UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) ~~December~~September 56, 2006

SOURCE PETROLEUM INC.
(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of incorporation)

000-51241
(Commission File Number)

98-0443283
(IRS Employer Identification No.)

Suite 620, 304 - 8^th Avenue, S.W., Calgary, Alberta T2P 1C1 Canada

(Address of principal executive offices and Zip Code)

403.444.2893 x 223
Registrant's telephone number, including area code

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Item 21.0301 ~~Creation~~Entry ofInto a ~~Direct~~Material ~~Financial~~Definitive ~~Obligation or an Obligation under an Off-Balance Sheet~~Agreement

~~Arrangement~~On ofSeptember 6, 2006, we entered into an employment agreement with Hussein Charanek to act as our president, chief executive officer, chief financial officer and as a director. The agreement is ~~Registrant~~of an indeterminate duration. Mr. Charanek may receive bonuses at the discretion of the Board of Directors.

OnAdditionally, ~~December~~on 5September 22, 2006, we entered into ~~a Forbearance~~an ~~Agreement~~employment ~~among~~agreement ~~our company, K2 Principal Fund L.P. and Fuel-x International Inc. We signed a letter of intent~~ with ~~Fuel-x~~Tarik ~~International Inc~~G. on ~~November~~Elsaghir ~~17, 2006~~ to ~~potentially~~act ~~acquire~~as ~~the business of Fuel-x~~a ~~International~~director. ~~One~~The ofagreement ~~the~~is ~~condition precedents in the letter~~ of ~~intent~~an ~~was satisfactory~~indeterminate ~~negotiation~~duration. ~~with K2 Principal Fund L~~Mr.P. ~~because~~Elsaghir ~~Fuel-x~~may ~~International~~receive ~~Inc.~~bonuses isat ~~indebted to K2 Principal Fund L.P. in~~ the ~~amount~~discretion of ~~$9,300,000.~~ ~~The Forbearance Agreement signed among our company, K2 Principal Fund L.P. and Fuel-x International Inc. was~~ the ~~result~~Board of ~~such negotiation~~Directors.

- 2 -

~~Pursuant~~Item ~~to the Forbearance Agreement so K2 Principal Fund L~~9.P01. ~~would~~Financial ~~forbear~~Statements ~~Fuel-x International Inc.’s obligations under the Credit Facility Agreement entered into on January 31, 2006~~ and ~~subsequently~~ ~~amended on August 10, 2006 and October 19, 2006, upon completion of the followings:~~Exhibits

110.1 aForm ~~cash payment~~ of ~~Cdn $2,500,000 from~~Employment ~~our company to K2 Principal Fund L.P., which we have made upon execution of the Forbearance~~ Agreement;.

~~2. a cash payment of Cdn $3,500,000 to K2 Principal Fund L.P. upon completion of a plan of arrangement or other business combination between our company and Fuel-x International Inc.;~~SIGNATURES

3.Pursuant ~~conversion~~to of the ~~remaining~~requirements ~~principal~~of the ~~and~~Securities ~~accrued~~Exchange ~~interest~~Act ~~due~~of on1934, the ~~credit~~registrant ~~facility~~has ~~into~~duly ~~common~~caused ~~shares~~this inreport ~~the~~to ~~capital~~be ~~stock~~signed ofon ~~our~~its ~~company~~behalf orby of the ~~company~~undersigned ~~resulting~~hereunto ~~from~~duly ~~the plan of arrangement between our company and Fuel-x International Inc~~authorized. ~~at a deemed value of US $1.23 per common share (subject to adjustment);~~

4.SOURCE ~~upon~~PETROLEUM ~~completion of the plan of arrangement or other business combination between our company and Fuel-x International Inc~~INC.~~, we will convert K2 Principal Fund L.P.’s 3,720,000 warrants of Fuel-x International Inc. for 1,660,714 warrants of the resulting company; and~~

5.By: ~~upon~~/s/ ~~completion~~Hussein ofCharanekHussein ~~the plan of~~CharanekPresident, ~~arrangement~~Chief orExecutive ~~other~~Officer ~~business combination between our company~~ and ~~Fuel-x~~DirectorDate: ~~International~~December ~~Inc.~~6, ~~we will further issue 2,000,000 warrants of the resulting company to K2 Principal Fund L.P. to purchase a common share of the resulting company at US $1.80 for a period 24 months.~~2006

However, if Fuel-x International Inc. is not able to get at least 66.66% of its debenture holders, who hold debentures issued by Fuel-x International Inc. in the aggregate amount of Cdn $11,770,000 to enter into a lockup and standstill agreement by December 15, 2006, or if we announce that we will proceed with a plan of arrangement or other business combination with Fuel-x International Inc. before such lockup and standstill agreement is executed, K2 Principal Fund L.P. will return the Cdn $2,500,000 to us and our obligations under the Forbearance Agreement will cease. In the event that a lockup and standstill agreement with the debenture holders is signed by December 15, 2006 and the plan of arrangement or other business combination between our company and Fuel-x International Inc. is not completed by March 31, 2007, the Forbearance Agreement will also terminate and the payment by our company to K2 Principal Fund L.P. of the Cdn $2,500,000 shall be treated as a loan to Fuel-x International Inc.

Item 9.01. Financial Statements and Exhibits.

10.1 Forbearance Agreement dated December 5, 2006 among our company, K2 Principal Fund L.P. and Fuel-x International Inc.

SIGNATURES

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

SOURCE PROJECTS INC./s/ Tarik ElsaghirBy: Tarik ElsaghirDirectorDate: December 12, 2006

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