of the Company’s fiscal year-end, August 31, 2010, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are from the year 2007 forward (with limited exceptions). Tax penalties and interest, if any, would be accrued as incurred and would be classified as tax expense in the consolidated statements of operations.

Recently Issued Accounting Pronouncements

In February 2010, the FASB amended guidance on subsequent events to alleviate potential conflicts between FASB guidance and Securities and Exchange Commission (“SEC”) requirements. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

3. INVESTMENTS

Investment in Joint Venture Entities - Sold

On March 22, 2006, the Company entered into a letter of intent with Cia. Mexicana de Gas Natural, S.A. de C.V. (“CMGN”), a private Mexican corporation, whereby the Company would acquire a 50% interest in a joint venture to be formed (the “Gulf United/CMGN Joint Venture”). The Company contributed cash to the Gulf United/CMGN Joint Venture and CMGN contributed its 24% equity interest in a proposed project to design, construct, operate and maintain an open access natural gas pipeline between Valladolid, Cancun and Punta Venado, as well as its initial 24% equity interest in a project to build a proposed LNG storage and regasification facility.

The value of the joint venture investment was impaired in the amount of $1,010,970 and adjusted as of May 31, 2009 to reflect the present value of the then-agreed sale amount of $1,000,000. The valuation was completed using level 3 inputs, using a 10% discount rate on funds to be received after closing. The joint venture interest was further impaired in the amount of $940,240 to reflect management’s view that, as of May 31, 2010, the interest had a zero value.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

As reported in the Company’s Form 8K filed on November 5, 2010, the Company closed on an agreement with its former joint venture partner, Cia. Mexicana de Gas Natural, S.A. de C.V., to sell all of the Company’s shares in Fermaca LNG de Cancun, S.A. de C.V. and Fermaca Gas de Cancun, S.A. de C.V. for a total amount of $1,000,000 of which$50,000 was paid upon entry into thesale agreement, $150,000 of which was paid at the close of the transaction, $120,000 of the next $150,000 was paid as of February 28, 2011 with the remaining $30,000 paid in March, 2011. The next installment of $150,000 wasdue on May 1, 2011 and as of July 15, 2011, it has not been paid, but it is expected to be paid by the end of July. The next two $150,000 installments are due August 1, 2011 and November 1, 2011 with the final payment of $200,000 due February 1, 2012. No interest accrues on the installments. Management expects that all installments will be paid, but there is no certainty; consequently, the gain on the sale of the joint venture investment is being recognized on an installment basis as the sales proceeds are received. Because the sale of the joint venture interests ended the Company’s investments in pipeline and LNG infrastructure, the gain from the sale and the impairment losses have been reclassified to discontinued operations.As of May 31, 2011, the unrecorded present value of the $650,000 to be received in the future is $626,967discounted at a 10% interest rate.

Investments in oil and gas properties

Peru Block XXIV and TEA

On July 31, 2010, the Company entered into an amendment to the participation agreement dated March 12, 2010covering blocks XXIV Peru and the Peru TEA. Under the terms of the amendment, the Company acquired an undivided 5% working interest in Block XXIV, an approximately 280,000 acre onshore and offshore property and an undivided 2% working interest in the Peru TEA which consists of four contiguous blocks totaling approximately 40,000,000 acresin exchange for a $500,000 cash payment and 1,000,000 shares of restricted common stock.Prior to the execution of the amendment, the Company had paid a total of $1,100,000 toward past costs and $1,813,391 for drilling costs throughMay 31, 2011. With respect to the Peru TEA, the Company has paid $250,000 toward the Peru TEA ongoing costs as of May 31, 2011. Upland spudded two wells on Block XXIV prior to May 31, 2011. Both wells are currently considered dry holes. The right for the Company to make this investment was granted by four related-party assignors in exchange for 60,000,000 shares of the Company’s unregistered, restricted common stock.Theassignors retained a 2% overriding royalty interest, proportionately reduced, in these properties. There are no current plans to drill additional wells or to rework existing wells in the short term on Block XXIV. Future drilling has been planned on this property by Upland. Similarly, there are no current plans to develop the Peru TEA.

Peru Z-46

On July 13, 2010, the Company entered into a farmout agreement with SK Energy pursuant to which the Company will pay to SK Energy approximately $2,914,917 for past costs and expenses incurred through May 31, 2010 to earn an undivided forty percent (40%) participation interest in Block Z-46. The payment for past costs is due within thirty (30) days after receipt of the approval from Perupetro S.A.which is expected in July or August 2011.

The Company has paid and will pay SK Energy its proportionate share of on-going costs and an additional thirty-five percent (35%) of seismic acquisition costs (the Company pays a total of seventy five percent (75%) of certain seismic acquisition costs). The assignment of the participation interest in Block Z-46 is conditioned upon the approval of the assignment by Perupetro S.A.In the event that the PeruPetro consent is delayed or denied, the farmout agreement provides that the parties will meet within thirty days after such date to discuss possible amendments to the farmout agreement to avoid the need for the approval. If the Company and SK Energy are unable to agree upon the amendment, the farmout agreement will be terminated, the Company’s interest in Block Z-46 will be deemed re-assigned back to SK Energy, and the Company will have the right to have returned any amounts paid under the farmout, without interest ($5,626,488 has been paid through May 31, 2011).

Recent re-processed 2-D seismic data suggests a submarine fan deposition on the block and multiple leads have been identified. Two wells previously drilled on the block by Repsol reported oil, indicating an active hydrocarbon system. The Company and SK Energy began the acquisition of additional infill 2-D seismic data in December 2010; the acquisition, processing and analysis of seismic datais ongoing.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Colombia CPO-4

On July 30, 2010, the Companyentered into a farmout agreementwith SK Energy pursuant to which, the Company, through its wholly owned subsidiary, Gulf United Energy de Colombia Ltd., acquired the right to earn an undivided twelve and one-half percent (12.5%) participation interest in the CPO-4 block located in the Llanos Basin of Colombia. The assignment of the interest in CPO-4 is conditioned upon the approval by the National Hydrocarbon Agency of Colombia (“ANH”) and the Republic of Korea by July 31, 2011.If such approval is not received from ANH and the Republic of Korea by July 31, 2011, the farmout agreement provides that the parties will meet within thirty days after such date to discuss possible amendments to the farmout agreement to avoid the need for the approval. If the Company and SK Energy are unable to agree upon the amendment, the farmout agreement will be terminated, the Company’s interest in Block CPO-4 will be deemed re-assigned back to SK Energy, and the Company will have the right to have returned any amounts paid under the farmout, without interest. The Company has paid SK its share of past costs and has paid and will pay SK its proportionate share of on-going costs and an additional twelve and one-half percent (12.5%) of seismic acquisition costs. The Company will pay a total of twenty-five percent (25%) of seismic acquisition costs.

SK Energy serves as operator on CPO-4. Block CPO-4 is near existing production and immediately adjacent to and on trend with the Guatiquia block operated by Petrominerales Ltd. (TSX:PMG). Block CPO-4 is the near-term focus of the Company and SK Energy, with drilling commencing in July, 2011. One well was spudded on July 12, 2011.

At May 31, 2011, the Company does not have sufficient cash or credit facilities to fund all of the above-noted short-term costswhich are summarized below. At May 31, 2011, the Company’s investment in oil and gas properties and approximate fiscal 2011 commitments are as follows:

	Total Costs		Fiscal 2011
	To Date		Commitment

Block XXIV and TEA – Peru	$	4,060,784	$	-
Block Z-46 – Peru		8,538,488		3,584,000
CPO-4 – Colombia		5,636,599		4,935,000
	$	18,235,871	$	8,519,000

As of the date of this report and based upon all the known facts and circumstances, management does not believe that any impairment exists with respect to these properties.

4. COMMON STOCK

As of May 31, 2011 and August 31, 2010, the Company had 454,667,726 and 293,700,000 shares of its $.001 par value common stock issued and outstanding, respectively.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

The following schedule is a summary of the transactions in the Company’s common stock since August 31, 2010:

Shares issued and outstanding as of August 31, 2010		293,700,000


Shares issued for services rendered	September-March, 2011	48,829,000

Shares issued in conjunction with oil and gas participation agreement	November, 2010	1,000,000

Shares issued in conjunction with debt subscriptions	September-March, 2011	14,000,000

Shares issued for cash	September-March, 2011	97,138,726

Total shares issued and outstanding as of May 31, 2011:		454,667,726

As additional compensation, related to sale of the common stock on February 15, 2011, the Company issued to Pritchard Capital warrants to purchase up to 1 million shares of common stock at an exercise price of $0.30 subject to anti-dilution adjustments. As of May 31, 2011, the total value of these warrants is estimated at approximately $455,178using the Black-Scholes valuation model. Expected volatility is based on historical volatility of our common stock over the past twelve months. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of issuance for an instrument with a maturity of five years. A dividend yield rate of zero was used because we have never paid cash dividends and we do not intend to pay cash dividends on our common stock.

5. INCOME TAXES

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has incurred net operating losses totaling $17,172,514 which commence expiring in 2023 if not previously utilized. Pursuant to Accounting Standards Codification, the Company is required to compute tax asset benefits for net operating loss carry-forwards. The potential benefit of net operating losses has been offset by a valuation allowance in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. The valuation of the tax loss carryforward and the valuation allowance thereon were as follows:

	May 31, 2011			August 31, 2010
Tax benefit carry forward	$	5,288,971		$	821,997
Loss from discontinued operations		549,684			663,411
Valuation allowance		(5,838,655	)		(1,485,408	)
	$	-		$	-

At August 31, 2010, the Company had approximately $2,418,000 of federal net operating loss carryforwards for tax reporting purposes available to offset future taxable income. The federal net operating loss carryforwards expire on various dates through 2030. Under the Tax Reform Act of 1986, the amounts of and benefits from net operating losses carried forward may be impaired or limited in certain circumstances. Events which may cause limitations in the amount of net operating losses the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50 percent over a three-year period.

The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation. If the Company has experienced an ownership change at any time since its formation, utilization of the net operating loss carryforwards would be subject to an annual limitation under Section 382 of the Internal Revenue Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Further, until a study is completed and any limitations known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefit will not impact its effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance.

6. LOANS PAYABLE TO RELATED PARTIES

Notes payable to related parties consists of the following as of May 31, 2011 and August 31, 2010:

Unsecured loans to related parties

26,574

Two stockholders and former directors of the Company provided these loans. The loans are non-interest bearing, unsecured and payable upon demand.

7.	SHAREHOLDER LOANS PAYABLE AND ACCRUED INTEREST

Unsecured loans and accrued interest payable to shareholders at May 31, 2011 and August 31, 2010:

	May 31, 2011			August 31, 2010
Loan payable	$	-		$	1,089,685
Accrued interest		-			19,430
		-			1,109,115

Short-term debt		1,800,000			2,900,000
Less: total note discount for stock issued		(1,082,326	)		(1,185,791	)
Add: amortization of note discount		796,212			329,358
Add: accrued interest		99,285			70,834
		1,613,171			2,114,401
Total shareholder loans payable and accrued interest	$	1,613,171		$	3,223,516

During the quarter ended February 28, 2011, the Company used proceeds from common stock sales to retire the one-year promissory note from a related party stockholder, James M. Askew, which originally totaled $1,089,685.

The remaining notes bear interest at 8% annually with all interest and principal due at maturity. As additional consideration for the purchasers of notes, the Company issued an additional 1,000,000 shares of its common stock in March, 2011, which was shown as common stock subscribed as of February 28, 2011.

The notes were discounted based on the fair market value of the common stock received (determined with the assistance of independent valuation experts) as a percentage of the total fair marketvalue of all consideration received. The resulting note discount is being amortized as additional interest expense over the twelve month life of each note and is being calculated based on a normal amortization schedule using the interest method.

The weighted average interest rates on shareholder loans payable at May 31, 2011 and August 31, 2010 were 8.0% and 8.5%, respectively.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

8.	COMMITMENTS AND CONTRACTUAL OBLIGATIONS

Our commitments under existing agreements for the next three fiscal years are estimated as follows as of May 31, 2011:

Contractual Obligations (Amounts in Thousands)	Payments due by period
	Total		FY 2011		FY 2012		FY 2013
Debt obligations	$	1,944	$	432	$	1,512	$	-
Commitments under employment agreements		1,793		296		1,033		463
Commitments under consulting contracts		140		60		80		-

Commitments under participation and farmout agreements:
CPO - 4		8,458		4,935		3,085		438
Z-46		5,648		3,584		1,032		1,032
Block XXIV		-		-		-		-
Peru TEA		-		-		-		-
Subtotal		14,106		8,519		4,117		1,470
Total	$	17,983	$	9,307	$	6,742	$	1,933

Oil and Gas Investment Commitments

Colombia CPO-4

On July 30, 2010, the Company entered into a farmout agreement with SK Energy pursuant to which the Company acquired, through its wholly owned subsidiary, Gulf United Energy de Colombia Ltd., the right to earn an undivided twelve and one-half percent (12.5%) participation interest in the CPO-4 block located in the Llanos Basin of Colombia. The assignment of the interest in CPO-4 is conditioned upon the approval by the National Hydrocarbon Agency of Colombia (“ANH”) and the Republic of Korea by July 31, 2011. SK Energy serves as operator on CPO-4.The Company will also be responsible for 25% of all future seismic acquisition costs and its pro-rata share of all other future costs with respect to CPO-4.The commitments for Block CPO-4 reflect our plan to drill three wells during calendar year 2011. The current obligation on Block CPO-4 is $8.55 million which includes three wells at approximately $1.5 million each, payments of $2.25 million for 3-D seismic expense and $1.5 million for seismic acquisition costs incurred subsequent to July 31, 2010 owed to Houston American Energy Corp., and joint operating costs of $300,000. The budgeted drilling program of three wells assumes success on the initial two wells. Any drilling success may have associated revenues to offset additional costs.

Peru Z-46

On July 13, 2010, the Company entered into a farmout agreementwith SK Energy pursuant to which the Company acquired, through its wholly owned subsidiary, Gulf United Energy Cuenca Trujillo Ltd., the right to earn an undivided forty percent (40%) participation interest in Block Z-46,an approximately 2.8 million acre offshore block in Peru. SK Energy, through its subsidiary SK Energy Sucursal Peruana, serves as operator on Block Z-46.

Pursuant to the agreement, the Company will pay to SK Energy approximately $2,914,917 for past costs and expenses incurred through May 31, 2010. The payment for past costs is due within thirty (30) days after receipt of the approval from Perupetro S.A.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

The Company will also pay SK Energy its proportionate share of on-going costs and thirty-five percent (35%) of seismic acquisition costs, approximately $500,000 for seismic processing, and joint operating costs of $860,000. If the results of the 2-D seismic are positive, the Company will consider a 3-D seismic acquisition and drilling a well, increasing the future obligations on the block.

Peru Block XXIV and TEA

On July 31, 2010, the Company, entered into an amendment to the participation agreement, dated March 12, 2010, covering blocks XXIV Peru and the Peru TEA. Under the terms of the amendment, the Company paid$500,000 for the purchase of an undivided 5% working interest in Block XXIV and an undivided 2% working interest in the Peru TEA. In addition to the $500,000 payment, the Company issued one million shares of the Company’s common stock to Upland. The Company is responsible for its proportionate share of future costs incurred with respect to Block XXIV and TEA.

Agreement with our former Chief Executive Officer

On March 1, 2010, the Company entered into a two-year agreement with Don Wilson for services to be rendered subsequent to March 1, 2010. Under the agreement, the Company is obligated to pay Mr. Wilson $180,000 before the end of calendar year 2011as compensation when he was Chief Executive Officer and sole director of the Company and as consulting expense once he resigned as Chief Executive Officer and sole director in September 2010. A pro-rata portion of this obligation has been recorded and paid through May 31, 2011.

Software license agreement

In March, 2010, the Company began paying a twelve-month software license agreement with Seismic Micro-Technology for seismic analysis software. The license agreement was entered into on February 23, 2010, is payable in twelve monthly installments of $5,213 beginning March 25, 2010 for a total cost of $62,563. As of February 28, 2011, this obligation has been paid in full. The Companyhas paid a software maintenance fee for an annual cost of$8,885 in order to receive software maintenance and upgrades.

Entry into consulting agreements

On December 7, 2010, the Company entered into one-year consulting agreements with John Eddie Williams, Jr. and Reese Minerals, Ltd., a Texas limited partnership. Pursuant to the agreements, consultants provided certain high-level business development and strategic services to the Company.Each of the Consultants received 20,000,000 shares of the Company’scommon stock valued at $4 million based on the then active selling price of the Company’s restricted common shares. The value of these shares wasexpensed in the quarter ended February 28,2011 based on work performed related to potential and actual business relationships essential to the company’s business, funding structure and sources, and potential property acquisitions.

On February 10, 2011, the Company entered into a one-year consulting agreement with Charles Newman under which Mr. Newman will provide director and administrative services for each of the Company’s subsidiaries registered in the British Virgin Islands or which may be registered in the future. Pursuant to the agreement, Mr. Newman will be paid $1,500 per month. In addition, Mr. Newman was issued 125,000 shares of common stock valued at $37,500 based on the then active selling price of the Company’s restricted common sharesas additional compensation for work performed related to management of the Company’s subsidiaries. Upon mutual consent, the agreement may be extended for successive one-year periods.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

9. RELATED PARTY TRANSACTIONS

Mr. James Askew was paid a total of $66,519 in interest expense was paid during fiscal 2010 and the note principal balance of $1,089,685was paid during the nine months ended May 31, 2011.

As of May 31, 2011, officer’s salary of $260,323 had been paid and a $400,000 bonus accrued to John B.Connally III; $113,750 salary had been paid and $100,000 bonus accrued to Jim D. Ford, an owner of Rodeo Resources, LP, and to Ernest B. Miller IV.

During the nine months ended May 31, 2011 the Company incurred $43,164 for administrative services from Rodeo Resources, L.P., a related party. The Company incurred $15,000 in administrative services expense to Rodeo Resources, L.P. in the fiscal year ended August 31, 2010. The Companyhas incurred $31,058 in costs for travel expenses for Jim Ford during the nine months ended May 31, 2011, $9,167 for John B. Connally III and $4,697 for Ernest B. Miller IV; $5,192 was incurred in the fiscal year ended August 31, 2010.

During the three months ended February 28, 2011, the Company incurred $4,000,000 in expense to each John Eddie Williams, Jr. and Reese Minerals, Ltd., a Texas limited partnership forservices rendered for the common stock issued under the consulting agreements described in Note 8. The Company also received and paid off bridge financing in the amount of $1,900,000 each from John Eddie Williams and Reese Minerals, Ltd.

10. SUBSEQUENT EVENTS

Formation of Compensation Committee and 2011 Stock Incentive Plan

On June 14, 2011, the Company established a compensation committee (the “Compensation Committee”), and appointed John Seitz and Thomas G. Loeffler to serve as the initial members of the committee. Both John Seitz and Thomas G. Loeffler are “independent” directors, as such term is defined under independence standards used by both the NASDAQ Stock Market and NYSE Amex rules. On June 14, 2011, the Compensation Committee adopted of the Company’s 2011 Stock Incentive Plan (the “2011 Plan”). The plan was approved to reward long-term performance, encourage the achievement of superior results over time, align executive and stockholder interests, and retain executive management through the award of a combination of restricted stock, stock options and other stock-based compensation. The board of directors believes that by providing employees, consultants, and directors with an opportunity to acquire a proprietary interest in the Company and additional incentive and reward opportunities based on the growth of the Company, the 2011 Plan will give such individuals a stronger incentive to work for the continued success of the Company. The board also believes that the 2011 Plan is critical for the Company in attracting and retaining outside personnel, without which we will not be competitive in the employment environment today.

The 2011 Plan provides for the granting of options (either incentive stock options within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or options that do not constitute incentive stock options (“nonqualified stock options”)), restricted stock awards, performance awards, incentive awards, and bonus stock awards.

Our directors and all employees and consultants of the Company and its affiliates are eligible to participate in the 2011 Plan and to receive awards under the plan. However, incentive stock options may be granted only to individuals who are employees of the Company and its subsidiary corporations at the time of the grant. The selection of those employees, consultants and directors, from among those eligible, who will receive awards is within the discretion of the administrator of the 2011 Plan.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

The 2011 Plan covers an aggregate of 45,000,000 shares of Company common stock (subject to certain adjustments in the event of a reorganization, stock split, recapitalization, other change in our capital structure and certain other events (“adjustments”)). No more than 1,000,000 shares of Common Stock, subject to adjustments, may be issued pursuant to awards granted under the 2011 Plan to any one individual in any calendar year. The maximum aggregate cash payout with respect to performance awards granted to any one individual during a calendar year is $5,000,000.

The 2011 Plan will be administered by the Compensation Committee. The Compensation Committee has the power to determine those employees, consultants and/or outside directors who will receive an award, the time or times when such award will be made, the type of the award and the number of shares of Company common stock to be issued under the award or the value of the award.

The Compensation Committee may from time to time, in its sole discretion, delegate to the Company’s chief executive officer the administration of the 2011 Plan, including the right to grant awards, insofar as such administration and power to grant awards relates to any person who is not subject to Section 16 of the Securities Exchange Act of 1934, as amended. Such delegation may be effective only so long as the chief executive officer is a member of our board of directors, and the Compensation Committee may revoke the delegation at any time. The Compensation Committee, in its sole discretion, may place any conditions and restrictions on the powers delegated to the chief executive officer. In the event of a conflict in a determination or interpretation under the 2011 Plan as between the Compensation Committee and our chief executive officer, the determination or interpretation of the Compensation Committee will be conclusive. The key features of the plan include: (i) no re-pricing of stock options without stockholder approval;(ii) no grants of discounted awards; (iii) independent committee administering the plan; (iv) the plan prohibits shares from being added back to the aggregate plan limit under the following circumstances: (1) shares tendered in payment of the option price; (2) shares withheld by the Company to satisfy the tax withholding obligation; and (3) shares that are repurchased by the Company with option right proceeds; (v) minimum three-year vesting requirements for options, restricted stock awards and incentive awards, except as awarded in lieu of cash compensation; and (vi) minimum one-year performance period for performance awards.

Compensation for Non-Executive Directors

On June 14, 2011, the Compensation Committee approved a new compensation structure for non-executive employees. Under the approved structure, existing directors will receive a $40,000 annual cash retainer, and the Chairpersons of the Audit Committee and Compensation Committee will receive an additional $20,000 cash retainer. Each director will also receive a $1,000 meeting fee and annual grant of equity from the 2011 Plan of 275,000 shares of restricted stock. The shares subject to the restricted stock grant will vest over a period of three years. New directors appointed to the board will receive an additional 275,000 shares of restricted stock. Directors may elect to receive their cash compensation in shares of Company common stock. If a director elects to receive cash, a 25% premium is added to the dollar amount received.

Bonus and Stock Awards to Executive Officers

On June 14, 2011, the Compensation Committee awarded cash bonuses to its executive officers. Mr. Connally was awarded $400,000, each of Messrs. Ford, Miller, and Fluker were awarded $100,000, and Mr. Pomerantz was awarded $50,000 all of which were accrued as of May 31, 2011.

On July 11, 2011, Mr. Connally was issued 600,000 shares of restricted stock and a five-year option to purchase 1,500,000 shares of common stock, exercisable at $0.32 per share, pursuant to the 2011 Plan. The shares subject to the restricted stock award and the option will vest over a period of three years. Also on July 11, 2011, Messrs. Ford, Miller, and Fluker were each issued 200,000 shares of restricted stock and options to purchase up to 500,000 shares of common stock, all on the same terms as the awards made to Mr. Connally. The estimated $192,000 value of the restricted stock was accrued as of May 31, 2011.

-22-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

Employment Agreements

On July 11, 2011, the Company and Messrs. Connally, Ford, Miller, and Fluker all entered into amended and restated employment agreements. Pursuant to Mr. Connally’s new agreement, Mr. Connally will continue his employment with the Company, subject to termination and corporatechange provisions that are outlined in the agreement, for a three year term. Mr. Connally’s agreement maintains substantially the same provisions of his previous employment agreement, except that his base salary was increased to $450,000 per year, and the provisions entitling Mr. Connally to a gross-up of severance payments, to the extent any portion of such severance were deemed to be a “parachute payment” subject to excise taxes under Section 280G of the Internal Revenue Code, were deleted.

Pursuant to each of the new agreements entered into with each of Messrs. Ford, Miller, and Fluker, each individual will continue their employment in their current capacities for one-year. Each of the new employment agreements maintain substantially the same provisions of the previous employment agreements, except that the base salaries for Messrs. Ford, Miller, and Fluker were each increased to $240,000 per year.

Consulting Agreements

Effective July 11, 2011, the Company entered into one-year consulting agreements with four individuals pursuant to which the consultants would provide advice to the board of directors relating to certain of the Company’s strategic and business development activities. In consideration for providing the consulting services, the consultants will be issued an aggregate of 5.2 million shares of restricted common stock. Mr. James Askew, a related party, was one of the four individuals and was granted three million shares of restricted common stock.

-23-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

May 31, 2011

(Unaudited)

11. SUPPLEMENTAL DISCLOSURES – CONSOLIDATED STATEMENTS OF CASH FLOWS

Supplemental Disclosure of Non-Cash and Financing Activities:

	Nine Months May 31,		Nine Months Ended May 31,		Period From Inception Through May 31,
	2011		2010		2011

Investment advances paid from shareholder loans	$	-	$	-	$	1,263,985
Capital stock issued for investment in joint venture projects	$	-	$	-	$	687,225
Capital stock issued or subscribed for expenses	$	9,086,800	$	-	$	9,279,400
Capital stock issued for prepaid expenses	$	-	$	-	$	20,000
Capital stock issued for oil and gas properties	$	90,000	$	-	$	3,646,000
Capital stock issued or subscribed in connection with short-termnotes	$	623,232	$	-	$	1,809,023
Interest forgiven on shareholder loan payable	$	-	$	-	$	631,444
Capital stock issued in conversion of shareholder loan	$	-	$	-	$	400,000
Capital expenditures acquired with accounts payable	$	-	$	-	$	31,282

Settlement of loan payable by assignment of investment:
Loan payable	$	-	$	-	$	(200,000	)
Investment	$	-	$	-	$	200,000
Warrants issued for non-employee compensation	$	455,178	$	-	$	455,178
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest	$	328,970	$	-	$	363,604
Income taxes	$	-	$	-	$	-

-24-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” above and “Risk Factors” included in our Form 10-K for the fiscal year ended August 31, 2010, filed with the Securities and Exchange Commission (“SEC”) on December 7, 2010 (the “2010 Form 10-K”), for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared on the accrual basis of accounting, whereby revenues are recognized when earned, and expenses are recognized when incurred. These consolidatedfinancial statements as of May 31, 2011, and for the three and ninemonths ended May 31, 2011 and 2010, are unaudited. In the opinion of management, such financial statements include the adjustments and accruals necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in these financial statements as of May 31, 2011 and for the three and ninemonths ended May 31, 2011 and 2010.

You should read this discussion and analysis together with such financial statements and the notes thereto.

Overview

We are an international, early-stage oil and gas exploration and production company with operations in South America. We have acquired a working interest in an oil and gas property in Colombia and have entered into agreements to acquire additional working interests in properties located in Peru. We expect to engage in investment opportunities in oil and gas exploration and development. The scope of our activities in this regard may include, but may not be limited to, the acquisition of or assignment of rights to develop exploratory acreage under concessions with government authorities and other private or public exploration and production (“E&P”) companies, the purchase of oil and gas producing properties, farm-in and farmout opportunities.

We plan to build a successful oil and gas exploration and production company focused on acquiring working interests, royalty interests, partnership or limited liability company interests, lease options, leasehold positions, or other mineral rights in select countries in South America. We have initially concentrated our efforts in Colombia and Peru, where we believe we have found good E&P opportunities with straight-forward oil and gas contracting terms and conditions. We may turn to opportunities in other countries if we deem the relevant considerations merit our investment. We plan to focus on early-stage exploration for hydrocarbons through a variety of transactions aimed at building a resources base.

Operational Update

Colombia CPO-4

As of the date of this report, we have spudded one well with the goal of production by the fourth calendar quarter of 2011. During 2011, the Company plans to drill at least two wells on the block.We will fund approximately $3.75 million for past costs including seismic acquisition, approximately $350,000 for joint operating costs and approximately $3.0 million for drilling two exploratory wells and beginning phase 2 drilling (in about October, 2011). We are currently reprocessing and analyzing seismic data, long lead-time items have been ordered and equipment is being moved on to the first drilling site. In addition, environmental permitting is in process related to three drilling sites.

Peru Z-46

During the current fiscal year, we intend to acquire an additional approximately 2,900 square km of 2D seismic data on Block Z-46 to further delineate prospects in anticipation of a focused 3D acquisition in the future.We and our operating partner have evaluated seismic data as well as information from surrounding drilling activity and management has concluded that valuable prospects exist for oil reserves.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Cont.

Based on this conclusion, 2D seismic acquisition began on December 31, 2010 and is ongoing.We expect to pay approximately $2.9 million for funding past costs which is due upon government approval of the assignment of interest (estimated to be in July or August of 2011) and approximately $700,000for joint operating costs through the end of the fiscal year.

Peru Block XXIV

During the fiscal year ended August 31, 2010, we paid an aggregate of $2,763,391 to Upland under the existing farmout and participation agreements. In September 2011, we paid an additional $500,000 to Upland relating to Block XXIV and the Peru TEApursuant to the July 2010 amendment. During fiscal 2010, two dry holes were drilled on the Block XXIV property and currently there is no drilling activity. There are no current plans to drill additional wells or to rework existing wells in the short-term, but drilling is planned in the future on this property. The current work program for Block XXIV is comprised of the acquisition and evaluation of new seismic data.

Peru Technical Evaluation Area (“TEA”)

The Peru TEA consists of four contiguous blocks totaling approximately 40,000,000 gross acres onshore on the western flank of the AndesMountains. As is typical of Technical Evaluation Areas, this project represents a greenfield opportunity to identify prospects from an area that has had virtually no geological study (aeromagnetic, seismic, or otherwise) beyond field notes and descriptions.We intend to acquire and evaluate an aeromagnetic survey in the future, which may or may not be during fiscal year 2011, the results of which may result in further geological evaluation through a 2D seismic survey.

Results of Operations for Three Months and Nine Months Ended May 31, 2011

We have not earned any revenues during the period from inception through May 31, 2011. We have not attained profitable operations and are, therefore, dependent upon obtaining additional debt or equity financing. If we are unable to obtain additional financing, there is substantial doubt that we will be able to continue as a going concern.

Sale of pipeline and LNG re-gasification facility joint venture investments

As reported in the Company’s Form 8K filed November 5, 2010, the Company closed on an agreement with its former joint venture partner, Cia. Mexicana de Gas Natural, S.A. de C.V., to sell all of the Company’s shares in Fermaca LNG de Cancun, S.A. de C.V. and Fermaca Gas de Cancun, S.A. de C.V. for a total amount of $1,000,000. $350,000 has been paid to date. The next installment was due on May 1, 2011 and has not been paid, but is expected by July 15, 2011. The next twoinstallments of $150,000 are due on August 1, 2011 and November 1, 2011 with the final payment of $200,000 due February 1, 2012. No interest accrues on the installments.

Liquidity and Capital Resources

At May 31, 2011, the Company has current assets of $10,142,205, current liabilities of $2,684,238 resulting in a working capital surplus of $7,457,967. During the current fiscal year, the Company received net proceeds of $25,822,119 from sales of common stock. In addition, the Company funded $9,086,800 in expenses through the issuance of the Company’s restricted, common shares. During the remainder of fiscal 2011, we will need to fund approximately $8.9 million under existing farmout and participation agreements. Additionally, we will need to pay approximately $432,000 through the end of the fiscal year under existing credit facilities, and will require an additional $1.0 million to fund obligations under employment and consulting agreements and for other working capital purposes. The Company has no other sources of financing and will continue to rely on best efforts equity, equity equivalent, or debt financings and borrowings from shareholders.

-26-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Cont.

There are no additional commitments from or assurances that we will be able to obtain additional capital on terms favorable to the Company or at all. Our auditors have issued a going concern opinion for our financial statements due to their substantial doubt about our ability to continue as a going concern.

Results of Operations

Three and Nine Months ended May 31, 2011, compared to periods ended May 31, 2010

	2011			2010			2011			2010
Revenue	$	-		$	-		$	-		$	-

Office and other		19			28			31			33
Depreciation expense		6			5			16			6
Salaries and related expenses		1,174			-			1,795			-
Professional fees		317			143			1,083			306
Consulting		355			115			8,654			115
Travel		35			2			52			6
Shareholder loan and other interest		235			119			1,532			228
Total operating expense		2,141			412			13,163			694
Gain (loss) on joint venture investment		30			(940	)		350			(940	)
Interest Income		8			-			9			-

Net loss for the period	$	(2,103	)	$	(1,352	)	$	(12,804	)	$	(1,634	)

Operating Expenses

For the quarter ended May 31, 2011, operating expenses increased $1,729,000 as compared to the same quarter ended in 2010. The increase occurred primarily due to: (i) the $240,000 increase in consulting expense, (ii) the $1,174,000 increase in salaries, bonus and related expenses, (iii) the $174,000 increase in professional fees which includes accounting, legal fees, geotechnical services and other and, (iv) the $116,000 increase in interest expense and loan discount amortization. Similarly, for the nine months period, operating expenses increased $12,469,000 primarily due to: (i) the $8,539,000 increase in consulting expense, (ii) the $1,795,000 increase in salaries and related expenses, (iii) the $777,000 increase in professional fees which includes accounting, legal fees, geotechnical services and other and (iv) the $1,304,000 increase in interest expense and loan discount amortization.

Net Loss

The Company incurred a net loss of $2,103,000 for the three months ended May 31, 2011 which is $751,000 higher than the net loss of $1,352,000 in 2010. The higher loss is dueto the expense increases noted above offset by the loss on joint venture investment in 2010 as well asthe increased interest expense associated with greater borrowings and loan discount amortization in the current quarter. An increased loss is reflected for the nine-month period ended May 31, 2011 was due mostly to a $8,539,000 increase in consulting expense, a $1,795,000 increase in salaries and increased interest expense of $1,304,000.

Net Loss Applicable to Common Shareholders

Cash flows

For the three months ended May 31, 2011, our net loss per share was $0.005 compared to a loss of $0.009 for the three months ended May 31, 2010. For the nine month periods, our net loss per share was $0.034 compared to a loss of $0.025 for the nine months ended May 31, 2010.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Cont.

For the nine months ended May 31, 2011, the Company's operating activities used cash of $3,243,322 compared to net cash used of $306,074 for the same period in 2010. Investing activities used cash of $10,577,918 for investment in oil and gas properties and capital expenditures. The Company's financing activities provided net cash of $23,632,434in the nine months endedMay 31, 2011, compared to $2,688,000 in cash provided in the nine months ended May 31, 2010. The cash provided in the current fiscal year was provided by proceeds from sales of common shares less the amounts used to pay down shareholder short-term loans. In 2010, the financing was provided primarily by shareholder loans as well as some common stock sales.

For the period from inception-to-date, the Company used cash of $4,055,023 in operating activities, used $13,762,362 in investing activities and $27,648,258 was provided from financing activities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure results from fluctuations in foreign exchange rates. The Company is exposed to foreign exchange risk based on the Company’s investments in oil and gas properties in Peru and Colombia. The Company funds the oil and gas projects and reports the investments in US dollars, but a significant portion of the expenses funded may be denominated in local currency and converted to US dollars. To the extent that we are required to reimburse expenses originally denominated in foreign currencies, our total costs could increase (or decrease). We don’t expect that this risk will have a material impact on future financial statements. The Company is not exposed to market risks related to fluctuations in interest rates. The interest rate on all Company debt instruments is fixed. We do not currently own marketable securities, use interest rate swaps, futures contracts, options on futures or other types of derivative financial instruments. We do not hold or issue financial instruments for trading purposes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company's periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Company's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the Company's principal executive officer and principal financial officer, of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).

Based upon the evaluation, the Company's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. In addition, the Company's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Cont.

Limitations on the Effectiveness of Controls

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company's financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control Over Financial Reporting

As reported in our Annual Report on Form 10-K filed with the SEC on December 7, 2010, management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of August 31, 2010. We identified a material weakness in our internal control over financial reporting relating to segregation of duties. However, the Company’s management believes that the material weaknesses described in our Form 10-K were the result of the scale of our operations, and are intrinsic to our small size and are of a nature that companies of our size would normally encounter. The Company has added qualified individuals to our staff during the current fiscal year and management believes that we have improved and can continue to improve the control weakness related to our lack of segregation of duties. We have implemented changes in procedures in our internal control over financial reporting during the quarter ended May 31, 2011that we believe have materially improved, or are reasonably likely to materially improve, our internal control over financial reporting.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

PART II- OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The Company is now subject to risk factors in addition to (or which differ materially from) those previously disclosed under Item 1 of the Company’s Form 10-K filed with the Securities and Exchange Commission on December 7, 2010:

We have a limited cash and liquidity position and will need to raise approximately $6 million to fund existing contractual obligations and estimated working capital needs in calendar year 2011.

At May 31, 2011, the Company has current assets of $10,142,205, current liabilities of $2,684,238 resulting in a working capital surplus of $7,457,967. During the current fiscal year, the Company received net proceeds of $25,797,119 from sales of common stock. In addition, the Company funded $9,086,800 in expenses through the issuance of the Company’s restricted, common shares. During the remainder of the calendar 2011, we will need to fund approximately $16 million under existing contracts, farmout and participation agreements. The Company has no other sources of financing and will continue to rely on best efforts equity, equity equivalent, or debt financings and borrowings from shareholders.

We expect to deploy the remaining proceeds from our financings to fund existing contractual obligations and estimated working capital needs through December 2011, which are as follows:

·	$11.6 million under existing farmout agreements ($4.0 million relating to Block Z-46 and $7.6 million relating to Block CPO-4, which amounts are payable throughout calendar 2011, but probably concentrated in the 3rd calendar quarter);
·	$2.0 million under existing credit facilities (due in the second half of calendar 2011);
·	$1.0 million under employment and consulting agreements; and
·	$1.3 million for working capital purposes.

We will need to raise at least $7.5 million of net proceeds beginning about September, 2011 to fund our remaining calendar year 2011 contractual commitments and working capital needs. Inability to obtain capital on a timely basis may damage our credibility with industry participants if we cannot fund previously closed transactions.

We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Future financings may be dilutive to our stockholders, as we will most likely issue additional shares of our common stock or other equity to investors in future financing transactions, the terms of which may include preferences, superior voting rights, and the issuance of warrants or other derivative securities. In addition, debt and possible mezzanine financing may involve a pledge of assets and may be senior to equity holders.

We have historically financed our operations through best efforts private debt and equity financing. We do not have any credit facilities available with financial institutions, stockholders or third party investors, and will continue to rely on best efforts financings. There is no assurance that we can raise additional debt or equity capital from external sources. The Company has no control over the amount of funds that it may receive in financings and the time frame in which they may be received. Failure to raise additional capital during calendar year 2011 on favorable terms, or at all, will have a material adverse effect on our operations, could result in the loss of our interests in our exploration projects, and will likely cause us to curtail or cease operations.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

We will need to raise additional capital in calendar year 2012. If we are unable to raise additional capital in 2012, we may be unable to meet our capital requirements in the future, causing us to curtail future growth plans or cut back our operations.

In addition to the amounts required in calendar year 2011, we will need to raise at least $17 million in calendar year 2012 in order to satisfy our obligations under existing contractual commitments and for general working capital purposes.

We may need to raise in excess of that amount to meet various objectives including, but not limited to:

·	complying with funding obligations under new contractual commitments;
·	pursuing growth opportunities, including more rapid expansion;
·	making investments to improve our infrastructure;
·	hiring and retaining qualified management and key employees;
·	responding to competitive pressures;
·	complying with licensing, registration and other requirements;
·	maintaining compliance with applicable laws; and
·	maintaining adequate funds for working capital purposes.

We plan to pursue sources of such capital through various financing transactions or arrangements, including joint venturing of projects, debt financing, equity financing or other means. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Future financings may be dilutive to our stockholders, as we will most likely issue additional shares of our common stock or other equity to investors in future financing transactions, the terms of which may include preferences, superior voting rights, and the issuance of warrants or other derivative securities. In addition, debt and possible mezzanine financing may involve a pledge of assets and may be senior to equity holders.

We will incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We will also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our results of operations.

We have historically financed our operations through best efforts private debt and equity financing. We do not have any credit facilities available with financial institutions, stockholders or third party investors, and will continue to rely on best efforts financings. There is no assurance that we can raise additional debt or equity capital from external sources. The Company has no control over the amount of funds that it may receive in financings and the time frame in which they may be received. Failure to raise additional capital, on favorable terms or at all, will have a material adverse effect on our operations, could result in the loss of our interests in our exploration projects, and will likely cause us to curtail or cease operations.

We may not receive approval of the assignments of rights to us in our oil and gas properties in which we have invested and are continuing to invest, and, as a result, we may not be able to legally protect our rights under our agreements with the operators of the applicable properties.

The assignment to the Company of the interest in Block CPO-4 is subject to the approval of both the ANH and the Republic of Korea. If such approval is not received from ANH and the Republic of Korea by July 31, 2011, the farmout agreement provides that the parties will meet within thirty days after such date to discuss possible amendments to the farmout agreement to avoid the need for the approval. If the Company and SK Energy are unable to agree upon the amendment, the farmout agreement will be terminated, the Company’s interest in Block CPO-4 will be deemed re-assigned back to SK Energy, and the Company will have the right to have returned any amounts paid under the farmout, without interest.

The assignment to the Company of the interest in Block Z-46 is subject to the approval of PeruPetro S.A. If such approval is not received from PeruPetro S.A. by November 30, 2011, the farmout agreement provides that the parties will meet within thirty days after such date to discuss possible amendments to the farmout agreement to avoid the need for the approval.

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

If the Company and SK Energy are unable to agree upon the amendment, the farmout agreement will be terminated, the Company’s interest in Block Z-46 will be deemed re-assigned back to SK, and the Company will have the right to have returned any amounts paid under the farmout, without interest.

The assignment to the Company of the interests in Block XXIV and the Peru TEA are also subject to the approval of PeruPetro S.A. and certain governmental agencies of the Republic of Peru. Until such time as the approvals are received, Upland is holding the Block XXIV and Peru TEA interests in escrow.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

None.

Item 5. Other Information

Registration Statement of Form S-1

On March 18, 2011, the Company filed with the SEC a registrationstatement on Form S-1 (the "Registration Statement") to register theresale of 96,288,726 shares of Company common stock, which included anaggregate of 1,000,000 shares of common stock issuable upon the exerciseof outstanding five-year common stock purchase warrants exercisable at $0.30 per share. The Registration Statement was declared effective bythe SEC on April 8, 2011.

Formation of Compensation Committee and 2011 Stock Incentive Plan

On June 14, 2011, the Company established a compensation committee (the “Compensation Committee”), and appointed John Seitz and Thomas G. Loeffler to serve as the initial members of the committee. Both John Seitz and Thomas G. Loeffler are “independent” directors, as such term is defined under independence standards used by both the NASDAQ Stock Market and NYSE Amex rules.On June 14, 2011, the Compensation Committeeadopted of the Company’s 2011 Stock Incentive Plan (the “2011 Plan”). The plan was approved to reward long-term performance, encourage the achievement of superior results over time, align executive and stockholder interests, and retain executive management through the award of a combination of restricted stock, stock options and other stock-based compensation. The board of directors believes that by providing employees, consultants, and directors with an opportunity to acquire a proprietary interest in the Company and additional incentive and reward opportunities based on the growth of the Company, the 2011 Plan will give such individuals a stronger incentive to work for the continued success of the Company.

-32-

GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

The board also believes that the 2011 Plan is critical for the Company in attracting and retaining outside personnel, without which we will not be competitive in the employment environment today.

The 2011 Plan provides for the granting of options (either incentive stock options within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or options that do not constitute incentive stock options (“nonqualified stock options”), restricted stock awards, performance awards, incentive awards, and bonus stock awards.

The 2011 Plan covers an aggregate of 45,000,000 shares of Company common stock (subject to certain adjustments in the event of a reorganization, stock split, recapitalization, other change in our capital structure and certain other events (“adjustments”)). No more than 1,000,000 shares of Common Stock, subject to adjustments, may be issued pursuant to awards granted under the 2010 Plan to any one individual in any calendar year. The maximum aggregate cash payout with respect to performance awards granted to any one individual during a calendar year is $5,000,000.

Compensation for Non-Executive Directors

Bonus and Stock Awards to Executive Officers

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GULF UNITED ENERGY, INC. AND SUBSIDIARIES

(A Development Stage Company)

Employment Agreements

Consulting Agreements

Item 6. Exhibits

3.1	Amended and Restated Articles of Incorporation and By-Laws of the Company(1)

10.6*†

Amended and Restated Employment Agreement by and between the Company and John B. Connally III

10.7*†

Amended and Restated Employment Agreement by and between the Company and Jim Ford

10.8*†

Amended and Restated Employment Agreement by and between the Company and Ernest B. Miller IV

10.9*†

Amended and Restated Employment Agreement by and between the Company and James C. Fluker III

10.10*†

2011 Stock Incentive Plan

31.1* Certifications pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1* Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Filed herewith.

(1) Incorporated by reference to Exhibit 10.4 of Form 10-Q filed July 20, 2010.

† Identifies management contracts and compensatory plans or arrangements.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Gulf United Energy, Inc.

/S/ JOHN B. CONNALLY III

John B. Connally III, President and C.E.O.

(Principal Executive Officer)

DATED: July 15, 2011

/S/ DAVID POMERANTZ

David Pomerantz, CFO

Principal Financial Officer and

Principal Accounting Officer

DATED: July 15, 2011

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Gulf United Energy, Inc. - FORM 10-Q - July 15, 2011

Attached files

Gulf United Energy, Inc. Reports