UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2007

OR

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________ to _____________

Commission file number 333-125695

FOX PETROLEUM INC.
(Exact name of small business issuer as specified in its charter)
Nevada	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
64 Knightsbridge, London SW1X 7JF, England
(Address of principal executive offices)
44-207-590-9630
(Issuer’s telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No [ ]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

51,186,792 shares of common stock issued and outstanding as of July 20, 2007.

Transitional Small Business Disclosure Format (Check one):    Yes o   No x

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

It is the opinion of management that the interim consolidated financial statements for the quarter ended May 31, 2007 include all adjustments necessary in order to ensure that the interim consolidated financial statements are not misleading.

Our consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

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FOX PETROLEUM INC.

(A Pre-exploration Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2007

(Stated in US Dollars)

(Unaudited)

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FOX PETROLEUM INC.

(A Pre-exploration Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

May 31, 2007 and February 28, 2007

(Stated in US Dollars)

(Unaudited)

		May 31,	February 28,
ASSETS		2007	2007
Current
Cash		$1,684,968	$119,051
Prepaid expenses		358,838	-
		$2,043,806	$119,051
LIABILITIES
Current
Accounts payable and accrued liabilities		$53,102	$40,467
Due to related parties – Note 4		29,975	29,975
		83,077	70,442
STOCKHOLDERS’ EQUITY
Capital stock – Notes 3 and 5
Authorized:
450,000,000	common shares, par value $0.001 per share
Issued and outstanding:
51,186,792	common shares (February 28, 2007: 49,300,000 common shares)	51,187	49,300
Additional paid-in capital – Note 4		2,116,713	118,600
Deficit accumulated during the pre-exploration stage		(207,171)	(119,291)
		1,960,729	48,609
		$2,043,806	$119,051

SEE ACCOMPANYING NOTES

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FOX PETROLEUM INC.

(A Pre-exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

for the three months ended May 31, 2007 and 2006 and

for the period November 4, 2004 (Date of Inception) to May 31, 2007

(Stated in US Dollars)

(Unaudited)

			November 4,
			2004 (Date of
	Three months ended		Inception) to
	May31,		May 31,
	2007	2006	2007
Interest income	$214	$-	$214
Expenses
Accounting and audit fees	5,576	2,477	39,089
Advertising and public relations	8,312	-	8,312
Bank charges	682	20	1,320
Filing and transfer agent	700	562	6,808
Legal fees	11,451	-	39,575
Management fees – Note 4	27,000	1,500	51,000
Mineral property acquisition and exploration costs	2,335	-	19,335
Office and miscellaneous – Note 4	22,542	1,945	32,450
Travel	9,496	-	9,496
	(88,094)	(6,504)	(207,385)
Net loss for the period	$(87,880)	$(6,504)	$(207,171)
Basic and diluted loss per share	$(0.00)	$(0.00)
Weighted average number of shares outstanding	50,783,587	32,918,793

SEE ACCOMPANYING NOTES

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FOX PETROLEUM INC.

(A Pre-exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the three months ended May 31, 2007 and 2006 and

for the period November 4, 2004 (Date of Inception) to May 31, 2007

(Stated in US Dollars)

(Unaudited)

			November 4,
			2004 (Date of
	Three months ended		Inception) to
	May 31,		May 31,
	2007	2006	2007
Cash Flows used in Operating Activities
Net loss for the period	$(87,880)	$(6,504)	$(207,171)
Add item not affecting cash:
Donated services and rent	-	2,250	21,000
Change in non-cash working capital balance related to operations:
Prepaid expenses	(358,838)	-	(358,838)
Accounts payable and accrued liabilities	12,635	1,291	53,102
Net cash used in operating activities	(434,083)	(2,963)	(491,907)
Financing Activities
Issuance of common shares	2,000,000	-	2,146,900
Advance from related parties	-	-	29,975
Net cash provided by financing activities	2,000,000	-	2,176,875
Increase (decrease) in cash during the period	1,565,917	(2,963)	1,684,968
Cash, beginning of period	119,051	17,714	-
Cash, end of period	$1,684,968	$14,751	$1,684,968

SEE ACCOMPANYING NOTES

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FOX PETROLEUM INC.

(A Pre-exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

for the period November 4, 2004 (Date of Inception) to May 31, 2007

(Stated in US Dollars)

(Unaudited)

				Deficit
				Accumulated
			Additional	During the
	*Common Shares		Paid-in	Pre-exploration
	Number	Par Value	Capital	Stage	Total
Capital stock issued for cash – at $0.0001667	29,400,000	$29,400	$(24,500)	$-	$4,900
– at $0.0016667	19,200,000	19,200	12,800	-	32,000
– at $0.0166667	600,000	600	9,400	-	10,000
Donated services and rent	-	-	3,000	-	3,000
Net loss for the period	-	-	-	(18,821)	(18,821)
Balance, February 28, 2005	49,200,000	49,200	700	(18,821)	31,079
Donated services and rent	-	-	9,000	-	9,000
Net loss for the year	-	-	-	(45,915)	(45,915)
Balance, February 28, 2006	49,200,000	49,200	9,700	(64,736)	(5,836)
Capital stock issued for cash – at $1.00	100,000	100	99,900	-	100,000
Donated services and rent	-	-	9,000	-	9,000
Net loss for the year	-	-	-	(54,555)	(54,555)
Balance, February 28, 2007	49,300,000	49,300	118,600	(119,291)	48,609
Capital stock issued for cash - at $1.06	1,886,792	1,887	1,998,113	-	2,000,000
Net loss for the period	-	-	-	(87,880)	(87,880)
Balance, May 31, 2007	51,186,792	$51,187	$2,116,713	$(207,171)	$1,960,729

* The common stock issued has been retroactively restated to reflect a forward split of 6 new shares for 1 old share, effective on January 11, 2007. The par value of common stock and additional paid-in capital has been retroactively restated to reflect this change.

SEE ACCOMPANYING NOTES

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FOX PETROLEUM INC.

(A Pre-exploration Stage Company)

NOTES TO THE INTERIM FINANCIAL STATEMENTS

May 31, 2007

(Stated in US Dollars)

(Unaudited)

Note 1 Interim Consolidated Financial Statements

While the information presented in the accompanying three months to May 31, 2007 interim consolidated financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with the accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the Company’s February 28, 2007 financial statements.

Operating results for the three months ended May 31, 2007 are not necessarily indicative of the results that can be expected for the year ending February 28, 2008.

Note 2 Additional Significant Accounting Policy

Principles of Consolidation

These consolidated financial statements include the accounts of Fox Energy Exploration Limited, a wholly-owned inactive subsidiary incorporated in England and Wales on May 17, 2007. All significant inter-company transactions land balances have been eliminated.

Note 3 Oil and Gas Lease – Note 7

On May 29, 2007, the Company entered into a Lease Purchase and Sale Agreement with a company to acquire a combined 100% working interest in 12 state-issued oil and gas leases in the north slope of Alaska subject to a royalty of 16.66667% to the State of Alaska and a private royalty equal to 5%. In consideration for the oil and gas leases the Company will issue 20,000,000 restricted common shares of the Company within five days of the assignment of the lease to the Company. At May 31, 2007, the lease had not been assigned.

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Fox Petroleum Inc.

(formerly Nova Resources Inc.)

(A Pre-exploration Stage Company)

Notes to the Interim Financial Statements

May 31, 2007

(Stated in US Dollars)

(Unaudited)

Note 4 Related Party Transactions – Note 7

The officers of the Company provide management services to the Company as follows:

			November 4,
			2004 (Date of
	Three months		Inception) to
	ended May 31,		May 31,
	2007	2006	2007
Management fees	$27,000	$1,500	$51,000
Office and miscellaneous	-	750	7,000
	$27,000	$2,250	$58,000

Included in these amounts is the fair value of services and office premises provided by an officer during the period ended May 31, 2006.

Included in accounts payable and accrued liabilities at May 31, 2007, is $6,000 (February 28, 2007: $10,000) owed to a director of the Company for unpaid management fees.

The amounts due to related parties are unsecured, non-interest bearing and have no specific terms for repayment. These amounts are due to the director of the Company and a company controlled by the director of the Company.

Note 5 Capital Stock – Note 3

Commitments

a) On May 17, 2007, the Company entered into a share issuance agreement with a subscriber that will allow the subscriber to advance up to $8,000,000 to the Company in exchange for units of the Company. The units will be issued at a price equal to 80% of the volume weighted average of the closing price of common share for the 10 banking days immediately preceding the date of the notice. Each unit will consist of one common share of the Company and one common share purchase warrant. Each common share purchase warrant will entitle the subscriber the right to purchase one additional common share at an exercise price equal to 125% of the price of the units for a period of three years. On May 17, 2007 the Company received $2,000,000 and issued to the subscriber 1,886,792 common shares and warrants at $1.06 per unit. The share purchase warrants entitle the subscriber to purchase one additional common share at a price of $1.33 per share until May 17, 2010.

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Fox Petroleum Inc.

(formerly Nova Resources Inc.)

(A Pre-exploration Stage Company)

Notes to the Interim Financial Statements

May 31, 2007

(Stated in US Dollars)

(Unaudited)

Note 5 Capital Stock – Note 3 – (cont’d)

Commitments– (cont’d)

b) Share Purchase Warrants

At May 31, 2007, there are 1,986,792 share purchase warrants outstanding entitling the holders thereof the right to acquire one common share for each warrant held at $1.33 per share until May 17, 2010 as to 1,886,792 warrants, and at $1.25 per share until February 23, 2010, as to 100,000 warrants.

The summary of the changes in the Company’s warrants for the period ended May 31, 2007 and 2006 is presented below:

	2007		2006
		Weighted		Weighted
		Average		Average
	Number of	Exercise	Number of	Exercise
	Warrants	Price	Warrants	Price
Outstanding, beginning of the year	100,000	$1.25	-	$     -
Granted	1,886,792	$1.33	-	-
Outstanding, end of period	1,986,792	$1.33	-	$     -

Note 6 Commitments – Notes 3 and 5

By an agreement dated May 22, 2007, the Company engaged an independent analyst to provide continuing research coverage regarding the Company beginning May 22, 2007 until May 31, 2009. The Company is required to pay $5,000 before commencement of work and twenty-four installments of $1,750.

Note 7 Subsequent Events

a) Pursuant to a farm-in agreement dated June 8, 2007, the Company agreed to acquire a 33.33% interest in two UK petroleum production licenses (“Licenses”). The Licenses are located in the UK North Sea. As consideration for the Licenses, the Company agreed to fund 100% of the seismic costs and its 33.33% share of the License budget costs as agreed by the parties.

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Fox Petroleum Inc.

(formerly Nova Resources Inc.)

(A Pre-exploration Stage Company)

Notes to the Interim Financial Statements

May 31, 2007

(Stated in US Dollars)

(Unaudited)

Note 7 Subsequent Events – (cont’d)

a) – (cont’d)

The Company may have the option to acquire an additional 26.67% interest in the License. The option is effective from completion of the transfer of the assigned interest to the Company and shall continue to be valid and exercisable until 28 days after receipt by the Company of the processed seismic data. To acquire the option, the Company shall pay an additional 46.67% of the dry-hole costs of an exploration well.

b) By agreements dated in June 2007, the Company agreed to pay three directors of the Company agreed to pay three directors of the Company a total amount of $20,000 per month on a month to month basis for consulting and employment services to the Company.

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Item 2. Management’s Discussion and Analysis or Plan of Operation.

FORWARD LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term is defined in section 27A of the United States Securities Act of 1933, as amended, and section 21E of the United States Securities Exchange Act of 1934, as amended. 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”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements speak only as of the date of this quarterly report. In particular, this quarterly report contains forward-looking statements pertaining to the following:

• the quantity of potential natural gas and petroleum reserves;

• potential natural gas and crude oil production levels;

• capital expenditure programs;

• projections of market prices and costs;

• supply and demand for natural gas and crude oil;

• expectations regarding our ability to raise capital and to continually add to reserves through acquisitions and development; and

• treatment under governmental regulatory regimes and tax laws.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks, such as

• our ability to establish or find reserves;

• volatility in market prices for natural gas and crude oil;

• liabilities inherent in natural gas and crude oil operations;

• uncertainties associated with estimating natural gas reserves and crude oil;

• competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

• political instability or changes of laws in the countries in which we operate and risks of terrorist attacks;

• incorrect assessments of the value of acquisitions;

• geological, technical, drilling and processing problems;

• the uncertainty inherent in the litigation process, including the possibility of newly discovered evidence or the acceptance of novel legal theories, and the difficulties in predicting the decisions of judges and juries; and

• other factors discussed under the section entitled “Risk Factors” commencing on page 23 of this quarterly

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report.

These risks may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance 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 or performance. 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 consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all references to “common shares” refer to the common shares in our capital stock and the terms “we”, “us” and “our” refer to Fox Petroleum Inc. and/or our wholly owned subsidiaries, Fox Petroleum (Alaska) Inc. and Fox Energy Exploration Limited, as the case may be.

Company Overview

We are an exploration stage company engaged in the acquisition, exploration and, if warranted, development of prospective oil and gas properties. We were previously engaged in mineral resource exploration. Because we have not discovered any economically viable mineral deposit on our mineral property, we decided to change the direction of our exploration activities to oil and gas sectors.

On May 29, 2007, we entered into the Lease Purchase and Sale Agreement with Fox Petroleum LLC, a Nevada company, to acquire 12 oil and gas leases in North Slope, Alaska. Upon completion of the transactions contemplated under this Lease Purchase and Sale Agreement, we intend to conduct an aggressive exploration and appraisal program on the leases acquired over the next two years.

On June 8, 2007, through our wholly owned UK subsidiary, Fox Energy Exploration Limited, we entered into the Farm-In Agreement with Granby Enterprises Limited and Atlantic Petroleum UK Limited. Pursuant to the terms of the Farm-In Agreement, Granby Enterprises Limited and Atlantic Petroleum UK Limited agreed to farm-out and assign to us and we agreed to farm-in and acquire from them a total of 33.33% interests in two UK Petroleum Production Licenses. These blocks were merged into one single license which is located in the UK North Sea.

PLAN OF OPERATIONS AND CASH REQUIREMENTS

We intend to conduct an aggressive exploration and appraisal program on the 12 oil and gas leases to be acquired under the Lease Purchase and Sale Agreement with Fox Petroleum LLC over the next two years. Our starting point will be to collect and analyse the existing information available to us from the many geophysical surveys, well drilling and testing activities that have already taken place in or around the leases since serious exploration and appraisal commenced in the region.

Our primary aim is to model the geological structure surrounding and including the leases based on the direct and offset data available to us. This will involve a detailed analysis and re-interpretation of several key 2D seismic lines crossing over the leases. Currently we have identified 8 to 10 lines of seismic available in the public domain. Further seismic data, readily available at market cost of around $1,000 per km, will be acquired through specialist seismic brokers operating on the North Slope. We are already in discussion with several licensed data brokers in the region.

In addition to this, it is likely to prove advantageous to re-process the available seismic data. Seismic data can be altered in many ways during the processing phase and techniques have improved beyond recognition over the course of the last decade. Since most of the data in this area is relatively old, a simple and cost-effective way of enhancing our understanding of the area is to reprocess the seismic data.

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We are also considering the use of Electromagnetic and Gravity Survey processes to further assist us in defining the most likely whereabouts of hydrocarbons on the leases. The idea is to use Electromagnetic and Gravity Survey processes over prospects identified by seismic surveys as containing the right kind of rock structures for the accumulation of hydrocarbons. Electromagnetic and Gravity Survey processes provide an independent measurement of the potential for hydrocarbons and could be used to select the prospects with greatest chance of success.

Pursuant to the Farm-In Agreement dated June 8, 2007, we will also spend approximately $1,800,000 dollars for the hi-density 2D seismic survey over the licenses located in the UK North Sea to be conducted in the third quarter of 2007 and we may have to spend approximately $4,000,000 dollars for drilling an exploration well under the agreement.

Because we entered into the Farm-In Agreement, we plan to obtain additional advance from EuroEnergy Growth Capital S.A. under our financing arrangement with EuroEnergy to fund our oil and gas exploration operations. Obtaining additional funds from EuroEnergy will result in further dilution in the equity ownership of our shares. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his or her investment in our common stock. Further, we may continue to be unprofitable.

We estimate our operating expenses and working capital requirements for the next twelve month period to be as follows:

Estimated Expenses For the Next Twelve Month Period
Lease Acquisition Costs	$	30,000
Operating Expenses
Exploration Costs	$	2,400,000
Employee and Consultant Compensation	$	340,000
Professional Fees	$	100,000
General and Administrative Expenses	$	75,000
Total	$	2,945,000

Exploration Costs

We estimate that our exploration costs on our future leases in North Slope, Alaska will be approximately $600,000 during the next twelve months, which will include modeling the geological structure surrounding and including the leases based on the direct and offset data available to us and re-processing the available seismic data and the use of Eletromagnetic and Gravity Survey process. We will also pay roughly $1,800,000 for a seismic survey on the UK North Sea licenses. Depending on the result of the seismic survey, we may then drill the prospect at a cost to us of $4,000,000.

Employee and Consultant Compensation

Given the early stage of our development and exploration properties, we intend to continue to outsource our professional and personnel requirements by retaining consultants on an as needed basis. We estimate that our consultant and related professional compensation expenses for the next twelve month period will be approximately $100,000. We estimate that our employee compensation expenses for the next twelve month period will be approximately $240,000.

Professional Fees

We expect to incur on-going legal expenses to comply with our reporting responsibilities as a public company under the United States Securities Exchange Act of 1934, as amended. We estimate our legal and accounting expenses for the next twelve month period to be approximately $100,000.

General and Administrative Expenses

We anticipate spending $75,000 on general and administrative costs in the next twelve month period. These costs

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primarily consist of expenses such as lease payments, office supplies and office equipment.

LIQUIDITY AND CAPITAL RESOURCES

Our company's principal cash requirements are for exploration expenses which we anticipate will rise as we proceed to determine the feasibility of developing our future property interests.

Capital Resources

As of May 31, 2007, we had cash of $1,684,968 and working capital of $1,960,729, compared to cash of $119,051 and working capital of $48,609 as of February 28, 2007. We have suffered recurring losses from inception. Our ability to meet our financial liabilities and commitments is primarily dependent upon the continued financial support of our directors and shareholders, the continued issuance of equity to new or existing shareholders, and our ability to achieve and maintain profitable operations.

On October 3, 2006, our director, Alexander James Craven advanced $10,000 to our company as working capital and on December 20, 2006, advanced $19,975 to our company for a retainer to retain Clark Wilson LLP as our legal counsel.

On February 23, 2007, we entered into a subscription agreement for a private placement of 100,000 units at the price of $1.00 per unit for the total purchase price of $100,000. Each unit consists of one common share and one common share purchase warrant. One common share purchase warrant entitles the subscriber to purchase one additional common share at an exercise price of $1.25 per common share for a period of three years. We received the proceeds of $100,000 in February 2007, but did not issue the units until June 1, 2007. We issued the 100,000 units to a non-U.S. person (as that term is defined in Regulation S of the 1933 Act) in an offshore transaction relying on Regulation S promulgated under the 1933 Act.

On May 17, 2007 we entered into a share issuance agreement with EuroEnergy Growth Capital S.A. that will allow EuroEnergy to advance up to $8,000,000 to us in exchange for units of our company. The advances will be in minimum $100,000 increments, payable when we give notice under the terms of the agreement. The units will be issued at a price equal to 80% of the volume weighted average of the closing price of common share for the 10 banking days immediately preceding the date of the notice, as quoted on Yahoo! Finance. Each unit will consist of one common share and one common share purchase warrant. Each common share purchase warrant will entitle EuroEnergy to purchase an additional common share at an exercise price equal to 125% of the price of the units.

On May 17, 2007, we gave notice to EuroEnergy, for an advance of $2,000,000, pursuant to the share issuance agreement. As consideration for the cash advance, we issued to EuroEnergy 1,886,792 units at a determined price of $1.06 per unit. Each unit consists of one common share and one common share purchase warrant. One common share purchase warrant entitles the holder to purchase one common share at a price of $1.33 per share until May 17, 2010. We issued the 1,886,792 units to a non-U.S. person (as that term is defined in Regulation S of the 1933 Act) in an offshore transaction relying on Regulation S promulgated under the 1933 Act.

Capital Expenditure Requirements

Except as disclosed otherwise, as of July 23, 2007, we do not have any material commitments for capital expenditures and our management does not anticipate that we will spend additional material amounts on capital expenditures in the near future.

Under the Lease Purchase and Sale Agreement with Fox Petroleum LLC, we will acquire a combined 100% working interests in 12 state-issued oil and gas leases in Alaska’s North Slope hydrocarbon province subject to a royalty of 16.66667% to the State of Alaska and a private royalty equal to 5%. In consideration for the oil and gas leases, we agreed to issue 20,000,000 restricted common shares of our company to Fox Petroleum LLC or such other persons as Fox Petroleum LLC may direct in writing prior to the closing. We have the leases for 5 years and there are no work commitments. We are required to pay $1 per acre in the first year then increasing by $0.50 per

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annum up to $3 in the fifth year in order to maintain the leases. The leases comprise approximately 32,490 acres and lease date for all the leases is March 1, 2006.

Under the Farm-In Agreement with Granby Enterprises Limited and Atlantic Petroleum UK Limited, we are required to spend approximately $1,800,000 dollars for the hi-density 2D seismic survey to be conducted in the third quarter of 2007 and we may have to spend approximately $4,000,000 dollars for drilling an exploration well under the agreement.

Off-Balance Sheet Arrangements

We have no significant 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.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates. The financial statements have, in our management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Pre-exploration Stage Company

We comply with Financial Accounting Standard Board Statement No. 7 and the Securities and Exchange Commission Exchange Act Guide 7 for its characterization of our company as pre-exploration stage.

Mineral Property

Costs of lease, acquisition, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred.

Development Stage Company

We comply with Financial Accounting Standard Board Statement No. 7 for our characterization of our company as a development stage company. We are devoting substantially all of our present efforts to establish a new business and none of our planned principal operations have commenced.

Oil and Gas Properties

We follow the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost centre) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities.

Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil.

Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.

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If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based on the present value of estimated future net revenues attributed to proved reserves, using current prices less estimated future expenditures plus the lower of cost and fair value of unproven properties within the cost centre.

Proceeds from a sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre. Royalties paid net of any tax credits received are netted with oil and gas sales.

Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or our commitments to plan of action based on the then known facts. There have been no environmental expenses incurred by the Company.

Foreign Currency Translation

We use the United States of America dollar as our functional and reporting currency for consistency with registrants of the Securities and Exchange Commission and in accordance with the Statement of Financial Accounting No. 52.

Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the year and are included in the Comprehensive Income Account in Stockholders’ Equity, if applicable.

Transactions undertaken in currencies other than the functional currency of our company are translated using the exchange rate in effect as of the transaction date. Any exchange gains or losses are included in other income or expenses on the Statement of Operations, if applicable.

Financial Instruments

The carrying value of cash, accounts payable and accrued liabilities and due to related party approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is our management’s opinion that we are not exposed to significant interest, currency or credit risks arising from these financial instruments.

Income Taxes

We use the assets and liability method of accounting for income taxes pursuant to Statement of Financial Accounting No. 109 “Accounting for Income Taxes”. Under the assets and liability method of Statement of Financial Accounting No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Basic and Diluted Loss Per Share

We report basic loss per share in accordance with the Statement of Financial Accounting No. 128, “Earnings Per Share”. Basic loss per share is computed using the weighted average number of shares outstanding during the period. Diluted loss per share has not been provided, as it would be anti-dilutive.

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NEW ACCOUNTING STANDARDS

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”. The interpretation clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. Specifically, the pronouncement prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on the related derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition of uncertain tax position. The interpretation is effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 is not expected to have a material impact on our consolidated financial position, results of operations or cash flows; however, we are still analyzing the effects of FIN 48.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This Statement defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure related to the use of fair value measures in financial statements. The Statement is to be effective for our financial statements issued in 2008; however, earlier application is encouraged. We are currently evaluating the timing of adoption and the impact that adoption might have on our financial position or results of operations.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 108 (“SAB 108”). Due to diversity in practice among registrants, SAB 108 expressed SEC staff views regarding the process by which misstatements in financial statements are evaluated for purposes of determining whether financial statement restatement is necessary. SAB 108 is effective for fiscal years ending after November 15, 2006, and early application is encouraged. We do not believe SAB 108 will have a material impact on our financial position or results from operations.

In December 2006, the FASB issued FASB Staff Position (“FSP”) EITF 00-19-2, “Accounting for Registration Payment Arrangements”. This FSP specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with FASB No. 5, “Accounting for Contingencies”. This FSP is effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that re entered into or modified subsequent to December 31, 2006. For registration payment arrangements and financial instruments subject to those arrangements that were entered into prior to December 31, 2006, the guidance in the FSP is effective January 1, 2006 for our company. We do not believe that this FSP will have a material impact on our financial position or results from operations.

On February 15, 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities”. This Statement establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for our financial statements issued in 2008. We are currently evaluating the impact that the adoption of SFAS No. 159 might have on our financial position or results of operations.

RISK FACTORS

In addition to other information in this quarterly report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment.

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RISKS RELATING TO OUR BUSINESS AND THE OIL AND GAS INDUSTRY

We have had a history of losses and no revenue to date, which trend may continue and may negatively impact our ability to achieve our business objectives.

We have experienced net losses since inception, and expect to continue to incur substantial losses for the foreseeable future. To date, we have not generated any revenues from our operations. We will not be able to generate significant revenues in the future and our management expects operating expenses to increase substantially over the next 12 months following the commencement of oil and gas exploration activities. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future and cannot predict when, if ever, our business might become profitable. In addition to our financing from EuroEnergy Growth Capital S.A., we may need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations.

We are an exploration stage company with a limited operating history, which may hinder our ability to successfully meet our objectives.

We are an exploration stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects. We have only begun engaging in the oil and gas exploration and development business since February 2007 and we do not have an established history of locating and developing properties that have oil and gas reserves. As a result, the revenue and income potential of our business is unproven. In addition, because of our limited operating history, we have limited insight into trends that may emerge and affect our business. Errors may be made in predicting and reacting to relevant business trends and we will be subject to the risks, uncertainties and difficulties frequently encountered by early-stage companies in evolving markets. We may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause our business, results of operations and financial condition to suffer.

Market conditions or operation impediments may hinder our access to oil and gas markets or delay our potential production.

The marketability of potential production from our properties depends in part upon the availability, proximity and capacity of pipelines, natural gas gathering systems and processing facilities. This dependence is heightened where this infrastructure is less developed. Therefore, even if drilling results are positive in certain areas of our oil and gas properties, a new gathering system may need to be built to handle the potential volume of oil and gas produced. We might be required to shut in wells, at least temporarily, for lack of a market or because of the inadequacy or unavailability of transportation facilities. If that were to occur, we would be unable to realize revenue from those wells until arrangements were made to deliver production to market.

Even if we are able to establish any oil or gas reserves on our properties, our ability to produce and market oil and gas is affected and also may be harmed by:

• inadequate pipeline transmission facilities or carrying capacity;

• government regulation of natural gas and oil production;

• government transportation, tax and energy policies;

• changes in supply and demand; and

• general economic conditions.

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Our future performance is dependent upon our ability to identify, acquire and develop oil and gas properties, the failure of which could result in under use of capital and losses.

Our future performance depends upon our ability to identify, acquire and develop oil and gas reserves that are economically recoverable. Our success will depend upon our ability to acquire working and revenue interests in properties upon which oil and gas reserves are ultimately discovered in commercial quantities, and our ability to develop prospects that contain proven oil and gas reserves to the point of production. Without successful acquisition and exploration activities, we will not be able to develop oil and gas reserves or generate revenues. We cannot provide you with any assurance that we will be able to identify and acquire oil and gas reserves on acceptable terms, or that oil and gas deposits will be discovered in sufficient quantities to enable us to recover our exploration and development costs or sustain our business.

The successful acquisition and development of oil and gas properties requires an assessment of recoverable reserves, future oil and gas prices and operating costs, potential environmental and other liabilities, and other factors. Such assessments are necessarily inexact and their accuracy inherently uncertain. In addition, no assurance can be given that our exploitation and development activities will result in the discovery of any reserves.

We have a very small management team and the loss of any member of our team may prevent us from implementing our business plan in a timely manner.

We currently have two executive officers and a limited number of additional consultants upon whom our success largely depends. We do not maintain key person life insurance policies on our executive officers or consultants, the loss of which could seriously harm our business, financial condition and results of operations. In such an event, we may not be able to recruit personnel to replace our executive officers or consultants in a timely manner, or at all, on acceptable terms.

If we are unable to successfully recruit qualified managerial and field personnel having experience in oil and gas exploration, we may not be able to continue our operations.

In order to successfully implement and manage our business plan, we will depend upon, among other things, successfully recruiting qualified managerial and field personnel having experience in the oil and gas exploration business. Competition for qualified individuals is intense. We may not be able to find, attract and retain qualified personnel on acceptable terms. If we are unable to find, attract and retain qualified personnel with technical expertise, our business operations could suffer.

Future growth could strain our personnel and infrastructure resources, and if we are unable to implement appropriate controls and procedures to manage our growth, we may not be able to successfully implement our business plan.

We expect to experience rapid growth in our operations, which will place a significant strain on our management, administrative, operational and financial infrastructure. Our future success will depend in part upon the ability of our executive officers to manage growth effectively. This may require us to hire and train additional personnel to manage our expanding operations. In addition, we must continue to improve our operational, financial and management controls and our reporting systems and procedures. If we fail to successfully manage our growth, we may be unable to execute upon our business plan.

We will have substantial capital requirements that, if not met, may hinder our growth and operations.

Our future growth depends on our ability to make large capital expenditures for the exploration and development of our natural gas and oil properties. Future cash flows and the availability of financing will be subject to a number of variables, such as:

• the success of our planned projects in Alaska’s North Slope and UK North Sea;

• success in locating and producing reserves; and

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• prices of natural gas and oil.

Financing might not be available in the future, or we might not be able to obtain necessary financing on acceptable terms, if at all. If sufficient capital resources are not available, we might be forced to curtail our drilling and other activities or be forced to sell some assets on an untimely or unfavorable basis, which would have an adverse affect on our business, financial condition and results of operations.

If we obtain additional financing, our existing stockholders may suffer substantial dilution or we may not have sufficient funds to pay the interest on our current or future debt.

Additional financing sources will be required in the future to fund developmental and exploratory drilling. Issuing equity securities to satisfy our financing requirements could cause substantial dilution to our existing stockholders.

Additional debt financing could lead to:

• a substantial portion of operating cash flow being dedicated to the payment of principal and interest;

• being more vulnerable to competitive pressures and economic downturns; and

• restrictions on our operations.

If we incur indebtedness, our ability to meet our debt obligations and reduce our level of indebtedness depends on future performance. General economic conditions, oil and gas prices and financial, business and other factors affect our operations and future performance. Many of these factors are beyond our control. We cannot assure you that we will be able to generate sufficient cash flow to pay the interest on our current or future debt or that future working capital, borrowings or equity financing will be available to pay or refinance such debt. Factors that will affect our ability to raise cash through an offering of our capital stock or a refinancing of our debt include financial market conditions, the value of our assets and performance at the time we need capital. We cannot assure you that we will have sufficient funds to make such payments. If we do not have sufficient funds and are otherwise unable to negotiate renewals of our borrowings or arrange additional financing, we might have to sell significant assets. Any such sale could have a material adverse effect on our business and financial results.

We may not be able to determine reserve potential or identify liabilities associated with our future properties in Alaska and UK North Sea and/or other future properties. We may also not be able to obtain protection from vendors against possible liabilities, which could cause us to incur losses.

Although we have reviewed and evaluated our future properties in Alaska and UK North Sea in a manner consistent with industry practices, such review and evaluation might not necessarily reveal all existing or potential problems. This is also true for any future acquisitions made by us. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, a vendor may be unwilling or unable to provide effective contractual protection against all or part of those problems, and we may assume environmental and other risks and liabilities in connection with the acquired properties.

If we or our operators fail to maintain adequate insurance, our business could be materially and adversely affected.

Our operations are subject to risks inherent in the oil and gas industry, such as blowouts, cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution, earthquakes and other environmental risks. These risks could result in substantial losses due to injury and loss of life, severe damage to and destruction of property and equipment, pollution and other environmental damage, and suspension of operations. We could be liable for environmental damages caused by previous property owners. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could have a material adverse effect on our financial condition and results of operations.

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Any prospective drilling contractor or operator which we hire will be required to maintain insurance of various types to cover our operations with policy limits and retention liability customary in the industry. Therefore, we do not plan to acquire our own insurance coverage for such prospects. The occurrence of a significant adverse event on such prospects that is not fully covered by insurance could result in the loss of all or part of our investment in a particular prospect which could have a material adverse effect on our financial condition and results of operations.

The oil and gas industry is highly competitive, and we may not have sufficient resources to compete effectively.

The oil and gas industry is highly competitive. We compete with oil and natural gas companies and other individual producers and operators, many of which have longer operating histories and substantially greater financial and other resources than we do, as well as companies in other industries supplying energy, fuel and other needs to consumers. Our larger competitors, by reason of their size and relative financial strength, can more easily access capital markets than we can and may enjoy a competitive advantage in the recruitment of qualified personnel. They may be able to absorb the burden of any changes in laws and regulation in the jurisdictions in which we do business and handle longer periods of reduced prices for oil and gas more easily than we can. Our competitors may be able to pay more for oil and gas leases and properties and may be able to define, evaluate, bid for and purchase a greater number of leases and properties than we can. Further, these companies may enjoy technological advantages and may be able to implement new technologies more rapidly than we can. Our ability to acquire additional properties in the future will depend upon our ability to conduct efficient operations, evaluate and select suitable properties, implement advanced technologies and consummate transactions in a highly competitive environment.

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. 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 any such changes may have material adverse effects on our activities. We are unable to predict the ultimate cost of compliance with such laws and regulations. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry. 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.

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

The business of oil and gas exploration and development is subject to substantial regulation under federal, state, local and foreign laws relating to the exploration for, and the development, upgrading, marketing, pricing, taxation, and transportation of oil and gas and related products and other matters. Amendments to current laws and regulations governing operations and activities of oil and gas exploration and development operations could have a material adverse impact on our business. In addition, there can be no assurance that income tax laws, royalty regulations and government incentive programs related to our oil and gas properties and the oil and gas industry generally, will not be changed in a manner which may adversely affect our progress and cause delays, inability to explore and develop or abandonment of these interests.

Permits, leases, licenses, and approvals are required from a variety of regulatory authorities at various stages of exploration and development. There can be no assurance that the various government permits, leases, licenses and approvals sought will be granted in respect of our activities or, if granted, will not be cancelled or will be renewed upon expiry. There is no assurance that such permits, leases, licenses, and approvals will not contain terms and provisions which may adversely affect our exploration and development activities.

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Shortages of rigs, equipment, supplies and personnel could delay or otherwise adversely affect our cost of operations or our ability to operate according to our business plans.

If drilling activity increases in North Slope, Alaska or UK North Sea, a shortage of drilling and completion rigs, field equipment and qualified personnel could develop. These costs have recently increased sharply and could continue to do so. The demand for and wage rates of qualified drilling rig crews generally rise in response to the increasing number of active rigs in service and could increase sharply in the event of a shortage. Shortages of drilling and completion rigs, field equipment or qualified personnel could delay, restrict or curtail our exploration and development operations, which could in turn harm our operating results.

To the extent that we establish oil and gas reserves, we will be required to replace, maintain or expand our oil and gas reserves in order to prevent our reserves and production from declining, which would adversely affect cash flows and income.

In general, production from oil and gas properties declines over time as reserves are depleted, with the rate of decline depending on reservoir characteristics. If we establish reserves, of which there is no assurance, and we are not successful in our subsequent exploration and development activities or in subsequently acquiring properties containing proved reserves, our proved reserves will decline as reserves are produced. Our future oil and gas production is highly dependent upon our ability to economically find, develop or acquire reserves in commercial quantities.

To the extent cash flow from operations is reduced, either by a decrease in prevailing prices for oil and gas or an increase in finding and development costs, and external sources of capital become limited or unavailable, our ability to make the necessary capital investment to maintain or expand our asset base of oil and gas reserves would be impaired. Even with sufficient available capital, our future exploration and development activities may not result in additional proved reserves, and we might not be able to drill productive wells at acceptable costs.

The geographic concentration of all of our future properties in North Slope, Alaska and UK North Sea subjects us to an increased risk of loss of revenue or curtailment of production from factors affecting those areas.

The geographic concentration of all of our future leasehold interests in North Slope, Alaska and future farm-in interests in UK North Sea means that our future properties could be affected by the same event should the regions experience:

• severe weather;

• delays or decreases in production, the availability of equipment, facilities or services;

• delays or decreases in the availability of capacity to transport, gather or process production; or

• changes in the regulatory environment.

The oil and gas exploration and production industry is historically a cyclical industry and market fluctuations in the prices of oil and gas could adversely affect our business.

Prices for oil and gas tend to fluctuate significantly in response to factors beyond our control. These factors include:

• weather conditions in the United States and wherever our property interests are located;

• economic conditions, including demand for petroleum-based products, in the United States and the rest of the world;

• actions by OPEC, the Organization of Petroleum Exporting Countries;

• political instability in the Middle East and other major oil and gas producing regions;

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• governmental regulations, both domestic and foreign;

• domestic and foreign tax policy;

• the pace adopted by foreign governments for the exploration, development, and production of their national reserves;

• the price of foreign imports of oil and gas;

• the cost of exploring for, producing and delivering oil and gas;

• the discovery rate of new oil and gas reserves;

• the rate of decline of existing and new oil and gas reserves;

• available pipeline and other oil and gas transportation capacity;

• the ability of oil and gas companies to raise capital;

• the overall supply and demand for oil and gas; and

• the availability of alternate fuel sources.

Changes in commodity prices may significantly affect our capital resources, liquidity and expected operating results. Price changes will directly affect revenues and can indirectly impact expected production by changing the amount of funds available to reinvest in exploration and development activities. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in non-cash charges to earnings due to impairment.

Changes in commodity prices may also significantly affect our ability to estimate the value of producing properties for acquisition and divestiture and often cause disruption in the market for oil and gas producing properties, as buyers and sellers have difficulty agreeing on the value of the properties. Price volatility also makes it difficult to budget for and project the return on acquisitions and the development and exploitation of projects. We expect that commodity prices will continue to fluctuate significantly in the future.

Exploratory drilling involves many risks that are outside our control which may result in a material adverse effect on our business, financial condition or results of operations.

The business of exploring for and producing oil and gas involves a substantial risk of investment loss. Drilling oil and gas wells involves the risk that the wells may be unproductive or that, although productive, the wells may not produce oil or gas in economic quantities. Other hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, power outages, sour gas leakage, loss of circulation of drilling fluids or other conditions may substantially delay or prevent completion of any well. Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic if water or other deleterious substances are encountered that impair or prevent the production of oil or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. There can be no assurance that oil and gas will be produced from the properties in which we have interests.

We are dependent upon the efforts of various third parties that we do not control and, as a result, we may not be able to control the timing of development efforts, associated costs, or the rate of production of reserves (if any).

The success of our business depends upon the efforts of various third parties that we do not control. At least at the present, we do not plan to serve as the operator for our projects. As a result, we may have limited ability to exercise influence over the operations of the properties or their associated costs. Our dependence on the operator and, where

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applicable, other working interest owners for these projects and our limited ability to influence operations and associated costs could prevent the realization of our targeted returns on capital in drilling or acquisition activities. The success and timing of development and exploitation activities on properties operated by others depend upon a number of factors that will be largely outside of our control, including:

• the timing and amount of capital expenditures;

• the operator's expertise and financial resources;

• approval of other participants in drilling wells;

• selection of technology;

• the rate of production of the reserves; and

• the availability of suitable drilling rigs, drilling equipment, production and transportation infrastructure, and qualified operating personnel.

We will rely upon various companies to provide us with technical assistance and services. We will also rely upon the services of geologists, geophysicists, chemists, engineers and other scientists to explore and analyze oil and gas prospects to determine a method in which the oil and gas prospects may be developed in a cost-effective manner. Although our management has relationships with a number of third-party service providers, we cannot assure you that we will be able to continue to rely on such persons. If any of these relationships with third-party service providers are terminated or are unavailable on commercially acceptable terms, we may not be able to execute our business plan.

We may be unable to retain our leases or licenses and working interests in our leases or licenses, which would result in significant financial losses to our company.

Our properties are held under oil and gas leases or licenses. If we fail to meet the specific requirements of each lease or license, such lease or license may terminate or expire. We cannot assure you that any of the obligations required to maintain each lease or license will be met. The termination or expiration of our leases or licenses will harm our business. Our property interests will terminate unless we fulfill certain obligations under the terms of our leases or licenses and other agreements related to such properties. If we are unable to satisfy these conditions on a timely basis, we may lose our rights in these properties. The termination of our interests in these properties will harm our business. In addition, we will need significant funds to meet capital requirements for the exploration activities that we intend to conduct on our properties.

Title deficiencies could render our leases worthless which could have adverse effects on our financial condition or results of operations.

The existence of a material title deficiency can render a lease worthless and can result in a large expense to our business. It is our practice in acquiring oil and gas leases or undivided interests in oil and gas leases to forgo the expense of retaining lawyers to examine the title to the oil or gas interest to be placed under lease or already placed under lease. Instead, we rely upon the judgment of oil and gas landmen who perform the field work in examining records in the appropriate governmental office before attempting to place under lease a specific oil or gas interest. This is customary practice in the oil and gas industry. However, we do not anticipate that we, or the person or company acting as operator of the wells located on the properties that we lease or may lease in the future, will obtain counsel to examine title to the lease until the well is about to be drilled. As a result, we may be unaware of deficiencies in the marketability of the title to the lease. Such deficiencies may render the lease worthless.

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RISKS RELATING TO OUR COMMON STOCK

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

A prolonged decline in the price of our common stock could reduce liquidity of our common stock and reduce our ability to raise capital. Because a significant portion of our operations have been and will be 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 operations. Such reductions may force us to reallocate funds from other planned uses and may have a significant negative effect on our business plan and operations, including our ability to continue our current operations. If our stock price declines, we can offer no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.

The market price for our common stock may also be affected by our ability to meet or exceed expectations of analysts or investors. Any failure to meet these expectations, even if minor, may have a material adverse effect on the market price of our common stock.

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our articles of incorporation authorizes the issuance of up to 450,000,000 shares of common stock with a par value of $0.001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will reduce the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

Trading of our stock may be restricted by the Securities Exchange Commission's penny stock regulations, which may limit a stockholder's ability to buy and sell our common stock.

The 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 Securities and Exchange Commission, 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 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.

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NASD sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the National Association of Securities Dealers (“NASD”) 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, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD 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.

Our common stock is illiquid and the price of our common stock may be negatively impacted by factors which are unrelated to our operations.

Our common stock currently trades on a limited basis on the OTC Bulletin Board. Trading of our stock through the OTC Bulletin Board is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in our stock, in which case it could be difficult for shareholders to sell their stock. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

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 are engaged in the business of exploring and, if warranted, developing commercial reserves of oil and gas. Our properties are in the exploration stage only and are without known reserves of oil and gas. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon 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 any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

We do not intend to pay dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

RISKS RELATED TO OUR COMPANY

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

Our By-laws provide the indemnification of our 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 or her, including an amount paid to settle an action or satisfy a judgment in active criminal or administrative action or proceeding to which he or she is made a party by reason of his or her being or having been one of our directors. Our By-laws also

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provide that we may indemnify our officers against all costs, charges and expenses incurred by him or them and resulting from his or her acting as an officer of our company.

Our By-laws do not contain anti-takeover provisions and thus our management and directors may change 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. If there is a take-over of our company, our management and directors may change.

Because 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 directors and officers.

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 officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

Item 3: Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures as of the end of the period covered by this quarterly report, being May 31, 2007. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's President and Chief Executive Officer and our company’s Vice President, Finance.

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Based upon that evaluation, our company's President and Chief Executive Officer and our company’s Vice President, Finance concluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report. There have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our President and Chief Executive Officer and our Vice President, Finance as appropriate, to allow timely decisions regarding required disclosure.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

We have not engaged in any unregistered sales of our equity securities in the fiscal quarter ended May 31, 2007, which previously have not been disclosed in our current report on Form 8-K.

Item 3. Default upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits, required by Item 601 of Regulation S-B, are being filed as part of this quarterly report, or are incorporated by reference where indicated:

Exhibit No. Description

(3)Articles of Incorporation and By-laws

3.1  Articles of Incorporation (incorporated by reference from our registration statement on Form SB-2 filed on August 19, 2005)

3.2  By-laws (incorporated by reference from our registration statement on Form SB-2 filed on August 19, 2005)

3.3  Certificate of change filed with the Secretary of State of Nevada on January 2, 2007 and which is effective on January 11, 2007 (incorporated by reference from our current report on Form 8-K filed on January 12, 2007)

3.4  Article of Merger filed with the Secretary of State of Nevada on January 11, 2007 (incorporated by reference from our current report on Form 8-K filed on February 7, 2007)

(10)Material Contracts

10.1  Mineral Property Purchase Agreement dated January 25, 2005 (incorporated by reference from our registration statement on Form SB-2 filed on August 19, 2005)

10.2  Private Placement Subscription Agreement dated February 23, 2007 (incorporated by reference from our current report on Form 8-K filed on June 1, 2007)

10.3  Lease Purchase and Sale Agreement dated May 29, 2007 ((incorporated by reference from our current report on Form 8-K filed on May 31, 2007)

10.4  Share Issuance Agreement dated May 17, 2007 (incorporated by reference from our current report on Form 8-K filed on June 1, 2007)

10.5  Farm-In Agreement dated June 8, 2007 (incorporated by reference from our annual report on Form 10-KSB filed on June 13, 2007)

10.6  Employment Agreement dated June 11, 2007 (incorporated by reference from our annual report on Form 10-KSB filed on June 13, 2007)

10.7  Escrow Agreement dated June 8, 2007 (incorporated by reference from our annual report on Form 10-KSB filed on June 13, 2007)

10.8  Consulting Agreement dated June 12, 2007 (incorporated by reference from our annual report on Form 10-KSB filed on June 13, 2007)

10.9  Consulting Agreement dated June 12, 2007 (incorporated by reference from our annual report on Form 10-KSB filed on June 13, 2007)

(21)Subsidiaries

21.1  Fox Petroleum (Alaska) Inc., incorporated in Alaska

21.2  Fox Energy Exploration Limited, incorporated in England and Wales

(31)  Section 302 Certification

31.1*  Section 302 Certification of Richard Joseph Moore

31.2*  Section 302 Certification of Alexander James Craven

(32)  Section 906 Certification

32.1*  Section 906 Certification of Richard Joseph Moore

32.2*  Section 906 Certification of Alexander James Craven

*Filed herewith

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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.

FOX PETROLEUM INC.

/s/ Richard Joseph Moore

By: Richard Joseph Moore, President, Chief Executive Officer and Director

(Principal Executive Officer)

Dated: July 23, 2007

/s/ Alexander James Craven

By: Alexander James Craven, Vice President, Finance, Secretary, Treasurer and Director

(Principal Financial Officer and Principal Accounting Officer)

Dated: July 23, 2007