UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011 or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________

Commission File Number 000-31503

EDEN ENERGY CORP.
(Exact name of registrant as specified in its charter)

604-568-4700
(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
[ ] YES [ X ] NO

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
[ ] YES [ ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 2,325,938 common shares issued and outstanding as of August 15, 2011

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited interim consolidated financial statements for the three and six month period ended June 30, 2011 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

EDEN ENERGY CORP.

Consolidated Financial Statements
(Expressed in United States dollars)

June 30, 2011

(Unaudited)

The accompanying notes are an integral part of these consolidated statements
F-1

The accompanying notes are an integral part of these consolidated statements
F-2

The accompanying notes are an integral part of these consolidated statements
F-3

F-4

F-5

During the six months ended June 30, 2011, 82,000 stock options expired and/or were cancelled with exercise prices ranging between $15.00 and $62.50 per share.

F-6

A summary of the Company’s stock option activity is as follows:

Additional information regarding warrants as at June 30, 2011 is as follows:

F-7

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this current report and unless otherwise indicated, the terms "we", "us", "our", "our company” and "Eden" mean Eden Energy Corp. and/or our subsidiaries, unless otherwise indicated.

General Overview

Our company, Eden Energy Corp., was incorporated in the State of Nevada on January 29, 1999, under the name E-Com Technologies Corp. On June 16, 2004 we effected a 2 for 1 stock split of our common stock and our preferred stock. On August 6, 2004 we changed our name to Eden Energy Corp. and increased our authorized capital to 100,000,000 shares of common stock having a $0.001 par value and 10,000,000 shares of preferred stock having a $0.001 par value. On January 7, 2010 we effected a share consolidation of our authorized and issued and outstanding shares of common stock on a 5 old for 1 new basis, such that our authorized capital decreased from 100,000,000 shares of common stock with a par value of $0.001 to 20,000,000 shares of common stock with a par value of $0.001 and, correspondingly, our issued and outstanding shares of common stock decreased from 49,467,856 shares of common stock to 9,893,563 shares of common stock. On May 20, 2010, our board of directors approved an amendment to our Articles to increase our authorized share capital to 200,000,000 common shares with a par value of $0.001 per share. This increase in authorized capital received approval of the requisite stockholders of our shares at our annual and special meeting held in Vancouver BC, Canada on August 3, 2010. Our authorized capital increased to 200,000,000 shares of common stock having a $0.001 par value and 10,000,000 shares of preferred stock having a $0.001 par value. On March 8, 2011, our company effected a 5 old for 1 new reverse stock-split of the authorized, issued and outstanding common stock. As a result, the authorized share capital decreased from 200,000,000 shares of common stock with a par value of $0.001 to 40,000,000 shares of common stock with a par value of $0.001. The issued and outstanding share capital decreased from 9,893,563 shares of common stock to 2,325,938 shares of common stock.

3

From mid 2004 through to mid 2008 we were an exploration stage oil and gas company engaged in the exploration for petroleum and natural gas in the State of Nevada and in the Province of Alberta, Canada. Effective September 2006 we commenced with a natural gas development-drilling program in the White River Dome, Ant Hill Unit located in the Piceance Basin in Colorado. The White River Dome project became our primary focus of activity mid 2008 due to the belief it represented the combination of good commercial returns while providing a large number of low risk development locations. We commenced receiving revenues from our White River Dome project during 2008 and have moved from an exploration stage company to an operating company. In conjunction with our partners we continue to monitor exploration activities in Alberta, Canada.

Net production from continuing operations for the three months ended June 30, 2011 was approximately 24,895 Mcfe as compared to 58,896 Mcfe for the three months ended June 30, 2010. Revenues recognized decreased due to a general decrease in production resulting in revenue of $163,558 for the three months ended June 30, 2011 as compared to $324,554 for the three months ended June 30, 2010.

The decline in natural gas prices over the past two years has impaired the valuation of our Colorado assets and has eroded our access to reserve based financing for continued drilling in Colorado. The commencement date for our continuous drilling program in Colorado was extended to no later than July 1, 2010. On June 30, 2010 we provided notice to EnCana we would not drill additional earning wells nor continue the drilling program in Colorado thus terminating our drilling and development agreement effective July 1, 2010. In conjunction with the Unit operator, management continues to evaluate production data from its wells prior to making future decisions. Management plans to continue to review other potential exploration projects, which may be presented to them from time to time.

In order to continue operating on October 2, 2009 we entered into a loan agreement whereby under certain terms and conditions we could borrow up to a $1,000,000 from D. Sharpe Management Inc., a company owned and controlled by our president and director. As of December 31, 2009 we had borrowed the full amount. Ongoing production related issues and the depressed state of natural gas prices continue to challenge our revenue projections and estimates of operating cash flows.

On October 14, 2010 we disclosed that we had entered into an amendment to the loan agreement with D. Sharpe Management Inc., extending the due date for the loan to April 5, 2011.

On April 1, 2011, we entered into an amending agreement with D. Sharpe Management Inc., wherein the loan has been further extended to May 5, 2011. All other terms of the loan agreement remain unchanged. The maturity date of the loan payable was extended to July 4, 2011, and thereafter on a month to month basis unless notice is given by either party at least one month in advance. Should additional extensions not be provided, and if our company is not capable of repayment, the loan’s security, consisting of all of our company’s assets, may be used to repay the loan. This could significantly impact the continued operation of our company.

On May 17, 2011 our directors approved the adoption of the 2011 Stock Option Plan which permits our company to issue up to 395,778 shares of our common stock to directors, officers, employees and consultants of our company upon the exercise of stock options granted under the 2011 Plan.

Awards under our 2011 Plan will vest as determined by our board of directors and as established in stock option agreements to be entered into between our company and each participant receiving an award.

Additional funds to meet loan retirement obligations and to cover future costs of company operations will be required when the loan comes due. There is uncertainty that further funding can be raised when necessary or that the loan can be extended upon maturity.

Due to the implementation of British Columbia Instrument 51-509 on September 30, 2008 by the British Columbia Securities Commission, we have been deemed to be a British Columbia based reporting issuer. As such, we are required to file certain information and documents at www.sedar.com.

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Our Current Business

We are primarily focused and engaged in managing the White River Dome, Ant Hill Unit Project in Colorado. We expect to continue to monitor our exploration projects pursuant to our participation agreements with our partners.

White River Dome, Ant Hill Unit Drilling and Development Project – Colorado

The White River Dome, Ant Hill Project is a natural gas development-drilling program located in the Piceance Basin of western Colorado. Through agreements entered into September 1, 2006 and August 31, 2007 we have an 85% working interest in these prospective lands, and Eden carries the unit operator for 15% of the total well cost in each new well drilled on 40-acre drill site quarter/quarter section. For each well drilled, Eden earned a 100% interest in a diagonal 40-acre tract, located in the same 160-acre quarter section. The unit operator retains its 100% interest in the two remaining offset locations in each 160-acre drilling block. On July 26, 2010 Koch Exploration Company LLC was designated unit operator of the Ant Hill Unit assuming all rights, duties and obligations of the resigning unit operator, EnCana.

After the initial four locations were drilled, Eden elected to develop 4 additional 160-acre drilling blocks on acreage outside the existing participation agreements under the same terms, which initiated Eden’s continuing drilling commitment. There are 34 potential 160-acre drilling blocks outside of the existing participation agreements that have not been developed, resulting in 68 potential drilling locations on what is effectively 40-acre spacing. There is also the potential to develop the field on 20-acre spacing, which would provide for another 68 drilling locations. On June 30, 2010 we provided notice to EnCana that we would not drill additional earning wells nor continue the drilling program in Colorado thus terminating our drilling and development agreement effective July 1, 2010. As a result of this election Eden will conduct no further well earning operations in the Ant Hill Unit, but will continue to manage its interests in the current wells and properties earned to date. Properties earned to date include the potential to drill up to 8 offset well locations, one for each of the 8 wells already drilled. This election has not impaired the remaining carrying value of proven reserves.

Ant Hill Unit – Colorado

The primary targets are the Cameo Coal and Williams Fork Sandstones of the Cretaceous Mesaverde Group, found at an average depth of 8,100 feet. As of January 1, 2011 cumulative production from the field is in excess of approximately 85 Bcfe from 162 wells, with current production averaging 6.08 MMcf/d from 79 active wells. Typical well life in the field is in the range of 25-30 years. Gas from the Ant Hill unit typically contains about 25% carbon dioxide, which is removed at a local natural gas treatment plant. Drilling and completion costs have historically been in the $2,000,000 range per well throughout the field, though with service costs declining due to general economic conditions, we estimate costs now to be in the $1,500,000 range. Lease operating and gas gathering costs have increased in the unit with recent amendments to our agreements and the change in Unit operator. Operations in the White River Dome Field are largely prohibited in the winter months.

Effective March 1, 2011 we entered into an amendment to the gas marketing agreement with Koch Exploration Company, LLC which provides that the operator shall charge and deduct from production proceeds a fee for the processing and treating of Eden’s gas in an amount equal to Eden’s allocated share, on a volume basis, of the operator’s actual gas plant costs, inclusive.

5

On February 28, 2011 we received an independent reserve report from MHA Petroleum Consultants Inc., of Lakewood, Colorado, which was effective January 1, 2011. Using an average of 2010 monthly actual received oil and gas prices in accordance with Securities and Exchange Commission (SEC) criteria, net to Eden, the report assigned our eight proved developed producing wells net reserves of approximately 1.03 Bcfe with a pre tax PV10 value of $1.70 million. Our eight associated proved and undeveloped well locations were not included in the SEC report as they are uneconomical to develop using the current SEC reserve criteria. As an alternative evaluation, effective December 31, 2010 in accordance with the current Canadian Oil and Gas Handbook NI 51-101 reserve evaluation criteria, which uses the Sproule December 31, 2010 oil and gas price forecast, MHA Petroleum Consultants Inc. assigned Eden net proved reserves of approximately 5.47 Bcfe with a pre tax PV 10 value of $3.20 million.

Noah Project - Nevada

From August 2004 to July 2008 we conducted an exploration program in Nevada, which cumulated in the drilling of the Noah Federal #1 well in the spring of 2008. Though the well encountered its target formation, log analysis and the lack of oil or gas shows did not support further testing and our project in Nevada was terminated. Accordingly, we recognized total impairment of $8,398,382 related to the Noah project during the year ended December 31, 2008. Subsequently, we assigned all our rights, title, and interests to our partners in the project area.

On September 20, 2010 we received a refund of $332,150 from our joint venture partner relating to road and site reclamation costs which we had prepaid by authorization of expenditure when drilling was initially scheduled to commence. A remaining $25,000 has been held by our partner to cover final site reclamation costs, which all or some may be refunded if final costs are less than $25,000. More detailed information on this project is available in our 2008 and 2009 year end filings.

Cherry Creek Project - Nevada

On October 21, 2005, we commenced with a second exploration project in Nevada called Cherry Creek. On July 28, 2008, subsequent to the Noah well drilling and after a careful review of the technical aspects involved, we terminated the project. Accordingly, we recognized total impairment of $876,195 related to the Cherry Creek project during the year ended December 31, 2008. Subsequently, we assigned all our rights, title, and interests to our partner in the project area. More detailed information on this project is available in our 2008 and 2009 year end filings.

Chinchaga Project – Alberta

From March 13, 2006 to February 2007 in conjunction with our partners, we conducted an exploration program in Alberta, which cumulated with drilling two exploratory wells. Both wells were plugged and abandoned in early 2007 and we recognized total impairment of $1,462,214 relating to the dry wells. By drilling these wells we have earned an interest in certain lands for potential future exploration. In the year ended December 31, 2010 we recognized additional impairment on these properties of $647,915 and unless there is a significant improvement in natural gas prices in the near future, management is unlikely to focus further in this area. More detailed information on this project is available in our 2008 and 2009 year end filings.

Cash Requirements

Due to our company’s current financial situation, it is challenging for management to comment on plans for the next twelve-month period.

6

In Colorado, we hold 640 gross acres in our White River Dome, Ant Hill unit development-drilling project. We have assigned our interests to our partners in the Noah and Cherry Creek projects in Nevada. In Alberta we have interests in approximately 23,000 gross acres of leases pursuant to our joint venture exploration agreements.

Our current focus of activity is managing our well program in Colorado and over the next twelve-month period we have not budgeted for exploration expenditures.

The past two years decline in natural gas prices has led to a significant write down in the valuation of our Colorado assets. Ongoing production related issues; increased lease operating and gas gathering costs, and the current depressed state of natural gas prices are challenging our revenue projections and estimates of operating cash flows. We expect cash flows for the next twelve-month period to be in a range of $500,000, which we anticipate will not provide adequate operating cash flow for the period. For the prior year ending December 31, 2010 we had received or accrued approximately $1.156 million from gas, oil, and natural gas liquid sales from our production wells. For the three months ended June 30, 2011, we had received or accrued $163,558 from gas, oil and natural gas liquid sales from our production wells.

We anticipate we will not have adequate operating cash flow for the next twelve month period. Additional funds to meet obligations and to cover the costs of company operations will be required in future and there is uncertainty that further funding can be raised.

Our net cash provided by financing activities during the three months ended June 30, 2011 was $105,000 as compared to $Nil used during the three months ended June 30, 2010.

We will require additional funds in the future to maintain operations and further funds to implement our growth strategy in our gas development operations. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable.

In order to proceed with past settlement plans and provide working capital, on October 2, 2009 we entered into a loan agreement to borrow the principal sum of up to US$1,000,000 from a company owned and controlled by Donald Sharpe, our president and a director. The loan is secured pursuant to a general security agreement over all of our company’s assets, also dated effective October 2, 2009.

The loan available to us was to be drawn down in an initial draw of $500,000 and, upon the provision of 30 days written notice, further draws of not less than $50,000, to an aggregate maximum of $1,000,000. The initial draw was confirmed received by our company on October 7, 2009 and a subsequent draw of $500,000 was confirmed received on October 21, 2009.

The loan bears interest from the date any funds are advanced to the date of full repayment of all amounts outstanding under the loan, at 20% per annum. Interest is payable quarterly, in arrears, commencing January 5, 2010, and quarterly thereafter, for the initial draw. For subsequent draws, interest shall be payable three months after such draws, in arrears, and quarterly thereafter. The undrawn amount of the loan shall bear interest at the rate of 1% per month, which amount shall be payable quarterly, commencing three months after the date of the loan agreement.

We were required to repay the principal amount of the loan and all accrued and unpaid amounts and interest on the earlier to occur of October 5, 2010, subject to extension upon mutual agreement, or an event of default occurring, as defined in the agreement. This repayment date was extended to July 4, 2011, and thereafter on a month to month basis unless notice is given by either party at least one month in advance. We may prepay the loan in whole or in part, at any time and from time to time without notice, bonus or penalty.

7

Estimated Net Expenditures During the Next Twelve Months

Over the next twelve months we expect to expend funds as follows:

We have recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.

The continuation of our business is dependent upon obtaining further financing, a successful program of exploration and/or development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment (excluding oil and gas activities) over the twelve months ending June 30, 2012 other than office computers, furnishings, and communication equipment as required.

Research and Development

We have incurred $Nil in research and development expenditures over the last two fiscal years.

Employees

Currently our only employees are our directors and officers. We do and will continue to outsource contract employment as needed. With project advancement and if we are successful in any exploration or drilling programs, we may retain additional employees.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

8

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

Basis of Presentation and Consolidation

The unaudited interim consolidated financial statements have been prepared by our company in accordance with generally accepted accounting principles in the United States for interim financial information and conforms with the rules and regulations of the Security and Exchange Commission and reflects all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2011. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These unaudited interim consolidated financial statements and notes included herein should be read in conjunction with our company’s audited consolidated financial statements and notes for the year ended December 31, 2010, included in our company’s Annual Report on Form 10-K. The accounting principles applied in the preparation of these interim consolidated financial statements are consistent with those applied for the year ended December 31, 2010.

Our company’s interim consolidated financial statements are prepared on a going concern basis in accordance with generally accepted accounting principles in the United States which contemplates the realization of assets and discharge of liabilities and commitments in the normal course of business. Our company has experienced negative cash flows from operations to date and has accumulated losses of $50,786,178 since inception including a loss for the current period of $980,787. To date our company has funded operations through the issuance of capital stock and debt. Management’s plan is to continue raising additional funds through future equity or debt financings, if available, as needed until it achieves profitable operations from its oil and gas activities. Given our company’s focus of operations in natural gas production and the related supply and pricing challenges, there may be difficulty in raising further funding. The ability of our company to continue its operations as a going concern is dependent on continuing to raise sufficient new capital to fund its exploration and development commitments and to fund ongoing losses if, as and when needed, and ultimately on generating profitable operations. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to recoverable values of oil and gas properties, stock-based compensation, convertible notes, the provision for income taxes, depreciation, depletion and asset retirement obligations.

9

Cash and Cash Equivalents

Our company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Foreign Currency Translation

Our company’s and its United States subsidiaries’ functional and reporting currency is the United States dollar. The functional currency of our company’s Canadian subsidiary is the Canadian dollar. The financial statements of the subsidiary are translated to United States dollars in accordance with ASC 830 “Foreign Currency Translation Matters” using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in current operations. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. Our company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Asset Retirement Obligations

Our company accounts for asset retirement obligations in accordance with the provisions of ASC 440 “Asset Retirement and Environmental Obligations”. ASC 440 requires our company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The estimated fair value of the asset retirement obligation is based on the current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability is capitalized as part of the cost of the related asset and amortized over its useful life. The liability accretes until our company settles the obligation.

Oil and Gas Properties

Our company utilizes the full cost method to account for its investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, capitalized interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. When our company commences production from established proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects including capitalized interest, if any, are not depleted until proved reserves associated with the projects can be determined. If the future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be depleted.

The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions plus the lower of cost and estimated net realizable value of unproven properties.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Property and Equipment

Property and equipment is recorded at net cost of $8,289 (2010 - $15,180) less accumulated depreciation of $67,640 (2010 - $61,501). Depreciation is recorded on the straight-line basis over five years.

10

Long-Lived Assets

In accordance with ASC 360, “Property Plant and Equipment", the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. Our company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

Loss Per Share

Our company computes net loss per share in accordance with ASC 260 "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. Shares underlying these securities totaled approximately 647,000 as of August 15, 2011. Diluted loss per share figures are equal to those of basic loss per share for each period since the effects of convertible debt, stock options and warrants have been excluded as they are anti-dilutive.

Other Comprehensive Income (Loss)

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. For the quarter ended June 30, 2011 and 2010, the only components of comprehensive income (loss) were foreign currency translation adjustments.

Financial Instruments

Our company’s financial instruments consist principally of cash and cash equivalents, accrued petroleum revenues, other receivables, accounts payable, and loan payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Management believes that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Income Taxes

Our company follows the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

Debt Issue Costs

In accordance with the Accounting Principles Board Opinion 21 “Interest on Receivables and Payables”, our company recognizes debt issue costs on the balance sheet as deferred charges, and amortizes the balance over the term of the related debt. Our company follows the guidance in the EITF 95-13 “Classification of Debt Issue Costs in the Statement of Cash Flows” and classifies cash payments for debt issue costs as a financing activity. During the quarter ended June 30, 2011 our company recognized amortization expense of $Nil.

11

Stock – Based Compensation

Our company has a stock-based compensation plan, whereby stock options are granted in accordance with the policies of the stock option plan. Our company records stock-based compensation in accordance with ASC 718 “Compensation – Stock Based Compensation”, using the fair value method.

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Revenue Recognition

Oil and natural gas revenues are recorded using the sales method whereby our company recognizes oil and natural gas revenue based on the amount of oil and gas sold to purchasers when title passes, the amount is determinable and collection is reasonably assured. Actual sales of gas are based on sales, net of the associated volume charges for processing fees and for costs associated with delivery, transportation, marketing, and royalties in accordance with industry standards. Operating costs and taxes are recognized in the same period of which revenue is earned.

Recently Issued Accounting Pronouncements

Our company has implemented all new accounting pronouncements that are in effect and that may impact our financial statements and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Going Concern

In 2008 we commenced receiving revenues from the White River Dome project and at mid-year we concluded our Nevada exploration projects. Reflecting these operational changes as at December 31, 2008, we moved from an exploration stage company to an operating company. However, due to early production instability with our new gas wells in the White River Dome field and a dramatic decline in gas selling prices through 2008, 2009 and into 2010, we continue to have operating losses and do not have substantial positive cash flow from our operating activities. Based on the current level of natural gas prices and the outlook ahead, we anticipate an operating cash short fall within the next twelve month period. Reserve based debt financing for further development became unavailable to us due to the decline in natural gas selling prices from prior levels and effective July 1, 2010 our drilling and development agreement in Colorado was terminated. We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock or through debt financing from our directors, although we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors. We currently do not have any firm arrangements in place for any future debt or equity financing. On October 14, 2010 we agreed with our company president to an extension to his company’s $1 million loan to July 4, 2011 and thereafter on a month to month basis. Though we have been successful in the past raising funding, we may not be successful in future in order to maintain operations. We have reduced overhead costs where possible in attempt to match anticipated future revenues; however ongoing commitments and a certain level of fixed costs make further reductions challenging to realize.

Results of Operations – Three Months Ended June 30, 2011 and 2010

The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended June 30, 2011, which are included herein.

Our operating results for the three months ended June 30, 2011, for the three months ended June 30, 2010 and the changes between those periods for the respective items are summarized as follows:

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Our accumulated losses increased to $50,786,178 as of June 30, 2011. Our financial statements report a net loss of $669,284 for the three month period ended June 30, 2011 compared to a net loss of $181,593 for the three month period ended June 30, 2010. Our losses have increase primarily as a result of the accrual of a legal settlement of $338,936 recorded in general and administration. Our company also recognized depletion, depreciation and amortization of its capitalized oil and gas expenditures of $75,649 during the three months ended June 30, 2011, compared to $72,758 for the three months ended June 30, 2010. The depletion rate for Colorado production for the three months ended June 30, 2011 was $1.50/mcfe (June 30, 2010 - $1.09/mcfe) .

Results of Operations – Six Months Ended June 30, 2011 and 2010

The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended June 30, 2011, which are included herein.

Our operating results for the six months ended June 30, 2011, for the six months ended June 30, 2010 and the changes between those periods for the respective items are summarized as follows:

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As at June 30, 2011, we had $1,633,724 in current liabilities. Our net cash used in operating activities for the six months ended June 30, 2011 was $369,319 compared to $90,114 used in operating activities in the six months ended June 30, 2010. Our accumulated losses increased to $50,786,178 as of June 30, 2011. Our financial statements report a net loss of $980,787 for the six month period ended June 30, 2011 compared to a net loss of $389,299 for the six month period ended June 30, 2010. Our losses have increased primarily as a result of a one-time accrual of $338,936 in legal settlement and a decrease in oil and gas revenue received or accrued. Our company also recognized depletion, depreciation and amortization of its capitalized oil and gas expenditures of $103,884 during the six months ended June 30, 2011, compared to $163,023 for the six months ended June 30, 2010. The depletion rate for Colorado production for the six months ended June 30, 2011 was $1.66/mcfe.

Our total liabilities as of June 30, 2011 were $1,913,690 as compared to total liabilities of $1,547,556 as of December 31, 2010. The $366,134 increase was largely due to an increase in accounts payable from $230,880 as at December 31, 2010 to $537,286 as at June 30, 2011.

During the six month period ended June 30, 2011 we expended $Nil on exploration, development and acquisition of our oil and gas properties as compared to a net recovery of $129,526 received during the six month period ended June 30, 2010. Of this amount $2,629 was attributable to acquisition costs and $132,155 net recovered was attributable to exploration and development costs incurred during the six months ended June 30, 2010.

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Liquidity and Financial Condition

Working Capital

Cash Flows

Operating Activities

Net cash used in operating activities was $369,319 in the six months ended June 30, 2011 compared with net cash used in operating activities of $90,114 in the same period in 2010. The increase in net cash used in operating activities of $279,205 is mainly because of an increase in payments on accounts payable and accrued liabilities, as well as a decrease in oil and gas revenue received during the six month period ended June 30, 2011 compared to the six months ended June 30, 2010.

Investing Activities

Net cash provided by investing activities was $31,428 in the six months ended June 30, 2011 compared to net cash provided by investing activities of $158,595 in the same period in 2010. The decrease in cash provided by of $127,167 in investing activities is mainly attributable to one-timer recovery in oil and gas acquisition and exploration activity in the six month period ended June 30, 2010.

Financing Activities

Net cash provided by financing activities was $105,000 in the six months ended June 30, 2011 compared to net cash used in financing of $58,679 in the same period in 2010. The difference in cash provided by of $163,679 in financing activities is mainly attributed to a repayment of a bank overdraft during the period ended June 30, 2010, as well as a financing completed of $105,000 in the six month period ended June 30, 2011.

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Oil and gas sales volume comparisons for the six months ended June 30, 2011 compared to the six months ended June 10, 2010

For the six months ended June 30, 2011 net production from continuing operations was 52,425 Mcfe as compared to 118,193 Mcfe for the six months ended June 30, 2010. Due to lower production overall we recognized oil and gas sales of $323,094 for the six months ended June 30, 2011 as compared to $703,079 in the same period in 2010.

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief executive officer (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

As of June 30, 2011, the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (also our principal executive officer) and our chief financial officer (also our principal financial and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. It should be noted that due to an unprecedented economic downturn, which began in late 2008, management in early 2009 implemented significant rationalizing initiatives within our company in attempts to bring costs in line with the reduced revenues being received and expected in the periods ahead. As the effectiveness of our company’s controls and procedures was to a degree dependant on a level of personnel and operations prior to rationalizing efforts, it is possible managements rationalizing initiatives consequently affected these controls. Through the subsequent periods and the quarter covered by this report, due to these rationalizing efforts, senior management became more directly involved with all aspects of company operations and processes. Based on the foregoing, our president (also our principal executive officer) and our chief financial officer (also our principal financial and principal accounting officer) believe that our disclosure controls and procedures were still effective as of the end of the period covered by this quarterly report in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance’s with US generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during our quarter ended June 30, 2011 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II

OTHER INFORMATION

On December 21, 2009 Ontrea Inc. filed an action in the courts of British Columbia, Canada against Eden Canada Holdings Ltd., a registered name of Eden Energy Corp. in Canada, claiming arrears rent and accelerated rent overdue of $109,273 plus damages. Eden Canada Holdings Ltd. filed its Statement of Defense on February 1, 2010. On May 13, 2011, Ontrea was awarded judgement against our company and during the period ended June 30, 2011, our company recognized a loss of $338,936 which is included in general and administrative expenses.

Other than this, we know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Our business operations are subject to a number of risks and uncertainties, including, but not limited to those set forth below:

We have had negative cash flows from operations If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

To date we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements and have incurred losses totaling approximately $980,787 for the six months ended June 30, 2011, and cumulative losses of $50,786,178 to June 30, 2011. As of June 30, 2011 we had a working capital deficit of $1,455,685. Other than for possibly a few months where our production rates are higher and commodity prices remain firm, we do not expect positive cash flow from operations in the next twelve month period and there is no assurance that actual cash requirements will not exceed our estimates, or that our sales projections will be realized as estimated. In particular, additional capital may be required in the event that:

• drilling and completion costs for further wells increase beyond our expectations; or

• commodity prices for our production decline beyond our expectations; or

• production levels do not meet our expectations; or

• we encounter greater costs associated with general and administrative expenses or offering costs.

The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans.

We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

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A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because our operations have been primarily financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new products and continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

We have a history of losses and fluctuating operating results. We expect to continue to incur operating losses and negative cash flow until we receive significant commercial production from our properties

From inception through to June 30, 2011, we have incurred aggregate losses of approximately $50,786,178. Our loss from operations for the six months ended June 30, 2011 was $980,787. There is no assurance that we will operate profitably or will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of when customers will purchase our production and/or services, the size of customers’ purchases, the demand for our production and/or services, and the level of competition and general economic conditions. If we cannot generate positive cash flows in the future, or raise sufficient financing to continue our normal operations, then we may be forced to scale down or even close our operations. Until such time as we generate significant revenues, we expect an increase in development costs and operating costs. Consequently, we expect to continue to incur operating losses and negative cash flow until we receive significant commercial production from our properties.

We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.

We have limited history of revenues from operations and have limited significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited operating history and must still be considered in the early development stage. The success of our company is significantly dependent on a successful acquisition, drilling, completion and production program. Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to locate recoverable reserves, extract the reserves economically, and/or operate on a profitable basis. We are in the early development stage of an operating company and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.

Trading of our stock may be restricted by the SEC's "Penny Stock" regulations, which may limit a stockholder's ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors." The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to

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effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder's ability to buy and sell our stock.

In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Trading in our common shares on the OTC Bulletin Board is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments.

Our common shares are currently listed for public trading on the OTC Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our development. We have largely been engaged in the business of exploring and until only recently attempting to develop commercial reserves of oil and gas. Our Alberta property is in the exploration stage and without known reserves of oil and gas. Only our Colorado properties have commenced production and due to depressed natural gas prices are proving uneconomical to develop. We have not generated significant revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate significant revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon attaining adequate levels of internally generated revenues through locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein. Since we have not generated adequate revenues, we will have to raise additional monies through either securing industry reserve based debt financing, or the sale of our equity securities or debt, or combinations of the above in order to continue our business operations.

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As our properties are in the exploration and early development stage there can be no assurance that we will establish commercial discoveries and/or profitable production programs on these properties.

Exploration for economic reserves of oil and gas is subject to a number of risk factors. Few properties that are explored are ultimately developed into producing oil and/or gas wells. Our past Nevada properties and our Alberta properties have been fully impaired and are without proven reserves of oil and gas. We may not establish commercial discoveries on these properties. Our Colorado property is in early stage development drilling and is proving uneconomical for us to continue drilling.

The potential profitability of oil and gas ventures depends upon factors beyond the control of our company.

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance.

Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. The marketability of oil and gas, which may be acquired or discovered, will be affected by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital.

Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring the leases.

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staff. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed. Our budget does not anticipate the potential acquisition of additional acreage in Alberta although this may change at any time without notice. This acreage may not become available or if it is available for leasing, that we may not be successful in acquiring the leases. There are other competitors that have operations in these areas and the presence of these competitors could adversely affect our ability to acquire additional leases.

The marketability of natural resources will be affected by numerous factors beyond our control, which may result in us not receiving an adequate return on invested capital to be profitable or viable.

The marketability of natural resources, which may be acquired or discovered by us, will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and gas and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.

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Oil and gas operations are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations, which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages, which it may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

Governmental Regulations

Our oil and gas operations are subject to various United States and Canadian federal, state/provincial and local governmental regulations. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. The production, handling, storage, transportation and disposal of oil and gas, by-products thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, state, provincial and local laws and regulations relating primarily to the protection of human health and the environment. To date, expenditures related to complying with these laws, and for remediation of existing environmental contamination, have not been significant in relation to the results of operations of our company. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

Exploration and production activities are subject to certain environmental regulations, which may prevent or delay the commencement or continuance of our operations.

In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

We believe that our operations comply, in all material respects, with all applicable environmental regulations.

Our operating partners maintain insurance coverage customary to the industry; however, we are not fully insured against all possible environmental risks.

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Exploratory and development drilling involves many risks and we may become liable for pollution or other liabilities, which may have an adverse effect on our financial position.

Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States, Canada, or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.

The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitably.

Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.

Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.

Our constating documents authorize the issuance of 40,000,000 shares of common stock with a par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001. In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change in our control.

Our By-laws do not contain anti-takeover provisions, which could result in a change of our management and directors if there is a take-over of our company.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors.

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As a result of a majority of our directors and officers are residents of other countries other than the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our company or our directors and officers.

Other than our operations office in Denver, Colorado, we do not currently maintain a permanent place of business within the United States. In addition, a majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our company or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

Other Risks

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.

On May 30, 2011, we issued an aggregate of 300,000 units at a price of $0.35 per unit pursuant to a private placement for total proceeds of $105,000. Each unit consists of one share of common stock and one warrant. One warrant is exercisable at $0.60 for a period of 24 months from the date of issuance. We issued the securities to three non-U.S. persons in an offshore transaction relying upon Regulation S and/or Section 4(2) of the Securities Act of 1933.

Effective June 9, 2011, we issued 47,000 units at a price of $0.35 per unit pursuant to a debt settlement with an officer of our company. Each unit consists of one share of common stock and one warrant. One warrant is exercisable at $0.60 for a period of 24 months from the date of issuance. We issued the securities to one U.S. person relying upon Rule 506 of Regulation D of the Securities Act of 1933.

None.

None.

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* Filed herewith.

**Certain parts of this document have not been disclosed and have been filed separately with the Secretary, Securities and Exchange Commission, and are subject to a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

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SIGNATURES

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

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