10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2013

OR

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

For the transition period from _______________ to _______________

Commission file number: 333-99455

SKY PETROLEUM, INC.

(Exact name of registrant as specified in its charter)

Nevada	32-0027992
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
401 Congress Avenue, Suite 1540 Austin, Texas	78701
(Address of principal executive offices)	(Zip Code)

(512) 687-3427

(Registrant’s Telephone Number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the 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). x Yes ¨ No

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting Company x

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

Number of Shares outstanding at August 14, 2013: 68,118,709

INDEX

		Page No.(s)
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012	4
	Condensed Consolidated Statements of Cash Flows for the six months ended  June 30, 2013 and 2012	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4T.	Disclosure Controls and Procedures	21
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	[RESERVED]	23
Item 5.	Other Information	23
Item 6.	Exhibits	23
SIGNATURES		24

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PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

NOTE: These condensed consolidated financial statements reflect the Company’s Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012.

Sky Petroleum, Inc.

Condensed Consolidated Balance Sheets

	June 30, 2013			December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	340,744		$	46,058
Restricted cash	—			1,500,000
Other current assets	77,194			172,412
Total Current Assets	417,938			1,718,470
Investment in oil and gas properties, net	—			10,205,220
Fixed assets, net	18,675			23,775
Deposits and other assets	14,768			14,768
Total Assets	$	451,381		$	11,962,233
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	1,809,830		$	1,187,017
Note Payable, related party	150,000			—
Total Current Liabilities	1,959,830			1,187,017
Commitments and contingencies
Stockholders' equity (deficit):
Series A Preferred stock, $0.001 par value, 10,000,000 shares authorized, none outstanding	—			—
Series B Preferred stock, no par value, 5,000,000 shares authorized, 3,863,636 issued and outstanding	7,820,000			7,820,000
Common stock, $0.001 par value, 150,000,000 shares authorized, 68,118,709 shares issued and outstanding, respectively	68,119			68,119
Additional paid-in capital	43,303,721			43,274,539
Accumulated deficit	(52,700,289		)	(40,387,442		)
Total Stockholders' equity (deficit):	(1,508,449		)	10,775,216
Total Liabilities and Stockholders’ Equity (Deficit)	$	451,381		$	11,962,233

The accompanying Notes are an integral part of these condensed consolidated financial statements

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Sky Petroleum, Inc.

Condensed Consolidated Statements of Operations

	Three Months Ended						Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Oil revenues	$	—		$	—		$	—		$	—
Expenses:
Depreciation	2,550			2,629			5,100			5,258
Arbitration expense	(106,544		)	—			941,314			—
Legal and accounting	171,696			149,847			584,863			522,965
Travel	199,925			27,512			218,925			56,552
Consulting services	58,097			40,980			116,557			159,460
Impairment expense of oil & gas investment in Albania	—			—			10,205,220			—
Other general and administrative	141,470			121,897			240,868			273,138
Total expenses	467,194			342,865			12,312,847			1,017,373
Net operating loss	(467,194		)	(342,865		)	(12,312,847		)	(1,017,373		)
Interest income	—			2,793			—			8,487
Net loss	$	(467,194	)	$	(340,072	)	$	(12,312,847	)	$	(1,008,886	)
Net loss per share - basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.18	)	$	(0.02	)
Weighted average number of common shares outstanding basic and diluted	68,383,709			67,104,588			68,383,709			66,450,083

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

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Sky Petroleum, Inc.

Condensed Consolidated Statements of Cash Flows

	Six Months Ended
	June 30, 2013			June 30, 2012
Cash flows from operating activities:
Net loss	$	(12,312,847	)	$	(1,008,886	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	5,100			5,258
Share based compensation	29,182			37,985
Impairment of oil & gas investment in Albania	10,205,220			—
Changes in operating assets and liabilities:
Other current assets	95,218			(119,369		)
Accounts payable and accrued liabilities	622,813			267,690
Net cash used in operating activities	(1,355,314		)	(817,322		)
Cash flows from investing activities:
Purchase of fixed assets	—			(5,930		)
Purchases of surety bond	—			(50,000		)
Net cash used in investing activities	—			(55,930		)
Cash flows from financing activities:
Proceeds from convertible debt issuance	150,000			—
Proceeds from private placement	—			640,000
Net cash provided by financing activities	150,000			640,000
Net decrease in cash and cash equivalents	(1,205,314		)	(233,252		)
Cash and cash equivalents at the beginning of period	1,546,058			605,784
Cash and cash equivalents at the end of period	$	340,744		$	372,532

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

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Sky Petroleum, Inc.

Notes to Condensed Consolidated Financial Statements

As used herein, the terms, “Sky Petroleum,” “Sky,” “Company,” “we,” “us,” and “our” refer to Sky Petroleum, Inc. and related subsidiaries.

Note 1 - Organization and Basis of Presentation

The Company was organized on August 22, 2002 under the laws of the State of Nevada, as The Flower Valet. On December 20, 2004 the Company amended its articles of incorporation to change its name to Seaside Explorations, Inc. Subsequently, on March 28, 2005 the Company changed its name to Sky Petroleum, Inc ("Sky", "Sky Petroleum", or "Company").The Company has three wholly-owned subsidiaries, two incorporated in Cyprus: Sastaro Limited (“Sastaro”) and Bekata Limited (Bekata”) which owns 100% of Sastaro, of which the companies relate to our Mubarek field operations, and a third Sky Petroleum (Albania) Inc., ("Sky Petroleum Albania") a Cayman Islands corporation and qualified branch in Albania, incorporated for the purposes of holding and operating our previously held interests in the Concession Area (as defined below) in Albania.

The Company is engaged in the exploration and development of oil and natural gas properties of others under arrangements in which we finance the costs in exchange for interests in the oil or natural gas revenue generated by the properties. Such arrangements are commonly referred to as farm-ins to us, or farm-outs by the property owners farming out to us.

On June 24, 2010, Sky entered into a Production Sharing Contract (“PSC”) with the Ministry of Economy, Trade and Energy of Albania, acting through the National Agency of Natural Resources of Albania (“AKBN”).  The PSC granted Sky Petroleum exclusive rights to three exploration blocks (Block Four, Block Five and Block Dumre) in the Republic of Albania (the “Concession Area”). The Concession Area covers approximately 1.2 million acres, representing approximately 20% of the landmass of Albania. The PSC had a seven-year term with three exploration periods.

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the alleged termination of the PSC. On May 7, 2013, the Arbitration Tribunal ruled that (i) AKBN provided proper notice of the termination of the PSC to Sky Petroleum on July 22, 2011, for Sky Petroleum's failure to deliver a conforming bank guarantee to AKBN by July 22, 2011, and (ii) the PSC was properly terminated on November 17, 2011.  The Arbitration Tribunal ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774($501,511). As a result of the ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See "Investment in Oil and Gas Properties" in the Notes to Condensed Consolidated Financial Statements for further details.

On May 18, 2005, our wholly owned subsidiary Sastaro entered into a Participation Agreement with Buttes Gas and Oil Co. International Inc. (which we refer to as “Buttes”), a wholly-owned subsidiary of Crescent Petroleum Company International Limited (which we refer to as “Crescent”) for the financing of a drilling program in the Mubarek field. The field is an offshore region in a concession area surrounding Abu Musa Island in the Arabian Gulf. Under the terms of the Participation Agreement, the Company participated in a share of the future production revenue by contributing $25 million in drilling and completion costs related to two wells in an off-shore oil and gas project in the United Arab Emirates. The operator of the drilling program, Crescent completed the first well in 2006 and the second well in 2007. As of December 31, 2009, the first well produced a total of 150,413 gross barrels, and the second well produced a total of 149,471 gross barrels. Both wells terminated production in 2009.

On December 31, 2009, Sastaro received written notice from Buttes that Buttes unilaterally and solely determined that the Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between the His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field was terminated. Buttes stated it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28, 2009. Management is exercising its rights under the Participation Agreement and intends to protect our interests and our investment in the Mubarek Field. Sky continues to seek discussions with Crescent regarding the Participation Agreement.

Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-

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Q Quarterly Report pursuant to certain rules and regulations of the Securities and Exchange Commission (“SEC”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

In the opinion of management, the interim unaudited consolidated financial statements include all normal recurring adjustments necessary to present fairly the financial position and results of operations for each interim period shown in conformity with accounting principles generally accepted in the United States of America. Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The Company cannot be certain that its existing sources of cash will be adequate to meet our liquidity requirements including cash requirements that are due under the arbitration award and our working capital deficit. Management has implemented plans to improve liquidity through slowing or stopping certain planned expenditures and exploring new business opportunities and arrangements. Management plans to obtain funding through equity, debt or other securities offerings. There can be no assurance that the capital raising efforts will be successful or that our results of operations will materially improve in either the short-term or long-term and accordingly, we may be unable to meet our obligations as they become due.

A fundamental principle of the preparation of financial statements in accordance with generally accepted accounting principles is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. However, this principle is applicable to all entities except for entities in liquidation or entities for which liquidation appears imminent. In accordance with this requirement, our policy is to prepare our consolidated financial statements on a going concern basis unless we intend to liquidate or have no other alternative but to liquidate. The Company's consolidated financial statements have been prepared on a going concern basis and do not reflect any adjustments that might specifically result from the outcome of this uncertainty.

Note 2 - Summary of Significant Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the

United States of America pursuant to the rules and regulations of the SEC and stated in US dollars.

Basis of Consolidation

The financial statements present the consolidated accounts of the Company and its wholly owned subsidiaries, Bekata, Sastaro

and Sky Petroleum (Albania). All intercompany account balances and transactions have been eliminated.

Nature of Operations

The Company's focus is on the acquisition, development and exploitation of long-lived oil and natural gas reserves and, to a lesser extent, exploration for new oil and natural gas reserves. The Company's business activities are currently to explore business opportunities in off-shore and on-shore concessions in the Middle East and Europe.

Investments

Investments in non-affiliated companies with a less than 20% ownership interest, no significant influence, and market prices are not readily available, are accounted for under the cost method.

Property and Equipment

Oil and natural gas properties:

The Company uses the full cost method of accounting for its oil and natural gas producing activities. Accordingly, all costs associated with acquisition, exploration, and development of oil and natural gas reserves, including directly related overhead costs, are capitalized. Management and service fees received under contractual arrangements, if any, are treated as reimbursement of costs, offsetting the costs incurred to provide those services.

Depletion is provided using the units-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the carrying

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value of the assets is reduced accordingly. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins.

Under the full cost method of accounting, the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated “ceiling”. The ceiling limitation is the discounted estimated after-tax future net cash flows from proved oil and natural gas properties. In calculating future net cash flows, current prices and costs are generally held constant indefinitely. The net book value of oil and natural gas properties, less related deferred income taxes is compared to the ceiling on a quarterly and annual basis. Any excess of the net book value, less related deferred income taxes, is generally written off as an expense. Under rules and regulations of the SEC, all or a portion of the excess above the ceiling may not be written off if, subsequent to the end of the quarter or year but prior to the release of the financial results, prices have increased sufficiently that all or a portion of such excess above the ceiling would not have existed if the increased prices were used in the calculations.

As of June 30, 2013, the net carrying value of the Company's investment in the Mubarek wells was $0.

As a result of the Arbitration ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See Note 3 - Investment in Oil and Gas Properties - Arbitration Proceedings. As of June 30, 2013, the Company incurred $0 in acquisition and development costs for oil and gas projects in Albania.  

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

Other Property and Equipment:

Maintenance and repairs are charged to operations. Renewals and betterments are capitalized to the appropriate property and equipment accounts.

Upon retirement or disposition of assets other than oil and natural gas properties, the cost and related accumulated depreciation are removed from the accounts with the resulting gains or losses, if any, recognized in income. Depreciation of other property and equipment is computed using the straight-line method based on the estimated useful lives of the property and equipment.

Income Taxes

We follow the guidance issued within Topic No.740, Income Taxes, for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Undistributed earnings of the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company's wholly owned subsidiaries have prepared required foreign tax returns that were due for the years ended December 31, 2005 through 2012 totaling approximately $33,000 has been included for potential tax liabilities, penalties and interest which will be due upon filing the returns with the appropriate countries.

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Stock-Based Compensation

The Company measures all share-based payments, including grants of employee stock options, using a fair-value based method in accordance with the FASB ASC Topic No. 505, Equity, and Topic No. 718 (formerly SFAS No. 123R), Share-Based Payments. The cost of services received in exchange for awards of equity instruments is recognized in the condensed consolidated statement of operations based on the grant date fair value of those awards amortized over the requisite service period.

Basic and Diluted Net Loss Per Share

Net loss per share is presented in accordance FASB ASC Topic No. 260, "Earnings Per Share". Basic net loss per share is computed based on the weighted average shares of common stock outstanding for the period. Common stock equivalents which represent stock options (approximately 2,100,000 stock options) and warrants (approximately 4,000,000 warrants), have been excluded from the computation of diluted net loss per share at as their effect is anti-dilutive. There were 4,000,000 remaining warrants that are outstanding as of June 30, 2013, 8,000,000 warrants expired on January 20, 2013.

Use of Estimates in the Preparation of Consolidated Financial Statements

Preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted

in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. None of these instruments are held for trading purposes.

FASB ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available (Level 1). If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters (Level 2). Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer's creditworthiness, among other things, as well as unobservable parameters (Level 3). Any such valuation adjustments are applied consistently over time.

Cash Equivalents and Restricted Cash

For purposes of the condensed consolidated statements of cash flows, the Company considers all demand deposits, money market accounts

and certificates of deposit purchased with an original maturity of three months or less to be cash equivalents.

On August 10, 2011, the Company delivered a bank guarantee in the form of a letter of credit under the terms of the PSC with

AKBN. In connection with the bank guarantee, Sky Petroleum deposited the principal balance of the $1,500,000 promissory note with Texas Citizens Bank N.A. to secure payment under the letter of credit. Subsequently, $1,500,000 was transferred to a certificate of deposit (“CD”) with the issuing bank. The issuing bank has the right of offset with the CD for any amounts used under the letter of credit. As of June 30, 2013 the Letter of Credit had matured and the proceeds were moved to unrestricted cash.

Revenue Recognition

Oil and natural gas revenues are recorded using the sales method, whereby the Company recognizes oil and natural gas revenue based on the amount of oil and natural gas sold to purchasers. As of June 30, 2013, the Company did not have any oil or natural gas imbalances recorded. The Company does not recognize revenues until they are realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller's price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured.

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Note 3 - Investment in Oil and Gas Properties

Blocks Four, Five and Dumre in Albania:

On June 24, 2010, Sky Petroleum executed a PSC, covering three exploration blocks, Four, Five, and Dumre in the Republic of Albania totaling approximately 1.2 million acres representing approximately 20% of the landmass of Albania. Under the terms of the PSC, Sky Petroleum had agreed to undertake exploration work of a minimum of $3,150,000 on the blocks during three exploration periods over the next seven years commencing on the effective date of the PSC (January 3, 2011).

The PSC provided for a number of Sky Petroleum obligations, including, among other things, (a) establishing an office in Albania, (b) paying a signing bonus of $50,000 (c) preparing an exploration work program and budget, (c) designating three members to a nine member Exploration Advisory Committee: (d) providing AKBN with a bank guarantee for $1,500,000 to guarantee expenditures during the first exploration period within 90 days of the Effective Date (the “AKBN Bank Guarantee”), and (e) commencing performance of a minimum work program.

In addition, to the work program undertakings, Sky Petroleum also agreed to allocate $100,000 for training and education during each year of the Exploration period. On April 5, 2011, Sky paid $50,000 towards the $100,000 allocation for training and education for the first year exploration period related to the Albania concession area. Sky also paid a signing bonus of $50,000 in 2010.

Arbitration Proceedings

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the termination of the PSC. On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774 ($501,511). This amount has been paid as of June 30, 2013 and included in arbitration costs on the condensed consolidated statement of operations. Sky Petroleum impaired its investment in oil and gas properties, net, related to acquisition and development cost for oil and gas projects in Albania by $10,205,220 to $0.

Consulting Agreement

On May 18, 2010, Sky Petroleum entered into a Consultant Agreement for Business Development in the Republic of Albania (the “Orsett Agreement”) with Orsett Ventures Inc., a British Virgin Islands company (“Orsett”). The Orsett Agreement was amended on September 29, 2010 (“Amendment #1”) and on October 8, 2010 (“Amendment #2”). Under the terms of the Orsett Agreement, Sky Petroleum retained Orsett as an independent consultant to use Orsett's experience, expertise, qualifications and expertise to acquire and negotiate the acquisition of oil and gas properties and projects in the Republic of Albania. The Orsett Agreement terminated under its term on April 30, 2011.

Pursuant to the Amendment #1, Sky Petroleum agreed to pay Orsett in connection with the execution and delivery of the PSC $700,000 and 1.5 million shares of common stock, all of which was paid and tendered, respectively as of December 31, 2010.

Pursuant to Amendment #2, Sky agreed to pay Orsett for additional services, $150,000, an additional 1.5 million shares of common stock; and 3,863,636 shares of newly designated Series B Preferred Stock. Following notification of approval by the Council of Ministers for the Republic of Albania of the PSC, the Company issued the Series B Preferred Stock. As of December 31, 2010, all fees and common and preferred shares were paid and tendered.

The fair market value of the total 3 million common shares issued to Orsett was approximately $1,170,000, and the fair market value of the 3,863,636 shares issued for Preferred Series B Stock of $7,820,000. The fair value of the preferred stock was determined using quoted market prices along with internally developed models that primarily use, as inputs, observable market-based parameters, and other valuation adjustments made to ensure that financial instruments are recorded at fair value.

Orsett and its affiliates, agents and representatives, are subject to ongoing obligations of confidentiality and covenants of non-compete and non-interference under the terms of the Orsett Agreement between Sky Petroleum and Orsett dated May 18, 2010, as amended.  Notwithstanding the expiration of the Orsett Agreement on April 30, 2011, Orsett and its affiliates, agents and representatives, are subject to confidentiality undertakings for a period of three years following the expiration of the term.  In addition, Orsett and its affiliates, agents and representatives have agreed not to circumvent any opportunities of Sky Petroleum.

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Total Orsett Agreement costs of $9,840,000 along with other payments related to the investment totaling $365,220 were capitalized as oil and gas properties in Albania projects and were subsequently impaired to $0 as of June 30, 2013. On June 25, 2012, the Company issued a stop order notice to its transfer agent under which the transfer agent was instructed to: not to remove the restrictive legends from the share certificates representing the Orsett Shares; not to effect or facilitate the transfer, assignment, conveyance or sale of any of the Orsett Shares; and not to effect the conversion of the Series B Preferred Stock into shares of common stock of the Corporation, unless the transfer agent receives the expressed written instructions of the Secretary of the Registrant.

Mubarek Field Operations:

On May 18, 2005, the Company entered into a Participation Agreement with Buttes, whereby the Company provided cash in the amount of $25,000,000, to be used for drilling costs associated with two oil wells located in the Arabian Gulf in exchange for a variable percentage of future production revenue. Pursuant to the Participation Agreement, the Company provided capital to Buttes in developmental increments. Upon commencement of production, which occurred in May 2006, the Company was to receive a preferred 75% of combined production revenue until such time as the Company recouped its total investment, and thereafter an incremental decrease of production revenue to 40%, until the Company has recouped two times its initial investment, and thereafter at 9.2%.

As of June 30, 2008, Buttes incurred drilling costs totaling approximately $53,219,000, exceeding the original cost estimates and funding by the Company of $25,000,000, and thus reducing the Company's preferred share of combined production revenue from 75% to 35.25% until such time as the Company has recouped its total investment, and thereafter an incremental decrease of production revenue to 18.84% until the Company has recouped two times its initial investment, and thereafter at 4.33%.

The Company's operating costs were capped at $3.00 per barrel and royalty fees were 14.5% of gross production revenues under the Participation Agreement.

On December 31, 2009, Sastaro received written notice from Buttes that Buttes had unilaterally and solely determined that the Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between the His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field was terminated. Buttes stated that it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28, 2009.

Buttes notified Sastaro that the Participation Agreement between Sastaro and Buttes is terminated. Under the terms of the Participation Agreement, the Registrant, through Sastaro, contributed $25 million in drilling and completion costs related to two in-fill wells for the right for the Registrant to participate in a share of their future production revenue.

As a result of these events, and as of December 31, 2009, the investment in the wells was impaired to $0.  

As of June 30, 2013 and December 31, 2012, the Company's investment in the Mubarek field oil and gas properties was $0.

Note 4 – Restricted Cash and Bank Guarantee

On August 10, 2011, the Company delivered a bank guarantee in the form of a letter of credit under the terms of the PSC with AKBN. In connection with the bank guarantee, Sky Petroleum made a cash deposit of $1,500,000 with Texas Citizens Bank N.A. in 2011. On February 22, 2013 the Letter of Credit expired and restricted cash relieved.

Note 5 - Stockholders' Equity

Preferred Stock

We have authorized 10 million shares of $0.001 par value Series A Preferred Stock. There were no shares of Series A Preferred Stock outstanding as of June 30, 2013, respectively. The Company has determined that Orsett breached numerous terms of the Consulting Agreement and committed other actions that resulted in substantial harm and damage to the Company and it's shareholders.

On October 8, 2010, pursuant to the terms of the Orsett Agreement, dated May 18, 2010, as amended September 29, 2010 and October 3, 2010, by and between the Company and Orsett, the Company filed a Certificate of Designation with the Secretary of

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State for the State of Nevada to designate 5,000,000 shares of the Company's preferred stock as shares of Series B Preferred Stock (the "Series B Preferred Shares").

The Series B Preferred Shares are participating with no preferences or voting rights, and shall not be converted by any holder, in whole or in part for a period of twelve months from the date of initial issuance. Each Series B Preferred Share is convertible into 4.4 shares of common stock of the Company, however, the shares may not be converted into more than 4.99% of beneficial ownership unless the holder waives the beneficial ownership limitation with 61 days notice.

In connection with the Series B designation and the Consultant Agreement, the Company issued 3,863,636 shares, with a fair value of $7,820,000. These shares were issued to the Consultant for expertise provided to the Company in acquiring and negotiating the acquisition of oil and gas properties in Albania. As of June 30, 2013, 3,863,636 shares of Series B Preferred Stock were outstanding.

On June 25, 2012, the Company issued a stop order notice to its transfer agent under which the transfer agent was instructed to: not to remove the restrictive legends from the share certificates representing the Orsett Shares; not to effect or facilitate the transfer, assignment, conveyance or sale of any of the Orsett Shares; and not to effect the conversion of the Series B Preferred Stock into shares of common stock of the Corporation, unless the transfer agent receives the expressed written instructions of the Secretary of the Registrant. The Company has determined that Orsett breached numerous terms of the Consulting Agreement and committed other actions that resulted in substantial harm and damage to the Company and it's shareholders.

Common Stock and Stock Options

On July 26, 2005, the Company adopted the Sky Petroleum, Inc. Non-U.S. Stock Option Plan (the “Non-U.S. Plan”), effective as of April 1, 2005. The Non-U.S. Plan authorizes the issuance of stock options to acquire up to 10% of the Company's issued and outstanding shares of common stock.

On August 25, 2005, the Company adopted the Sky Petroleum, Inc. 2005 U.S. Stock Incentive Plan (the “U.S. Plan”). The U.S. Plan authorizes the issuance of stock options and other awards to acquire up to a maximum of 3,321,600 shares of the Company's common stock (less the number of shares issuable upon exercise of options granted by the Company under all other stock incentive plans on the date of any grant under the U.S. Plan). The U.S. Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), options that are not incentive stock options, stock appreciation rights and various other stock-based grants.

On June 1, 2012, the Company granted 150,000 shares to an employee. These common shares were valued at $22,500 based on the quoted market price at that date.

On August 19, 2012, the Company granted 150,000 common shares valued at $24,000 to a new Advisory board member. Additionally, on October 11, 2012, the Company granted 100,000 common shares valued at $17,000 to a second Advisory board member. The common shares were all valued based on the quoted market price at date the shares were approved by the Board. The share certificates have been issued. On August 7, 2012, the Company granted 300,000 stock options under the Non-US Plan. The options are exercisable at $0.25 per share with vesting over the next three years and were valued at $56,767.

The 2012 and 2011 stock options fair value was determined using the following attributes and assumptions for each separate issuance: share prices ranging from $0.18 to $0.25, risk-free interest rates of approximately 1.55%, expected dividend yields of 0%, expected life of 4 years, and expected volatility of 207% to 291%.  The Company estimates forfeitures based on historical experience.

For the six months ended June 30, 2013, the Company recorded $29,182 of compensation expense based on its use of the Black Scholes model to estimate the grant-date fair value of these stock option awards. No options were exercised for the six months ended June 30, 2013. Compensation expense is based upon straight-line amortization of the grant-date fair value over the vesting period of the underlying stock option. In accordance with FASB ASC Topic No. 718 and No. 505, the fair value of each stock option grant was estimated on the date of the grant, using the Black-Scholes option-pricing model. As of June 30, 2013, there was approximately $61,745 of unrecognized compensation expenses related to non-vested stock option agreements.

A summary of stock options outstanding as of June 30, 2013, is as follows:

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Shares Underlying Options Outstanding						Shares Underlying Options Exercisable
Range of Exercise Prices		Shares Underlying Options Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Shares Underlying Options Exercisable	Weighted Average Exercise Price
$	0.18	750,000	4.97	$	0.18	683,333	$	0.18
$	0.25	550,000	5.52	$	0.25	250,000	$	0.25
$	0.50	200,000	3.35	$	0.50	200,000	$	0.50
$	1.29	600,000	2.25	$	1.29	600,000	$	1.29

The aggregate intrinsic value of exercisable options as of June 30, 2013 is $0.  The aggregate intrinsic value of options outstanding as of June 30, 2013 is $0.

The following is a summary of stock option activity for the nine months ended June 30, 2013 and for the year ended December 31, 2012:

	Number Of Shares		Weighted Average Exercise Price			Weighted Average Remaining Contract Life (Years)
Balance, December 31, 2011	2,500,000		$	0.76		4.35
Options canceled	(700,000	)	(1.18		)
Options granted	300,000		0.25
Balance, December 31, 2012	2,100,000		0.55			4.61
Options canceled	—
Options granted	—
Balance, June 30, 2013	2,100,000		0.55			4.11
Exercisable, June 30, 2013	1,733,333		$	0.61		3.89

Class A Units and Class A Warrants and Class B Units and Class B Warrants

In October 2011, the Company initiated subscriptions agreements for a non-brokered private placement to raise $1,000,000. Upon receipt of proceeds the Company will issue up to 4,000,000 Class A Units at $0.25 per unit to investors. Each Class A Unit consisted of one share of common stock of the Company, par value $0.001and one Class A Warrant.  Each Class A Warrant is exercisable to acquire one Class B Unit of the Company at an exercise price of $0.35 per Class B Unit until January 20, 2013. Each Class B Unit consists of one share of common stock of the Company, par value $0.001 and one Class B Warrant.  Each Class B Warrant is exercisable to acquire one common share of the Company, par value $0.001 at an exercise price of $0.60 per Class B Warrant Share until January 20, 2014. The Company received $860,000 in proceeds prior to the year ended December 31, 2011 for the offering, and received $140,000 after December, 31, 2011.The Company had received all $1,000,000 in proceeds as of June 30, 2013. As of June 30, 2013, 4,000,000 common shares were issued and 4,000,000 Class A Warrants and Class B Warrants had expired.

In May 2012, the Company initiated subscriptions agreements for a non-brokered private placement to raise $500,000. Upon receipt of proceeds in May 2012, the Company issued 2,000,000 Class A Units at $0.25 per unit to an investor. Each Class A Unit consisted of one share of common stock of the Company, par value $0.001and one Class A Warrant. Each Class A Warrant is exercisable to acquire one Class B Unit of the Company at an exercise price of $0.35 per Class B Unit until May 14, 2013. Each Class B Unit consists of one share of common stock of the Company, par value $0.001 and one Class B Warrant. Each Class B Warrant is exercisable to acquire one common share of the Company, par value $0.001 at an exercise price of $0.60 per Class B Warrant Share until May 14, 2014. The Company received $500,000 in proceeds as of December 31, 2012.

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Note 6 - Note Payable

The Company unanimously approved to obtain loans through the offer of 8% Promissory Notes due January 8, 2014 (the "Notes") in the aggregate amount of up to $1,000,000 (the "Offering") for the purpose of raising working capital. The Notes are convertible into shares of common stock of the Company ("Common Shares") at a conversion price of $0.25 per share (the "Conversion Price") and interest on the Notes is payable in cash or, at the option of the Company, in-kind in Common Shares at the Conversion Price. On January 8, 2013, Mark Rachovides (a "Board Member") loaned the Company $150,000 related to the Offering, a total of 600,000 shares can be exercised up to January 8, 2014. The note payable principal and interest is due in full January 9, 2014.

Note 7 - Income Taxes

For the six months ended June 30, 2013, the Company had net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At June 30, 2013, the Company has accumulated operating losses totaling approximately $45.7 million. The net operating loss carry forwards will begin to expire in 2020 if not utilized. The Company has recorded net operating losses in each year since its inception through June 30, 2013. Based upon all available objective evidence, including the Company’s loss history, management believes it is more likely than not that, the net deferred assets will not be fully realized. Therefore, the Company has provided a valuation allowance against its deferred tax assets at June 30, 2013.

Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company’s wholly owned subsidiaries have prepared the required foreign tax returns for the years ended December 31, 2005 through December 31, 2008. Foreign taxes of approximately $33,000 have been recorded for tax years 2005 through 2008, and are included in accrued expenses. Management has engaged qualified firms to identify and prepare foreign tax returns for filing for the years ended December 31, 2005 through 2012. The Company believes amounts due, if any, would not be material due to changes in Cyprus tax laws during those periods, and due to net operating losses from foreign operations carried forward.

Note 8 - Contingencies

Notice of Arbitration

On November 4, 2011, AKBN delivered a letter to Sky Petroleum that was untranslated. Sky Petroleum received an English translation on November 9, 2011.  The AKBN letter alleged material breach of the PSC and providing notice of termination pursuant to Section 24.2(a) of the PSC.  AKBN alleged breaches for failures to commence its initial working program, deliver a bank guarantee, open an office in Albania and establish an Exploration Advisory Committee.  Sky Petroleum responded to AKBN on November 10, 2011, and provided AKBN notice of its intent to institute an arbitration proceeding under the terms of the PSC against AKBN for breach of the PSC.

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC.

On January 10, 2012, Sky Petroleum filed a complaint (Case No.: A-12-CA-023-SS) with the United States District Court, Western District of Texas, Austin Division (the “Court”) for declaratory and injunctive relief against the Ministry of Economy, Trade, and Energy of Albania, acting by and through AKBN (collectively, the “Defendants”). The action for declaratory and injunctive relief under the Foreign Sovereign Immunities Act and the Albania-America Bilateral Investment Treaty sought to compel arbitration of the dispute between Sky Petroleum and the Defendants (collectively, the “Parties”) under the PSC and to preserve the status quo ante between the Parties pending completion of arbitration under the United Nations Commission on International Trade Law.

On January 20, 2012, the Court delivered an Order and Preliminary Injunction (i) granting Sky Petroleum's preliminary injunction to maintain the status quo between the Parties pending arbitration, (ii) enjoining the Defendants and all persons acting in concert with them from awarding, transferring, or otherwise disposing of any rights to explore, develop and/or produce petroleum on the Contract Area until a final arbitration award is issued, (iii) ordering the Defendants to remove from their website or other publicly available documents all references to the Contract Area being “free” or otherwise available for new contractors until a final arbitration award is issued, and (iv) ordering the Parties to arbitrate their dispute with the United Nations Commission on International Trade Law according to the terms of the PSC.

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On February 28, 2012, Sky Petroleum petitioned the Albanian Appeal Court, Tirana, to seek to enforce the Order and Preliminary Injunction granted by the United States District Court, Western District of Texas, Austin Division. On March 1, 2012, the Appeal Court refused to recognize the Order in Albania.

On April 30, 2012, the Company paid approximately $112,000 (CHF 100,000) to the Tribunal for the first tranche of the provisional budget which are included in other current assets on the Condensed Consolidated Balance Sheets as of December 31, 2012. Both Sky and AKBN were required to pay the advances, however AKBN failed to deliver its portion of the advance. During the quarter ended March 31, 2013, AKBN again failed to deliver its portion of the balance of the provisional budget, therefore the Company paid $238,000 (CHF 210,000) to the Tribunal.

The Arbitration took place before the Tribunal, at the International Dispute Resolution Centre in London, UK between February 18 and 22, 2013.

On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774 ($501,511). As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0, and for the period ended June 30, 2013, Sky Petroleum had an impairment charge of $10,205,220; and paid $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding.

Note 9 - Subsequent Events

On June 19, 2013, Michael Noonan provided notice of his intention to resign as chief financial officer of Sky Petroleum, Inc. The Board of Directors accepted Mr. Noonan's resignation following a 90 day transition period commencing July 1, 2013 and ending September 30, 2013 (the “Transition Period”). Mr. Noonan's resignation will result in the termination of the independent contractor services agreement (the “Agreement”) between the Company and Michael Noonan, individually and acting for Noonan Advisors, LLC effective April 1, 2005, as amended, and filed with the United States Securities and Exchange Commission as Exhibit 10.5 to the Company's Form SB-2/A Amendment No. 1 (SEC File No. 333-127940) on September 9, 2005. The Company's Board of Directors accepted the terms of Mr. Noonan's resignation and approved monthly compensation of $7,500 per month payable to Mr. Noonan during the Transition Period.

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and matters that may occur in the future. These statements relate to analysis and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors, which could cause actual events or results to differ from those, expressed or implied by the forward-looking statements, including, without limitation:

• risks related to our limited operating history;

• risks related to changes in policies and procedures and personnel at administrative and regulatory agencies

• risks related to our ability to perform under the terms of our production sharing contract;

• risks related to government regulations and approvals in the countries in which we operate;

• risks and uncertainty related to our legal rights under the participation agreement for the Mubarek Field;

• risks related to our financing and development activities;

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• risks related to the historical losses and expected losses in the future;

• risks related to our dependence on our executive officers;

• risks related to fluctuations in oil and natural gas prices;

• risks related to exploratory activities, drilling for and producing oil and natural gas;

• risks related to liability claims from oil and gas operations;

• risks related to accessing the oil and natural gas markets;

• risks related to legal compliance costs;

• risks related to the unavailability of drilling equipment and supplies;

• risks related to competition in the oil and natural gas industry;

• risks related to period to period comparison of our financial results;

• risks related to our securities;

• risks related to our ability to raise capital or enter into joint venture or working interest arrangements on acceptable terms; and

• political, social and cultural risks associated with operations and conducting business in foreign countries.

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission (which we refer to as the “SEC”) on March 29, 2013. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Our management has included projections and estimates in this Quarterly Report, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

We qualify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements.

Management’s Discussion and Analysis

This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth elsewhere in this report. See “Forward-Looking Statements” above.

This discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our consolidated financial position or results of operations.

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Overview and Plan of Operation

Business and Exploration Activities

Albania projects:

On June 24, 2010, Sky entered into a PSC, effective January 3, 2011, with the Ministry of Economy, Trade and Energy of Albania, acting through the National Agency of Natural Resources of Albania (“AKBN”). The PSC grants Sky Petroleum exclusive rights to three exploration blocks (Block Four, Block Five and Block Dumre) in the Republic of Albania (the “Concession Area”). The Concession Area covers approximately 1.2 million acres, representing approximately 20% of the landmass of Albania. The PSC has a seven-year term with three exploration periods.

Sky Petroleum committed to undertake G&G; seismic acquisition and an exploration drilling program with minimum expenditure commitments totaling $3,150,000.

Under the terms of the PSC, Sky Petroleum was obligated to, among other things, (a) establish an office in Albania, (b) pay a signing bonus of $50,000; (c) prepare an exploration work program and budget, (c) designate three members to a six member Exploration Advisory Committee, (d) provide AKBN with a bank guarantee for $1,500,000 to guarantee expenditures during the first exploration period within 90 days of the Effective Date and (e) commence performance of a minimum work program.

Since June 24, 2010, the Ministry of Economy, Trade and Energy of Albania and AKBN has been subject to multiple transitions in leadership.  Since June 24, 2010, each of Mr. Dritan Prifti, Mr. Ilir Meta and Mr. Nasip Naco have served as the Minister of the Ministry of Economy, Trade and Energy of Albania, and AKBN has had several Executive Directors, including Mr. Taulant Musabelliu, Mr. Gjergj Thomai and Mr. Besjan Pesha.  Since the ratification of the PSC, Sky Petroleum patiently sought guidance from AKBN on the nature, scope and timing of deliverables through several meetings and exchanges with AKBN officials.

Mr. Pesha was appointed as Executive Director of AKBN on June 27, 2011, and management of Sky Petroleum met with Mr. Pesha and members of AKBN on July 15, 2011 to discuss Sky Petroleum’s undertakings and commitments under the PSC.  On July 22, 2011, Sky Petroleum received a fax from AKBN that canceled a scheduled July 25, 2011 planning presentation and stated that AKBN intended to take the necessary steps to terminate the PSC based on Article 24.2(a), citing Sky Petroleum’s failure to commence its initial working program, deliver a bank guarantee, open an office in Albania and establish an Exploration Advisory Committee.  Sky Petroleum responded by objecting to AKBN’s cancellation of the July 22, 2011 meeting and proposed that AKBN withdraw its mandate to termination the PSC.  On August 10, 2011, Sky Petroleum management met with AKBN and delivered the bank guarantee to AKBN in the form of a letter of credit from Texas Citizens Bank, N.A.

On August 22, 2011, Sky Petroleum reported that it engaged a consulting team to make field development recommendations for their Albanian prospects. A technical team led by Tim Parson, formerly Occidental Oil Co., analyzed technical data and made recommendations for three of the ten Sky Petroleum prospects in Albania. Pathfinder, a Schlumberger company, commenced theoretical planning for extended reach side-tracks and determined that initial engineering indicates all three wells are drillable.

On September 19, 2011, the Company participated in the First US-Albania Investment Forum in New York, NY. The US-Albania Investment Forum featured a delegation led by HE Sali Berisha, Prime Minister, Government of Albania, and also included Hon Edmund Haxhinasto, Deputy Prime Minister and Minister of Foreign Affairs, Hon Nasip Naco, Minister of Economy, Trade and Energy and Hon Sokol Olldashi, Minister of Public Works and Transportation. The Albanian Honorary Consul, HE Dritan Mishto opened the forum and described the current investment climate in Albania and the country's efforts to attract foreign direct investment.

On November 4, 2011, AKBN delivered an untranslated letter to Sky Petroleum. Sky Petroleum received an English translation on November 9, 2011.  The AKBN letter alleged material breach of the PSC and providing notice of termination pursuant to Section 24.2(a) of the PSC.  AKBN alleged breaches for failures to commence its initial working program, deliver a bank guarantee, open an office in Albania and establish an Exploration Advisory Committee.  Sky Petroleum responded to AKBN on November 10, 2011, and provided AKBN notice of its intent to institute an arbitration proceeding under the terms of the PSC against AKBN for breach of the PSC.

On November 18, 2011, Sky Petroleum's legal counsel delivered to the National Agency of Natural Resources of Albania notice that the alleged termination of the PSC was made in breach of the PSC and that Sky Petroleum intended to institute an arbitration proceeding in accordance with Article XXI of the PSC.

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On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC.

On January 10, 2012, Sky Petroleum filed a complaint (Case No.: A-12-CA-023-SS) with the United States District Court, Western District of Texas, Austin Division (the “Court”) for declaratory and injunctive relief against the Ministry of Economy, Trade, and Energy of Albania, acting by and through AKBN (collectively, the “Defendants”). The action for declaratory and injunctive relief under the Foreign Sovereign Immunities Act and the Albania-America Bilateral Investment Treaty sought to compel arbitration of the dispute between Sky Petroleum and the Defendants (collectively, the “Parties”) under the PSC and to preserve the status quo ante between the Parties pending completion of arbitration under the United Nations Commission on International Trade Law.

On January 20, 2012, the Court delivered an Order and Preliminary Injunction (i) granting Sky Petroleum's preliminary injunction to maintain the status quo between the Parties pending arbitration, (ii) enjoining the Defendants and all persons acting in concert with them from awarding, transferring, or otherwise disposing of any rights to explore, develop and/or produce petroleum on the Contract Area until a final arbitration award is issued, (iii) ordering the Defendants to remove from their website or other publicly available documents all references to the Contract Area being “free” or otherwise available for new contractors until a final arbitration award is issued, and (iv) ordering the Parties to arbitrate their dispute with the United Nations Commission on International Trade Law according to the terms of the PSC.

On February 28, 2012, Sky Petroleum petitioned the Albanian Appeal Court, Tirana, to seek to enforce the Order and Preliminary Injunction granted by the United States District Court, Western District of Texas, Austin Division. On March 1, 2012, the Appeal Court refused to recognize the Order in Albania.

The Company paid approximately $342,000 to the Tribunal for estimated costs. Both Sky and AKBN were required to pay the advances, however AKBN has failed to deliver its portion of the advance.

On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for fees and expenses in connection with the Arbitration.

The Company's expenditures related to the Albania exploration blocks consisted of acquisition costs totaling $50,000, and $850,000 for fees to consultants for locating and negotiating the Company's investment in the Albania exploration blocks, $850,000 for fees related to evaluations and assessments of the concession area, and $50,000 towards the $100,000 allocation for training and education for the first year exploration period. In addition, 3 million shares of common stock with a fair value of $1,170,000, plus 3,863,636 Preferred Shares Series B with a value of $7,820,000, were issued to Orsett for expertise provided to the Company in acquiring and negotiating the acquisition of oil and gas properties.

As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0, and for the period ended June 30, 2013, Sky Petroleum had an impairment charge of $10,205,220; and paid $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding.

Mubarek Field Operations:

On May 18, 2005, our wholly owned subsidiary Sastaro entered into a Participation Agreement with Buttes Gas and Oil Co. International Inc. (which we refer to as “Buttes”), a wholly-owned subsidiary of Crescent Petroleum Company International Limited (which we refer to as “Crescent”) for the financing of a drilling program in the Mubarek field. The field is an offshore region in a concession area surrounding Abu Musa Island in the Arabian Gulf. Under the terms of the Participation Agreement, the Company participated in a share of the future production revenue by contributing $25 million in drilling and completion costs related to two wells in an off-shore oil and gas project in the United Arab Emirates. The operator of the drilling program, Crescent completed the first well in 2006 and the second well in 2007. As of December 31, 2009, the first well produced a total of 150,413 gross barrels, and the second well produced a total of 149,471 gross barrels. During the second quarter of 2010, there was one final lift for 1,521 barrels. No further production from the Mubarek wells is expected due to the abandonment of the wells by the operator.

On December 31, 2009, the Company received written notice from Buttes that Buttes unilaterally and solely determined that the Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between the His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field (the “Concession Agreement”) was terminated. Buttes stated that it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28,

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2009. Management is exercising its rights under the Participation Agreement and intends to protect our interests and our investment in the Mubarek Field. Sky continues to seek discussions with Crescent regarding the Participation Agreement.

As warranted, there can be no assurance that we will successfully implement our business strategy or meet our goals during the next twelve months, if ever.

Comparison of the Statement of Operations for the three months ended June 30, 2013 and June 30, 2012

We had no revenues from operations for the three months ended June 30, 2013 and June 30, 2012, respectively. Revenue from operations, if any, will be dependent on our ability to obtain Oil and Gas properties and successfully develop such properties.

We had a net loss of $467,194 for the three months ended June 30, 2013, and a net loss of $340,072 for the three months ended June 30, 2012. On May 7, 2013, the Arbitration Tribunal issued ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774($501,511). As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0, and for the period ended June 30, 2013. Sky Petroleum had an impairment charge of $10,205,220; and paid $501,551 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding.

For the three months ended June 30, 2013, total expenses were $467,194 compared to $342,865 for the three months ended June 30, 2012, an increase of $124,329 or 36%. The increase was the result of increases in legal expenses of $21,849, travel expenses of $172,413, other general and administrative expenses of $19,573, consulting expenses of $17,117 and adjustments to arbitration expense.

During the three months ended June 30, 2013, we incurred legal and accounting expenses of $171,696 ($149,847, Q2 2012); travel expenses of $199,925 ($27,512, Q2 2012); consulting services expenses of $58,097 ($40,980, Q2 2012); and general and administrative expenses of $141,470 ($121,897Q2 2012). We had income from interest of $0 for the three months ended June 30, 2013, compared to $2,793 for the three months ended June 30, 2012.

The Company is reviewing strategic options related to its future operations and capital requirements.

Comparison of the Statement of Operations for the six months ended June 30, 2013 and June 30, 2012

We had no revenues from operations for the six months ended June 30, 2013 and June 30, 2012, respectively. Revenue from operations, if any, will be dependent on our ability to obtain Oil and Gas properties and successfully develop such properties.

We had a net loss of $12,312,847 for the six months ended June 30, 2013, and a net loss of $1,008,886 for the six months ended June 30, 2012. On May 7, 2013, the Arbitration Tribunal issued ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding.

For the six months ended June 30, 2013, total expenses increased to $12,312,847 from $1,017,373 for the six months ended June 30, 2012, an increase of $11,295,474 or (1,110)%, which related primarily to impairment expenses in Albania of $10,205,220; arbitration expense of $941,314,  increases in legal expenses of $61,898 and travel expenses of $162,373, net of decreases in other general and administrative expenses of $32,270, and consulting expenses of $42,903.

During the six months ended June 30, 2013, we incurred impairment expense in Albania Oil and Gas of $10,205,220; legal and accounting expenses of $584,863 ($522,965, Q2 2012); travel expenses of $218,925 ($56,552, Q2 2012); consulting services expenses of $116,557 ($159,460, Q2 2012); and general and administrative expenses of $240,868 ($273,138Q2 2012). We had income from interest of $0 for the six months ended June 30, 2013, compared to $8,487 for the six months ended June 30, 2013.

The Company is reviewing strategic options related to its future operations and capital requirements.

Liquidity and Capital Resources

A component of our operating plan is the ability to obtain additional capital through additional equity and/or debt financing to fund our working capital requirements and exploration of business opportunities. Our only source of internal operating cash flow historically has been derived from our participation interest in the Mubarek Field, which ceased production at the end of 2009. We had cash on hand of $340,744 as of June 30, 2013.

19

Since inception, we have financed our cash flow requirements through the issuance of equity and debt securities with nominal revenue from our working interest in the Mubarek Field, which terminated production in 2009. We have no revenue from operations and do not expect any revenues from operations for the foreseeable future.

We anticipate that we will be required to raise additional funds in 2013 to meet our minimum working capital requirements. We intend to fund these obligations through common stock or preferred stock offerings, debt financings and bank borrowings, to the extent available. The current market conditions could make it difficult or impossible for us to raise necessary funds to meet our capital requirements.

On January 8, 2013 the Company agreed to obtain loans through the offer of 8% Convertible Promissory Notes due January 8,

2014 (the “Notes”) in the aggregate amount of up to US$1,000,000 (the “Offering”). The Notes are convertible into shares of

common shares of the Company (“Common Shares”) at a conversion price of US$0.25 per share (the “Conversion Price”) and

interest on the Notes is payable in cash or, at the option of the Company, in-kind in Common Shares at the Conversion Price.

Net cash used in operating activities during the six months ended June 30, 2013 was $1,355,314 as compared to net cash used in operating activities of $817,322 for the comparable period in 2012, an increase of $537,992. This increase in cash used in operations is a result of one-time expenses. Net cash provided by financing activities was $150,000 for six months ended June 30, 2013 due to the issuance of convertible debt, compared to $640,000 for the same period in 2012 due to private placement in 2012.

Total assets as of June 30, 2013, were $451,381 compared to total assets of $11,962,233 as of December 31, 2012. Stockholders' deficit as of June 30, 2013 was $1,508,449 compared to stockholders’ equity of $10,775,216 as of December 31, 2012. The decrease in assets and stockholders’ equity was primarily related to the impairment of investment in oil and gas properties Changes in total assets resulted from the $10,205,220 impairment of Investment in Oil and Gas Properties, that related to acquisition and development costs for oil and gas projects in Albania.

As of June 30, 2013, we had current assets of $417,938, including cash and cash equivalents of $340,744.  We had current liabilities of $1,959,830.  The Company had a deficit of $1,541,892 of working capital at June 30, 2013 compared to $531,453 in working capital at December 31, 2012. Working capital was negatively affected by the Arbitration ruling on May 7, 2013.

Sky Petroleum anticipates that it will be required to raise capital during the remainder of 2013 to fund its ongoing working capital requirements and current liabilities, as well as to provide capital to pursue business opportunities. We maybe unable to raise such capital in acceptable terms if at all.

Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies searching for opportunities in the oil and gas industry. Such risks include, but are not limited to, our ability to secure a drilling rig, our ability to successfully drill for hydrocarbons, commodity price fluctuations, delays in drilling or bringing production, if any, on line, an evolving business model and unpredictable availability of qualified oil and gas exploration prospects and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and development plan, successfully identify future drilling locations, continue to rely on qualified independent consultants, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

The Company follows the full-cost method of accounting for its oil and gas operations whereby exploration and development expenditures are capitalized. Such costs may include geological and geophysical, drilling, equipment and technical consulting directly related to exploration and development activities. Costs related to unproved properties and major development projects may be excluded from costs subject to depletion until proved reserves have been determined or their value is impaired.

During the three and six months ended June 30, 2013 , we had no other material transactions affecting our liquidity and capital resources other than those described above.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Contractual Obligations

Leases

20

The Company rents office facilities in Austin, Texas on a month to month basis, totaling approximately $30,000 per year.

The Company leases office facilities in Dubai, United Arab Emirates, under a one year operating lease agreement that expires on October 24, 2013, totaling approximately $38,000 per year.

The Company leases office facilities in Tirana, Albania on a month to month basis, totaling approximately $50,000 per year.

Oil and Gas Properties Commitments and Contingencies

Mubarek Field Operations:

On December 31, 2009, Sastaro received written notice from Buttes that Buttes had unilaterally and solely determined that the

Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field was terminated. Buttes stated that it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28, 2009.As a result of these events, Buttes notified Sastaro that the Participation Agreement between Sastaro and Buttes was terminated.

The Mubarek Field wells H2 and K2-ST4 continue to produce commercial amounts of oil, and the Company believes that there

is significant residual value in H2 and K2-ST4. Consequently, the Company considers the Participation Agreement valid and in

good standing. Management is exercising its rights under the Participation Agreement and intends to protect our interest and our investment in the Mubarek Field.

Production Sharing Contract related to Blocks Four, Five and Dumre in Albania:

Under the terms of the PSC, Sky Petroleum had agreed to undertake exploration work on the blocks during the following three

exploration periods over the next seven years commencing on the effective date of the PSC.

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the alleged termination of the PSC. On May 7, 2013, the Arbitration Tribunal ruled that (i) AKBN provided proper notice of the termination of the PSC to Sky Petroleum on July 22, 2011, for Sky Petroleum's failure to deliver a conforming bank guarantee to AKBN by July 22, 2011, and (ii) the PSC was properly terminated on November 17, 2011.  The Arbitration Tribunal ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774($501,511). As a result of the ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See "Investment in Oil and Gas Properties" in the Notes to Condensed Consolidated Financial Statements for further details.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4T - Disclosure Controls and Procedures

Disclosure Controls and Procedures

At the end of the period covered by our Annual Report for the year ended December 31, 2012 an evaluation was carried out under the supervision of and with the participation of the Company’s management, including the Interim Chief Executive Officer (“CEO”) and Interim Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation the CEO and CFO have concluded that the Company’s disclosure controls and procedures are adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

21

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the design and operation of the Company's internal control over financial reporting as of the end of the period covered by our Annual Report for the year December 31, 2012 based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that the Company's internal control over financial reporting was effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the above-referenced evaluation by management of the effectiveness of our internal control over financial reporting that occurred during the three and six months ended June 30, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

We are not aware of any material pending or threatened litigation or of any proceedings known to be contemplated by governmental authorities which are, or would be, likely to have a material adverse effect upon us or our operations, taken as a whole. There are no material proceedings pursuant to which any of our directors, officers or affiliates or any owner of record or beneficial owner of more than 5% of our securities or any associate of any such director, officer or security holder is a party adverse to us or has a material interest adverse to us.

We were involved in Arbitration proceedings regarding our Albania investment. On May 7, 2013, the Arbitration Tribunal issued ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding. See further information in "Contingencies - Notice of Arbitration" in the Notes to Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors as previously disclosed in our Form 10-K, which was filed with the SEC on March 29, 2013, except as follows:

The Adverse Ruling by the Arbitration Tribunal will have a material adverse affect on our Result of Operations and our Financial Condition

On May 7, 2013, the Arbitration Tribunal ruled that (i) AKBN provided proper notice of the termination of the PSC to Sky Petroleum on July 22, 2011, for Sky Petroleum's failure to deliver a conforming bank guarantee to AKBN by July 22, 2011, and (ii) the PSC was properly terminated on November 17, 2011.  The Arbitration Tribunal ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774($501,511). The Arbitration ruling has a material impact on Sky Petroleum's financial statements for the quarter ending June 30, 2013. Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania of $10,205,220 for the period ended June 30, 2013, Sky Petroleum had an impairment charge of $10,205,220; and paid $501,511 (EUR 382,774) related to the Arbitration ruling. The adverse ruling had a material adverse affect on our financial condition and results of operations for 2013.

22

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

Not applicable. There were no sales of unregistered securities during the quarter ended June 30, 2013.

Item 3 - Defaults Upon Senior Securities

None

Item 4 – [RESERVED]

Item 5 - Other Information

On June 19, 2013, Michael Noonan provided notice of his intention to resign as chief financial officer of the Company. The Board of Directors accepted Mr. Noonan's resignation effective following a 90 day transition period commencing July 1, 2013 and ending September 30, 2013 (the “Transition Period”). Mr. Noonan's resignation will result in the termination of the independent contractor services agreement (the “Agreement”) between the Company and Michael Noonan, individually and acting for Noonan Advisors, LLC effective April 1, 2005, as amended, and filed with the United States Securities and Exchange Commission as Exhibit 10.5 to the Company's Form SB-2/A Amendment No. 1 (SEC File No. 333-127940) on September 9, 2005. The Company's Board of Directors accepted the terms of Mr. Noonan's resignation effective on the expiration of the Transition Period and approved monthly compensation of $7,500 per month payable to Mr. Noonan during the Transition Period.

Item 6 – Exhibits

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SKY PETROLEUM, INC.
By:	/s/ Karim Jobanputra
Karim Jobanputra
Chairman
(Principal Executive Officer)
By:	/s/ Michael D. Noonan
Michael D. Noonan
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
August 14, 2013

24

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Karim Jobanputra, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sky Petroleum, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 14, 2013
	/s/Karim Jobanputra
	Karim Jobanputra
	Chairman
	On behalf of the Registrant and as Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael D. Noonan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sky Petroleum, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 14, 2013
	/s/Michael D. Noonan
	Michael D. Noonan
	Interim Chief Financial Officer
	Principal Financial and Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sky Petroleum, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Karim Jobanputra, acting on behalf of the Registrant and as Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 14, 2013	By:	/s/ Karim Jobanputra
		Karim Jobanputra
		Chairman
		On behalf of the Registrant and as Principal Executive Officer

A signed original of this written statement required by Section 906 has been provided to Sky Petroleum, Inc. and will be retained by Sky Petroleum, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sky Petroleum, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Noonan, Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 14, 2013	By:	/s/ Michael D. Noonan
		Michael D. Noonan
		Interim Chief Financial Officer
		Principal Financial and Accounting Officer

A signed original of this written statement required by Section 906 has been provided to Sky Petroleum, Inc. and will be retained by Sky Petroleum, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Organization and Basis of Presentation (Details)	3 Months Ended		6 Months Ended			0 Months Ended			0 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Dec. 31, 2012 USD ($)	May 07, 2013 ALBANIA [Member] USD ($)	Jun. 24, 2010 ALBANIA [Member] acre Periods blocks	Jun. 30, 2013 ALBANIA [Member] USD ($)	May 07, 2013 ALBANIA [Member] Production Sharing Breach of Contract [Member] USD ($)	May 07, 2013 ALBANIA [Member] Production Sharing Breach of Contract [Member] EUR (€)	Jun. 30, 2008 Mubarek Wells [Member] Buttes [Member] USD ($)	May 18, 2005 Mubarek Wells [Member] Buttes [Member] USD ($)	Dec. 31, 2009 Mubarek H2 [Member] Barrels	Dec. 31, 2009 Mubarek K2-ST4 [Member] Barrels
Productive Wells [Line Items]
Number of exploration blocks							3
Area of land							1,200,000
Area of land, percentage of landmass							20.00%
Contractual term							7 years
Number of exploration periods of contract							3
Litigation settlement, expense									$ 501,511	€ 382,774
Impairment of investment	0	0	10,205,220	0		10,205,220
Investment in oil and gas properties, net	0		0		10,205,220	0		0
Contribution in drilling and completion costs											$ 53,219,000	$ 25,000,000
Number of produced gross barrels													150,413	149,471

XML

Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Oil revenues	$ 0	$ 0	$ 0	$ 0
Expenses:
Depreciation	2,550	2,629	5,100	5,258
Arbitration expense	(106,544)	0	941,314	0
Legal and accounting	171,696	149,847	584,863	522,965
Travel	199,925	27,512	218,925	56,552
Consulting services	58,097	40,980	116,557	159,460
Impairment expense of oil & gas investment in Albania	0	0	10,205,220	0
Other general and administrative	141,470	121,897	240,868	273,138
Total expenses	467,194	342,865	12,312,847	1,017,373
Net operating loss	(467,194)	(342,865)	(12,312,847)	(1,017,373)
Interest income	0	2,793	0	8,487
Net loss	$ (467,194)	$ (340,072)	$ (12,312,847)	$ (1,008,886)
Net loss per share - basic and diluted	$ (0.01)	$ (0.01)	$ (0.18)	$ (0.02)
Weighted average number of common shares outstanding basic and diluted	68,383,709	67,104,588	68,383,709	66,450,083

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders' Equity

Preferred Stock

We have authorized 10 million shares of $0.001 par value Series A Preferred Stock. There were no shares of Series A Preferred Stock outstanding as of June 30, 2013, respectively. The Company has determined that Orsett breached numerous terms of the Consulting Agreement and committed other actions that resulted in substantial harm and damage to the Company and it's shareholders.

On October 8, 2010, pursuant to the terms of the Orsett Agreement, dated May 18, 2010, as amended September 29, 2010 and October 3, 2010, by and between the Company and Orsett, the Company filed a Certificate of Designation with the Secretary of State for the State of Nevada to designate 5,000,000 shares of the Company's preferred stock as shares of Series B Preferred Stock (the "Series B Preferred Shares").

The Series B Preferred Shares are participating with no preferences or voting rights, and shall not be converted by any holder, in whole or in part for a period of twelve months from the date of initial issuance. Each Series B Preferred Share is convertible into 4.4 shares of common stock of the Company, however, the shares may not be converted into more than 4.99% of beneficial ownership unless the holder waives the beneficial ownership limitation with 61 days notice.

In connection with the Series B designation and the Consultant Agreement, the Company issued 3,863,636 shares, with a fair value of $7,820,000. These shares were issued to the Consultant for expertise provided to the Company in acquiring and negotiating the acquisition of oil and gas properties in Albania. As of June 30, 2013, 3,863,636 shares of Series B Preferred Stock were outstanding.

On June 25, 2012, the Company issued a stop order notice to its transfer agent under which the transfer agent was instructed to: not to remove the restrictive legends from the share certificates representing the Orsett Shares; not to effect or facilitate the transfer, assignment, conveyance or sale of any of the Orsett Shares; and not to effect the conversion of the Series B Preferred Stock into shares of common stock of the Corporation, unless the transfer agent receives the expressed written instructions of the Secretary of the Registrant. The Company has determined that Orsett breached numerous terms of the Consulting Agreement and committed other actions that resulted in substantial harm and damage to the Company and it's shareholders.

Common Stock and Stock Options

On July 26, 2005, the Company adopted the Sky Petroleum, Inc. Non-U.S. Stock Option Plan (the “Non-U.S. Plan”), effective as of April 1, 2005. The Non-U.S. Plan authorizes the issuance of stock options to acquire up to 10% of the Company's issued and outstanding shares of common stock.

On August 25, 2005, the Company adopted the Sky Petroleum, Inc. 2005 U.S. Stock Incentive Plan (the “U.S. Plan”). The U.S. Plan authorizes the issuance of stock options and other awards to acquire up to a maximum of 3,321,600 shares of the Company's common stock (less the number of shares issuable upon exercise of options granted by the Company under all other stock incentive plans on the date of any grant under the U.S. Plan). The U.S. Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), options that are not incentive stock options, stock appreciation rights and various other stock-based grants.

On June 1, 2012, the Company granted 150,000 shares to an employee. These common shares were valued at $22,500 based on the quoted market price at that date.

On August 19, 2012, the Company granted 150,000 common shares valued at $24,000 to a new Advisory board member. Additionally, on October 11, 2012, the Company granted 100,000 common shares valued at $17,000 to a second Advisory board member. The common shares were all valued based on the quoted market price at date the shares were approved by the Board. The share certificates have been issued. On August 7, 2012, the Company granted 300,000 stock options under the Non-US Plan. The options are exercisable at $0.25 per share with vesting over the next three years and were valued at $56,767.

The 2012 and 2011 stock options fair value was determined using the following attributes and assumptions for each separate issuance: share prices ranging from $0.18 to $0.25, risk-free interest rates of approximately 1.55%, expected dividend yields of 0%, expected life of 4 years, and expected volatility of 207% to 291%.  The Company estimates forfeitures based on historical experience.

For the six months ended June 30, 2013, the Company recorded $29,182 of compensation expense based on its use of the Black Scholes model to estimate the grant-date fair value of these stock option awards. No options were exercised for the six months ended June 30, 2013. Compensation expense is based upon straight-line amortization of the grant-date fair value over the vesting period of the underlying stock option. In accordance with FASB ASC Topic No. 718 and No. 505, the fair value of each stock option grant was estimated on the date of the grant, using the Black-Scholes option-pricing model. As of June 30, 2013, there was approximately $61,745 of unrecognized compensation expenses related to non-vested stock option agreements.

A summary of stock options outstanding as of June 30, 2013, is as follows:

Shares Underlying Options Outstanding						Shares Underlying Options Exercisable
Range of Exercise Prices		Shares Underlying Options Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Shares Underlying Options Exercisable	Weighted Average Exercise Price
$	0.18	750,000	4.97	$	0.18	683,333	$	0.18
$	0.25	550,000	5.52	$	0.25	250,000	$	0.25
$	0.50	200,000	3.35	$	0.50	200,000	$	0.50
$	1.29	600,000	2.25	$	1.29	600,000	$	1.29

The aggregate intrinsic value of exercisable options as of June 30, 2013 is $0.  The aggregate intrinsic value of options outstanding as of June 30, 2013 is $0.

The following is a summary of stock option activity for the nine months ended June 30, 2013 and for the year ended December 31, 2012:

	Number Of Shares		Weighted Average Exercise Price			Weighted Average Remaining Contract Life (Years)
Balance, December 31, 2011	2,500,000		$	0.76		4.35
Options canceled	(700,000	)	(1.18		)
Options granted	300,000		0.25
Balance, December 31, 2012	2,100,000		0.55			4.61
Options canceled	—
Options granted	—
Balance, June 30, 2013	2,100,000		0.55			4.11
Exercisable, June 30, 2013	1,733,333		$	0.61		3.89

Class A Units and Class A Warrants and Class B Units and Class B Warrants

In October 2011, the Company initiated subscriptions agreements for a non-brokered private placement to raise $1,000,000. Upon receipt of proceeds the Company will issue up to 4,000,000 Class A Units at $0.25 per unit to investors. Each Class A Unit consisted of one share of common stock of the Company, par value $0.001and one Class A Warrant.  Each Class A Warrant is exercisable to acquire one Class B Unit of the Company at an exercise price of $0.35 per Class B Unit until January 20, 2013. Each Class B Unit consists of one share of common stock of the Company, par value $0.001 and one Class B Warrant.  Each Class B Warrant is exercisable to acquire one common share of the Company, par value $0.001 at an exercise price of $0.60 per Class B Warrant Share until January 20, 2014. The Company received $860,000 in proceeds prior to the year ended December 31, 2011 for the offering, and received $140,000 after December, 31, 2011.The Company had received all $1,000,000 in proceeds as of June 30, 2013. As of June 30, 2013, 4,000,000 common shares were issued and 4,000,000 Class A Warrants and Class B Warrants had expired.

In May 2012, the Company initiated subscriptions agreements for a non-brokered private placement to raise $500,000. Upon receipt of proceeds in May 2012, the Company issued 2,000,000 Class A Units at $0.25 per unit to an investor. Each Class A Unit consisted of one share of common stock of the Company, par value $0.001and one Class A Warrant. Each Class A Warrant is exercisable to acquire one Class B Unit of the Company at an exercise price of $0.35 per Class B Unit until May 14, 2013. Each Class B Unit consists of one share of common stock of the Company, par value $0.001 and one Class B Warrant. Each Class B Warrant is exercisable to acquire one common share of the Company, par value $0.001 at an exercise price of $0.60 per Class B Warrant Share until May 14, 2014. The Company received $500,000 in proceeds as of December 31, 2012.

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Stockholders' Equity (Preferred Stock) (Narrative) (Details) (USD $)	0 Months Ended
	Oct. 08, 2010	Jun. 30, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Maximum [Member]
Class of Stock [Line Items]
Percent of beneficial ownership that can be converted	4.99%
Beneficial ownership limitation notice period	61 days
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized		10,000,000	10,000,000
Preferred stock, par value		$ 0.001	$ 0.001
Preferred stock, shares issued		0	0
Preferred stock		$ 0	$ 0
Preferred stock, shares outstanding		0	0
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized	5,000,000	5,000,000	5,000,000
Preferred share converted into common stock	4.4
Preferred stock, shares issued		3,863,636	3,863,636		3,863,636
Preferred stock		$ 7,820,000	$ 7,820,000	$ 7,820,000
Preferred stock, shares outstanding		3,863,636	3,863,636

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Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		6 Months Ended		96 Months Ended		6 Months Ended			0 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Aug. 10, 2011 Texas Citizens Bank N.A. [Member]	Jun. 30, 2013 Warrant [Member]	Jun. 30, 2013 Mubarek Wells [Member]	Dec. 31, 2012 Mubarek Wells [Member]	May 07, 2013 ALBANIA [Member]	Jun. 30, 2013 ALBANIA [Member]
Loss Contingencies [Line Items]
Cost-method investments, aggregate carrying amount								$ 0	$ 0
Impairment of investment	0	0	10,205,220	0						10,205,220
Investment in oil and gas properties, net	0		0		10,205,220					0	0
Aquisition and development cost											0
Foreign taxes recorded					33,000
Stock options excluded from the computation of diluted net loss per share			2,100,000				4,000,000
Class of warrants , outstanding	4,000,000		4,000,000
Class of warrants, expired	8,000,000		8,000,000
Expenditure commitments						1,500,000
Amount transferred to certificate of deposit						$ 1,500,000

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Stockholders' Equity (Schedule of Stock Options Activity) (Details) (USD $)	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number Of Shares, Beginning Balance		2,100,000	2,500,000
Weighted Average Exercise Price, Beginning Balance		$ 0.55	$ 0.76
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	0			(700,000)
Weighted Average Exercise Price, Options cancelled				$ (1.18)
Number of Shares, Options granted	0			300,000
Weighted Average Exercise Price, Options granted				$ 0.25
Number Of Shares, Ending Balance	2,100,000	2,100,000		2,500,000
Weighted Average Exercise Price, Ending Balance	$ 0.55	$ 0.55		$ 0.76
Weighted Average Remaining Contract Life (Years), Outstanding		3 years 10 months 21 days	4 years 7 months 10 days	4 years 4 months 6 days
Number Of Shares, Exercisable	1,733,333	1,733,333
Weighted Average Exercise Price, Exercisable	$ 0.61	$ 0.61
Weighted Average Remaining Contract Life (Years), Exercisable		4 years 1 month 10 days

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Stockholders' Equity (Schedule of Stock Option Outstanding) (Details) (USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares Underlying Options Outstanding, Range of Exercise Prices			$ 0.18	$ 0.18
Shares Underlying Options Outstanding	2,100,000		2,100,000	2,500,000
Shares Underlying Options Outstanding, Weighted Average Remaining Contractual Life (Years)	3 years 10 months 21 days	4 years 7 months 10 days		4 years 4 months 6 days
Shares Underlying Options Outstanding, Weighted Average Exercise Price	$ 0.55		$ 0.55	$ 0.76
Shares Underlying Options Exercisable	1,733,333
Shares Underlying Options Exercisable, Weighted Average Exercise Price	$ 0.61
$0.18 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares Underlying Options Outstanding, Range of Exercise Prices	$ 0.18
Shares Underlying Options Outstanding	750,000
Shares Underlying Options Outstanding, Weighted Average Remaining Contractual Life (Years)	4 years 11 months 19 days
Shares Underlying Options Outstanding, Weighted Average Exercise Price	$ 0.18
Shares Underlying Options Exercisable	683,333
Shares Underlying Options Exercisable, Weighted Average Exercise Price	$ 0.18
$0.25 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares Underlying Options Outstanding, Range of Exercise Prices	$ 0.25
Shares Underlying Options Outstanding	550,000
Shares Underlying Options Outstanding, Weighted Average Remaining Contractual Life (Years)	5 years 6 months 7 days
Shares Underlying Options Outstanding, Weighted Average Exercise Price	$ 0.25
Shares Underlying Options Exercisable	250,000
Shares Underlying Options Exercisable, Weighted Average Exercise Price	$ 0.25
$0.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares Underlying Options Outstanding, Range of Exercise Prices	$ 0.50
Shares Underlying Options Outstanding	200,000
Shares Underlying Options Outstanding, Weighted Average Remaining Contractual Life (Years)	3 years 4 months 6 days
Shares Underlying Options Outstanding, Weighted Average Exercise Price	$ 0.50
Shares Underlying Options Exercisable	200,000
Shares Underlying Options Exercisable, Weighted Average Exercise Price	$ 0.50
$1.29 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares Underlying Options Outstanding, Range of Exercise Prices	$ 1.29
Shares Underlying Options Outstanding	600,000
Shares Underlying Options Outstanding, Weighted Average Remaining Contractual Life (Years)	2 years 3 months
Shares Underlying Options Outstanding, Weighted Average Exercise Price	$ 1.29
Shares Underlying Options Exercisable	600,000
Shares Underlying Options Exercisable, Weighted Average Exercise Price	$ 1.29

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Income Taxes (Details) (USD $)	6 Months Ended	96 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Accumulated operating losses	$ 45,700,000
Expiration of operating loss carry forward	2020
Foreign taxes recorded		$ 33,000

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Stockholders' Equity (Common Stock and Stock Options) (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended		12 Months Ended		0 Months Ended			0 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Aug. 07, 2012 Non-U.S. Plan [Member]	Jul. 26, 2005 Non-U.S. Plan [Member] Maximum [Member]	Aug. 25, 2005 U.S. Plan [Member] Maximum [Member]	Jun. 01, 2012 Former Chief Executive Officer [Member]	Aug. 19, 2012 Common Stock [Member] New Advisory Board Member [Member]	Oct. 11, 2012 Common Stock [Member] Second Advisory Board Member [Member]
Class of Stock [Line Items]
Percent to be acquired of entity issued and outstanding common stock							10.00%
Common stock, shares authorized	150,000,000	150,000,000		150,000,000				3,321,600
Common shares granted, shares									150,000	150,000	100,000
Common shares granted, value									$ 22,500	$ 24,000	$ 17,000
Stock options granted	0				300,000	300,000
Range of exercise prices				$ 0.18	$ 0.18	$ 0.25
Vesting period						3 years
Range of exercise prices, maximum				$ 0.25	$ 0.25
Risk-free interest rates				1.55%	1.55%
Expected dividend yields				0.00%	0.00%
Expected life				4 years	4 years
Expected volatility, minimum				207.00%	207.00%
Expected volatility, maximum				291.00%	291.00%
Share based compensation		29,182	37,985
Unrecognized compensation expenses related to non-vested option agreements	61,745	61,745
Aggregate intrinsic value of exercisable shares	0	0				56,767
Aggregate intrinsic value of options outstanding	$ 0	$ 0

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Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

The Company was organized on August 22, 2002 under the laws of the State of Nevada, as The Flower Valet. On December 20, 2004 the Company amended its articles of incorporation to change its name to Seaside Explorations, Inc. Subsequently, on March 28, 2005 the Company changed its name to Sky Petroleum, Inc ("Sky", "Sky Petroleum", or "Company").The Company has three wholly-owned subsidiaries, two incorporated in Cyprus: Sastaro Limited (“Sastaro”) and Bekata Limited (Bekata”) which owns 100% of Sastaro, of which the companies relate to our Mubarek field operations, and a third Sky Petroleum (Albania) Inc., ("Sky Petroleum Albania") a Cayman Islands corporation and qualified branch in Albania, incorporated for the purposes of holding and operating our previously held interests in the Concession Area (as defined below) in Albania.

The Company is engaged in the exploration and development of oil and natural gas properties of others under arrangements in which we finance the costs in exchange for interests in the oil or natural gas revenue generated by the properties. Such arrangements are commonly referred to as farm-ins to us, or farm-outs by the property owners farming out to us.

On June 24, 2010, Sky entered into a Production Sharing Contract (“PSC”) with the Ministry of Economy, Trade and Energy of Albania, acting through the National Agency of Natural Resources of Albania (“AKBN”).  The PSC granted Sky Petroleum exclusive rights to three exploration blocks (Block Four, Block Five and Block Dumre) in the Republic of Albania (the “Concession Area”). The Concession Area covers approximately 1.2 million acres, representing approximately 20% of the landmass of Albania. The PSC had a seven-year term with three exploration periods.

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the alleged termination of the PSC. On May 7, 2013, the Arbitration Tribunal ruled that (i) AKBN provided proper notice of the termination of the PSC to Sky Petroleum on July 22, 2011, for Sky Petroleum's failure to deliver a conforming bank guarantee to AKBN by July 22, 2011, and (ii) the PSC was properly terminated on November 17, 2011.  The Arbitration Tribunal ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774($501,511). As a result of the ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See "Investment in Oil and Gas Properties" in the Notes to Condensed Consolidated Financial Statements for further details.

On May 18, 2005, our wholly owned subsidiary Sastaro entered into a Participation Agreement with Buttes Gas and Oil Co. International Inc. (which we refer to as “Buttes”), a wholly-owned subsidiary of Crescent Petroleum Company International Limited (which we refer to as “Crescent”) for the financing of a drilling program in the Mubarek field. The field is an offshore region in a concession area surrounding Abu Musa Island in the Arabian Gulf. Under the terms of the Participation Agreement, the Company participated in a share of the future production revenue by contributing $25 million in drilling and completion costs related to two wells in an off-shore oil and gas project in the United Arab Emirates. The operator of the drilling program, Crescent completed the first well in 2006 and the second well in 2007. As of December 31, 2009, the first well produced a total of 150,413 gross barrels, and the second well produced a total of 149,471 gross barrels. Both wells terminated production in 2009.

On December 31, 2009, Sastaro received written notice from Buttes that Buttes unilaterally and solely determined that the Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between the His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field was terminated. Buttes stated it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28, 2009. Management is exercising its rights under the Participation Agreement and intends to protect our interests and our investment in the Mubarek Field. Sky continues to seek discussions with Crescent regarding the Participation Agreement.

Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q Quarterly Report pursuant to certain rules and regulations of the Securities and Exchange Commission (“SEC”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

In the opinion of management, the interim unaudited consolidated financial statements include all normal recurring adjustments necessary to present fairly the financial position and results of operations for each interim period shown in conformity with accounting principles generally accepted in the United States of America. Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The Company cannot be certain that its existing sources of cash will be adequate to meet our liquidity requirements including cash requirements that are due under the arbitration award and our working capital deficit. Management has implemented plans to improve liquidity through slowing or stopping certain planned expenditures and exploring new business opportunities and arrangements. Management plans to obtain funding through equity, debt or other securities offerings. There can be no assurance that the capital raising efforts will be successful or that our results of operations will materially improve in either the short-term or long-term and accordingly, we may be unable to meet our obligations as they become due.

A fundamental principle of the preparation of financial statements in accordance with generally accepted accounting principles is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. However, this principle is applicable to all entities except for entities in liquidation or entities for which liquidation appears imminent. In accordance with this requirement, our policy is to prepare our consolidated financial statements on a going concern basis unless we intend to liquidate or have no other alternative but to liquidate. The Company's consolidated financial statements have been prepared on a going concern basis and do not reflect any adjustments that might specifically result from the outcome of this uncertainty.

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Investment in Oil and Gas Properties

6 Months Ended

Jun. 30, 2013

Extractive Industries [Abstract]

Investment in Oil and Gas Properties

Investment in Oil and Gas Properties

Blocks Four, Five and Dumre in Albania:

On June 24, 2010, Sky Petroleum executed a PSC, covering three exploration blocks, Four, Five, and Dumre in the Republic of Albania totaling approximately 1.2 million acres representing approximately 20% of the landmass of Albania. Under the terms of the PSC, Sky Petroleum had agreed to undertake exploration work of a minimum of $3,150,000 on the blocks during three exploration periods over the next seven years commencing on the effective date of the PSC (January 3, 2011).

The PSC provided for a number of Sky Petroleum obligations, including, among other things, (a) establishing an office in Albania, (b) paying a signing bonus of $50,000 (c) preparing an exploration work program and budget, (c) designating three members to a nine member Exploration Advisory Committee: (d) providing AKBN with a bank guarantee for $1,500,000 to guarantee expenditures during the first exploration period within 90 days of the Effective Date (the “AKBN Bank Guarantee”), and (e) commencing performance of a minimum work program.

In addition, to the work program undertakings, Sky Petroleum also agreed to allocate $100,000 for training and education during each year of the Exploration period. On April 5, 2011, Sky paid $50,000 towards the $100,000 allocation for training and education for the first year exploration period related to the Albania concession area. Sky also paid a signing bonus of $50,000 in 2010.

Arbitration Proceedings

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the termination of the PSC. On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774 ($501,511). This amount has been paid as of June 30, 2013 and included in arbitration costs on the condensed consolidated statement of operations. Sky Petroleum impaired its investment in oil and gas properties, net, related to acquisition and development cost for oil and gas projects in Albania by $10,205,220 to $0.

Consulting Agreement

On May 18, 2010, Sky Petroleum entered into a Consultant Agreement for Business Development in the Republic of Albania (the “Orsett Agreement”) with Orsett Ventures Inc., a British Virgin Islands company (“Orsett”). The Orsett Agreement was amended on September 29, 2010 (“Amendment #1”) and on October 8, 2010 (“Amendment #2”). Under the terms of the Orsett Agreement, Sky Petroleum retained Orsett as an independent consultant to use Orsett's experience, expertise, qualifications and expertise to acquire and negotiate the acquisition of oil and gas properties and projects in the Republic of Albania. The Orsett Agreement terminated under its term on April 30, 2011.

Pursuant to the Amendment #1, Sky Petroleum agreed to pay Orsett in connection with the execution and delivery of the PSC $700,000 and 1.5 million shares of common stock, all of which was paid and tendered, respectively as of December 31, 2010.

Pursuant to Amendment #2, Sky agreed to pay Orsett for additional services, $150,000, an additional 1.5 million shares of common stock; and 3,863,636 shares of newly designated Series B Preferred Stock. Following notification of approval by the Council of Ministers for the Republic of Albania of the PSC, the Company issued the Series B Preferred Stock. As of December 31, 2010, all fees and common and preferred shares were paid and tendered.

The fair market value of the total 3 million common shares issued to Orsett was approximately $1,170,000, and the fair market value of the 3,863,636 shares issued for Preferred Series B Stock of $7,820,000. The fair value of the preferred stock was determined using quoted market prices along with internally developed models that primarily use, as inputs, observable market-based parameters, and other valuation adjustments made to ensure that financial instruments are recorded at fair value.

Orsett and its affiliates, agents and representatives, are subject to ongoing obligations of confidentiality and covenants of non-compete and non-interference under the terms of the Orsett Agreement between Sky Petroleum and Orsett dated May 18, 2010, as amended.  Notwithstanding the expiration of the Orsett Agreement on April 30, 2011, Orsett and its affiliates, agents and representatives, are subject to confidentiality undertakings for a period of three years following the expiration of the term.  In addition, Orsett and its affiliates, agents and representatives have agreed not to circumvent any opportunities of Sky Petroleum.

Total Orsett Agreement costs of $9,840,000 along with other payments related to the investment totaling $365,220 were capitalized as oil and gas properties in Albania projects and were subsequently impaired to $0 as of June 30, 2013. On June 25, 2012, the Company issued a stop order notice to its transfer agent under which the transfer agent was instructed to: not to remove the restrictive legends from the share certificates representing the Orsett Shares; not to effect or facilitate the transfer, assignment, conveyance or sale of any of the Orsett Shares; and not to effect the conversion of the Series B Preferred Stock into shares of common stock of the Corporation, unless the transfer agent receives the expressed written instructions of the Secretary of the Registrant.

Mubarek Field Operations:

On May 18, 2005, the Company entered into a Participation Agreement with Buttes, whereby the Company provided cash in the amount of $25,000,000, to be used for drilling costs associated with two oil wells located in the Arabian Gulf in exchange for a variable percentage of future production revenue. Pursuant to the Participation Agreement, the Company provided capital to Buttes in developmental increments. Upon commencement of production, which occurred in May 2006, the Company was to receive a preferred 75% of combined production revenue until such time as the Company recouped its total investment, and thereafter an incremental decrease of production revenue to 40%, until the Company has recouped two times its initial investment, and thereafter at 9.2%.

As of June 30, 2008, Buttes incurred drilling costs totaling approximately $53,219,000, exceeding the original cost estimates and funding by the Company of $25,000,000, and thus reducing the Company's preferred share of combined production revenue from 75% to 35.25% until such time as the Company has recouped its total investment, and thereafter an incremental decrease of production revenue to 18.84% until the Company has recouped two times its initial investment, and thereafter at 4.33%.

The Company's operating costs were capped at $3.00 per barrel and royalty fees were 14.5% of gross production revenues under the Participation Agreement.

On December 31, 2009, Sastaro received written notice from Buttes that Buttes had unilaterally and solely determined that the Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between the His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field was terminated. Buttes stated that it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28, 2009.

Buttes notified Sastaro that the Participation Agreement between Sastaro and Buttes is terminated. Under the terms of the Participation Agreement, the Registrant, through Sastaro, contributed $25 million in drilling and completion costs related to two in-fill wells for the right for the Registrant to participate in a share of their future production revenue.

As a result of these events, and as of December 31, 2009, the investment in the wells was impaired to $0.  

As of June 30, 2013 and December 31, 2012, the Company's investment in the Mubarek field oil and gas properties was $0.

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Notes Payable

6 Months Ended

Jun. 30, 2013

Notes Payable [Abstract]

Notes Payable

Note Payable

The Company unanimously approved to obtain loans through the offer of 8% Promissory Notes due January 8, 2014 (the "Notes") in the aggregate amount of up to $1,000,000 (the "Offering") for the purpose of raising working capital. The Notes are convertible into shares of common stock of the Company ("Common Shares") at a conversion price of $0.25 per share (the "Conversion Price") and interest on the Notes is payable in cash or, at the option of the Company, in-kind in Common Shares at the Conversion Price. On January 8, 2013, Mark Rachovides (a "Board Member") loaned the Company $150,000 related to the Offering, a total of 600,000 shares can be exercised up to January 8, 2014. The note payable principal and interest is due in full January 9, 2014.

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Restricted Cash and Bank Guarantee

6 Months Ended

Jun. 30, 2013

Restricted Cash and Bank Guarantee [Abstract]

Restricted Cash and Bank Guarantee

Restricted Cash and Bank Guarantee

On August 10, 2011, the Company delivered a bank guarantee in the form of a letter of credit under the terms of the PSC with AKBN. In connection with the bank guarantee, Sky Petroleum made a cash deposit of $1,500,000 with Texas Citizens Bank N.A. in 2011. On February 22, 2013 the Letter of Credit expired and restricted cash relieved.

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Stockholders' Equity (Class A Units and Class A Warrants and Class B Units and Class B Warrants) (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended	9 Months Ended
	Dec. 31, 2011	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	May 31, 2012	Oct. 31, 2011
Class of Warrant or Right [Line Items]
Increasing in capital					$ 500,000	$ 1,000,000
Common stock, par value		$ 0.001		$ 0.001	$ 0.001	$ 0.001
Proceeds from issuance of common stock	$ 860,000	$ 140,000	$ 1,000,000
Class A Units [Member]
Class of Warrant or Right [Line Items]
Class of warrant or right, reserved					2,000,000	4,000,000
Exercise price of warrants or rights					0.25	0.25
Class A Units [Member] | Common Stock [Member]
Class of Warrant or Right [Line Items]
Stock issued during period, shares, new issues		4,000,000
Class B Units [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants or rights					0.35	0.35
Class B Warrants (US$0.60) [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants or rights					0.60	0.60
Class A Warrants (US$0.35) [Member]
Class of Warrant or Right [Line Items]
Class of warrant or right, reserved						4,000,000
Exercise price of warrants or rights					0.35	0.35

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Contingencies (Details)	3 Months Ended		6 Months Ended			0 Months Ended		0 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Dec. 31, 2012 USD ($)	May 07, 2013 ALBANIA [Member] USD ($)	Jun. 30, 2013 ALBANIA [Member] USD ($)	May 07, 2013 Production Sharing Breach of Contract [Member] ALBANIA [Member] USD ($)	May 07, 2013 Production Sharing Breach of Contract [Member] ALBANIA [Member] EUR (€)	Jun. 30, 2013 Tribunal [Member] USD ($)	Jun. 30, 2013 Tribunal [Member] CHF	Apr. 30, 2012 Tribunal [Member] USD ($)	Apr. 30, 2012 Tribunal [Member] CHF
Loss Contingencies [Line Items]
Payments for estimated legal cost										$ 238,000	210,000	$ 112,000	100,000
Litigation settlement, expense								501,511	382,774
Investment in oil and gas properties, net	0		0		10,205,220	0	0
Impairment of investment	0	0	10,205,220	0		10,205,220
Settlement liabilities								$ 382,774	€ 501,511

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Series B Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member]
Preferred stock, no par value			$ 0	$ 0
Preferred stock, shares authorized			5,000,000	5,000,000
Preferred stock, shares issued			3,863,636	3,863,636
Preferred stock, shares outstanding			3,863,636	3,863,636
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	68,118,709	68,118,709
Common stock, shares outstanding	68,118,709	68,118,709

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On June 19, 2013, Michael Noonan provided notice of his intention to resign as chief financial officer of Sky Petroleum, Inc. The Board of Directors accepted Mr. Noonan's resignation following a 90 day transition period commencing July 1, 2013 and ending September 30, 2013 (the “Transition Period”). Mr. Noonan's resignation will result in the termination of the independent contractor services agreement (the “Agreement”) between the Company and Michael Noonan, individually and acting for Noonan Advisors, LLC effective April 1, 2005, as amended, and filed with the United States Securities and Exchange Commission as Exhibit 10.5 to the Company's Form SB-2/A Amendment No. 1 (SEC File No. 333-127940) on September 9, 2005. The Company's Board of Directors accepted the terms of Mr. Noonan's resignation and approved monthly compensation of $7,500 per month payable to Mr. Noonan during the Transition Period.

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Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net loss	$ (12,312,847)	$ (1,008,886)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	5,100	5,258
Share based compensation	29,182	37,985
Impairment of oil & gas investment in Albania	10,205,220	0
Changes in operating assets and liabilities:
Other current assets	95,218	(119,369)
Accounts payable and accrued liabilities	622,813	267,690
Net cash used in operating activities	(1,355,314)	(817,322)
Cash flows from financing activities:
Proceeds from convertible debt issuance	150,000	0
Proceeds from private placement	0	640,000
Net cash provided by financing activities	150,000	640,000
Cash flows from investing activities:
Purchase of fixed assets	0	(5,930)
Purchases of surety bond	0	50,000
Net cash used in investing activities	0	(55,930)
Net decrease in cash and cash equivalents	(1,205,314)	(233,252)
Cash and cash equivalents at the beginning of period	1,546,058	605,784
Cash and cash equivalents at the end of period	$ 340,744	$ 372,532

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Consolidated Balance Sheets (USD $)	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 340,744	$ 46,058
Restricted cash	0	1,500,000
Other current assets	77,194	172,412
Total Current Assets	417,938	1,718,470
Investment in oil and gas properties, net	0	10,205,220
Fixed assets, net	18,675	23,775
Deposits and other assets	14,768	14,768
Total Assets	451,381	11,962,233
Current liabilities:
Accounts payable and accrued liabilities	1,809,830	1,187,017
Note Payable, related party	150,000	0
Total Current Liabilities	1,959,830	1,187,017
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 150,000,000 shares authorized, 68,118,709 shares issued and outstanding, respectively	68,119	68,119
Additional paid-in capital	43,303,721	43,274,539
Accumulated deficit	(52,700,289)	(40,387,442)
Total Stockholders' equity (deficit)	(1,508,449)	10,775,216
Total Liabilities and Stockholders’ Equity (Deficit)	451,381	11,962,233
Series A Preferred Stock [Member]
Stockholders' equity:
Preferred stock	0	0
Series B Preferred Stock [Member]
Stockholders' equity:
Preferred stock	$ 7,820,000	$ 7,820,000

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Stockholders' Equity (Schedule of Warrants by Class) (Details)	May 31, 2012	Oct. 31, 2011
Class A Warrants (US$0.35) [Member]
Class of Warrant or Right [Line Items]
Warrant Class/Exercise Price (per Unit)	0.35	0.35
Number of Shares Common Stock (Reserved)		4,000,000
Class B Warrants (US$0.60) [Member]
Class of Warrant or Right [Line Items]
Warrant Class/Exercise Price (per Unit)	0.60	0.60

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Restricted Cash and Bank Guarantee (Details) (Texas Citizens Bank N.A. [Member], USD $)	Aug. 10, 2011
Productive Wells [Line Items]
Expenditure commitments	$ 1,500,000
Letter of Credit [Member]
Productive Wells [Line Items]
Expenditure commitments	$ 1,500,000

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Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Notice of Arbitration

On November 4, 2011, AKBN delivered a letter to Sky Petroleum that was untranslated. Sky Petroleum received an English translation on November 9, 2011.  The AKBN letter alleged material breach of the PSC and providing notice of termination pursuant to Section 24.2(a) of the PSC.  AKBN alleged breaches for failures to commence its initial working program, deliver a bank guarantee, open an office in Albania and establish an Exploration Advisory Committee.  Sky Petroleum responded to AKBN on November 10, 2011, and provided AKBN notice of its intent to institute an arbitration proceeding under the terms of the PSC against AKBN for breach of the PSC.

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC.

On January 10, 2012, Sky Petroleum filed a complaint (Case No.: A-12-CA-023-SS) with the United States District Court, Western District of Texas, Austin Division (the “Court”) for declaratory and injunctive relief against the Ministry of Economy, Trade, and Energy of Albania, acting by and through AKBN (collectively, the “Defendants”). The action for declaratory and injunctive relief under the Foreign Sovereign Immunities Act and the Albania-America Bilateral Investment Treaty sought to compel arbitration of the dispute between Sky Petroleum and the Defendants (collectively, the “Parties”) under the PSC and to preserve the status quo ante between the Parties pending completion of arbitration under the United Nations Commission on International Trade Law.

On January 20, 2012, the Court delivered an Order and Preliminary Injunction (i) granting Sky Petroleum's preliminary injunction to maintain the status quo between the Parties pending arbitration, (ii) enjoining the Defendants and all persons acting in concert with them from awarding, transferring, or otherwise disposing of any rights to explore, develop and/or produce petroleum on the Contract Area until a final arbitration award is issued, (iii) ordering the Defendants to remove from their website or other publicly available documents all references to the Contract Area being “free” or otherwise available for new contractors until a final arbitration award is issued, and (iv) ordering the Parties to arbitrate their dispute with the United Nations Commission on International Trade Law according to the terms of the PSC.

On February 28, 2012, Sky Petroleum petitioned the Albanian Appeal Court, Tirana, to seek to enforce the Order and Preliminary Injunction granted by the United States District Court, Western District of Texas, Austin Division. On March 1, 2012, the Appeal Court refused to recognize the Order in Albania.

On April 30, 2012, the Company paid approximately $112,000 (CHF 100,000) to the Tribunal for the first tranche of the provisional budget which are included in other current assets on the Condensed Consolidated Balance Sheets as of December 31, 2012. Both Sky and AKBN were required to pay the advances, however AKBN failed to deliver its portion of the advance. During the quarter ended March 31, 2013, AKBN again failed to deliver its portion of the balance of the provisional budget, therefore the Company paid $238,000 (CHF 210,000) to the Tribunal.

The Arbitration took place before the Tribunal, at the International Dispute Resolution Centre in London, UK between February 18 and 22, 2013.

On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774 ($501,511). As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0, and for the period ended June 30, 2013, Sky Petroleum had an impairment charge of $10,205,220; and paid $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding.

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Notes Payable (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Debt Instrument [Line Items]
Numbers of shares that can be exercised up to Janyary 8, 2014	600,000
Board Member [Member]
Debt Instrument [Line Items]
Amount loaned, related to the Offering	$ 150,000
Convertible Notes Payable [Member]
Debt Instrument [Line Items]
Stated percentage	8.00%
Notes payable	$ 1,000,000
Conversion price	$ 0.25

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

Schedule of Stock Option Outstanding

A summary of stock options outstanding as of June 30, 2013, is as follows:

Shares Underlying Options Outstanding						Shares Underlying Options Exercisable
Range of Exercise Prices		Shares Underlying Options Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Shares Underlying Options Exercisable	Weighted Average Exercise Price
$	0.18	750,000	4.97	$	0.18	683,333	$	0.18
$	0.25	550,000	5.52	$	0.25	250,000	$	0.25
$	0.50	200,000	3.35	$	0.50	200,000	$	0.50
$	1.29	600,000	2.25	$	1.29	600,000	$	1.29

Schedule of Stock Options Activity

The following is a summary of stock option activity for the nine months ended June 30, 2013 and for the year ended December 31, 2012:

	Number Of Shares		Weighted Average Exercise Price			Weighted Average Remaining Contract Life (Years)
Balance, December 31, 2011	2,500,000		$	0.76		4.35
Options canceled	(700,000	)	(1.18		)
Options granted	300,000		0.25
Balance, December 31, 2012	2,100,000		0.55			4.61
Options canceled	—
Options granted	—
Balance, June 30, 2013	2,100,000		0.55			4.11
Exercisable, June 30, 2013	1,733,333		$	0.61		3.89

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the six months ended June 30, 2013, the Company had net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At June 30, 2013, the Company has accumulated operating losses totaling approximately $45.7 million. The net operating loss carry forwards will begin to expire in 2020 if not utilized. The Company has recorded net operating losses in each year since its inception through June 30, 2013. Based upon all available objective evidence, including the Company’s loss history, management believes it is more likely than not that, the net deferred assets will not be fully realized. Therefore, the Company has provided a valuation allowance against its deferred tax assets at June 30, 2013.

Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company’s wholly owned subsidiaries have prepared the required foreign tax returns for the years ended December 31, 2005 through December 31, 2008. Foreign taxes of approximately $33,000 have been recorded for tax years 2005 through 2008, and are included in accrued expenses. Management has engaged qualified firms to identify and prepare foreign tax returns for filing for the years ended December 31, 2005 through 2012. The Company believes amounts due, if any, would not be material due to changes in Cyprus tax laws during those periods, and due to net operating losses from foreign operations carried forward.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the

United States of America pursuant to the rules and regulations of the SEC and stated in US dollars.

Basis of Consolidation

The financial statements present the consolidated accounts of the Company and its wholly owned subsidiaries, Bekata, Sastaro

and Sky Petroleum (Albania). All intercompany account balances and transactions have been eliminated.

Nature of Operations

The Company's focus is on the acquisition, development and exploitation of long-lived oil and natural gas reserves and, to a lesser extent, exploration for new oil and natural gas reserves. The Company's business activities are currently to explore business opportunities in off-shore and on-shore concessions in the Middle East and Europe.

Investments

Investments in non-affiliated companies with a less than 20% ownership interest, no significant influence, and market prices are not readily available, are accounted for under the cost method.

Property and Equipment

Oil and natural gas properties:

The Company uses the full cost method of accounting for its oil and natural gas producing activities. Accordingly, all costs associated with acquisition, exploration, and development of oil and natural gas reserves, including directly related overhead costs, are capitalized. Management and service fees received under contractual arrangements, if any, are treated as reimbursement of costs, offsetting the costs incurred to provide those services.

Depletion is provided using the units-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the carrying value of the assets is reduced accordingly. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins.

Under the full cost method of accounting, the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated “ceiling”. The ceiling limitation is the discounted estimated after-tax future net cash flows from proved oil and natural gas properties. In calculating future net cash flows, current prices and costs are generally held constant indefinitely. The net book value of oil and natural gas properties, less related deferred income taxes is compared to the ceiling on a quarterly and annual basis. Any excess of the net book value, less related deferred income taxes, is generally written off as an expense. Under rules and regulations of the SEC, all or a portion of the excess above the ceiling may not be written off if, subsequent to the end of the quarter or year but prior to the release of the financial results, prices have increased sufficiently that all or a portion of such excess above the ceiling would not have existed if the increased prices were used in the calculations.

As of June 30, 2013, the net carrying value of the Company's investment in the Mubarek wells was $0.

As a result of the Arbitration ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See Note 3 - Investment in Oil and Gas Properties - Arbitration Proceedings. As of June 30, 2013, the Company incurred $0 in acquisition and development costs for oil and gas projects in Albania.  

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

Other Property and Equipment:

Maintenance and repairs are charged to operations. Renewals and betterments are capitalized to the appropriate property and equipment accounts.

Upon retirement or disposition of assets other than oil and natural gas properties, the cost and related accumulated depreciation are removed from the accounts with the resulting gains or losses, if any, recognized in income. Depreciation of other property and equipment is computed using the straight-line method based on the estimated useful lives of the property and equipment.

Income Taxes

We follow the guidance issued within Topic No.740, Income Taxes, for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Undistributed earnings of the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company's wholly owned subsidiaries have prepared required foreign tax returns that were due for the years ended December 31, 2005 through 2012 totaling approximately $33,000 has been included for potential tax liabilities, penalties and interest which will be due upon filing the returns with the appropriate countries.

Stock-Based Compensation

The Company measures all share-based payments, including grants of employee stock options, using a fair-value based method in accordance with the FASB ASC Topic No. 505, Equity, and Topic No. 718 (formerly SFAS No. 123R), Share-Based Payments. The cost of services received in exchange for awards of equity instruments is recognized in the condensed consolidated statement of operations based on the grant date fair value of those awards amortized over the requisite service period.

Basic and Diluted Net Loss Per Share

Net loss per share is presented in accordance FASB ASC Topic No. 260, "Earnings Per Share". Basic net loss per share is computed based on the weighted average shares of common stock outstanding for the period. Common stock equivalents which represent stock options (approximately 2,100,000 stock options) and warrants (approximately 4,000,000 warrants), have been excluded from the computation of diluted net loss per share at as their effect is anti-dilutive. There were 4,000,000 remaining warrants that are outstanding as of June 30, 2013, 8,000,000 warrants expired on January 20, 2013.

Use of Estimates in the Preparation of Consolidated Financial Statements

Preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted

in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. None of these instruments are held for trading purposes.

FASB ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available (Level 1). If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters (Level 2). Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer's creditworthiness, among other things, as well as unobservable parameters (Level 3). Any such valuation adjustments are applied consistently over time.

Cash Equivalents and Restricted Cash

For purposes of the condensed consolidated statements of cash flows, the Company considers all demand deposits, money market accounts

and certificates of deposit purchased with an original maturity of three months or less to be cash equivalents.

On August 10, 2011, the Company delivered a bank guarantee in the form of a letter of credit under the terms of the PSC with

AKBN. In connection with the bank guarantee, Sky Petroleum deposited the principal balance of the $1,500,000 promissory note with Texas Citizens Bank N.A. to secure payment under the letter of credit. Subsequently, $1,500,000 was transferred to a certificate of deposit (“CD”) with the issuing bank. The issuing bank has the right of offset with the CD for any amounts used under the letter of credit. As of June 30, 2013 the Letter of Credit had matured and the proceeds were moved to unrestricted cash.

Revenue Recognition

Oil and natural gas revenues are recorded using the sales method, whereby the Company recognizes oil and natural gas revenue based on the amount of oil and natural gas sold to purchasers. As of June 30, 2013, the Company did not have any oil or natural gas imbalances recorded. The Company does not recognize revenues until they are realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller's price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured.

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Subsequent Events (Details)	3 Months Ended		6 Months Ended			0 Months Ended		0 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Dec. 31, 2012 USD ($)	May 07, 2013 ALBANIA [Member] USD ($)	Jun. 30, 2013 ALBANIA [Member] USD ($)	May 07, 2013 ALBANIA [Member] Production Sharing Breach of Contract [Member] USD ($)	May 07, 2013 ALBANIA [Member] Production Sharing Breach of Contract [Member] EUR (€)	Jul. 01, 2013 Subsequent Event [Member] From July1, 2013 to September 30, 2013 [Member] Chief Financial Officer [Member] USD ($)
Subsequent Event [Line Items]
Litigation settlement, expense								$ 501,511	€ 382,774
Impairment of investment	0	0	10,205,220	0		10,205,220
Investment in oil and gas properties, net	0		0		10,205,220	0	0
Monthly compensation payments										$ 7,500

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Investment in Oil and Gas Properties (Blocks Four, Five and Dumre in Albania) (Details) (ALBANIA [Member], USD $)	0 Months Ended
	Jun. 24, 2010 Periods blocks acre	Apr. 05, 2011	Dec. 31, 2010
Productive Wells [Line Items]
Number of exploration blocks	3
Area of land	1,200,000
Area of land, percentage of landmass	20.00%
Contractual obligation	$ 3,150,000
Number of exploration periods of contract	3
Term of exploration periods	7 years
Signig bonus paid for exploration and development of oil and gas properties	50,000		50,000
Amount allocated for training and education	100,000
Amount paid toward allocation for training and education		50,000
Production Sharing Breach of Contract [Member]
Productive Wells [Line Items]
Number of members designated to exploration advisory committee	3
Number of members of exploration advisory committee	9
Production Sharing Breach of Contract [Member] | First Exploration Period [Member]
Productive Wells [Line Items]
Expenditure commitments	$ 1,500,000
Term of bank gurantee during exploration period	90 days

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Consolidation

The financial statements present the consolidated accounts of the Company and its wholly owned subsidiaries, Bekata, Sastaro

and Sky Petroleum (Albania). All intercompany account balances and transactions have been eliminated.

Investments

Investments in non-affiliated companies with a less than 20% ownership interest, no significant influence, and market prices are not readily available, are accounted for under the cost method.

Property and Equipment

Oil and natural gas properties:

The Company uses the full cost method of accounting for its oil and natural gas producing activities. Accordingly, all costs associated with acquisition, exploration, and development of oil and natural gas reserves, including directly related overhead costs, are capitalized. Management and service fees received under contractual arrangements, if any, are treated as reimbursement of costs, offsetting the costs incurred to provide those services.

Depletion is provided using the units-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the carrying value of the assets is reduced accordingly. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins.

Under the full cost method of accounting, the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated “ceiling”. The ceiling limitation is the discounted estimated after-tax future net cash flows from proved oil and natural gas properties. In calculating future net cash flows, current prices and costs are generally held constant indefinitely. The net book value of oil and natural gas properties, less related deferred income taxes is compared to the ceiling on a quarterly and annual basis. Any excess of the net book value, less related deferred income taxes, is generally written off as an expense. Under rules and regulations of the SEC, all or a portion of the excess above the ceiling may not be written off if, subsequent to the end of the quarter or year but prior to the release of the financial results, prices have increased sufficiently that all or a portion of such excess above the ceiling would not have existed if the increased prices were used in the calculations.

As of June 30, 2013, the net carrying value of the Company's investment in the Mubarek wells was $0.

As a result of the Arbitration ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See Note 3 - Investment in Oil and Gas Properties - Arbitration Proceedings. As of June 30, 2013, the Company incurred $0 in acquisition and development costs for oil and gas projects in Albania.  

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

Other Property and Equipment:

Maintenance and repairs are charged to operations. Renewals and betterments are capitalized to the appropriate property and equipment accounts.

Upon retirement or disposition of assets other than oil and natural gas properties, the cost and related accumulated depreciation are removed from the accounts with the resulting gains or losses, if any, recognized in income. Depreciation of other property and equipment is computed using the straight-line method based on the estimated useful lives of the property and equipment.

Income Taxes

We follow the guidance issued within Topic No.740, Income Taxes, for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Undistributed earnings of the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company's wholly owned subsidiaries have prepared required foreign tax returns that were due for the years ended December 31, 2005 through 2012 totaling approximately $33,000 has been included for potential tax liabilities, penalties and interest which will be due upon filing the returns with the appropriate countries.

Stock-Based Compensation

The Company measures all share-based payments, including grants of employee stock options, using a fair-value based method in accordance with the FASB ASC Topic No. 505, Equity, and Topic No. 718 (formerly SFAS No. 123R), Share-Based Payments. The cost of services received in exchange for awards of equity instruments is recognized in the condensed consolidated statement of operations based on the grant date fair value of those awards amortized over the requisite service period.

Basic and Diluted Net Loss Per Share

Net loss per share is presented in accordance FASB ASC Topic No. 260, "Earnings Per Share". Basic net loss per share is computed based on the weighted average shares of common stock outstanding for the period. Common stock equivalents which represent stock options (approximately 2,100,000 stock options) and warrants (approximately 4,000,000 warrants), have been excluded from the computation of diluted net loss per share at as their effect is anti-dilutive. There were 4,000,000 remaining warrants that are outstanding as of June 30, 2013, 8,000,000 warrants expired on January 20, 2013.

Use of Estimates in the Preparation of Consolidated Financial Statements

Preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted

in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. None of these instruments are held for trading purposes.

FASB ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available (Level 1). If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters (Level 2). Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer's creditworthiness, among other things, as well as unobservable parameters (Level 3). Any such valuation adjustments are applied consistently over time.

Cash Equivalents and Restricted Cash

For purposes of the condensed consolidated statements of cash flows, the Company considers all demand deposits, money market accounts

and certificates of deposit purchased with an original maturity of three months or less to be cash equivalents.

On August 10, 2011, the Company delivered a bank guarantee in the form of a letter of credit under the terms of the PSC with

AKBN. In connection with the bank guarantee, Sky Petroleum deposited the principal balance of the $1,500,000 promissory note with Texas Citizens Bank N.A. to secure payment under the letter of credit. Subsequently, $1,500,000 was transferred to a certificate of deposit (“CD”) with the issuing bank. The issuing bank has the right of offset with the CD for any amounts used under the letter of credit. As of June 30, 2013 the Letter of Credit had matured and the proceeds were moved to unrestricted cash.

Revenue Recognition

Oil and natural gas revenues are recorded using the sales method, whereby the Company recognizes oil and natural gas revenue based on the amount of oil and natural gas sold to purchasers. As of June 30, 2013, the Company did not have any oil or natural gas imbalances recorded. The Company does not recognize revenues until they are realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller's price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured.

XML

Investment in Oil and Gas Properties (Mubarek Field Operations) (Details) (Mubarek Wells [Member], USD $)	0 Months Ended			6 Months Ended		0 Months Ended
	Dec. 31, 2009	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Participation Agreement [Member]	Dec. 28, 2009 Participation Agreement [Member] Sastaro [Member]	Jun. 30, 2008 Buttes [Member]	May 18, 2005 Buttes [Member]	Jun. 30, 2008 Buttes [Member] Recoupe Total Investment [Member]	May 18, 2005 Buttes [Member] Recoupe Total Investment [Member]	Jun. 30, 2008 Buttes [Member] Decrease in Production Revenue Due to Exceeding Original Cost Estimated [Member]	Jun. 30, 2008 Buttes [Member] After Total Investment Recouped [Member]	May 18, 2005 Buttes [Member] After Total Investment Recouped [Member]	Jun. 30, 2008 Buttes [Member] Two Times Inital Investment Recouped [Member]	May 18, 2005 Buttes [Member] Two Times Inital Investment Recouped [Member]
Productive Wells [Line Items]
Contribution in drilling and completion costs						$ 53,219,000	$ 25,000,000
Percentage of production revenue received								75.00%	75.00%	35.25%	18.84%	40.00%	4.33%	9.20%
Maximum operating costs per barrel				3.00
Royalty fees of gross production				14.50%
Drilling and completion costs					25,000,000
Impairment of oil and gas properties	0
Cost-method investments, aggregate carrying amount		$ 0	$ 0

XML

Investment in Oil and Gas Properties (Bank Guarantee and Arbitration Proceedings) (Details) (ALBANIA [Member], Production Sharing Breach of Contract [Member])	0 Months Ended
	May 07, 2013 USD ($)	May 07, 2013 EUR (€)	Jun. 24, 2010 First Exploration Period [Member] USD ($)
Productive Wells [Line Items]
Term of bank gurantee during exploration period			90 days
Expenditure commitments			$ 1,500,000
Litigation settlement, expense	$ 501,511	€ 382,774

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 14, 2013
Document - Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	SKPI
Entity Registrant Name	SKY PETROLEUM, INC.
Entity Central Index Key	0001183276
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		68,118,709

XML

Investment in Oil and Gas Properties (Consulting Agreement) (Details) (USD $)			0 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 24, 2010 ALBANIA [Member]	Jun. 30, 2013 ALBANIA [Member]	May 07, 2013 ALBANIA [Member]	Apr. 05, 2011 ALBANIA [Member]	Dec. 31, 2010 ALBANIA [Member]	Jun. 30, 2013 Series B Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member]	Dec. 31, 2011 Series B Preferred Stock [Member]	Dec. 31, 2010 Series B Preferred Stock [Member]	Jun. 30, 2013 Orsett [Member]	Dec. 31, 2011 Orsett [Member]	Dec. 31, 2010 Orsett [Member] Amendment Term One [Member]	Dec. 31, 2010 Orsett [Member] Amendment Term Two [Member]
Productive Wells [Line Items]
Payments related to investment												$ 365,220		$ 700,000	$ 150,000
Shares payment														1,500,000	1,500,000
Preferred stock, shares issued								3,863,636	3,863,636		3,863,636
Common stock, shares issued	68,118,709	68,118,709											3,000,000
Common stock, value issued	68,119	68,119											1,170,000
Preferred stock								7,820,000	7,820,000	7,820,000
Costs												9,840,000
Investment in oil and gas properties, net	0	10,205,220		0	0
Signig bonus paid for exploration and development of oil and gas properties			50,000				50,000
Amount paid toward allocation for training and education						50,000
Amount allocated for training and education			$ 100,000