Cano Petroleum 8-K Regulation FD Disclosure

Exhibit 99.4

		Monthly Operating Report
CASE NAME: Square One Energy, Inc.		ACCRUAL BASIS
CASE NUMBER: 12-31552-bjh-11
JUDGE:	Barbara J. Houser

UNITED STATES BANKRUPTCY COURT

NORTHERN AND EASTERN

DISTRICT OF

TEXAS

DIVISION 6

MONTHLY OPERATING REPORT

MONTH ENDING: June 30th, 2012

IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED STATES CODE, I DECLARE UNDER PENALTY OF PERJURY THAT I HAVE EXAMINED THE FOLLOWING MONTHLY OPERATING REPORT (ACCRUAL BASIS-1 THROUGH ACCRUAL BASIS-7) AND THE ACCOMPANYING ATTACHMENTS AND, TO THE BEST OF MY KNOWLEDGE, THESE DOCUMENTS ARE TRUE, CORRECT AND COMPLETE. DECLARATION OF THE PREPARER (OTHER THAN RESPONSIBLE PARTY): IS BASED ON ALL INFORMATION OF WHICH

PREPARER HAS ANY KNOWLEDGE.

RESPONSIBLE PARTY:
/s/ John H. Homier	CFO
ORIGINAL SIGNATURE OF RESPONSIBLE PARTY	TITLE
John H. Homier	7/20/2012
PRINTED NAME OF RESPONSIBLE PARTY	DATE
PREPARER:
/s/ John H. Homier	Controller
ORIGINAL SIGNATURE OF PREPARER	TITLE
Adrian Lamberti	7/20/2012
PRINTED NAME OF PREPARER	DATE

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-1
CASE NUMBER: 12-31552-bjh-11
COMPARATIVE BALANCE SHEET

		SCHEDULE			MONTH			MONTH		MONTH
		AMOUNT			June 2012			July 2012		August 2012
ASSETS
1.	UNRESTRICTED CASH				$	(39,191	)
2.	RESTRICTED CASH
3.	TOTAL CASH	$	0		$	(39,191	)	$	0	$	0
4.	ACCOUNTS RECEIVABLE (NET)	$	49,000		$	32,000
5.	INVENTORY (3)	$	50,100		$	16,856
6.	NOTES RECEIVABLE
7.	PREPAID EXPENSES				$	39,332
8.	OTHER (1) MOR-1C	$	520,000		$	270,000
9.	TOTAL CURRENT ASSETS	$	619,100		$	318,997		$	0	$	0
10.	PROPERTY, PLANT & EQUIPMENT	$	105,733		$	42,479,802
11.	LESS: ACCUMULATED DEPRECIATION / DEPLETION				$	42,606,081
12.	NET PROPERTY, PLANT & EQUIPMENT	$	105,733		$	(126,279	)	$	0	$	0
13.	DUE FROM INSIDERS
14.	OTHER ASSETS - NET OF AMORTIZATION (ATTACH LIST)
15.	OTHER (ATTACH LIST)
16.	TOTAL ASSETS	$	724,833		$	192,718		$	0	$	0
POSTPETITION LIABILITIES
17.	ACCOUNTS PAYABLE				$	38,070
18.	TAXES PAYABLE (3)				$	8,463
19.	NOTES PAYABLE
20.	PROFESSIONAL FEES
21.	SECURED DEBT
22.	OTHER MOR-1D				$	17,165
23.	TOTAL POSTPETITION LIABILITIES				$	63,698		$	0	$	0
PREPETITION LIABILITIES
24.	SECURED DEBT (2)	$	80,995,000
25.	PRIORITY DEBT (4)	$	43,188		$	40,068
26.	UNSECURED DEBT	$	145,835		$	145,838
27.	OTHER (MOR-1 A and MOR-1 B)				$	45,033,338
28.	TOTAL PREPETITION LIABILITIES	$	81,184,022		$	45,219,244		$	0	$	0
29.	TOTAL LIABILITIES	$	81,184,022		$	45,282,942		$	0	$	0
EQUITY
30.	PREPETITION OWNERS’ EQUITY				$	(44,895,341	)
31.	POSTPETITION CUMULATIVE PROFIT OR (LOSS)				$	(194,884	)
32.	DIRECT CHARGES TO EQUITY (ATTACH EXPLANATION)
33.	TOTAL EQUITY	$	(80,459,189	)	$	(45,090,225	)	$	0	$	0
34.	TOTAL LIABILITIES & OWNERS’ EQUITY	$	724,833		$	192,718		$	0	$	0

(1) Includes consolidated retainer of $250,000 for Cano Petroleum, Inc. and its related debtor entities

(2) For balance sheet purposes, the secured debt for Cano Petroleum, Inc. and its subsidiaries is carried in total by Cano Petroleum, Inc.

(3) Estimated

(4) Severance taxes of $2,187.86 were paid in April 2012 for December 2011 and January 2012 severance taxes and $931.69 paid in May 2012 for February 2012 severance taxes.

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-2
CASE NUMBER: 12-31552-bjh-11
INCOME STATEMENT

		MONTH			MONTH		MONTH		MONTH
		June 2012			July 2012		August 2012
REVENUES
1.	GROSS REVENUES (1)	$	25,600
2.	LESS: RETURNS & DISCOUNTS
3.	NET REVENUE	$	25,600		$	0	$	0	$	0
COST OF GOODS SOLD
4.	MATERIAL
5.	DIRECT LABOR (LOE)	$	50,053
6.	DIRECT OVERHEAD
7.	TOTAL COST OF GOODS SOLD	$	50,053		$	0	$	0	$	0
8.	GROSS PROFIT	$	(24,453	)	$	0	$	0	$	0
OPERATING EXPENSES
9.	OFFICER / INSIDER COMPENSATION
10.	SELLING & MARKETING
11.	GENERAL & ADMINISTRATIVE	$	682
12.	RENT & LEASE
13.	OTHER (3) (MOR-2a)	$	600
14.	TOTAL OPERATING EXPENSES	$	1,282		$	0	$	0	$	0
15.	INCOME BEFORE NON-OPERATING INCOME & EXPENSE	$	(25,734	)	$	0	$	0	$	0
OTHER INCOME & EXPENSES
16.	NON-OPERATING INCOME (ATT. LIST)
17.	NON-OPERATING EXPENSE (ATT. LIST)
18.	INTEREST EXPENSE	$	639
19.	DEPRECIATION / DEPLETION	$	30,428
20.	AMORTIZATION
21.	OTHER (2) (MOR-2b)	$	1,701
22.	NET OTHER INCOME & EXPENSES	$	32,768		$	0	$	0	$	0
REORGANIZATION EXPENSES
23.	PROFESSIONAL FEES
24.	U.S. TRUSTEE FEES	$	1,625
25.	OTHER (ATTACH LIST)
26.	TOTAL REORGANIZATION EXPENSES	$	1,625		$	0	$	0	$	0
27.	INCOME TAX
28.	NET PROFIT (LOSS)	$	(60,127	)	$	0	$	0	$	0

(1) Net of royalties, estimated and/or paid.

(2) Estimated Property Taxes.

(3) Estimated SeveranceTaxes.

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-3
CASE NUMBER: 12-31552-bjh-11

		MONTH			MONTH		MONTH		QUARTER
		June 2012			July 2012		August 2012		TOTAL
CASH RECEIPTS AND DISBURSEMENTS
1.	CASH - BEGINNING OF MONTH	$	(1,425	)					$	(1,425	)
RECEIPTS FROM OPERATIONS
2.	CASH SALES
COLLECTION OF ACCOUNTS RECEIVABLE
3.	PREPETITION								$	0
4.	POSTPETITION	$	14,938						$	14,938
5.	TOTAL OPERATING RECEIPTS	$	14,938		$	0	$	0	$	14,938
NON-OPERATING RECEIPTS
6.	LOANS & ADVANCES (ATTACH LIST)								$	0
7.	SALE OF ASSETS								$	0
8.	OTHER (ATTACH LIST)								$	0
9.	TOTAL NON-OPERATING RECEIPTS	$	0		$	0	$	0	$	0
10.	TOTAL RECEIPTS	$	14,938		$	0	$	0	$	14,938
11.	TOTAL CASH AVAILABLE	$	13,513		$	0	$	0	$	13,513
OPERATING DISBURSEMENTS
12.	NET PAYROLL	$	7,581						$	7,581
13.	PAYROLL TAXES PAID	$	471						$	471
14.	SALES, USE & OTHER TAXES PAID								$	0
15.	SECURED / RENTAL / LEASES								$	0
16.	UTILITIES (2)	$	5,400						$	5,400
17.	INSURANCE								$	0
18.	INVENTORY PURCHASES								$	0
19.	VEHICLE EXPENSES								$	0
20.	TRAVEL								$	0
21.	ENTERTAINMENT								$	0
22.	REPAIRS & MAINTENANCE								$	0
23.	SUPPLIES								$	0
24.	ADVERTISING								$	0
25.	OTHER (3) (ATTACH LIST)MOR-3a	$	39,253						$	39,253
26.	TOTAL OPERATING DISBURSEMENTS	$	52,705		$	0	$	0	$	52,705
REORGANIZATION EXPENSES
27.	PROFESSIONAL FEES								$	0
28.	U.S. TRUSTEE FEES								$	0
29.	OTHER (ATTACH LIST)								$	0
30.	TOTAL REORGANIZATION EXPENSES	$	0		$	0	$	0	$	0
31.	TOTAL DISBURSEMENTS	$	52,705		$	0	$	0	$	52,705
32.	NET CASH FLOW	$	(37,766	)	$	0	$	0	$	(37,766	)
33.	CASH - END OF MONTH (1)	$	(39,191	)	$	0	$	0	$	(39,191	)

(1) Exclusive of cash sweep from zero balance accounts to concentration account at Cano Petroleum, Inc.

(2) April 2012 on earlier schedule Includes Utility Deposits paid of $14,422

(3) Including royalties, estimated and/ or paid.

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-4
CASE NUMBER: 12-31552-bjh-11

		SCHEDULE		MONTH		MONTH		MONTH
ACCOUNTS RECEIVABLE AGING		AMOUNT		June 2012		July 2012		August 2012
1.	0-30	$	49,000	$	32,000
2.	31-60
3.	61-90
4.	91+
5.	TOTAL ACCOUNTS RECEIVABLE	$	49,000	$	32,000	$	0	$	0
6.	AMOUNT CONSIDERED UNCOLLECTIBLE
7.	ACCOUNTS RECEIVABLE (NET)	$	49,000	$	32,000	$	0	$	0

AGING OF POSTPETITION TAXES AND PAYABLES (1) MONTH: June 2012

		0-30		31-60		61-90		91+
TAXES PAYABLE		DAYS		DAYS		DAYS		DAYS		TOTAL
1.	FEDERAL
2.	STATE
3.	LOCAL
4.	OTHER (ATTACH LIST) MOR-4a	$	600	$	400	$	1,000			$	2,000
5.	TOTAL TAXES PAYABLE	$	600	$	400	$	1,000	$	0	$	2,000
6.	ACCOUNTS PAYABLE	$	38,070							$	38,070

STATUS OF POSTPETITION TAXES (1) MONTH: June 2012

		BEGINNING		AMOUNT				ENDING
		TAX		WITHHELD AND/		AMOUNT		TAX
		LIABILITY*		0R ACCRUED		PAID		LIABILITY
FEDERAL
1.	WITHHOLDING**
2.	FICA-EMPLOYEE**
3.	FICA-EMPLOYER**
4.	UNEMPLOYMENT
5.	INCOME
6.	OTHER (ATTACH LIST)
7.	TOTAL FEDERAL TAXES	$	0	$	0	$	0	$	0
STATE AND LOCAL
8.	WITHHOLDING
9.	SALES
10.	EXCISE
11.	UNEMPLOYMENT
12.	REAL PROPERTY	$	4,762	$	1,701			$	6,463
13.	PERSONAL PROPERTY
14.	OTHER (ATTACH LIST) MOR-4a	$	1,400	$	600			$	2,000
15.	TOTAL STATE & LOCAL	$	6,162	$	2,301	$	0	$	8,463
16.	TOTAL TAXES	$	6,162	$	2,301	$	0	$	8,463

*The beginning tax liability should represent the liability from the prior month or, if this is the first operating report, the amount should be zero.

**Attach photocopies of IRS Form 6123 or your FTD coupon and payment receipt to verify payment or deposit.

(1)Only taxes paid directly by Cano Petroleum, Inc. and its subsidiaries; taxes paid on their behalf by others (e.g. first purchasers and PEO — Resourcing Edge) are not shown

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-5
CASE NUMBER: 12-31552-bjh-11

The debtor in possession must complete the reconciliation below for each bank account, including all general, payroll and tax accounts, as well as all savings and investment accounts, money market accounts, certificates of deposit, government obligations, etc. Accounts with restricted funds should be identified by placing an asterisk next to the

account number.  Attach additional sheets if necessary.

MONTH: June 2012

BANK RECONCILIATIONS

		Account #1			Account #2		Account #3
A. BANK:		Bank of Texas N.A
B. ACCOUNT NUMBER:		31013023
C. PURPOSE (TYPE):		Checking							TOTAL
1.	BALANCE PER BANK STATEMENT	$	0						$	0
2.	ADD: TOTAL DEPOSITS NOT CREDITED								$	0
3.	SUBTRACT: OUTSTANDING CHECKS	$	10,264						$	10,264
4.	OTHER RECONCILING ITEMS								$	0
5.	MONTH END BALANCE PER BOOKS (1)	$	(10,264	)	$	0	$	0	$	(10,264	)
6.	NUMBER OF LAST CHECK WRITTEN	1004000842

INVESTMENT ACCOUNTS

		DATE OF	TYPE OF	PURCHASE		CURRENT
BANK, ACCOUNT NAME & NUMBER		PURCHASE	INSTRUMENT	PRICE		VALUE
7.
8.
9.
10.
11.	TOTAL INVESTMENTS			$	0	$	0

CASH

12.	CURRENCY ON HAND	$	0
13.	TOTAL CASH — END OF MONTH	$	(10,264	)

(1) Includes effect of cash sweeps from zero balance accounts to concentration account at Cano Petroleum, Inc.

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-6
CASE NUMBER: 12-31552-bjh-11

MONTH: June 2012

PAYMENTS TO INSIDERS AND PROFESSIONALS

OF THE TOTAL DISBURSEMENTS SHOWN FOR THE MONTH, LIST THE AMOUNT PAID TO INSIDERS (AS DEFINED IN SECTION 101 (31) (A)-(F) OF THE U.S. BANKRUPTCY CODE) AND TO PROFESSIONALS. ALSO, FOR PAYMENTS TO INSIDERS, IDENTIFY THE TYPE OF COMPENSATION PAID (e.g. SALARY, BONUS, COMMISSIONS, INSURANCE, HOUSING ALLOWANCE, TRAVEL, CAR ALLOWANCE, ETC.). ATTACH ADDITIONAL SHEETS IF NECESSARY.

INSIDERS

		TYPE OF	AMOUNT		TOTAL PAID
NAME		PAYMENT	PAID		TO DATE
1.
2.
3.
4.
5.
6.	TOTAL PAYMENTS TO INSIDERS		$	0	$	0

PROFESSIONALS

		DATE OF COURT				TOTAL
		ORDER AUTHORIZING	AMOUNT	AMOUNT	TOTAL PAID	INCURRED
NAME		PAYMENT	APPROVED	PAID	TO DATE	& UNPAID *
1.
2.
3.
4.
5.
6.	TOTAL PAYMENTS TO PROFESSIONALS		$0	$0	$0	$0

* INCLUDE ALL FEES INCURRED, BOTH APPROVED AND UNAPPROVED

POSTPETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE PROTECTION PAYMENTS

		SCHEDULED		AMOUNTS
		MONTHLY		PAID		TOTAL
		PAYMENTS		DURING		UNPAID
NAME OF CREDITOR		DUE		MONTH		POSTPETITION
1.
2.
3.
4.
5.
6.	TOTAL	$	0	$	0	$	0

	Monthly Operating Report
CASE NAME: Square One Energy, Inc.	ACCRUAL BASIS-7
CASE NUMBER: 12-31552-bjh-11

MONTH: June 2012

QUESTIONNAIRE

		YES	NO
1.	HAVE ANY ASSETS BEEN SOLD OR TRANSFERRED OUTSIDE THE NORMAL COURSE OF BUSINESS THIS REPORTING PERIOD?		X
2.	HAVE ANY FUNDS BEEN DISBURSED FROM ANY ACCOUNT OTHER THAN A DEBTOR IN POSSESSION ACCOUNT?		X
3.	ARE ANY POSTPETITION RECEIVABLES (ACCOUNTS, NOTES, OR LOANS) DUE FROM RELATED PARTIES?		X
4.	HAVE ANY PAYMENTS BEEN MADE ON PREPETITION LIABILITIES THIS REPORTING PERIOD?		X
5.	HAVE ANY POSTPETITION LOANS BEEN RECEIVED BY THE DEBTOR FROM ANY PARTY?		X
6.	ARE ANY POSTPETITION PAYROLL TAXES PAST DUE?		X
7.	ARE ANY POSTPETITION STATE OR FEDERAL INCOME TAXES PAST DUE?		X
8.	ARE ANY POSTPETITION REAL ESTATE TAXES PAST DUE?		X
9.	ARE ANY OTHER POSTPETITION TAXES PAST DUE?		X
10.	ARE ANY AMOUNTS OWED TO POSTPETITION CREDITORS DELINQUENT?		X
11.	HAVE ANY PREPETITION TAXES BEEN PAID DURING THE REPORTING PERIOD?		X
12.	ARE ANY WAGE PAYMENTS PAST DUE?		X

IF THE ANSWER TO ANY OF THE ABOVE QUESTIONS IS “YES,” PROVIDE A DETAILED EXPLANATION OF EACH ITEM. ATTACH ADDITIONAL SHEETS IF NECESSARY.

INSURANCE

		YES	NO
1.	ARE WORKER’S COMPENSATION, GENERAL LIABILITY AND OTHER NECESSARY INSURANCE COVERAGES IN EFFECT?	X
2.	ARE ALL PREMIUM PAYMENTS PAID CURRENT?	X
3.	PLEASE ITEMIZE POLICIES BELOW.

IF THE ANSWER TO ANY OF THE ABOVE QUESTIONS IS “NO,” OR IF ANY POLICIES HAVE BEEN CANCELLED OR NOT RENEWED DURING THIS REPORTING PERIOD, PROVIDE AN EXPLANATION BELOW. ATTACH ADDITIONAL SHEETS IF NECESSARY.

INSTALLMENT PAYMENTS

TYPE OF			PAYMENT AMOUNT
POLICY	CARRIER	PERIOD COVERED	& FREQUENCY
General Liability Insurance	ACE American Insurance	8/16/2011 to 8/16/2012	Fully paid at time of
Business Auto	ACE American Insurance	8/16/2011 to 8/16/2012	preparation
Umbrella	ACE Property & Casualty	8/16/2011 to 8/16/2012
Umbrella Extension	Gotham Insurance Company	8/16/2011 to 8/16/2012
Marine Insurance	AGCS Marine Insurance Co.	8/16/2011 to 8/16/2012
COW	Lloyds of London	8/16/2011 to 8/16/2012

MOR-1A

PREPETITION INTERCOMPANY
1160000000 Intercompany Receivable/Payable Account	$	(41,869,457	)
1160001001 Intercompany Receivable/Payable CC 1001	$	(1,750,599	)
1160001003 Intercompany Receivable/Payable CC 1003	$	(898	)
1160001005 Intercompany Receivable/Payable CC 1005	$	17,152
1160001010 Intercompany Receivable/Payable CC 1010	$	505
Total	$	(43,603,297	)

MOR-1B

PREPETITION
3800000000 Asset Retirement Obligation Short Term	$	(9,808	)
4800000000 Asset Retirement Obligation Long Term	$	(1,420,233	)
Total	$	(1,430,041	)

MOR-1C

Railroad Commission of Texas Blanket Bond	250,000
License and Performance Bond	20,000
Total	270,000

MOR-1D

June Adjustments to Inter Company	$	17,165
Net Total	$	17,165

MOR-2a

June Severance Taxes	600
Total	600

MOR-2b

June Property Taxes	1,701
Total	1,701

MOR-3a

Line 25 - Other Expenses

June 2012

LOE Payments General	20,149
Adjustments for 03/8/12 to 05/31/12 LOE	16,827
Royalty Checks - May 2012 Sales	2,277
Lease Operating Expense LOE	39,253

MOR 4a

April Estimated Severance taxes	1,000
May Estimated Severance taxes	400
June Estimated Severance taxes	600
July Estimated Severance taxes	0
Total Taxes Due	2,000