Hi All, 

As expected the Kansas results are not fully reflected in the financials, because we only picked up the interests at the Beginning of September and the Pipeline to the best of my knowledge is still shut-in, but we should expect addtional revenues heading into Q4 and into the New Year.

Nothing too interesting in one way or another, except a few things that I found interesting.

Lets start with Negatives:

Our expenses doubled from $500k to $1 million for numerous differnt reasons of which some are:

Our investor relations increased $94k stating that we are using professional investor groups to help promote the companies efforts. I find that laughable and actually ridiculous. I know $60k of the $100k or so spent is going to the IR firm in Europe and they have done $%#& all. I don't know how many investors we have in Europe, but why not promote the story here in North America first. That $60k would do a lot more here then over there IMO.

We only have $345k in Cash and a lot of the PP at .40 went to paying down our credit line ($2 million of it) and to me it sounds like there might be a financing near term?? At these prices would be ridiculous and I would be the first one to the exits.

"The Company used part of the financing to pay off $2,221,282 USD drawn from the line of credit with Sovereign Bank. The remainder of the private placement has been used to fund additional prospect agreements, acquisitions, the 2007 drilling program, and other company activities. The Company may close on a second tranche of the private placement if the Company requires additional financing for acquisitions and other new projects. Further, the Company may be required to raise additional funds by way of another equity financing or debt financing."

Our Burn Rate is $130k/month and our average monthly cash flow (OUTFLOW) is $692, so we are losing a small amount each month.



SOME POSITIVES:

We re-negotiated out borrowing base on our credit line from $2.7 million to $4 million, which is indicative of future acquisitions. The new agreements is also extended to be re-paid at Sept 09 (making it a long term debt now)

Our Revenues increased $200k from the previous Q3 2006 (but we are still losing money)

"Drilling of the Jackson-Williams #3 well commenced on September 1, 2007. The operator reached a total depth of 13,856 feet on October 23, 2007 and subsequently evaluated the well using electric logs, which indicated multiple productive gas sands between 11,000 and 13,600 feet in the overpressured Wilcox section. During the drilling process the well encountered reservoir pressures in excess of 10,000 psi. The operator is currently in the final phase of completing the well, with first production in the fourth quarter of 2007.

We don't own much of this well, but that pressure is impressive to me and 2,600 feet of mutiple producitve gas sands. IMO this could be a good producer even at less then 1%. Future Development would be a great opportunity as this was a Exploration well.



All in all, this wasn't the best Q3 financials and a little under my expectations, but I guess when you factor in a burn rate of $130k and no real production from Kansas reflected in the financials yet, it should have been expected to be the same.

Moving forward I see us cashflow positive near term and a positive EPS.

Cheers,

cvac01