Tekoil & Gas 10QSB 2007 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended September 30, 2007

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

For the transition period from __________________________________to__________________________________

Commission File Number: 0-52100

TEKOIL & GAS CORPORATION

(Exact name of small business issuer as specified in its charter)

DELAWARE	34-2035350
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

25025 I-45 NORTH, STE 525, THE WOODLANDS, TEXAS	77380
(Address of principal executive offices)	(Zip Code)

(281) 364-6950

(Issuer's telephone number)

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

At November 1, 2007, there were 46,713,177 shares of Common Stock, $0.000001 par value, outstanding.

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

TEKOIL & GAS CORPORATION

TABLE OF CONTENTS

			Page
PART I		FINANCIAL INFORMATION

	Item 1.	Financial Statements.	1

		Consolidated Balance Sheets as of September 30, 2007 (Unaudited) and December 31, 2006	2

		Consolidated Statements of Operations for the Nine and Three Months Ended September 30, 2007 and 2006 (Unaudited)	3

		Consolidated Statements of Stockholders' Equity for the period January 1, 2006 through September 30, 2007 (Unaudited)	4

		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006 (Unaudited)	5-6

		Notes to Unaudited Consolidated Financial Statements	7-20

	Item 2.	Management's Discussion and Analysis or Plan of Operation.	21-29

	Item 3.	Controls and Procedures.	29

PART II		OTHER INFORMATION

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	30

	Item 5.	Other Information.	32

	Item 6.	Exhibits.	32-38

		Signatures	39

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-KSB for the year ended December 31, 2006.

The results of operations for the nine and three months ended September 30, 2007 and 2006 are not necessarily indicative of the results for the entire fiscal year or for any other period.

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TEKOIL & GAS CORPORATION
CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2007			2006
	(Unaudited)
ASSETS
Current Assets:
Cash	$	1,120,436		$	294,021
Marketable securities - restricted		6,448,659			-
Accounts receivable		1,761,844			-
Prepaid expenses		638,712			53,475
Total Current Assets		9,969,651			347,496

Property, plant and equipment - net		56,347,483			458,871
Other assets		-			1,004,394

TOTAL ASSETS	$	66,317,134		$	1,810,761

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable	$	6,575,070		$	-
Accrued expenses		836,775			362,147
Notes payable - related parties		635,000			50,000
Current portion of long-term debt		5,139			4,261
Total Current Liabilities		8,051,984			416,408

Long-term Liabilities:
Royalties payable		1,592,965			-
Long-term debt - less current portion above		27,756,338			255,032
Plugging and abandonment obligations		6,370,000			-
Total Long-term Liabilities		35,719,303			255,032

TOTAL LIABILITIES		43,771,287			671,440

Minority interest in consolidated subsidiary		7,030,565			-

Commitments and Contingencies

Stockholders' Equity:

Preferred stock, $.00000001
par value, authorized
20,000,000 shares

Series A Convertible Preferred Stock
-0- and 2,985,000 shares outstanding
at September 30, 2007 and December 31,
2006, respectively		-			-

Common stock, par value .000001
authorized 200,000,000 shares; 46,543,175 and
21,624,175 shares issued and outstanding at
September 30, 2007 and December 31, 2006, respectively		47			22

Additional paid-in capital		30,882,264			6,758,637

Accumulated other comprehensive income (loss)		47,369			(772	)

Deficit		(15,414,398	)		(5,618,566	)

Total Stockholders' Equity		15,515,282			1,139,321

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	66,317,134		$	1,810,761

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Nine Months Ended						Three Months Ended
	September 30,						September 30,
	2007			2006			2007			2006

Revenues

Oil sales	$	3,022,058		$	-		$	1,703,148		$	-
Gas sales		1,369,496			-			762,283			-
Transportation income		588,784			-			359,220			-

Total revenues		4,980,338			-			2,824,651			-
Less: Production taxes		154,168			-			31,180			-

Net revenues		4,826,170			-			2,793,471			-

Cost and expenses:
Leasehold operating expenses
(including workover costs)		3,700,159			-			2,394,149			-
Selling, general and administrative expenses		3,476,929			1,430,512			1,924,944			385,113
Depreciation, depletion and amortization		405,817			-			18,243			-
Compensatory element of common
stock issuance		5,158,900			82,500			5,158,900			82,500
		12,741,805			1,513,012			9,496,236			467,613

Loss from operations		(7,915,635	)		(1,513,012	)		(6,702,765	)		(467,613	)

Other income (expense)
Other income		3,535			-			2			-
Interest income		78,659						78,659
Interest expense		(2,741,075	)		(2,931	)		(1,846,751	)		(1,025	)
		(2,658,881	)		(2,931	)		(1,768,090	)		(1,025	)

Loss before minority interest		(10,574,516	)		(1,515,943	)		(8,470,855	)		(468,638	)

Minority interest share of (loss) of
consolidated subsidiary		778,684			-			557,969			-

Loss before provision for income taxes		(9,795,832	)		(1,515,943	)		(7,912,886	)		(468,638	)

Provision for income taxes		-			-			-			-

Net loss	$	(9,795,832	)	$	(1,515,943	)	$	(7,912,886	)	$	(468,638	)

Loss per common share - basic and diluted	$	(0.24	)	$	(0.09	)	$	(0.07	)	$	(0.02	)

Weighted average number of common shares
outstanding - basic and diluted		41,469,996			17,601,164			45,608,109			17,622,784

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

																Additional			Accumulated
																Paid			Other
				Comprehensive			Common Stock				Series A Preferred Stock					in			Comprehensive
	Total			(Loss)			No of shares		Amount		No of shares			Amount		Capital			Income (Loss)			Deficit

Balance, January 1, 2006	$	111,415						17,472,005	$	17		667,000		$	-	$	2,763,438		$	-		$	(2,652,040	)

Sale of common stock		1,050,000						2,205,000		3							1,049,997			-

Sale of preferred stock		2,268,000						-		-		2,268,000			-		2,268,000			-			-

Issuance of preferred stock for services (valued at $1.00 per share)		50,000						-		-		50,000			-		50,000			-			-

Issuance of common stock for services (valued at $0.33 per share)		627,204						1,947,170		2		-			-		627,202			-			-

Net loss		(2,966,526	)	$	(2,966,526	)		-		-		-			-		-			-			(2,966,526	)

Currency translation adjustment - net of taxes		(772	)		(772	)		-		-		-			-		-			(772	)		-
Comprehensive (loss)				$	(2,967,298	)


Balance, December 31, 2006		1,139,321						21,624,175		22		2,985,000			-		6,758,637			(772	)		(5,618,566	)

Sale of preferred stock		1,047,000						-		-		1,047,000			-		1,047,000			-			-

Issuance of 9,000,000 shares of common stock for acquisition		15,900,000						9,000,000		9							15,899,991

Issuance of 900,000 warrants (valued at $0.44 per share)		400,000															400,000

Conversion of preferred stock into common stock		2						12,096,000		12		(4,032,000	)		-		(10	)		-			-

Sale of common stock		1,617,750						2,157,000		2		-			-		1,617,748			-			-

Issuance of 7,000,000 stock options (valued at $0.064 per share)		4,492,500															4,492,500

Issuance of common stock for services (valued at $0.40 per share)		666,400						1,666,000		2							666,398

Net loss		(9,795,832	)	$	(9,795,832	)		-		-		-			-		-			-			(9,795,832	)

Currency translation adjustment - net of taxes		48,141			48,141			-		-		-			-		-			48,141			-
Comprehensive income				$	(9,747,691	)

Balance, September 30, 2007	$	15,515,282					$	46,543,175	$	47	$	-		$	-	$	30,882,264		$	47,369		$	(15,414,398	)

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30,
	2007			2006
Cash flows from operating activities:
Net loss	$	(9,795,832	)	$	(1,515,943	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization		409,963			13,292
Non cash fair value of stock		5,158,900			156,134
Minority interest loss		(781,881	)		-
Stock based compensation		-			-
Accretion on long term debt		826,282			-
Changes in operating assets and liabilities		5,628,351			123,328
Net Cash Used in Operating Activities		1,445,783			(1,223,189	)

Cash flows from investing activities:
Purchase of property, plant and
equipment		(193,303	)		(475,308	)
Payment on acquisition		(32,594,212	)		-
Purchase of oil and gas properties		(1,241,060	)		-
Net Cash Flows Used in Investing
Activities:		(34,028,575	)		(475,308	)

Cash flows from financing activities:
Proceeds from issuance of common
stock		1,617,750			-
Proceeds from borrowings		36,752,200			264,374
Proceeds from issuance of preferred
stock		1,047,000			1,265,000
Repayment of debt		(3,606	)		-
Payment for marketable securities - restricted		(6,370,000	)		-
Proceeds from borrowings - related parties		585,000			-
Repayment of royalties		(307,035	)		-
Net Cash Flows Provided by Financing Activities		33,321,309			1,529,374

Effect of exchange rate changes on cash		87,898			2,029

Net increase in cash		826,415			(167,094	)

Cash - beginning of period		294,021			167,524

Cash - end of period	$	1,120,436		$	430

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30,
	2007			2006

Supplementary information:
Cash paid during the year for:
Interest	$	2,623,218		$	-
Income taxes	$	-		$	-

Non-cash financings activities:
Issuance of preferred stock for services	$	-		$	50,000
Issuance of common stock for services	$	666,400		$	106,134

Changes in operating assets and liabilities consists of the following:
Increase in accounts receivable	$	(1,761,844	)	$	-
Increase in interest receivable		(78,659	)		-
Increase in prepaid expenses		(585,237	)		-
Decrease in other assets		1,004,393			5,506
Increase in accrued expenses and accounts payable		7,049,698			117,386

	$	5,628,351		$	122,892

Details of acquisition:
Fair value of net assets received	$	48,494,212
Less:
Issuance of common stock		(15,900,000	)
Cash paid for acquisition	$	32,594,212

See notes to unaudited consolidated financial statements.

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TEKOIL & GAS CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated balance sheet as of September 30, 2007, and the consolidated statements of operations, stockholders' equity and cash flows for the periods presented herein have been prepared by Tekoil & Gas Corporation (the "Company or "Tekoil") and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows for all periods presented have been made. The information for the consolidated balance sheet as of December 31, 2006 was derived from audited financial statements.

Organization

Tekoil & Gas Corporation (the "Company" or "Tekoil") was incorporated in Delaware. The Company is focused on the acquisition, stimulation, rehabilitation and asset improvement of small to medium sized manageable oil and gas fields throughout North America.

The Company currently operates its business directly, and not through its Tekoil & Gas Corporation Florida subsidiary (“Tekoil-FL”), which continues to exist but has no assets or operations. For the purpose of pursuing its business strategy in the Province of Newfoundland, Canada, on March 29, 2006, the Company formed Tekoil Rig Development Corporation, a wholly-owned Newfoundland Corporation, and on April 19, 2006, the Company qualified to do business in Newfoundland. In May 2007, the Company completed the acquisition of four oil and gas properties in Galveston Bay, Texas, through its majority-owned subsidiary, Tekoil and Gas Gulf Coast, LLC.

As of May 11, 2007, the Company is no longer considered an exploration stage enterprise, as defined in Financial Accounting Standards Board ("FASB") Statement No. 19, "Financial Accounting and Reporting by Oil and Gas Producing Companies." The Company commenced operations in Galveston Bay, Texas, and purchased proven reserves of oil and gas.

Basis of Presentation

On May 25, 2005, Pexcon, Inc. ("Pexcon") entered into a share exchange agreement with the shareholders of Tekoil-FL. In connection with the share exchange, Pexcon acquired the assets and assumed the liabilities of Tekoil-FL. For accounting purposes, the share exchange agreement has been treated as a recapitalization of Tekoil-FL as the acquirer. The financial statements prior to June 27, 2005 are those of Tekoil-FL and reflect the assets and liabilities of Tekoil-FL at historical carrying amounts.

As provided for in the share exchange agreement, the stockholders of Tekoil-FL received 6,949,800 of Pexcon common stock, representing 90% of the outstanding stock after the acquisition, in exchange for the outstanding shares of Tekoil-FL common stock they held, which was accounted for as a recapitalization. Immediately following the share acquisition exchange, Pexcon had a total of 7,722,000 common shares issued and outstanding. The financial statements show a retroactive restatement of Tekoil-FL’s historical stockholders’ equity to reflect the equivalent number of shares of common stock issued in the acquisition.

- 7 -

In addition, the resignation of the former officers and directors of Pexcon took effect upon the close of the share exchange. The Tekoil-FL Board of Directors became the Board of Directors of Pexcon, and Mark Western became President and Chief Executive Officer.

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All inter-company transactions and balances have been eliminated. For those consolidated subsidiaries in which the Company's ownership is less than 100 percent (100%), the outside stockholders' interests are shown as minority interests. The minority ownership of the Company’s earnings or loss is classified as “Minority interest in earnings or loss of consolidated subsidiaries” in the consolidated statement of operations.

Use of Estimates

The preparation of the 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency for foreign operations is the local currency. Assets and liabilities of foreign operations are translated at exchange rates as of the balance sheet date, and income, expense and cash flow items are translated at the average exchange rate for the applicable period. Translation adjustments are recorded in Cumulative Other Comprehensive Income (Loss).

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable, accounts payable and accrued expenses.

The Company's cash and cash equivalents are concentrated primarily in one bank in the United States. At times, such deposits could be in excess of insured limits. Management believes that the financial institution that holds the Company financial instrument is financially sound and, accordingly, minimal credit risk is believed to exist with respect to these financial instruments.

The Company grants credit to customers based on an evaluation of the customer’s financial condition, without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company controls its exposure to credit risk through credit approvals and monitoring procedures.

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Revenue Recognition

The Company recognizes revenue in accordance with the guidance contained in SEC Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements.” Revenue is recognized when the product has been delivered and title and risk of loss has passed to the customer, collection of the resulting receivable is deemed reasonably assured by management, persuasive evidence of an arrangement exists and the sale price is fixed and determinable.

Earnings Per Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted loss per common share is computed by dividing net loss by the weighed average number of common shares and potential common shares during the specified period. All potentially dilutive securities, which include preferred stock, options and warrants convertible into 7,900,000 and 5,946,000 common shares at September 30, 2007 and 2006, respectively, have been excluded from the computation, as their effect is antidilutive.

Property, Plant and Equipment

Successful Efforts Method

The Company accounts for its crude oil and natural gas properties under the successful efforts method of accounting. Under this method, costs to acquire mineral interests in crude oil and natural gas properties, to drill and equip exploratory wells that find proved reserves and to drill and equip development wells are capitalized. Capitalized costs of producing crude oil and natural gas properties are amortized to operations by the unit-of-production method based on proved developed crude oil and natural gas reserves on a property-by-property basis as estimated by Company engineers. Upon sale or related accumulated depreciation, depletion and amortization ("DD&A") are eliminated from the accounts and the resulting gain or loss is recognized. Repairs and maintenance are expensed as incurred.

Proved Properties

In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company reviews proved oil and gas properties and other long-lived assets for impairment when events and circumstances indicate a decline in the recoverability of the carrying value of such properties, such as a downward revision of the reserve estimates or commodity prices. The Company estimates the future cash flows expected in connection with the properties and compares such future cash flows to the carrying amount of the properties to determine if the carrying amount is recoverable. When the carrying amounts of the properties exceed their estimated undiscounted future cash flows, the carrying amount of the properties is written down to their estimated fair value. The factors used to determine fair value include, but are not limited to, estimates of proved reserves, future commodity prices, and timing of future production, future capital expenditures and a risk-adjusted discount rate.

Unproved Properties

Individually significant unproved properties are also periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Cash flows used in the impairment analysis are determined based on management's estimates of crude oil and natural gas reserves, future commodity prices and future costs to extract the reserves. Cash flow estimates related to probable and possible reserves are reduced by additional risk-weighting factors. Other individually insignificant unproved properties are amortized on a composite method based on the Company's experience of successful drilling and average holding period.

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Properties Acquired in Masters Resources Acquisition

On May 11, 2007, the Company’s majority-owned subsidiary, Tekoil and Gas Gulf Coast, LLC, completed the acquisition from Masters Resources, LLC, and Masters Oil and Gas, LLC, of four properties in Galveston Bay, Texas. In determining the fair values of Masters Resources proved and unproved properties, the Company prepared estimates of crude oil and natural gas reserves. The Company estimated future prices to apply to the estimated reserve quantities acquired, and estimated future operating and development costs, to arrive at estimates of future net revenues. For the fair value assigned to proved reserves, the future net revenues were discounted using a market-based weighted average cost of capital rate determined appropriate at the time of the merger. To compensate for the inherent risk of estimating and valuing unproved reserves, the discounted future net revenues of probable and possible reserves were reduced by additional risk weighting factors.

Depreciation

Property and equipment are stated at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets.

Stock Based Compensation

The Company issues shares of common stock and preferred stock to employees and non-employees as stock-based compensation. The Company accounts for the services using the fair market value of the consideration issued. For the nine months ended September 30, 2007 and 2006 the Company issued 1,666,000 and 250,000 shares and recorded compensation expense of $666,398 and $82,500, respectively.

Income Taxes

The Company accounts for income taxes using an asset and liability approach under which deferred income taxes are recognized by applying enacted tax rates applicable to future years to the differences between the financial statement carrying amounts and the tax bases of reported assets and liabilities.

The principal items giving rise to deferred taxes are certain expenses which have been deducted for financial reporting purposes which are not currently deductible for income tax purposes and the future tax benefits of certain net operating loss carryforward.

Fair Value of Financial Instruments

For financial instruments including cash, accrued expenses and accounts payable it was assumed that the carrying amount approximated fair value because of the short maturities of such instruments.

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New Financial Accounting Standards

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” (“SFAS 157”) which enhances existing guidance for measuring assets and liabilities using fair value. This standard provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not believe that SFAS 157 will have a material impact on its financial statements.

In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS 159”) providing companies with an option to report selected financial assets and liabilities at fair value. The standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. It also requires entities to display the fair value of those assets and liabilities for which the Company has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of the adoption of this Statement on its financial statements.

2.	ACQUISITION

On May 11, 2007, the Company’s majority-owned subsidiary, Tekoil and Gas Gulf Coast, LLC (the “Subsidiary”), and Masters Resources, LLC, and Masters Oil and Gas, LLC (together the “Sellers”), closed on a Purchase and Sale Agreement, dated effective as of October 1, 2006, as subsequently amended (the “Purchase Agreement”) to acquire four oil and gas properties (the “Galveston Bay Properties”), consisting of interests in Trinity Bay, Redfish Reef, Fishers Reef, and North Point Bolivar Fields, located in Galveston and Chambers Counties in Galveston Bay, Texas (the “Masters Acquisition”).

The Galveston Bay Properties include 34 producing wells with 33 PDNP (proved non-producing) opportunities and more than 64 PUD (proved undeveloped) opportunities. There are 24,261 gross acres included in the Galveston Bay properties, as well as transportation and processing infrastructure.

In exchange for conveyance of the Galveston Bay Properties to the Subsidiary, the Sellers received approximately $30 million dollars in cash (subject to adjustment for an effective date of transfer of October 1, 2006, a $1 million dollar holdback for potential claims and prorations of closing costs), nine million restricted shares of the Company’s common stock, $0.000001 par value (the “Common Stock”), and conveyance of certain overriding royalty interests in the Galverston Bay Properties (the “Royalties”). The shares of Common Stock issued to the Sellers were initially restricted but subject to a previously executed Registration Rights Agreement between the Company and the Sellers, and the Company has filed a registration statement on Form SB-2 to permit the resale of such shares of Common Stock.

The royalties to be paid to the sellers consist of (i) a declining royalty which is initially 6% on proved undeveloped, proved non-producing properties, and any present or future well completed in and producing from any zone or formation not presently producing or capable of producing within the properties, which royalty reduces to 4% and 2%, respectively, after $20 million dollars and $10 million dollars, respectively, are paid on the declining royalty and the fixed royalty described below, together; (ii) a fixed royalty which is initially 3% on current proved producing properties, which royalty reduces to 2% when the $30 million threshold described immediately above is achieved; and (iii) an additional royalty of 2% on all properties for a term of 3 years. The royalties are subject to a deed of trust in favor of the Company securing an indemnity agreement relating to the potential claims described above.

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The cash portion of the consideration was paid utilizing $30 million of a $50 million Senior Secured Credit Facility arranged by Goldman Sachs E & P Capital, a division of Goldman, Sachs & Co. The $30 million funded portion of the Loan is guaranteed by the Company and secured by the Galveston Bay Properties, has a term of 48 months, bears interest at an initial rate of libor plus 800 basis points, and is amortized by available net cash flow from the properties (after payment of certain related lease operating and overhead expenses, a portion of which are allowed to the Company under certain circumstances). In addition, the Lender or its affiliates received a 50 basis point funding fee on amounts advanced; a 2% overriding royalty interest in the properties; a warrant to purchase 900,000 shares of the Company’s Common Stock at a strike price of $0.50 per share over a five-year term (which Common Stock was included in a registration statement on Form SB-2 filed by the Company to permit the resale of such shares of Common Stock); a 25% ownership interest in Tekoil and Gas Gulf Coast, LLC (the other 75% being held by the Company), which interest is non-dilutable until the Company contributes $7.5 million in additional capital for expenditures related to the properties; and certain rights to participate in future debt and equity financings of the Company.

The Company was required to contribute the $7.5 million dollars detailed above to the Subsidiary within 90 days following the closing to cover certain agreed development expenditures and to raise an additional $5 million dollars for the Company within 180 days following the closing, in each case, in order to avoid a default under the Loan. As a part of the Loan transaction, the subsidiary entered into certain hedging transactions with respect to the pricing of its oil and gas production and certain insurance coverages as described in the Credit Agreement evidencing the Loan. The Loan documents contain other customary representations, warranties, covenants and events of default.

The Credit Agreement was amended on July 2, 2007 to increase the aggregate value of the Loan by the amount of $6,752,200, to change the bond requirements applicable to the Loan and to extend the date upon which certain title opinions were to be provided by the Company. The Lenders also agreed to waive the following events of default under the Credit Agreement: (i) the Subsidiary’s failure to furnish timely certain title opinions required by the Credit Agreement; and (ii) the Subsidiary’s failure to provide bonds and/or letters of credit in lieu of bonds with respect to the properties for the Railroad Commission of Texas prior to June 11, 2007.

On August 15, 2007, the Credit Agreement was further amended to extend the deadline for the Company’s contribution to the Subsidiary of $7.5 million in capital and for the repayment in full of insurance premiums financing indebtedness until August 31, 2007; and to extend the date by which the Subsidiary was required to provide certain title opinions until August 15, 2007.

On October 24, 2007, the Subsidiary, the Company and the Lender Parties entered into Amendment No. 3 and Waiver with respect to the Credit Agreement (“Amendment No. 3”) and Mark S. Western, the Company’s Chief Executive Officer, executed a Limited Guaranty (the “Limited Guaranty”), pursuant to which he agreed to personally guaranty certain of the Company’s obligations under the Credit Agreement.

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Amendment No. 3 amended the Credit Agreement by (i) extending the deadline for the Company’s contribution to the Subsidiary of $7.5 million in capital and for the repayment in full of insurance premiums financing Indebtedness until October 26, 2007, (ii) extending the date on which the Subsidiary was required to provide certain title opinions covering Texas State Lease MF062790 (State Tract 343) until November 7, 2007, (iii) extending the date on which the Subsidiary was required to provide certain title opinions covering Texas State Lease MF030085 (State Tract 5-8A) until January 23, 2008, and (iv) extending the deadline for approval by the Railroad Commission of Texas regarding the change of operator P-4 submissions to January 23, 2008.

Amendment No. 3 also amended the Credit Agreement to include as additional Events of Default thereunder (i) the failure of the Limited Guaranty to remain in full force and effect at any time prior to the satisfaction in full of all obligations under the Credit Agreement or the declaration of such Limited Guaranty to be null and void or the repudiation of such Limited Guaranty by Mr. Western, (ii) the failure of the Company to pay amounts owed by the Company to K-3 Resources, L.P. by the earlier to occur of the Required Capital Date (as defined in the Credit Agreement) and October 26, 2007, and (vi) the failure by the Company to deposit to the Collateral Account (as defined in the Credit Agreement) by November 23, 2007 cash in the amount of $370,000, or such greater amount to adequately reserve for the liabilities asserted by J-W Power Company.

In consideration of the execution of Amendment No. 3 by the Lender Parties, the Company agreed to pay a waiver and amendment fee of $367,522 and all fees and expenses of the Administrative Agent’s outside legal counsel and other consultants.

The purchase price for the Masters Acquisition has been allocated by management to tangible assets and liabilities, subject to further adjustment, based on estimated fair values after considering various independent appraisals. No goodwill arose from the transaction. The acquisition has been accounted for using the purchase method of accounting and, accordingly, the results of operations of the acquired entity have been included in the Company’s consolidated financial statements from May 11, 2007.

The following unaudited pro forma summary results of operations assumes that the Galveston Bay Properties had been acquired as of January 1, 2006 (in thousands, except per share data).

	Nine Months Ended
	September 30,
	2007			2006
Net revenue	$	7,825		$	11,068

Net loss	$	(9,616	)	$	(590	)

Net loss per share - basic and diluted	$	(0.23	)	$	(0.01	)

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The information above is not necessarily indicative of the results of operations that would have occurred if the acquisition had been consummated as of January 1, 2006. Such information should not be construed as a representation of the future results of operations of the Company.

A condensed balance sheet of the assets and liabilities of the Galveston Bay properties as of the acquisition date is as follows:

Property, plant and equipment	$	17,279,090
Oil and mineral interests		31,215,122
	$	48,494,212

3.	FARMOUT AGREEMENT

On January 4, 2007, the Company executed a Farmout Agreement (“Agreement”) with Newfoundland and Labrador-based Ptarmigan Resources (“Ptarmigan”), in their offshore exploration license EL-1069 (“License”) just north of the Port au Port Peninsula in western Newfoundland, Canada.

The Agreement required the Company to pay approximately $214,000 ($250,000 Canadian) to Ptarmigan, which was used as a drilling deposit to secure a one year extension granted by the Canada – Newfoundland and Labrador Offshore Petroleum Board (“C-NLOPB”). The drilling deposit is being expensed during 2007. For the nine months ended September 30, 2007, the Company expensed $160,985, and the balance of $53,662 included in prepaid expenses on the Company’s balance sheet at September 30, 2007. The Agreement also requires the Company to drill an onshore-to-offshore exploration test-well in 2007 (“Phase 1”), which will test an offshore structure, and as the validation well, will extend the lease until January 2011. The Company will earn a one-third interest (33.3%) in the license for the completion of Phase 1. The Company will then conduct an offshore 3-D seismic program (“Phase 2”) by late 2008, to map in more detail four offshore features already identified by Ptarmigan using 2-D seismic data, which will earn the Company a further 26.7% of the License, for a total ownership of 60%.

The Company and Ptarmigan then plan to drill an offshore exploration well (“Phase 3”) and will share the drilling costs; 60% the Company and 40% Ptarmigan. Should the Company carry 100% of the Phase 3 drilling expenses, the Company will earn an additional 20% interest in the License, for a total up to 80%, subject to government royalties. The Company estimates the total cost of Phase 1, 2 and 3 to approximate $6,000,000 in 2007, $10,000,000 in 2008 and $25,000,000 in 2009.

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4.	PROPERTY, PLANT AND EQUIPMENT

	September 30,		December 31,
	2007		2006
Building	$	404,430	$	352,522
Oil and gas mineral interests		38,826,182		-
Tangible oil producing equipment		17,279,090		-
Transportation equipment		40,482		35,286
Equipment		149,242		21,229
Furniture and fixtures		76,608		69,233
Leasehold improvements		6,321		5,510
		56,782,355		483,780
Less: Accumulated depreciation, depletion and amortazation		434,872		24,909
	$	56,347,483	$	458,871

Depreciation, depletion and amortization expense for the nine months ended September 30, 2007 and 2006 amounted to $409,963 and $13,291, respectively.

5.	NOTES PAYABLE - RELATED PARTIES

a) On December 15, 2005 the Company issued an unsecured promissory note at prime plus 1% (8.25% at September 30, 2007) to a related party in the amount of $50,000, with principal and interest due at maturity on June 15, 2006. This note was extended to December 31, 2007. At the option of the lender, at any time prior to maturity the lender can convert the loan into 50,000 shares of the Company’s convertible preferred stock, at the fair value at the time the note was issued.

After the principal of this Note becomes due, interest shall be payable on demand and shall accrue at a rate of 12% per annum. As additional consideration for the loan, the Company issued to the lender 25,000 shares of the Company’s Common Stock, valued at $8,250, the fair value at the time of issuance. The shares of Common Stock were initially restricted but the Company has filed a registration statement on Form SB-2 to permit the resale of such shares of Common Stock. Interest expense for the nine months ended September 30, 2007 and 2006 amounted to $3,094 and $2,931, respectively, and, was accrued as of September 30, 2007.

b) During the third quarter of 2007 certain shareholders of the Company, including the Company’s Chief Executive Officer and Chief Financial Officer, advanced funds in the amount of $585,000 for working capital. The funds advanced by the Chief Executive Officer and Chief Financial Officer ($350,000 as of September 30, 2007) are due upon demand and bear interest at 10% per annum. Subsequent to September 30, 2007, the Chief Executive Officer and Chief Financial Officer advanced an additional $145,000. The balance of the advances by other shareholders is due in January 2008 with interest at 10% per annum payable at maturity. For the nine months ended September 30, 2007, the Company recorded interest expense of $3,942.

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6.	LONG-TERM DEBT

On September 15, 2006, the Company entered into a mortgage agreement with CIBC Mortgages Inc. The Company borrowed $260,318 to purchase a building in St. John's, Newfoundland. The mortgage bears interest equal to the CIBC Prime Rate plus 0.667% (6.667% at September 30, 2007). The mortgage matures September 15, 2011. The mortgage is collateralized by the building in Newfoundland and a personal guarantee by the Company's Chief Financial Officer. The current portion of the mortgage of $5,139 is included in current liabilities on the Company's balance sheet as of September 30, 2007.

On May 11, 2007, in connection with the acquisition of the Galveston Bay properties located in Galveston Bay, Texas, the Company borrowed $30 million of a $50 million Senior Secured Credit Facility arranged by Goldman Sachs E & P Capital. The $30 million funded portion of the loan is guaranteed by the Company and secured by the Galveston Bay Properties, has a term of 48 months, bears interest at an initial rate of libor plus 800 basis points (14.8% at September 30, 2007) and is amortized by available net cash flow from the Galveston Bay Properties (after payment of certain related lease operating and overhead expenses, a portion of which are allowed to the Company under certain circumstances.)

In July 2007, Goldman Sachs E & P Capital advanced an additional $6,752,200 against the credit facility. The Company secured an irrevocable standby letter of credit in the amount of $6,370,000 in favor of the Texas Railroad Commission on behalf of the Company’s contingent obligation to plug and abandon various wells in connection with the acquisition of the Galveston Bay Properties. The terms and conditions of this advance are the same as under the Senior Secured Credit Facility.

As of September 30, 2007, the net present value of the long-term debt facility was $27,467,635. The loan will accrete to $36,752,200 over 48 months.

For the nine months ended September 30, 2007, interest expense amounted to $1,882,249. In addition, accretion of the long-term debt discount amounted to $826,282 and is included in interest expense on the Company’s consolidated statement of operations.

On October 24, 2007, the Company and Tri Star Capital Ventures Limited (“Tri Star”) entered into a loan agreement (“Loan Agreement”), pursuant to which Tri Star agreed to lend the Company $8.5 million (the “Tri Star Loan”). The proceeds of the Tri Star Loan were used to make the $7.5 million equity contribution to the Subsidiary as required in the Credit Agreement and to pay certain costs and expenses of the Subsidiary. The Company is obligated to make monthly payments of principal on the Tri Star Loan equal to $708,333, beginning on May 1, 2008. The Tri Star Loan matures on April 15, 2009 and accrues interest at an annual rate of 13%.

In connection with the execution of the Loan Agreement, the Company and Tri Star entered into Deeds of Guarantee with each of Mark S. Western, Gerald Goodman, Francis G. Clear and Richard Creitzman (the Company’s Board of Directors) pursuant to which these individuals agreed to personally guarantee repayment of the Tri Star Loan. In exchange for these Deeds of Guarantee, the Company agreed to provide each guarantor with indemnification of liabilities incurred by each guarantor under such guarantees.

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The payments now required under the long-term obligations listed above during the years following January 1, 2007, are set below:

2007	$	2,465
2008		4,553
2009		4,867
2010		5,201
2011		6,327
Thereafter		27,738,064
		27,761,477
Less: current portion		5,139
	$	27,756,338

7.	INCOME TAXES

The Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no adjustment in the net liability for unrecognized income tax benefits.

At September 30, 2007, the Company has a net operating loss carry-forward of approximately $15,000,000 million, which expires in various years through 2020. Deferred income taxes reflect the impact of the net operating loss carry-forwards. In recognition of the uncertainty regarding the ultimate amount of tax benefits to be derived from the Company’s net operating loss carry-forwards, the Company has recorded a valuation allowance for the entire amount of the deferred asset.

8.	ACCRUED EXPENSES

Accrued expenses consisted of the following:

	September 30,		December 31,
	2007		2006
Professional fees	$	435,197	$	311,660
Payroll expense		-		37,421
Advalroum tax		250,000		-
Interest expense		123,277		3,963
Other		28,301		9,103
	$	836,775	$	362,147

9.	PLUGGING AND ABANDONMENT OBLIGATION

The Company has recorded an obligation in the amount of $6,370,000 to plug and abandon various wells in connection with the acquisition of the Galveston Bay Properties. The Company secured an irrevocable standby letter of credit in the amount of $6,370,000 in favor of the Texas Railroad Commission on behalf of the Company’s contingent obligation. The letter of credit is included as "Marketable Securities – Restricted" on the Company’s consolidated balance sheet.

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10.	STOCKHOLDERS' EQUITY

Common Stock

The Company is authorized to issue 200,000,000 shares of .000001 par value Common Stock. All the outstanding Common Stock is fully paid and non-assessable. The total proceeds received for the Common Stock is the value used for the Common Stock.

On November 20, 2006, the Company sold 2,205,000 shares of its Common Stock at a purchase price of approximately $0.4762 per share, for an aggregate purchase price of $1,050,000. Such shares were subject to a put option, which has since expired.

During the nine months ended September 30, 2007, the Company sold 2,157,002 shares of its Common Stock through a private placement at a purchase price of $0.75 per share, for an aggregate purchase price of $1,617,750.

Preferred Stock

The Company is authorized to issue 20,000,000 shares of .00000001 par value preferred stock. The Company has designated 3,000,000 of these authorized shares of preferred stock as Series A Convertible Preferred Stock. The Board of Directors has the authority, without action by the stockholders, to designate and issue the shares of preferred stock in one or more series and to designate the rights, preferences and each series, any or all of which may be greater than the rights of the Company's Common Stock. At the time of designation, there was no quoted market price for the Company’s Common Stock. During the years ended December 31, 2006 and 2005, the Company sold 2,268,000 and 655,000 shares of Series A Convertible Preferred Stock and received net proceeds of $2,268,000 and $655,000, respectively. During the nine months ended September 30, 2007 the Company sold an additional 1,047,000 shares and received net proceeds of $1,047,000. On July 1, 2007, the Board of Directors invoked the mandatory conversion provisions of the Series A Convertible Preferred Stock, converting each remaining outstanding share of such stock into three (3) shares of Common Stock. As of the date of this report, no shares of any series of preferred stock are deemed to be outstanding.

The following is a summary of the pertinent rights and privileges of each class outstanding:

The holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting, with the result that the holders of more than 50% if the shares voting for the election of directors can elect all of the directors.

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The holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors for each such class of stock out of the funds legally available therefor. In the event of the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining available for distribution after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock.

Holders of shares of Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock.

Options and Warrants

In May 2007, the Company granted a warrant to Goldman, Sachs & Co. to purchase 900,000 shares of the Company’s Common Stock at an exercise price of $0.50 per share in connection with Senior Credit Facility. The warrant expires in five years and is exercisable immediately. The Company recorded the warrant as part of its investment in the acquisition of the Galveston Bay Properties and capitalized the fair value of $400,000. The Company has filed a registration statement on Form SB-2 to permit the resale of such shares subject to the warrant.

In August 2007, the Company granted options to the Board of Directors to purchase seven million shares of the Company’s Common Stock at an exercise price of $1.00 per share, the fair value at the time of grant. The options vest immediately and expire in five years. The Company will record compensation expense of approximately $4.5 million during the nine months ended September 30, 2007 in connection with the stock options.

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11.	BUSINESS SEGMENT INFORMATION

The Company operates in one industry and has two reportable segments. The segments are geographic and include the United States and Canada. The primary criteria by which financial performance is evaluated and resources are allocated are revenues and operating income (loss). The following is a summary of key financial data:

	Nine Months Ended September 30,						Three Months Ended September 30,
	2007			2006			2007			2006
Total Revenues:
United States	$	4,980,338		$	-		$	2,824,651		$	-
Canada		-			-			-			-
	$	4,980,338		$	-		$	2,824,651		$	-

Loss from Operations:
United States	$	(7,933,053	)	$	(1,513,012	)	$	(6,710,136	)	$	(467,613	)
Canada		17,418			-			7,371			-
	$	(7,915,635	)	$	(1,513,012	)	$	(6,702,765	)	$	(467,613	)

12.	RELATED PARTY TRANSACTIONS

On November 8, 2006, the Company issued 1,000,000 shares of Common Stock valued at $.33 per share (the fair value at the time of the issuance) to Gerald Goodman, the Company's Chief Financial Officer, in exchange for Mr. Goodman's personal guarantee of the following obligations of the Company: (i) credit card debts of the Company and/or its subsidiaries and related entities in the amount of fifty thousand dollars ($50,000), (ii) a mortgage and promissory note related to property owned by the Company and/or its subsidiaries and related entities in Newfoundland, Canada, in the amount of Two hundred sixty four thousand three hundred seventy four dollars ($264,374), (iii) a credit line of the Company and/or its subsidiaries and related entities in the amount of Fifty thousand dollars ($50,000). The shares of Common Stock issued to Mr. Goodman were initially restricted, but the Company has filed a registration statement on Form SB-2 to permit the resale of such shares of Common Stock.

See Note 5 for additional information to related party transactions.

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

Important Consideration Related to Forward-looking Statements

This Form 10-QSB includes “forward-looking statements.” All statements, other than statements of historical fact, included or incorporated by reference in this registration statement which address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements. The words “believe,” “intend,” “expect,” “anticipate,” “project,” “estimate,” “predict” and similar expressions are also intended to identify forward-looking statements.

These forward-looking statements include, among others, things such as:

·	plans and objectives of our management for future operations relating to our products and services;

·	plans and objectives of our management for our future economic performance;

·	amounts and nature of future capital expenditures;

·	wells to be drilled and reworked;

·	anticipated oil and gas prices and demand;

·	exploitation and exploration prospects;

·	estimates of proved oil and gas reserves;

·	reserve potential;

·	development and infill drilling potential;

·	expansion and other development trends of the oil and gas industry;

·	business strategy;

·	productions of oil and gas reserves;

·	planned asset sales or disposition;

·	plans for capital raising and financing; and

·	expansion and growth of our business and operations.

FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT. THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE THOSE DISCUSSED IN “PART I, ITEM 1. – DESCRIPTION OF BUSINESS – RISK FACTORS” CONTAINED IN THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2006, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2007, AS WELL AS THOSE SET FORTH IN THE “RISK FACTORS” SECTION OF THE PROSPECTUS FILED AS PART OF THE COMPANY’S REGISTRATION STATEMENT ON FORM SB-2 (AMENDMENT NO. 1) ON OCTOBER 30, 2007. UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. INVESTORS SHOULD REVIEW THIS QUARTERLY REPORT IN COMBINATION WITH THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB AND REGISTRATION STATEMENT ON FORM SB-2 (AMENDMENT NO. 1) IN ORDER TO HAVE A MORE COMPLETE UNDERSTANDING OF THE PRINCIPAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE COMPANY’S STOCK.

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These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including, but not limited to, the following:

·	risk factors discussed in the Company's Form 10-KSB;

·	oil and gas prices;

·	exploitation and exploration successes;

·	continued availability of capital and financing;

·	general economic, market or business conditions;

·	acquisitions and other business opportunities (or lack thereof) that may be presented to and pursued by us;

·	changes in laws or regulations; and

·	other factors, most of which are beyond our control.

Consequently, all of the forward-looking statements made in this report and in the documents we incorporate by reference are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. In light of the significant uncertainties inherent in such forward-looking statements, their inclusion should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.

Critical Accounting Policies

Our discussion and analysis of our financial condition and plan of operation are based upon the Company’s financial statements, which have been prepared with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical expenses and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Stock-Based Compensation. The Company issues shares of its common and preferred stock to employees and non-employees as stock-based compensation. The Company accounts for the services using the fair market value of the consideration issued.

Intangible Assets. The valuation of intangible assets will be determined by management after considering a number of factors. On an annual basis, the Company will test for impairment. If the carrying value of the intangible assets exceeds the present value of estimated future cash flows, the intangible assets would be adjusted to their fair value and an impairment loss would be charged to operations in the period identified. Should the impairment loss be significant, the charge to operations could have a material effect on the Company’s results of operations and financial condition.

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Plan of Operation

Forecasted Activities October 2007 to September 2008

We have identified the following objectives for the 12-month period ending September 30, 2008:

Drill an onshore-to-offshore well in Block EL-1069, to a bottom-hole location which has the potential to produce commercial hydrocarbons.

Obtain approval to conduct an intense 3D seismic survey over the area’s onshore and offshore prospects.

Further establish our general presence and enhance our company profile in Newfoundland.

Continue working with the government on an apprenticeship training program for the rig refurbishment business with the provincial technical college.

Begin remodeling of the rig refurbishment center located in Stephenville, Newfoundland. The Company will purchase a 50,000-square-foot building previously used as a hockey stadium to use as its center.

Secure and purchase two used drilling rigs for refurbishment.

Three instruments govern onshore petroleum activities in Newfoundland:

An exploration permit, issued as a result of a Request for Bids, confers the exclusive right to drill and test for petroleum on designated lands. It is valid for a primary term of five (5) years and can be extended for a further secondary term of two (2) years if certain conditions are met.

An exploration license does not confer any petroleum rights, but confers the non-exclusive right to conduct an exploration survey (e.g., seismic program) described in the license. An exploration license is valid for 180 days. We have applied for an exploration license with respect to our 3D seismic survey.

A lease, issued as a result of a discovery on an exploration permit, confers to the lessee the exclusive right to develop and produce a petroleum pool in the lease area. A lease has an initial term of 10 years, subject to five (5) year renewals for those areas still in production or necessary for production.

Offshore petroleum activities are subject to three different documents:

An exploration license, issued as a result of a Request for Bids, confers the right to explore for, and the exclusive right to drill and test for petroleum on designated lands, as well as the exclusive right to develop those portions of the offshore area in order to produce petroleum and the exclusive right, subject to compliance with other requirements, to obtain a production license. An exploration license is valid for a primary term of nine (9) years, consisting of two consecutive periods of five (5) years and four (4) years, with certain milestones that must be completed in the first five years for the license holder to continue to have rights in the latter four years. At the end of nine years, all rights to an area terminate unless the area becomes subject to a significant discovery license or a production license.

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A significant discovery license may be granted with respect to an area as a result of an application for a declaration of significant discovery. It grants the same rights as an exploration license, and effectively extends rights to an area for so long as the relevant declaration of significant discovery is in force, or until a production license is issued for the relevant lands. The government retains significant authority over drilling orders and development orders.

A production license is issued where a commercial discovery is declared, which is a discovery of petroleum that has been demonstrated to contain reserves that justify the investment of capital and effort to bring the discovery to production. A production license confers the following: the right to explore for, and the exclusive right to drill and test for, petroleum; the exclusive right to develop those portions of the offshore area in order to produce petroleum; the exclusive right to produce petroleum from those portions of the offshore area; and title to the petroleum so produced. A production license is effective from the date it is issued for a term of twenty-five (25) years or for such period thereafter during which commercial production continues. The government retains significant authority over drilling orders and development orders.

We are interested in two offshore licenses. One exploration license, EL #1070, which is currently issued to another operator, has been granted an extension from the Canada-Newfoundland and Labrador Offshore Petroleum Board until January 15, 2008. During this extended time period, the operator must drill a validating well. If the operator fails to meet the terms and conditions of the extension, the license will revert back to the Provincial government, and we will then express an interest in having the land included in the next Request for Bids. If the operator complies with the conditions, the license will be extended for a secondary term of an additional four years.

The second offshore license in which we are interested is EL #1071. This license was previously owned by Canadian Imperial Venture Corp. ("CIVC"), but it reverted back to the Provincial government on January 15, 2007. We intend to express an interest in this area, as a Call for Nominations in the offshore area was announced on October 15, 2007. We will nominate this parcel and expect to see it available in the Canada-Newfoundland and Labrador Offshore Petroleum Board’s next Request for Bids, which will occur in November 2008.

We also have one onshore area of interest. Lease 2002-01, presently held by PDI Production ("PDIP"), expired August 13, 2007. On August 13, 2007, CIVC announced that PDIP has a further 5 year extension over the Port au Port lease area. However, there are strict terms and conditions attached to the extension. This extension was based upon PDIP’s performance of work commitments and additional security deposits. One condition states there must be commencement of production within the next 24 month period. If production does not commence within the next 2 years, there will be no further extensions granted and the lease will automatically revert back to the provincial government. Unlike the Petroleum Board, the provincial Department of Natural Resources, which manages onshore activities, is sporadic in its Request for Bids process. This is mainly due to less interest in the onshore area, as compared to the already viable offshore area. We have already expressed an interest in this area and are optimistic about the opportunity to bid on this area when presented by the Department of Natural Resources.

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We are currently in the process of confirming the environmental approval amendment procedures for the applications submitted to date to expand and include prospective offshore acreage surrounding the Port au Port peninsula. We have obtained environmental approvals for an exploration license to conduct the 3D seismic survey over the onshore prospects. On May 2, 2006, the Department of Environment and Conservation issued a letter regarding our Port au Port Peninsula 3D seismic survey, along with a summary of comments received from various reviewing agencies during the review period. The letter released our proposed 3D seismic survey from further environmental assessment by the Department, subject to the approval of an Environmental Protection Plan prior to the commencement of the survey. On November 21, 2006, we announced that our application for expansion of our original 3D seismic program had been increased from approximately 240 sq km to approximately 300 sq km and released from further environment assessment by the Newfoundland and Labrador Department of Environmental Conservation. We are in the final stages with the Canada-Newfoundland and Labrador Offshore Petroleum Board to complete its approvals for the offshore component of the program.

To further cement our presence in Newfoundland, we have formed a wholly-owned Canadian subsidiary, Tekoil Rig Development Corporation, opened our Canadian headquarters in St. John’s and appointed Donna Parsons as Vice-President, Corporate Relations. We are talking to a number of companies and institutions concerning the long-term financing for the Company’s operations. We are also engaged in ongoing discussions with the provincial technical college to create training programs for the rig refurbishment business.

Our rig consultant continues to monitor the availability of used, inactive rigs, and he is confident that once we have secured funding for this program, he will be able to act expeditiously to obtain such a rig.

In January 2007, we executed a Farmout Agreement with Ptarmigan Resources Limited with respect to Ptarmigan’s offshore exploration license EL-1069. The license covers approximately 140,000 hectares, or 346,500 acres of offshore surface area, in the shallow waters of the Gulf of St. Lawrence north of the Port au Port peninsula in western Newfoundland. We are required to drill an onshore-to-offshore test well during 2007, which will test an offshore structure and, as the validation well, will extend the lease until January 2011 (Phase 1). We will earn a one-third interest (33.3%) in the license for the completion of Phase 1.

On May 11, 2007, our majority-owned subsidiary, Tekoil and Gas Gulf Coast, LLC (the "Subsidiary") acquired four oil and gas properties, consisting of interests in Trinity Bay, Redfish Reef, Fishers Reef and North Point Bolivar Fields, located in Galveston and Chambers Counties in Galveston Bay, Texas pursuant to a Purchase and Sale Agreement with Masters Resources, LLC and Masters Oil and Gas, LLC (the "Masters Acquisition"). Our efforts with respect to these properties for the near future will be focused on improving operations and putting in place cost control measures. Beginning in the third quarter of 2007, we will be conducting recompletions and workovers on the wells located on these properties. We anticipate that such activities will continue through the first half of 2008.

Liquidity and Capital Resources

Our operating and capital requirements have exceeded our cash flows from operations from inception as we have been building our business. Since inception through September 30, 2007, we have expended approximately $41.9 for operating and investing activities, which has been funded by investments of approximately $6.4 from our shareholders and $37.0 from borrowings. Subsequent to September 30, 2007, the Company borrowed an additional $8.5 million to meet certain capital requirements to the Subsidiary in connection with the Masters Acquisition.

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Our Subsidiary completed the acquisition of the Galveston Bay, Texas properties in May 2007. Total consideration paid was approximately $45.9 million. The Subsidiary received a $50.0 million multiple-advance, senior secured four-year credit facility arranged by Goldman Sachs E & P Capital, a division of Goldman, Sachs and Co., $30.0 million of which was used to pay the cash portion of the consideration for the acquisition of the properties. The terms of the Loan were set forth in a Credit and Guaranty Agreement dated as of May 11, 2007. In addition to the cash component of the consideration, the Company issued 9,000,000 shares of its Common Stock to the Sellers in connection with the acquisition of the properties. These shares were included in a registration statement on Form SB-2 filed by the Company.

The funded portion of the loan is guaranteed by the Company and secured by the Galveston Bay Texas properties, has a term of 48 months, bears interest at an initial rate of LIBOR plus 800 base points (13% at June 30, 2007) and is amortized by available net cash flow from the properties (after payment of certain related lease operating and overhead expenses, a portion of which are allocated to the Company under certain circumstances). In addition, the Lenders or their affiliates received a 50 basis point funding fee on amounts advanced ($150,000); a 2% overriding royalty interest in the properties; a warrant to purchase 900,000 shares of the Company’s Common Stock at a strike price of $0.50 per share over a five-year term (which shares of Common Stock were included in the registration statement on Form SB-2 filed by the Company); a 25% ownership interest in the subsidiary (the other 75% being held by the Company), which interest is non-dilutable until the Company contributes $7.5 million in additional capital to the subsidiary for expenditures related to the properties; and certain rights to participate in future debt and equity financings of the Company.

The Company was required to contribute the $7.5 million detailed above to the Subsidiary within 90 days following the closing to cover certain agreed development expenditures and raise an additional $5 million dollars for the Company within 180 days following the closing, in each case in order to avoid a default under the Loan. As a part of the Loan transaction, the Subsidiary entered into certain hedging transactions with respect to the pricing of its oil and gas production and certain insurance coverage as described in the Credit Agreement. The Loan documents contain other customary representations, warranties, covenants and events of default.

The Credit Agreement was amended on July 2, 2007 to increase the aggregate value of the Loan by the amount of $6,752,200, to change the bond requirements applicable to the Loan and to extend the date upon which certain title opinions were to be provided by the Company. The Lenders also agreed to waive the following events of default under the Credit Agreement: (i) the majority-owned subsidiary’s failure to furnish timely certain title opinions required by the Credit Agreement; and (ii) the Subsidiary’s failure to provide bonds and/or letters of credit in lieu of bonds with respect to the properties for the Railroad Commission of Texas prior to June 11, 2007.

On August 15, 2007, the Credit Agreement was further amended to extend the deadline for the Company’s contribution to the subsidiary of $7.5 million in capital and for the repayment in full of insurance premiums financing indebtedness until August 31, 2007 and to extend the date on which the subsidiary was required to provide certain title opinions until August 15, 2007. In connection with the execution of Amendment No. 2 to the Credit Agreement, certain events of default were waived under the Credit Agreement.

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On October 24, 2007, the Company and Tri Star Capital Ventures Limited (“Tri Star”) entered into a Loan Agreement (the “Loan Agreement”), pursuant to which Tri Star agreed to lend to the Company $8.5 million (the “Tri Star Loan”). The proceeds of the Tri Star Loan will be used to make the $7.5 million equity contribution to the Subsidiary as required in the Credit Agreement and to pay certain costs and expenses of the Subsidiary. The Company is obligated to make monthly payments of principal on the Tri Star Loan equal to $708,333, beginning on May 1, 2008. The Tri Star Loan matures on April 15, 2009 and accrues interest at an annual rate of 13%.

In connection with the execution of the Loan Agreement, the Company and Tri Star entered into Deeds of Guarantee with each of Mark S. Western, Gerald Goodman, Francis G. Clear and Richard Creitzman pursuant to which these individuals agreed to personally guarantee repayment of the Tri Star Loan. In exchange for these Deeds of Guarantee, the Company agreed to provide each guarantor with indemnification of liabilities incurred by each guarantor under such guarantees.

The Company remains in default under the Credit Agreement, due to the failure to repay in full insurance premiums financing indebtedness by October 26, 2007; failure to achieve the required indebtedness to EBITDA ratio; and failure to furnish an updated reserve report by September 1, 2007. The Company is negotiating with the Lender Parties with respect to these remaining defaults.

The Company also entered into a Consulting Agreement on October 24, 2007 (the “Consulting Agreement”) with Portland Worldwide Investments Limited (“PWI”), pursuant to which PWI agreed to provide consulting services to the Company in connection with the further development of its energy assets and the Company agreed to pay the Consultant approximately $935,000 in the aggregate consideration during the 18-month term of the Consulting Agreement.

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In January 2007, we executed a Farmout Agreement with Ptarmigan Resources Limited with respect to Ptarmigan’s offshore exploration license EL-1069. We paid Ptarmigan $214,000 USD ($250,000 Canadian), which was used as a drilling deposit to secure a one-year extension of the License from the Canada - Newfoundland and Labrador Offshore Petroleum Board. We are also required to drill an onshore-to-offshore test well during 2007, which will test an offshore structure and, as the validation well, will extend the lease until January 2011 (Phase 1). We will earn a one-third interest (33.3%) in the license for the completion of Phase 1. We may then conduct an offshore 3D seismic program by late 2008, to map in more detail four offshore features already identified by Ptarmigan using 2D seismic data, which will earn the Company a further 26.7% of the license, for a total ownership of 60% (Phase 2).

The Farmout Agreement further provides that the Company and Ptarmigan will then drill an offshore exploration well and will share the drilling costs; 60% by the Company and 40% by Ptarmigan. Should the Company carry 100% of the cost of drilling, we will earn an additional 20% interest in the license, for a total of up to 80%, subject to government royalties (Phase 3). We estimate the total cost of Phases 1, 2, and 3 to be approximately $6,000,000 in 2007, $10,000,000 in 2008 and $25,000,000 in 2009.

We will need to raise additional capital of approximately $35 million to proceed with the 3D seismic program and the drilling of two wells. We will also need to raise an additional $15 million to proceed with our drilling rig refurbishment program. The Company has begun to generate revenues through our Tekoil and Gas Gulf Coast, LLC subsidiary. We are currently in negotiations with various investors, primarily for debt financing, but there can be no assurance that such funds will be available to us or that adequate funds from debt or equity financing will be available when needed or on terms satisfactory to us. Our failure to obtain adequate additional financing may require us to delay or curtail some of our business efforts. Additional equity financing may involve substantial dilution to our existing shareholders.

During the past three years, we have sold, through private placements, shares of our Series A Convertible Preferred Stock at the offering price of $1.00 per share. We have also sold, through private placements, shares of our Common Stock. We may continue to sell unregistered securities from time to time.

On December 15, 2005, we issued an unsecured promissory note, bearing interest at the rate of prime plus one percent (1%) per annum (8.25% at December 31, 2005) to Wiener, Goodman & Company, P.C. Profit Sharing Plan FBO Gerald Goodman (the Company's chief financial officer, treasurer and director) in the principal amount of $50,000, with principal and interest due at maturity on June 15, 2006. The maturity date was extended until December 31, 2007. At any time prior to maturity, the lender may, at its option, convert the promissory note into 50,000 shares of Series A Convertible Preferred Stock. There is no other formal arrangement to advance or loan funds to the Company or repay any such advances or loans.

On September 15, 2006, we entered into a mortgage agreement with CIBC Mortgages Inc. We borrowed $264,373 to purchase a building in St. John's, Newfoundland. The mortgage bears interest equal to the CIBC Prime Rate plus 0.667% (6.667% at December 31, 2006). The mortgage matures on September 15, 2011. The mortgage is collateralized by the building in Newfoundland and a personal guarantee by the Company's chief financial officer.

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During the third quarter of 2007 certain shareholders of the Company, including the Company’s chief executive officer and chief financial officer, advanced funds in the amount of $585,000 for working capital. The funds advanced by the chief executive officer and chief financial officer ($350,000 as of September 30, 2007) are due upon demand and bear interest at 10% per annum. Subsequent to September 30, 2007, the chief executive officer and chief financial officer advanced an additional $145,000. The balance of the advances by other shareholders is due in January 2008 with interest at 10% per annum payable at maturity.

Item 3. Controls and Procedures.

Disclosure controls and procedures. As of the end of the Company’s most recently completed fiscal quarter covered by this report, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are effective, at the reasonable assurance level, in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in internal controls over financial reporting: There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's last fiscal quarter to which this report relates that have materially affected, or are reasonable likely to materially affect, the Company’s internal controls over financial reporting.

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PART II — OTHER INFORMATION

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

During the period covered by this report and through the date of this report, the Company made the following sales of unregistered shares of its Common Stock, par value $0.000001 per share, at the offering price of $0.75 per share, unless otherwise stated:

	Number	Proceeds of Sale	Date of
Name of Purchaser	of Shares	(in Dollars)	Issuance

Bradley, Marshall L. and Claire M. and Gibbens, Deborah L. JTWROS	10,000	$7,500	July 24, 2007

Flisar, Avis M. (1)	10,000	10,000	November 20, 2006 (1)

Ghulldu, Harbinder S. and Lisa, JTWROS	70,000	52,500	July 24, 2007

Hall, Laura and Nathan, JTWROS	6,666	5,000	July 24, 2007

Horge, Margaret (2)	33,000	(2)	October 16, 2007 (2)

Joiner, James T. and Judy S.	10,000	7,500	August 22, 2007

Korenek, Alfred J.	20,000	15,000	July 24, 2007

Koseluk, Richard (3)	1,250,000	(3)	October 16, 2007 (3)

Mather, Dianna (4)	25,000	(4)	October 16, 2007 (4)

McConnell, Paul, Fiserv ISS & Co. TTEE FBO	30,000	22,500	July 24, 2007

Melhorn, Janice (5)	25,000	(5)	October 16, 2007 (5)

Monteleone, Mario and Lynn	20,000	15,000	July 24, 2007

Moore, Stephen A.	10,000	7,500	July 24, 2007

Moore, Stephen A. and Pifer Donald, as tenants in common	10,000	7,500	August 20, 2007

Ottens, Eric (6)	250,000	(6)	October 16, 2007 (6)

Richardson, Rickey	20,000	15,000	July 24, 2007

Robert M. Bisienere Family Trust	40,000	30,000	July 24, 2007

Roberts, Rickie R	10,000	7,500	July 24, 2007

Robinson, Steven	10,000	7,500	July 24, 2007

Robinson, Steven and Martin, Michele	10,000	7,500	August 20, 2007

William C. Martin Trust	70,000	52,500	July 24, 2007

Vosbein, Michael (7)	83,000	(7)	October 16, 2007 (7)

(1)

These sales of shares of Common Stock occurred prior to the period covered by this report, but they were erroneously omitted from previous reports.

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(2)

The Company granted 100,000 shares of restricted Common Stock to Margaret Horge as consideration for services provided pursuant to an Employment Agreement effective June 1, 2007, to be issued as follows: (i) 33,000 shares as of June 1, 2007, (ii) 33,000 shares as of June 1, 2008, and (iii) 34,000 shares as of June 1, 2009. The market value of these shares at the date of the award is recorded as a compensation expense. No proceeds were received. In its report on Form 10-QSB for the quarter ended June 30, 2007, the Company erroneously reported this issuance as an issuance of 100,000 shares valued at $1.10 per share as of June 1, 2007.

(3)

The Company granted 1,500,000 shares of restricted Common Stock to Richard Koseluk as consideration for services provided pursuant to an Employment Agreement effective October 1, 2006, to be issued as follows: (i) 750,000 shares as of October 1, 2006, (ii) 500,000 shares as of October 1, 2007, and (iii) 250,000 shares as of October 1, 2008. The market value of these shares at the date of the award is recorded as a compensation expense. No proceeds were received.

(4)

The Company granted 75,000 shares of restricted Common Stock to Dianna Mather on June 1, 2007, her date of employment, as a sign-on bonus, to be issued as follows: (i) 25,000 shares as of June 1, 2007, (ii) 25,000 shares as of June 1, 2008, and (iii) 25,000 shares as of June 1, 2009. The market value of these shares at the date of the award is recorded as a compensation expense. No proceeds were received. In its report on Form 10-QSB for the quarter ended June 30, 2007, the Company erroneously reported this issuance as an issuance of 25,000 shares valued at $1.10 per share as of June 1, 2007.

(5)

The Company granted 25,000 shares of restricted Common Stock to Janice Melhorn on August 1, 2007, her date of employment, as a sign-on bonus. The market value of these shares at the date of the award is recorded as a compensation expense. No proceeds were received.

(6)

The Company granted 250,000 shares of restricted Common Stock to Eric Ottens on June 30, 2007, the date of Mr. Ottens’ retirement from the Company. The market value of these shares at the date of the award is recorded as a compensation expense. No proceeds were received.

(7)

The Company granted 250,000 shares of restricted Common Stock to Michael Vosbein as consideration for services provided pursuant to an Employment Agreement effective May 1, 2007, to be issued as follows: (i) 83,000 shares as of May 1, 2007, (ii) 83,000 shares as of May 1, 2008, and (iii) 84,000 shares as of May 1, 2009. The market value of these shares at the date of the award is recorded as a compensation expense. No proceeds were received. In its report on Form 10-QSB for the quarter ended June 30, 2007, the Company erroneously reported this issuance as an issuance of 250,000 shares valued at $1.10 per share as of June 1, 2007.

No underwriters took part in these sales of unregistered shares of Common Stock, and no underwriting discounts or commissions were paid. The Company’s sales of these unregistered shares of Common Stock were made in reliance on Section 4(2) of the Securities Act of 1933, as amended (the “Act”), and the safe harbor provided by Rule 506 of Regulation D promulgated under the Act, in that the sales did not involve any public offering. All purchasers of these unregistered shares of Common Stock were “accredited investors” as defined in Rule 501 of Regulation D, based upon representations made by such purchasers to the Company; and, consequently, the Company did not provide such purchasers information of the type described in Rule 502(b)(2) of Regulation D. Neither the Company nor any person acting on its behalf offered or sold these unregistered shares of Common Stock by any form of general solicitation or general advertising. Each purchaser of these unregistered shares of Common Stock represented to the Company (i) that such purchaser was acquiring such shares for such purchaser’s own account and not with a view to the sale or distribution thereof, (ii) that such purchaser understood that such shares had not been registered under the Act and, therefore, could not be resold unless they were subsequently registered under the Act or unless an exemption from registration was available; and (iii) that a legend would be placed on the certificate evidencing such shares stating that the shares had not been registered under the Act and setting forth the restrictions on transferability and sale of the shares. All stock certificates representing such shares were issued with a restrictive legend, and the Company filed notices on Form D with the SEC.

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The Company has filed a registration statement on Form SB-2 to permit the resale of shares of its Common Stock by the holders of such shares; however, the sales of Common Stock set forth in the table above, except for those sold to Avis M. Flisar, occurred after the filing of such registration statement. The resale of such shares of Common Stock by the purchasers thereof has not been registered by the Company, and such unregistered shares remain subject to the restrictions set forth above.

On July 1, 2007, the Board of Directors invoked the mandatory conversion provisions of the Series A Convertible Preferred Stock, converting all shares of Series A Convertible Preferred stock outstanding on that date into shares of Common Stock at the rate of three (3) shares of Common Stock for each share of Series A Convertible Preferred Stock. As of the date of this report, no shares of any series of preferred stock are deemed to be outstanding.

Item 5. Other Information.

On July 24, 2007, the Company announced that its Common Stock will be quoted on the OTC Bulletin Board®, effective July 24, 2007, under the symbol “TKGN.” The Common Stock has previously been quoted on the Pink Sheets. ACAP Financial, Inc., filed a Form 15c2-11 with the National Association of Securities Dealers (“NASD”), and the NASD has cleared the request for an unpriced quotation. In order to enter a priced quotation, ACAP Financial, Inc., must first file a supplemental Form 211 with the NASD, setting forth the basis for its priced quotation. The OTC Bulletin Board® is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter equity securities.

In addition, the first of the Company’s two registration statements on Form SB-2 was declared effective by the U.S. Securities and Exchange Commission as of July 17, 2007, permitting resales by the “Selling Shareholders,” defined therein, of their restricted shares of Common Stock, as well as the shares of Common Stock into which their shares of Series A Convertible Preferred Stock have been converted.

Item 6. Exhibits.

Exhibit Number		Description

3.1	-	Certificate of Incorporation of the Company and all Amendments thereto (filed as Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

3.2	-	Bylaws of the Company (filed as Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.1	-	Article Fourth of the Certificate of Incorporation of the Company, as amended (filed as part of Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.2	-	Articles II, III, VIII and XI of the Bylaws of the Company (filed as part of Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.3	-	Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

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4.4	-	Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.5	-	Second Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.1	-	Acquisition Agreement dated May 25, 2005, among Pexcon, Inc., Tekoil-FL, the shareholders of Tekoil-FL and Gerald M. Dunne (filed as Exhibit 99.6.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.2	-	Unsecured Promissory Note dated December 15, 2005, from the Company to Wiener Goodman & Company PC Profit Sharing Plan FBO Gerald Goodman (filed as Exhibit 99.6.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.3	-	Employment Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.4	-	Employment Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.5	-	Employment Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.6	-	Employment Agreement dated as of October 21, 2005, between the Company and Eric Ottens (filed as Exhibit 99.6.6 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.7	-	Director Service Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.7 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.8	-	Director Service Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.8 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.9	-	Director Service Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.9 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.10	-	Director Service Agreement dated as of October 21, 2005, between the Company and Richard Creitzman (filed as Exhibit 99.6.10 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.11	-	Employment Agreement dated as of June 1, 2006, between Tekoil Rig Development Corporation and Donna Parsons (filed as Exhibit 99.6.11 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006) *

10.12	-	Stock Grant and Repurchase Agreement dated as of June 1, 2006, between the Company and Donna Parsons (filed as Exhibit 99.6.12 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006) *

10.13	-	Form of Tender dated August 14, 2006, and Indenture dated August 31, 2006, for the purchase of Newfoundland facility (filed as Exhibit 99.6.13 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006) *

10.14	-	Mortgage dated September 12, 2006, between the Company and CIBC Mortgage Inc. (filed as Exhibit 99.6.14 to the Company's Form 10-SB/A (Amendment No. 2) filed with the SEC on November 13, 2006) *

10.15	-	Settlement Agreement and Mutual Release dated December 6, 2006, between the Company and Gerald M. Dunne (filed as Exhibit 10.15 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006) *

10.16	-	Stock Issuance Agreement dated May 1, 2006, between the Company and Don Parsons (filed as Exhibit 10.16 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006) *

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10.17	-	Form of Securities Purchase Agreement for the purchase of the Company’s Series A Convertible Preferred Stock (filed as Exhibit 10.17 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006) *

10.18	-	Purchase and Sale Agreement dated November 13, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.18 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006) *

10.19	-	Form of Subscription Agreement (with Put Option) dated November 20, 2006, between the Company and the subscribers thereto (filed as Exhibit 10.19 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006) *

10.20	-	First Amendment to Purchase and Sale Agreement executed on December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.20 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.21	-	Subscription Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.21 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.22	-	Registration Rights Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC, Rich Holdings, LLC, and John W. Barton (filed as Exhibit 10.22 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.23	-	Farmout Agreement executed on January 3, 2007, and dated as of December 19, 2006, between the Company and Ptarmigan Resources Limited (filed as Exhibit 10.23 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.24	-	Second Amendment to Purchase and Sale Agreement dated effective February 8, 2007, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.24 to the Company's Form 8-K dated February 8, 2007, and filed with the SEC on February 15, 2007) *

10.25	-	Third Amendment to Purchase and Sale Agreement dated effective March 1, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.1 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007) *

10.26	-	Fourth Amendment to Purchase and Sale Agreement dated effective March 22, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.2 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007) *

10.27	-	Fifth Amendment to Purchase and Sale Agreement dated effective April 12, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.27 to the Company's Form 8-K dated April 12, 2007, and filed with the SEC on April 18, 2007) *

10.28	-	Sixth Amendment to Purchase and Sale Agreement executed on April 30, 2007, and dated effective April 24, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.28 to the Company's Form 8-K dated April 30, 2007, and filed with the SEC on May 3, 2007) *

10.29	-	Credit and Guaranty Agreement dated as of May 11, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, and the other Guarantors (defined therein), the Lenders (defined therein), and J. Aron & Company, as Syndication Agent and Administrative Agent for the Lenders (filed as Exhibit 10.29 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.30	-	Note dated May 11, 2007, in the principal amount of $50 million, made by Tekoil and Gas Gulf Coast, LLC to J. Aron & Company (filed as Exhibit 10.30 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.31	-	Pledge and Security Agreement dated as of May 11, 2007, by and among Tekoil and Gas Gulf Coast, LLC, each of the affiliates of the Company signatory thereto, whether as an original signatory thereto or as an Additional Grantor (defined therein), and J. Aron & Company, as administrative agent for the Beneficiaries (defined therein) (filed as Exhibit 10.31 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

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10.32	-	Pledge Agreement dated as of May 11, 2007, by and between the Company and J. Aron & Company, as administrative agent for the Beneficiaries (defined therein) (filed as Exhibit 10.32 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.33	-	Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and Financing Statement dated May 11, 2007, from Tekoil and Gas Gulf Coast, LLC to John Howie, as Trustee, and J. Aron & Company, as Agent (filed as Exhibit 10.33 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.34	-	Blocked Deposit Account Control Agreement dated as of May 11, 2007, among Tekoil and Gas Gulf Coast, LLC, J. Aron & Company and Amegy Bank National Association (filed as Exhibit 10.34 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.35	-	Default Deposit Account Control Agreement dated as of May 11, 2007, among Tekoil and Gas Gulf Coast, LLC, J. Aron & Company and Amegy Bank National Association (filed as Exhibit 10.35 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.36	-	Conveyance of Overriding Royalty Interest dated as of May 11, 2007, but effective as of October 1, 2006, at 12:00 a.m. local time at the location of the property described therein, made by Tekoil and Gas Gulf Coast, LLC and its Affiliates, to and in favor of MTGLQ Investors, L.P. (filed as Exhibit 10.36 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.37	-	Warrant to purchase 900,000 shares of the Company’s Common Stock, dated May 11, 2007, issued to Goldman, Sachs & Co. by the Company (filed as Exhibit 10.37 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.38	-	Amended and Restated Operating Agreement of Tekoil and Gas Gulf Coast, LLC (formerly known as Masters Acquisition Co., LLC), dated May 11, 2007 (filed as Exhibit 10.38 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.39	-	Registration Rights Agreement dated as of May 11, 2007, by and between the Company and Goldman, Sachs & Co. (filed as Exhibit 10.39 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.40	-	Assignment and Bill of Sale executed May 11, 2007, and effective October 1, 2006, at 12:00 midnight Central Standard Time, from Masters Resources, LLC and Masters Oil & Gas, LLC to Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.40 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.41	-	Assignment of Overriding Royalty executed May 11, 2007, and effective as of October 1, 2006, at 7:00 a.m. Central Daylight Savings Time, from Masters Resources, LLC and Masters Oil & Gas, LLC to Masters Pipeline, LLC (filed as Exhibit 10.41 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.42	-	Indemnity Agreement dated as of May 11, 2007, among Masters Resources, LLC, Masters Oil & Gas, LLC and Masters Pipeline, LLC and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.42 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.43	-	Management Services Agreement dated as of May 11, 2007, by and between the Company and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.43 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.44	-	ISDA Master Agreement dated as of May 11, 2007, between J. Aron & Company and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.44 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

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10.45	-	Schedule to the ISDA Master Agreement dated as of May 11, 2007, between J. Aron & Company and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.45 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.46	-	Transfer Acknowledgement and Agreement dated May 11, 2007, among the Company and Masters Resources, LLC, Masters Oil & Gas, LLC, Rich Holdings LLC and John W. Barton (filed as Exhibit 10.46 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.47	-	Transaction Confirmation, dated May 11, 2007, from J. Aron & Company to Tekoil and Gas Gulf Coast, LLC, effective May 1,2007 — Contract Reference 897282314 1 1 (filed as Exhibit 10.47 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.48	-	Transaction Confirmation, dated May 11, 2007, from J. Aron & Company to Tekoil and Gas Gulf Coast, LLC, effective June 1, 2007 — Contract Reference 897282306 1 1 (filed as Exhibit 10.48 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.49	-	Amendment No. 1 and Waiver dated as of July 3, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, and the other Guarantors (defined therein), the Lenders (defined therein), and J. Aron & Company, as Lead Arranger and as Syndication Agent, and J Aron & Company, as Administrative Agent for the Lenders (filed as Exhibit 10.49 to the Company’s Form 8-K dated July 3, 2007, and filed with the SEC on July 10, 2007) *

10.50	-	Letter Agreement dated July 3, 2007, by and among Amegy Bank National Association, Tekoil and Gas Gulf Coast, LLC, and J. Aron & Company (filed as Exhibit 10.50 to the Company’s Form 8-K dated July 3, 2007, and filed with the SEC on July 10, 2007) *

10.51	-	Amendment No. 2 and Waiver dated as of August 15, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, the Lenders, J. Aron & Company, as Lead Arranger and as Syndication Agent, and J. Aron & Company, as Administrative Agent for the Lenders and as counterparty under the ISDA Master Agreement dated as of May 11, 2007. (filed as Exhibit 10.51 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.52	-	Tekoil & Gas Corporation Omnibus Equity Plan, adopted by the Company’s Board of Directors on August 15, 2007. (filed as Exhibit 10.52 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.53	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Mark S. Western. (filed as Exhibit 10.53 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.54	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Richard Creitzman. (filed as Exhibit 10.54 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.55	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Francis G. Clear. (filed as Exhibit 10.55 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.56	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Gerald Goodman. (filed as Exhibit 10.56 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.57	-	Amendment No. 3 and Waiver, dated as of October 24, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, the Lenders, J. Aron & Company, as Lead Arranger and as Syndication Agent, and J Aron & Company, as Administrative Agent for the Lenders and as counterparty under the ISDA Master Agreement dated as of May 11, 2007. (filed as Exhibit 10.57 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.58	-	Limited Guaranty, dated as of October 24, 2007, by Mark S. Western in favor of J. Aron & Company, as Administrative Agent. (filed as Exhibit 10.58 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

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10.59	-	Loan Agreement, dated October 24, 2007, by and between the Company and Tri Star Capital Ventures Limited (the “Lender”). (filed as Exhibit 10.59 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.60	-	Deed of Guarantee, dated October 24, 2007, by and between Mark S. Western, as Guarantor, and the Lender. (filed as Exhibit 10.60 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.61	-	Deed of Guarantee, dated October 24, 2007, by and between Gerald Goodman, as Guarantor, and the Lender. (filed as Exhibit 10.61 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.62	-	Deed of Guarantee, dated October 24, 2007, by and between Francis G. Clear, as Guarantor, and the Lender. (filed as Exhibit 10.62 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.63	-	Deed of Guarantee, dated October 24, 2007, by and between Richard Creitzman, as Guarantor, and the Lender. (filed as Exhibit 10.63 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.64	-	Consulting Agreement, dated October 24, 2007, by and between the Company and Portland Worldwide Investments Limited. (filed as Exhibit 10.63 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *


11.1	-	Statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this report on Form 10-QSB.

31.1	-	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith)

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31.2	-	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith)

32.1	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)

32.2	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)

Incorporated herein by reference. SEC File No. 0-52100

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TEKOIL & GAS CORPORATION

Date: November 13, 2007	By:	/s/ Mark S. Western
		Mark Western
		President and Chief Executive Officer

Date: November 13, 2007	By:	/s/ Gerald Goodman
		Gerald Goodman
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number		Description

3.1	-	Certificate of Incorporation of the Company and all Amendments thereto (filed as Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

3.2	-	Bylaws of the Company (filed as Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.1	-	Article Fourth of the Certificate of Incorporation of the Company, as amended (filed as part of Exhibit 2.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.2	-	Articles II, III, VIII and XI of the Bylaws of the Company (filed as part of Exhibit 2.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.3	-	Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.4	-	Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

4.5	-	Second Amendment to Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock (filed as Exhibit 3.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.1	-	Acquisition Agreement dated May 25, 2005, among Pexcon, Inc., Tekoil-FL, the shareholders of Tekoil-FL and Gerald M. Dunne (filed as Exhibit 99.6.1 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.2	-	Unsecured Promissory Note dated December 15, 2005, from the Company to Wiener Goodman & Company PC Profit Sharing Plan FBO Gerald Goodman (filed as Exhibit 99.6.2 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.3	-	Employment Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.3 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.4	-	Employment Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.4 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.5	-	Employment Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.5 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.6	-	Employment Agreement dated as of October 21, 2005, between the Company and Eric Ottens (filed as Exhibit 99.6.6 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.7	-	Director Service Agreement dated as of October 21, 2005, between the Company and Mark S. Western (filed as Exhibit 99.6.7 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.8	-	Director Service Agreement dated as of October 21, 2005, between the Company and Gerald Goodman (filed as Exhibit 99.6.8 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.9	-	Director Service Agreement dated as of October 21, 2005, between the Company and Francis G. Clear (filed as Exhibit 99.6.9 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.10	-	Director Service Agreement dated as of October 21, 2005, between the Company and Richard Creitzman (filed as Exhibit 99.6.10 to the Company’s Form 10-SB, filed with the SEC on July 5, 2006) *

10.11	-	Employment Agreement dated as of June 1, 2006, between Tekoil Rig Development Corporation and Donna Parsons (filed as Exhibit 99.6.11 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006) *

10.12	-	Stock Grant and Repurchase Agreement dated as of June 1, 2006, between the Company and Donna Parsons (filed as Exhibit 99.6.12 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006) *

10.13	-	Form of Tender dated August 14, 2006, and Indenture dated August 31, 2006, for the purchase of Newfoundland facility (filed as Exhibit 99.6.13 to the Company’s Form 10-SB/A (Amendment No. 2), filed with the SEC on November 13, 2006) *

10.14	-	Mortgage dated September 12, 2006, between the Company and CIBC Mortgage Inc. (filed as Exhibit 99.6.14 to the Company's Form 10-SB/A (Amendment No. 2) filed with the SEC on November 13, 2006) *

10.15	-	Settlement Agreement and Mutual Release dated December 6, 2006, between the Company and Gerald M. Dunne (filed as Exhibit 10.15 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006) *

10.16	-	Stock Issuance Agreement dated May 1, 2006, between the Company and Don Parsons (filed as Exhibit 10.16 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006) *

10.17	-	Form of Securities Purchase Agreement for the purchase of the Company’s Series A Convertible Preferred Stock (filed as Exhibit 10.17 to the Company's Form 8-K dated December 6, 2006, and filed with the SEC on December 11, 2006) *

10.18	-	Purchase and Sale Agreement dated November 13, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.18 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006) *

10.19	-	Form of Subscription Agreement (with Put Option) dated November 20, 2006, between the Company and the subscribers thereto (filed as Exhibit 10.19 to the Company's Form 8-K dated December 11, 2006, and filed with the SEC on December 14, 2006) *

10.20	-	First Amendment to Purchase and Sale Agreement executed on December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.20 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.21	-	Subscription Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.21 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.22	-	Registration Rights Agreement dated December 29, 2006, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC, Rich Holdings, LLC, and John W. Barton (filed as Exhibit 10.22 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.23	-	Farmout Agreement executed on January 3, 2007, and dated as of December 19, 2006, between the Company and Ptarmigan Resources Limited (filed as Exhibit 10.23 to the Company's Form 8-K dated December 29, 2006, and filed with the SEC on January 8, 2007) *

10.24	-	Second Amendment to Purchase and Sale Agreement dated effective February 8, 2007, between the Company and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.24 to the Company's Form 8-K dated February 8, 2007, and filed with the SEC on February 15, 2007) *

10.25	-	Third Amendment to Purchase and Sale Agreement dated effective March 1, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.1 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007) *

10.26	-	Fourth Amendment to Purchase and Sale Agreement dated effective March 22, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.2 to the Company's Form 8-K dated March 22, 2007, and filed with the SEC on March 26, 2007) *

10.27	-	Fifth Amendment to Purchase and Sale Agreement dated effective April 12, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.27 to the Company's Form 8-K dated April 12, 2007, and filed with the SEC on April 18, 2007) *

10.28	-	Sixth Amendment to Purchase and Sale Agreement executed on April 30, 2007, and dated effective April 24, 2007, between Tekoil and Gas Gulf Coast, LLC, and Masters Resources, LLC, and Masters Oil & Gas, LLC (filed as Exhibit 10.28 to the Company's Form 8-K dated April 30, 2007, and filed with the SEC on May 3, 2007) *

10.29	-	Credit and Guaranty Agreement dated as of May 11, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, and the other Guarantors (defined therein), the Lenders (defined therein), and J. Aron & Company, as Syndication Agent and Administrative Agent for the Lenders (filed as Exhibit 10.29 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.30	-	Note dated May 11, 2007, in the principal amount of $50 million, made by Tekoil and Gas Gulf Coast, LLC to J. Aron & Company (filed as Exhibit 10.30 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.31	-	Pledge and Security Agreement dated as of May 11, 2007, by and among Tekoil and Gas Gulf Coast, LLC, each of the affiliates of the Company signatory thereto, whether as an original signatory thereto or as an Additional Grantor (defined therein), and J. Aron & Company, as administrative agent for the Beneficiaries (defined therein) (filed as Exhibit 10.31 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.32	-	Pledge Agreement dated as of May 11, 2007, by and between the Company and J. Aron & Company, as administrative agent for the Beneficiaries (defined therein) (filed as Exhibit 10.32 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.33	-	Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and Financing Statement dated May 11, 2007, from Tekoil and Gas Gulf Coast, LLC to John Howie, as Trustee, and J. Aron & Company, as Agent (filed as Exhibit 10.33 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.34	-	Blocked Deposit Account Control Agreement dated as of May 11, 2007, among Tekoil and Gas Gulf Coast, LLC, J. Aron & Company and Amegy Bank National Association (filed as Exhibit 10.34 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.35	-	Default Deposit Account Control Agreement dated as of May 11, 2007, among Tekoil and Gas Gulf Coast, LLC, J. Aron & Company and Amegy Bank National Association (filed as Exhibit 10.35 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.36	-	Conveyance of Overriding Royalty Interest dated as of May 11, 2007, but effective as of October 1, 2006, at 12:00 a.m. local time at the location of the property described therein, made by Tekoil and Gas Gulf Coast, LLC and its Affiliates, to and in favor of MTGLQ Investors, L.P. (filed as Exhibit 10.36 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.37	-	Warrant to purchase 900,000 shares of the Company’s Common Stock, dated May 11, 2007, issued to Goldman, Sachs & Co. by the Company (filed as Exhibit 10.37 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.38	-	Amended and Restated Operating Agreement of Tekoil and Gas Gulf Coast, LLC (formerly known as Masters Acquisition Co., LLC), dated May 11, 2007 (filed as Exhibit 10.38 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.39	-	Registration Rights Agreement dated as of May 11, 2007, by and between the Company and Goldman, Sachs & Co. (filed as Exhibit 10.39 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.40	-	Assignment and Bill of Sale executed May 11, 2007, and effective October 1, 2006, at 12:00 midnight Central Standard Time, from Masters Resources, LLC and Masters Oil & Gas, LLC to Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.40 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.41	-	Assignment of Overriding Royalty executed May 11, 2007, and effective as of October 1, 2006, at 7:00 a.m. Central Daylight Savings Time, from Masters Resources, LLC and Masters Oil & Gas, LLC to Masters Pipeline, LLC (filed as Exhibit 10.41 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.42	-	Indemnity Agreement dated as of May 11, 2007, among Masters Resources, LLC, Masters Oil & Gas, LLC and Masters Pipeline, LLC and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.42 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.43	-	Management Services Agreement dated as of May 11, 2007, by and between the Company and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.43 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.44	-	ISDA Master Agreement dated as of May 11, 2007, between J. Aron & Company and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.44 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.45	-	Schedule to the ISDA Master Agreement dated as of May 11, 2007, between J. Aron & Company and Tekoil and Gas Gulf Coast, LLC (filed as Exhibit 10.45 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.46	-	Transfer Acknowledgement and Agreement dated May 11, 2007, among the Company and Masters Resources, LLC, Masters Oil & Gas, LLC, Rich Holdings LLC and John W. Barton (filed as Exhibit 10.46 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.47	-	Transaction Confirmation, dated May 11, 2007, from J. Aron & Company to Tekoil and Gas Gulf Coast, LLC, effective May 1,2007 — Contract Reference 897282314 1 1 (filed as Exhibit 10.47 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.48	-	Transaction Confirmation, dated May 11, 2007, from J. Aron & Company to Tekoil and Gas Gulf Coast, LLC, effective June 1, 2007 — Contract Reference 897282306 1 1 (filed as Exhibit 10.48 to the Company’s Form 8-K/A dated May 11, 2007, and filed with the SEC on May 23, 2007) *

10.49	-	Amendment No. 1 and Waiver dated as of July 3, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, and the other Guarantors (defined therein), the Lenders (defined therein), and J. Aron & Company, as Lead Arranger and as Syndication Agent, and J Aron & Company, as Administrative Agent for the Lenders (filed as Exhibit 10.49 to the Company’s Form 8-K dated July 3, 2007, and filed with the SEC on July 10, 2007) *

10.50	-	Letter Agreement dated July 3, 2007, by and among Amegy Bank National Association, Tekoil and Gas Gulf Coast, LLC, and J. Aron & Company (filed as Exhibit 10.50 to the Company’s Form 8-K dated July 3, 2007, and filed with the SEC on July 10, 2007) *

10.51	-	Amendment No. 2 and Waiver dated as of August 15, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, the Lenders, J. Aron & Company, as Lead Arranger and as Syndication Agent, and J. Aron & Company, as Administrative Agent for the Lenders and as counterparty under the ISDA Master Agreement dated as of May 11, 2007. (filed as Exhibit 10.51 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.52	-	Tekoil & Gas Corporation Omnibus Equity Plan, adopted by the Company’s Board of Directors on August 15, 2007. (filed as Exhibit 10.52 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.53	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Mark S. Western. (filed as Exhibit 10.53 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.54	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Richard Creitzman. (filed as Exhibit 10.54 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.55	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Francis G. Clear. (filed as Exhibit 10.55 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.56	-	Stock Option Agreement dated August 15, 2007, by and between the Company and Gerald Goodman. (filed as Exhibit 10.56 to the Company’s Form 8-K dated August 15, 2007, and filed with the SEC on August 21, 2007) *

10.57	-	Amendment No. 3 and Waiver, dated as of October 24, 2007, by and among Tekoil and Gas Gulf Coast, LLC, the Company, the Lenders, J. Aron & Company, as Lead Arranger and as Syndication Agent, and J Aron & Company, as Administrative Agent for the Lenders and as counterparty under the ISDA Master Agreement dated as of May 11, 2007. (filed as Exhibit 10.57 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.58	-	Limited Guaranty, dated as of October 24, 2007, by Mark S. Western in favor of J. Aron & Company, as Administrative Agent. (filed as Exhibit 10.58 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.59	-	Loan Agreement, dated October 24, 2007, by and between the Company and Tri Star Capital Ventures Limited (the “Lender”). (filed as Exhibit 10.59 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.60	-	Deed of Guarantee, dated October 24, 2007, by and between Mark S. Western, as Guarantor, and the Lender. (filed as Exhibit 10.60 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.61	-	Deed of Guarantee, dated October 24, 2007, by and between Gerald Goodman, as Guarantor, and the Lender. (filed as Exhibit 10.61 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.62	-	Deed of Guarantee, dated October 24, 2007, by and between Francis G. Clear, as Guarantor, and the Lender. (filed as Exhibit 10.62 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.63	-	Deed of Guarantee, dated October 24, 2007, by and between Richard Creitzman, as Guarantor, and the Lender. (filed as Exhibit 10.63 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

10.64	-	Consulting Agreement, dated October 24, 2007, by and between the Company and Portland Worldwide Investments Limited. (filed as Exhibit 10.63 to the Company’s Form 8-K dated October 24, 2007, and filed with the SEC on October 29, 2007) *

11.1	-	Statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this report on Form 10-QSB.

31.1	-	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith)

31.2	-	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith)

32.1	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)

32.2	-	Certifications of Chief Executive Officer pursuant to Section 1350 (furnished herewith)

Incorporated herein by reference. SEC File No. 0-52100

Tekoil & Gas (TKGN) Inactive 10QSB2007 Q3 Quarterly report (small business)