SUPERIOR OIL & GAS CO 10-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

¨ TRANSITION UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

000-50173

(Commission File Number)

Superior Oil and Gas Co.

(Exact name of registrant as specified in its charter)

Nevada		87-0537621
(state of incorporation)		(IRS Employer I.D. Number)

844 South Walbaum Road

Calumet, OK 73014

(405) 884-2080

____________________________________________________

(Address and telephone number of registrant's principal

executive offices and principal place of business)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past twelve 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨		Smaller reporting company x

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

State issuer’s revenues for its most recent fiscal year: $35,481

State the aggregate market value of the 42,984,082 voting and non-voting common equity held by non-affiliates computed by reference to the $0.048 average bid and asked price of such common equity, as of June 30, 2009, the last business day of the registrant’s most recently completed second fiscal quarter: $2,063,236

As of April 9, 2010 there were 195,234,082 shares of the Registrant's Common Stock, par value $0.001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None

TABLE OF CONTENTS

		Page

	PART I

Item 1	Business	1
	Business Development	1
	Our Business	1
	Distribution Methods	2
	Competitive Business Conditions	2
	Source and Availability of Raw Materials	3
	Major Customers	3
	Patents, Trademarks, Royalties, Etc.	3
	Government Regulations	3
	Environmental Compliance and Risks	5
	Employees	5

Item 1A	Risk Factors	6

Item 2	Properties	15

Item 3	Legal Proceedings	16

	PART II

Item 5	Market for Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	18

Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Off-Balance Sheet Arrangements	22

Item 8	Financial Statements	22

Item 9	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	38

Item 9A(T)	Controls and Procedures	38

Item 9B	Other Information	39

	PART III

Item 10	Directors, Executive Officers, Promoters and Corporate Governance; Compliance with Section 16(a) of the Exchange Act	39
	Code of Ethics	41
	Corporate Governance	41
	Compliance with Section 16(a) of the Exchange Act	42

Item 11	Executive Compensation	42
	Equity Compensation Plans	44

Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44

Item 13	Certain Relationships and Related Transactions and Director Independence	44

Item 14	Principal Accountant Fees and Services	45

	PART IV

Item 15	Exhibits	46

Signatures		48

iii

PART I

ITEM 1. BUSINESS.

Business Development.

Our company, Superior Oil and Gas Co., a Nevada corporation, has two predecessors in interest. On February 22, 1989 there was incorporated under the laws of the State of Utah a corporation named Western States Resources, Inc. On February 24, 1997 there was incorporated under the laws of the State of Nevada a corporation named Western States Resources US Inc. On March 31, 1997 these two corporations merged. The surviving corporation was the Nevada corporation, but it changed its name at the time of the merger to Red River Resources, Inc. On June 5, 1997 Red River Resources, Inc. changed its name to Superior Oil and Gas Co., the present name of this Nevada corporation.

Our Business.

We explore for and produce oil and gas that we sell to oil and gas gatherers. The gas sometimes is sold directly to the public utility companies. We do our exploration with working interest partners and oil and gas companies that wish to invest in the oil and gas business. A working interest partner buys a percent in a project or well and receives a share of the monthly net revenue of that well (gross revenue less royalties, taxes and operating expenses) based on his percentage of ownership in the well or project. If a well experiences a net loss for a month, a working interest partner is billed for his percentage share of the costs of operating the well in excess of the revenues received. In all of the projects we have, we are the operating working interest partner and the other working interest partners have no involvement in the management of the well or project. The working interest partner receives a recordable assignment for his share of the well or project. The share of revenues and expenses of the working interest partners is not included in the revenue and expenses of our company.

We currently own a one-half interest in leases with 240 (120 acres net) undeveloped acres in Oklahoma and Texas and are negotiating for leases in other states in addition to where we are currently operating. In 2006 we drilled two wells. We produced minimal amounts of oil and gas from those wells in 2007 and 2008. One of the wells was lost in 2009 due to lack of production and the other was lost due to a judgement which was placed on the well and not satisfied. We started drilling a third well at the end of 2007, which was completed in 2008, and a fourth well in January 2009. We also did a recompletion on another well in 2008. The three wells drilled or recompleted in 2008 were productive for part of 2008 and 2009 but have been shut-in from time to time due to cash flow problems of the company.

Our focus for the current fiscal year will be on developing our existing properties, while continuing to pursue acquisition of additional leases and/or existing oil and gas production which has potential for increased production either through additional drilling on its property or applying modern techniques to increase the production already in place.

Distribution Methods

We distribute oil and gas that we produce through oil and gas gathering companies with the gas sometimes being sold directly to public utility companies.

Our distribution agreements for oil provide for an oil wholesaler to pick up oil from our tanks and pay us according to the market prices at the time the oil is picked up at our tanks. There is a great demand for oil and there are several companies we can have pick the oil up. We have no long-term contracts with any one company.

Our distribution agreements for gas provide for us to tap into the distribution line of a gas distribution company, and we are paid for our gas at the market price at the time of delivery less any transportation charge from the gas transmission company. These charges can range from 5% upward of the market value of the gas, depending on the competition among transmission companies in the area of the wells.

Competitive Business Conditions

We operate in a highly competitive environment for acquiring properties, modernizing existing wells, marketing oil and natural gas and securing trained personnel. The majority of our competitors possess and employ financial, technical and personnel resources substantially greater than ours, which can be particularly important in the areas in which we operate. Those companies may be able to pay more for productive oil and natural gas properties and exploratory prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Also, there is substantial competition for capital available for investment in the oil and natural gas industry.

Current competitive factors in the domestic oil and gas industry are unique. The actual price range of crude oil is largely established by major international producers. Pricing for natural gas is more regional; however, more favorable prices can usually be negotiated for larger quantities of oil and/or gas product. In this respect, while we believe we have a price disadvantage when compared to larger producers, we view our primary pricing risk to be related to a potential decline in international prices to a level which could render our current production uneconomical.

We are presently committed to use the services of the existing gathering companies in our present areas of production. This potentially gives such gathering companies certain short-term relative monopolistic powers to set gathering and transportation costs, because obtaining the services of an alternative gathering company would require substantial additional costs (since an alternative gathering would be required to lay new pipeline and/or obtain new rights of way to any lease from which we are selling production).

Source and Availability of Raw Materials

We have no significant raw materials. However, we make use of numerous oil field service companies in the drilling of wells. We currently operate now only in Oklahoma, where there are numerous oil field service companies.

Major Customers

We principally sell our oil and natural gas production to marketers and other purchasers that have access to nearby pipeline facilities. In areas where there is no practical access to pipelines, oil is trucked to storage facilities. Our marketing of oil and natural gas can be affected by factors beyond our control, the effects of which cannot be accurately predicted. For the fiscal year 2009, we had multiple purchasers for both our oil and natural gas production. However, we believe that the loss of any of these oil and gas purchasers would not materially impact our business, because we could readily find other purchasers for our oil and gas as produced.

Patents, Trademarks, Royalties, Etc.

We have no patents, trademarks, licenses, concessions, or labor contracts. We pay royalties to mineral owners and owners of overriding royalties on oil and gas leases. These royalties usually are 25%. The leases are good and royalties are owed as long as there is production on the property.

Governmental Regulations

Regulation of Transportation of Oil

Sales of crude oil, condensate and natural gas liquids are not currently regulated and are made at negotiated prices. Nevertheless, Congress could reenact price controls in the future.

Our sales of crude oil are affected by the availability, terms and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate regulation. The Federal Energy Regulatory Commission, or the FERC, regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.

Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors. Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity, access is governed by pro-rationing provisions set forth in the pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors.

Regulation of Transportation and Sale of Natural Gas

Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 and regulations issued under those Acts by the FERC. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at uncontrolled market prices, Congress could reenact price controls in the future.

Since 1985, the FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers on an open and non-discriminatory basis. The FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services. Although the FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry.

We cannot accurately predict whether the FERC’s actions will achieve the goal of increasing competition in markets in which our natural gas is sold. Therefore, we cannot provide any assurance that the less stringent regulatory approach recently established by the FERC will continue. However, we do not believe that any action taken will affect us in a way that materially differs from the way it affects other natural gas producers.

Intrastate natural gas transportation is subject to regulation by state regulatory agencies. The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny given to intrastate natural gas pipeline rates and services varies from state to state. Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors.

Regulation of Production

The production of oil and natural gas is subject to regulation under a wide range of local, state and federal statutes, rules, orders and regulations. Federal, state and local statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. All of the states in which we own and operate properties have regulations governing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum allowable rates of production from oil and natural gas wells, the regulation of well spacing, and plugging and abandonment of wells. The effect of these regulations is to limit the amount of oil and natural gas that we can produce from our wells and to limit the number of wells or the locations at which we can drill, although we can apply for exceptions to such regulations or to have reductions in well spacing. Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas and natural gas liquids within its jurisdiction.

The failure to comply with these rules and regulations can result in substantial penalties. Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations.

Environmental Compliance and Risks

Our oil and natural gas exploration, development and production operations are subject to stringent federal, state and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Historically, most of the environmental regulation of oil and gas production has been left to state regulatory boards or agencies in those jurisdictions where there is significant gas and oil production, with limited direct regulation by such federal agencies as the Environmental Protection Agency. However, while we believe this generally to be the case for our production activities in Oklahoma, there are various regulations issued by the Environmental Protection Agency (“EPA”) and other governmental agencies that would govern significant spills, blow-outs, or uncontrolled emissions.

In Oklahoma, specific oil and gas regulations apply to the drilling, completion and operations of wells, and the disposal of waste oil and salt water. There are also procedures incident to the plugging and abandonment of dry holes or other non-operational wells, all as governed by the applicable governing state agency.

At the federal level, among the more significant laws and regulations that may affect our business and the oil and gas industry are: The Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as “CERCLA” or Superfund; the Oil Pollution Act of 1990; the Resource Conservation and Recovery Act, also known as “RCRA”; the Clean Air Act; Federal Water Pollution Control Act of 1972, or the Clean Water Act; and the Safe Drinking Water Act of 1974.

Compliance with these regulations may constitute a significant cost and effort for us. No specific accounting for environmental compliance has been maintained or projected by us at this time. We are not presently aware of any environmental demands, claims, or adverse actions, litigation or administrative proceedings in which either us or our acquired properties are involved or subject to, or arising out of any predecessor operations.

In the event of a breach of environmental regulations, these environmental regulatory agencies have a broad range of alternative or cumulative remedies which include: ordering a clean-up of any spills or waste material and restoration of the soil or water to conditions existing prior to the environmental violation; fines; or enjoining further drilling, completion or production activities. In certain egregious situations the agencies may also pursue criminal remedies against us or our principal officers.

Employees

We have one full-time and no part-time employees.

ITEM 1A. RISK FACTORS

You should carefully consider each of the risks described below, together with all of the other information contained or incorporated by reference in this Annual Report. If any of the following risks develop into actual events, our business, financial condition or results of operations could be materially adversely affected and the trading prices of our common stock could decline.

General Risks Related to Our Company

We Have a Limited Operating History.

Because our business plan was recently adopted, we have a limited operating history. Such limited operating history makes it more difficult to predict whether or not we will be successful in the future. Our future financial and operational success is subject to the risks, uncertainties, expenses, delays and difficulties associated with managing a new business, many of which may be beyond our control. In addition, we compete in a volatile and highly price sensitive industry and we may face many uncertainties. Our success will depend on many factors, including those described in this Risk Factors section.

We Have a History of Losses and May Need Additional Financing.

We have experienced operating losses, as well as net losses, for each of the years during which we have operated. We anticipate future losses and negative cash flow to continue for the foreseeable future.

To date, we have received only limited revenue from the sale of our products. We have incurred significant costs in connection with the development of our leases and properties and there is no assurance that we will achieve sufficient revenues to offset anticipated operating costs. Although we anticipate deriving revenues from the sale of our oil and gas production, no assurance can be given that these products can be sold on a net profit basis. Included in such former and future losses are development expenses and general and administrative expenses. We anticipate that our losses will continue until we are able to generate sufficient revenues to support our operations. If we achieve profitability, we cannot give any assurance that we would be able to sustain or increase profitability on a quarterly or annual basis in the future.

Similarly, in the future, we may not generate sufficient revenue from operations to pay our operating expenses. If we fail to generate sufficient cash from operations to pay these expenses, our management will need to identify other sources of funds. We may not be able to borrow money or issue more shares of common or preferred stock to meet our cash needs. Even if we can complete such transactions, they may not be on terms that are favorable or reasonable from our perspective.

We May Not Be Able to Borrow Funds.

There currently are no legal limitations on our ability to borrow funds to increase the amount of capital available to us to carry out our business plan. However, our limited resources and limited operating history will make it difficult to borrow funds. The amount and nature of any such borrowings would depend on numerous considerations, including our capital requirements, our perceived ability to meet debt service on any such borrowings and the then prevailing conditions in the financial markets, as well as general economic conditions. There can be no assurance that debt financing, if required or sought, would be available on terms deemed to be commercially acceptable by us and in our best interest.

Managing Growth and Expansion.

We currently anticipate a period of growth as a result of the recent changes in our corporate structure and the production and sale of oil and gas under the leases on our properties. The resulting strain on our managerial, operational, financial and other resources could be significant. Success in managing any such expansion and growth will depend, in part, upon the ability of senior management to manage effectively. Any failure to manage the anticipated growth and expansion could have a material adverse effect on our business.

Risks Relating to the Oil and Natural Gas Industry and Our Business

A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.

The prices we receive for our oil and natural gas production heavily influence our revenue, profitability, access to capital and future rate of growth. Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile. These markets will likely continue to be volatile in the future. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control. These factors include, but are not limited to, the following:

	•	changes in global supply and demand for oil and natural gas;

	•	the actions of the Organization of Petroleum Exporting Countries, or OPEC;

	•	the price and quantity of imports of foreign oil and natural gas;

	•	political conditions, including embargoes, in or affecting other oil-producing activity;

	•	the level of global oil and natural gas exploration and production activity;

	•	the level of global oil and natural gas inventories;

	•	weather conditions;

	•	technological advances affecting energy consumption; and

•

the price and availability of alternative fuels.

Lower oil and natural gas prices may not only decrease our revenues on a per share basis but also may reduce the amount of oil and natural gas that we can produce economically. Lower prices will also negatively impact the value of our proved reserves when and if we have them. A substantial or extended decline in oil or natural gas prices may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.

A substantial percentage of our properties are undeveloped; therefore the risk associated with our success is greater than would be the case if the majority of our properties were categorized as proved developed producing.

Because none of our properties are proven properties we will require significant additional capital to develop such properties before they may become productive. Further, because of the inherent uncertainties associated with drilling for oil and gas, some of these properties may never be developed to the extent that they result in positive cash flow. Even if we are successful in our development efforts, it could take several years for a significant portion of our undeveloped properties to be converted to positive cash flow.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.

Our future success will depend on the success of our exploitation, exploration, development and production activities. Our oil and natural gas exploration and production activities are subject to numerous risks beyond our control, including the risk that drilling will not result in commercially viable oil or natural gas production. Our decisions to purchase, explore, develop or otherwise exploit prospects or properties will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations. Please read “—Reserve estimates depend on many assumptions that may turn out to be inaccurate” (below) for a discussion of the uncertainty involved in these processes. Our cost of drilling, completing and operating wells is often uncertain before drilling commences. Overruns in budgeted expenditures are common risks that can make a particular project uneconomical. Further, many factors may curtail, delay or cancel drilling, including the following:

	•	delays imposed by or resulting from compliance with regulatory requirements;

	•	pressure or irregularities in geological formations;

	•	shortages of or delays in obtaining equipment and qualified personnel;

	•	equipment failures or accidents;

	•	adverse weather conditions;

	•	reductions in oil and natural gas prices;

•

title problems; and

•

limitations in the market for oil and natural gas.

If our assessments of recently purchased properties are materially inaccurate, it could have significant impact on future operations and earnings.

The successful acquisition of producing properties requires assessments of many factors, which are inherently inexact and may be inaccurate, including the following:

	•	the amount of recoverable reserves;

	•	future oil and natural gas prices;

	•	estimates of operating costs;

	•	estimates of future development costs;

	•	estimates of the costs and timing of plugging and abandonment; and

•

potential environmental and other liabilities.

Our assessment will not reveal all existing or potential problems, nor will it permit us to become familiar enough with the properties to assess fully their capabilities and deficiencies.

If oil and natural gas prices decrease, we may be required to take write-downs of the carrying values of our oil and natural gas properties, potentially negatively impacting the trading value of our securities.

Accounting rules require that we review periodically the carrying value of our oil and natural gas properties for possible impairment. Based on specific market factors and circumstances at the time of prospective impairment reviews, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our oil and natural gas properties. A write-down could constitute a non-cash charge to earnings. It is likely the cumulative effect of a write-down could also negatively impact the trading price of our securities.

Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

The process of estimating oil and natural gas reserves is complex. It requires interpretations of available technical data and many assumptions, including assumptions relating to economic factors. Any significant inaccuracies in these interpretations or assumptions could materially affect the estimated quantities and present value of our reported reserves.

In order to prepare our estimates, we must project production rates and timing of development expenditures. We must also analyze available geological, geophysical, production and engineering data. The extent, quality and reliability of this data can vary. The process also requires economic assumptions about matters such as oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. Therefore, estimates of oil and natural gas reserves are inherently imprecise.

Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and natural gas reserves most likely will vary from our estimates. Any significant variance could materially affect the estimated quantities and present value of our reported reserves. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development, prevailing oil and natural gas prices and other factors, many of which are beyond our control.

You should not assume that the present value of future net revenues from our reported proved reserves is the current market value of our estimated oil and natural gas reserves. In accordance with SEC requirements, we generally base the estimated discounted future net cash flows from our proved reserves on prices and costs on the date of the estimate. Actual future prices and costs may differ materially from those used in the present value estimate. If future values decline or costs increase it could negatively impact our ability to finance operations, and individual properties could cease being commercially viable, affecting our decision to continue operations on producing properties or to attempt to develop properties. All of these factors would have a negative impact on earnings and net income, and most likely the trading price of our securities.

Prospects that we decide to drill may not yield oil or natural gas in commercially viable quantities.

Our prospects are in various stages of evaluation, ranging from prospects that are currently being developed, to prospects that will require substantial additional seismic data processing and interpretation. There is no way to predict in advance of drilling and testing whether any particular prospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable. This risk may be enhanced in our situation, due to the fact that a significant percentage of our properties are undeveloped. The use of seismic data and other technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling whether oil or natural gas will be present or, if present, whether oil or natural gas will be present in commercial quantities. We cannot assure you that the analogies we draw from available data from other wells, more fully explored prospects or producing fields will be applicable to our drilling prospects.

We may incur substantial losses and be subject to substantial liability claims as a result of our oil and natural gas operations.

We are not insured against all risks. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect our business, financial condition or results of operations. Our oil and natural gas exploration and production activities are subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the possibility of:

•

environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater and shoreline contamination;

	•	abnormally pressured formations;

	•	mechanical difficulties, such as stuck oil field drilling and service tools and casing collapse;

	•	fires and explosions;

	•	personal injuries and death; and

•

natural disasters.

Any of these risks could adversely affect our ability to conduct operations or result in substantial losses to our company. We may elect not to obtain insurance if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. If a significant accident or other event occurs and is not fully covered by insurance, then it could adversely affect us.

We are subject to complex laws that can affect the cost, manner or feasibility of doing business.

Exploration, development, production and sale of oil and natural gas are subject to extensive federal, state, local and international regulation. We may be required to make large expenditures to comply with governmental regulations. Matters subject to regulation include:

	•	discharge permits for drilling operations;

	•	drilling bonds;

	•	reports concerning operations;

	•	the spacing of wells;

	•	unitization and pooling of properties; and

•

taxation.

Under these laws, we could be liable for personal injuries, property damage and other damages. Failure to comply with these laws also may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties. Moreover, these laws could change in ways that substantially increase our costs. Any such liabilities, penalties, suspensions, terminations or regulatory changes could materially adversely affect our financial condition and results of operations.

Our operations may incur substantial liabilities to comply with the environmental laws and regulations.

Our oil and natural gas operations are subject to stringent federal, state and local laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the types, quantities and concentration of substances that can be released into the environment in connection with drilling and production activities, limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas, and impose substantial liabilities for pollution resulting from our operations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, incurrence of investigatory or remedial obligations or the imposition of injunctive relief. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to maintain compliance, and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition as well as the industry in general. Under these environmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or if our operations were standard in the industry at the time they were performed.

Unless we replace our oil and natural gas reserves, our reserves and production will decline, which would adversely affect our cash flows and income.

Unless we conduct successful development, exploitation and exploration activities or acquire properties containing proved reserves, our proved reserves when we find them will decline as those reserves are produced. Producing oil and natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Our future oil and natural gas reserves and production, and, therefore our cash flow and income, are highly dependent on our success in efficiently developing and exploiting our current reserves and economically finding or acquiring additional recoverable reserves. If we are unable to develop, exploit, find or acquire additional reserves to replace our current and future production, our cash flow and income will decline as production declines, until our existing properties would be incapable of sustaining commercial production.

The unavailability or high cost of drilling rigs, equipment, supplies, personnel and oil field services could adversely affect our ability to execute on a timely basis our exploration and development plans within our budget.

If the prices of oil and natural gas increases, the cost of securing drilling rigs, equipment and supplies may increase dramatically. Shortages or the high cost of drilling rigs, equipment, and supplies may occur. In addition, larger producers may be more likely to secure access to such equipment by virtue of offering drilling companies more lucrative terms. If we are unable to acquire access to such resources, or can obtain access only at higher prices, not only would this potentially delay our ability to convert our reserves into cash flow, but could also significantly increase the cost of producing those reserves, thereby negatively impacting anticipated net income.

If our access to markets is restricted, it could negatively impact our production, our income and ultimately our ability to retain our leases.

Market conditions or the unavailability of satisfactory oil and natural gas transportation arrangements may hinder our access to oil and natural gas markets or delay our production. The availability of a ready market for our oil and natural gas production depends on a number of factors, including the demand for and supply of oil and natural gas and the proximity of reserves to pipelines and terminal facilities. Our ability to market our production depends in substantial part on the availability and capacity of gathering systems, pipelines and processing facilities owned and operated by third parties. Our failure to obtain such services on acceptable terms could materially harm our business.

Currently, the majority of our production is sold to marketers and other purchasers that have access to nearby pipeline facilities. However, as we begin to further develop our properties, we may find production in areas with limited or no access to pipelines, thereby necessitating delivery by other means, such as trucking, or requiring compression facilities. Such restrictions on our ability to sell our oil or natural gas have several adverse affects, including higher transportation costs, fewer potential purchasers (thereby potentially resulting in a lower selling price) or, in the event we were unable to market and sustain production from a particular lease for an extended time, possibly causing us to lose a lease due to lack of production.

Competition in the oil and natural gas industry is intense, which may adversely affect our ability to compete.

We operate in a highly competitive environment for acquiring properties, marketing oil and natural gas and securing trained personnel. Many of our competitors possess and employ financial, technical and personnel resources substantially greater than ours, which can be particularly important in the areas in which we operate. Those companies may be able to pay more for productive oil and natural gas properties and exploratory prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Also, there is substantial competition for capital available for investment in the oil and natural gas industry. We may not be able to compete successfully in the future in acquiring prospective reserves, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital.

Risks Relating to Our Common Stock

We have no plans to pay dividends on our common stock. You may not receive funds without selling your stock.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon various factors, including our business, financial condition, results of operations, capital requirements and investment opportunities.

Provisions under Nevada law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.

While we do not believe that we currently have any provisions in our organizational documents that could prevent or delay a change in control of our company (such as provisions calling for a staggered board of directors, or the issuance of stock with super-majority voting rights), the existence of some provisions under Nevada law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock. Nevada law imposes some restrictions on mergers and other business combinations between us and any holder of 10% or more of our outstanding common stock.

Our Common Stock Is Subject To "Penny Stock" Restrictions Under Federal Securities Laws, Which Could Reduce The Liquidity Of Our Common Stock.

The Securities and Exchange Commission has adopted regulations, which generally define penny stocks to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. On April 9, 2007, the closing price for our common stock, as quoted on the Over the Counter Bulletin Board, was $0..15 per share and therefore, our common stock is designated a "Penny Stock." As a penny stock, our common stock may become subject to Rule 15g-9 under the Exchange Act or the Penny Stock Rules. These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities Exchange Act of 1934, as amended. These rules impose additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and "accredited investors" (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

The rules may further affect the ability of owners of our shares to sell their securities in any market that may develop for them. There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

The penny stock restrictions will no longer apply to our common stock if we become listed on a national exchange. In any event, even if our common stock were exempt from the penny stock restrictions, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the Securities and Exchange Commission the authority to restrict any person from participating in a distribution of penny stock, if the Securities and Exchange Commission finds that such a restriction would be in the public interest.

ITEM 2. PROPERTIES.

We occupy 3,000 square feet of office space at 844 South Walbaum Road, Calumet, Oklahoma 73014. The owner of the property is the secretary of the company. We are in the process of negotiating a lease with the individual. We currently pay $2,000 per month on a month-to-month lease.

Our oil and gas properties consist of the following:

Rio Blanco County, Colorado right-of-way for a pipeline. In May 2004, we entered into an agreement with Lloyd’s of America, Inc. to acquire its 50-foot wide and 26,000-foot long Bureau of Land Management (“BLM”) right-of-way in the White River Resource Area of Rio Blanco County, Colorado. In February 2006, we received the assigned permit from BLM. The purchase price for the right-of-way was 600,000 shares of common stock, which was paid to Lloyd’s of America in 2006, plus five additional shares of common stock for each dollar of revenue received from the operation of a planned gas pipeline until the purchase price should equal 2,500,000 shares of stock. The 29.84-acre right-of-way grants us “the right to construct, operate, maintain and terminate a four-inch, buried natural gas pipeline.” The area of interest surrounding this right-of-way contains thirteen completed but shut-in natural gas wells and drilling locations for six new wells. We estimate it will cost us approximately $1 million and take us approximately six to eight weeks to build the pipeline. We have not yet secured the acquisition of these funds, and we can give no assurance that we will be able to secure these funds or, if secured, that we can secure the funds on favorable terms.

Productive Wells and Acreage

We own an oil and gas lease in Oklahoma on which there are producing oil and gas wells in which we have working interest partners. Our aggregate interest is set forth below.

	Completed Producing Wells		Non-Productive Wells
County	Gross Wells	Net Wells	Gross Wells	Net Wells

Logan
Oil & Gas	3	1.50

The company has had cash flow problems and been forced to shut-in the wells from time to time. All of the wells have minimal commercial production.

	Developed Acreage In Non-Producing Wells

County	Gross Acreage	Net Acreage

Logan:
Oil and Gas	240	120

TOTAL	240	120

Undeveloped Oil and Gas Leases - none

Drilling Activity

We began drilling on two wells in 2006 and completed them in 2008. One of the wells had mechanical problems after a short period of production and we lost the lease due to non production. The other well was lost in a judgement action due to non-payment of some costs of its development. We also began drilling two wells in Logan County, Oklahoma at the end of 2007 which were completed in early 2008. In addition, we purchased an existing stripper well in Logan County that is adjacent to our other wells described herein for purposes of recompleting it on zones not completed when it was earlier drilled. We have had minimal production from these wells in 2008 and 2009 and they have been shut-in from time to time due to capital restraints. We are attempting to raise additional capital both for the operations as they currently exist and to enhance the production we have had.

Present Activity

We plan to continue drilling wells on this lease and acquire additional leases to drill wells as funds become available. In addition we are looking to buy existing wells on which production can be enhanced by infield drilling and work-over projects.

Delivery Commitments

We are not obligated to provide a fixed and determinable quantity of oil or natural gas in the near future under existing contracts or agreements. Further, during the last three years we had no significant delivery commitments.

ITEM 3. LEGAL PROCEEDINGS.

Following is a synopsis of lawsuits that have a potential impact on Superior Oil and Gas Company.

We are a judgment debtor in the case of Gotz Werner & Roman Werner v. Daniel Lloyd, McCoy Energy Co., Superior Oil and Gas Co., and Big Daddy’s BBQ Sauce & Spices Co., Superior Court of Arizona, Maricopa County, No. CV 99-11813. The principal amount of the judgment is $337,686 with ten percent interest accruing from and after October 14, 1999. As of December 31, 2009, the amount of the judgment including interest was $682,588.

Daniel Lloyd, McCoy Energy Co. and Big Daddy’s BBQ Sauce & Spices Co. are also judgment debtors in this litigation, each to the same extent and in the same amount as our company. Daniel Lloyd was the chief executive officer, chief financial officer and a director of our company until his death in July 2008. McCoy Energy Co. is under the control of Gayla McCoy, the secretary and treasurer of our company. Big Daddy’s BBQ Sauce & Spices Co. is under the control of Mr. Dan Lloyd, Jr. and Ms. McCoy.

Brooks Investments, LLC, et al. v. Blue Quail Resources, Inc., et al., Case No. CJ-2006-595, District Court of Canadian County, State of Oklahoma wherein Superior Oil and Gas Company, Daniel H. Lloyd and Gayla McCoy are named as co-defendants. Plaintiffs have alleged that Blue Quail Resources, Inc. committed securities fraud when it sold interests in the Lonesome River #1 oil and gas project and are seeking rescission of their contract and actual and punitive damages against Blue Quail and the other co-defendants. The primary plaintiff, an attorney, has testified that no one from Superior Oil and Gas Company nor Dan Lloyd nor Gayla McCoy ever made any representations to him regarding the Lonesome River #1 oil and gas project. Furthermore, it has been admitted by the plaintiffs that neither Superior Oil and Gas Company, Daniel Lloyd or Gayla McCoy have ever had a contractual relationship with any of the plaintiffs and that the only reason they have been named as defendants was on the basis of their attorney’s advice. That attorney has now been terminated from further representation and a Motion for Summary Judgment is now pending before the Court which Superior anticipate will result in a dismissal as to Superior Oil and Gas Company, Daniel H. Lloyd and Gayla McCoy.

HOCO Drilling, LLC v. Superior Oil and Gas Company, et al., Case No. CJ-2007-59-01, District Court of Garfield County, State of Oklahoma wherein Superior Oil and Gas Company is being sued for breach of contract by HOCO Drilling, LLC for $179,263.23, plus costs and attorneys fees. Superior filed an answer and counterclaim against HOCO for breach of contract and negligence in an amount in excess of that claimed by HOCO, plus costs and attorney’s fees. Subsequent to December 31, 2008, this lawsuit was settled with the agreement that the Company will pay to the plaintiff $100,000 within one year from May 1, 2009. The $100,000 amount is included in the accounts payable at December 31, 2009.

Julie Warren, et al. v. Superior Oil and Gas Co., et al., District Court, Garfield County, Case No. CJ-2008-325 wherein the plaintiffs have sued the company for trespassing in connection with laying a saltwater disposal line across their property in the completion of the Windy Vista well. They obtained a judgment against the company for $118,000 plus costs and attorney’s fees. During the year ended December 2009, the original judgment was overturned and has been settled for $65,000. The amount of the settlement is included in accounts payable on the balance sheet at December 31, 2009.

Midwest Mortgage Brokers and Paul Gee v. Hershey S. Baum, et al., Case No. CJ-2004-7796, District Court of Tulsa County, State of Oklahoma wherein Superior Oil and Gas Company is a named co-defendant involves a loan that was made by Paul Gee and Midwest Mortgage Brokers and Paul Gee to Hershey S. Baum and others for which Superior Oil and Gas purportedly agreed to repurchase 100,000 shares of stock from plaintiffs as part of the consideration for making the loan. The court granted summary judgment against Superior Oil and Gas Company in the amount of $286,448.39 on April 23, 2008 and Superior has filed an appeal from this judgment with the Oklahoma Supreme Court. Superior has recorded $286,448.39 in accounts payable at balance sheet date to cover the cost of this judgment.

James B. Jackson v. Superior Oil & Gas Co., District Court, Canadian County, Case No. CJ-2008-87. The plaintiff’s claims relate to geological service provided to Superior for which he has not been paid. A default judgment was entered against the Superior in the amount of $14,578.29 plus costs and attorney’s fees. Sufficient amounts have been recorded in accounts payable at the balance sheet date to cover the cost of this judgment.

Eagle Well Services, Inc. v. Superior Oil and Gas Co., District Court, Oklahoma County, Case No. CJ-2009-773 involves a claim by Eagle Well Services d/b/a Bronco Energy Services for $94,649.69 for services performed by it for the company. The amount of the claim is in accounts payable at December 31, 2009.

Superior Oil and Gas Co. v. Vince Freechea, District Court, Oklahoma County, Case No. CJ-2009-1793 involves a claim by Superior against an individual who operated a company known as High Plains Tubular. The claim arises out of that individual’s procurement of casing and tubing on behalf of Superior. Mr. Freechea subsequently wrongfully sold this casing and tubing to a third party and refused to remit the proceeds of the sale to Superior. Superior paid Mr. Freechea in excess of $220,000 for the product and is seeking to recover its cost plus the profit for a total of $350,000.

PART II

ITEM5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock trades on the OTC Bulletin Board under the stock symbol “SIOR.” The following sets forth the range of high and low bid information for the stock for the last two fiscal years as reported by the OTC Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Period	High	Low
2008:
1st Qtr	0.30	0.11
2nd Qtr	0.42	0.11
3rd Qtr	0.23	0.09
4th Qtr	0.20	0.03

2009:
1st Qtr	0.075	0.013
2nd Qtr	0.06	0.013
3rd Qtr	0.06	0.013
4th Qtr	0.034	0.013

Holders

As of April 9, 2010 there were approximately 185 holders of record of our Common Stock.

Dividends

We have paid no dividends to our common stockholders and do not plan to pay dividends on our Common Stock in the foreseeable future. We currently intend to retain any earnings to finance future growth.

Securities Authorized for Issuance Under Equity Compensation Plans.

We have no compensation plans under which equity securities are authorized for issuance.

Recent Sales of Unregistered Securities.

During August and November, 2009, the registrant sold 27,500,000 shares of its common stock to 11 accredited investors in exchange for services rendered to the company. The sales were made pursuant to the provisions of Rule 506 of Regulation D. All of the investors were well-acquainted with the operations of the company and were shareholders of many years.

There were no repurchases of our securities made by us or any affiliated purchasers in the fourth quarter of our last fiscal year.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto for the period ended December 31, 2009 and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere. See "Item 1. Financial Statements." The discussion includes management’s expectations for the future.

Such expressions of expectation are not historical in nature and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially from those expressed in any forward-looking statement.

We had oil and gas revenue for our interest in three oil and gas wells totaling $35,481 for the year ended December 31, 2009 compared $98,028 revenue from five oil and gas wells in the same period of 2008.

Late in 2006 we drilled two oil and gas wells which were initially completed in 2007. The neutron log on the Windy Vista #1 well in Garfield County, Oklahoma indicated numerous formations which may contain oil or natural gas. Initial completion attempts on the Wilcox Formation were not commercially successful, we believe, due to a poor cement job. We have later completed the well in the Mississippi zone.

Initial completion attempts in the Wilcox Formation on the Lonesome River #1 well in Blaine County, Oklahoma indicated substantial amounts of water. The well was completed in the Viola zone. The company also fractured the Hunton and Mississippi zones to enhance production on this well. We were able to get minimal production from this well.

The revenue in 2008 was from our working interest from sporadic production in these two wells while we were attempting their completion.

The Windy Vista well was lost in 2009 to a judgement creditor due to unpaid bills on the wells development. The Lonesome River well was lost due to non production.

In December of 2007 we began drilling on the Chickie #1 well in Logan County, Oklahoma which we completed in 2008. In 2008 we also drilled the Gayla #1 well in Logan County, Oklahoma and did a recompletion on the Lindsey #1 well in Logan County, Oklahoma which was on the lease that we acquired in Logan County.

Through December 31, 2008 we had spent $7,128,800 on these wells. Investors had put up $6,754,813 through December 31, 2008 for working interests - 63% of the Windy Vista #1 well, 56% of the Lonesome River #1 well and 50% of the Chickie #1, Gayla #1 and Lindsey #1 wells. This amount includes $932,997 which was invested for working interests by two parties in 2006 and their interests were returned to us in a court action in 2007 in which we were allowed to keep the amount invested.

Lease operating expenses in 2009 were $21,553 compared to $8,618 in 2008. These are our share of cost of operations for the wells when they were in operation. We were forced to pay some expenses on the Windy Vista well which could not be passed on to our working interest partners due to the loss of the well in a judgement action.

Impairment of assets in 2009 was $220,801 compared to $946,603 in 2008. All of this cost was due to leases which expired due to the fact that we could not get financing to drill wells on them.

Exploration costs are costs associated with geological and engineering in projects we did not go forward with. We did not have any of these expenses in 2009.

General and Administrative expenses were $1,955,102 for the year ended December 31, 2009 compared to $1,230,721 for the 2008 period, an increase of $724,381. The increase was primarily due to increases of approximately $468,000 in stock based compensation to employees, $55,000 professional fees and $960,000 in settlement costs. These increases were partially offset by a decrease in general office expenses of approximately $108,000, travel expenses, $109,000, occupancy expense, $24,000, option expense, $116,000, advertising and promotion, $27,000, financial consulting, $234,000, and new project development of $68,000. The increase in payroll costs was mostly stock compensation payment to three key individuals totaling $468,000. The increase in professional fees was mostly due to value of stock issued to a professional to keep providing services when the company was not able to pay his fees. The settlement cost was the value of stock issued to a major investor in the wells drilled in an attempt to keep him from taking action against the company. All of the stock issued as compensation was valued at $0.06 per share, the stock value on the date of issue. The decrease in general office expenses was due to lower operating costs due to the much lower volume of activity in 2009 as compared to 2008. The travel costs were much higher in 2008 than 2009 mostly because of travel costs associated with the death of our CEO while he was in New York on business in 2008. Occupancy costs decreased in 2009 from 2008 due to the fact that there were some initial costs in moving into our new offices in 2008 which were not repeated in 2009. There were no options issued or vested in 2009, while in 2008 options vested with a value of $26,812 and an option valued at $90,000 was issued to our new president. Advertising and promotion decreased because the cost of website development incurred in 2008 was not repeated in 2009. The financial consulting decreased in 2009 from 2008 due to the fact that consultants were not hired to help design a plan for raising capital. We also did not have any costs associated with analyzing new projects in 2009 which we did have in 2008.

Legal Settlement is from summary judgment in the amount of $286,448 that was entered against the company in regards to Midwest Mortgage Brokers and Paul Gee v. Hershey S. Baum, et al., Case No. CJ-2004-7796, District Court of Tulsa County, State of Oklahoma wherein Superior Oil and Gas Company is a named co-defendant involves a loan that was made by Paul Gee and Midwest Mortgage Brokers and Paul Gee to Hershey S. Baum and others for which Superior Oil and Gas purportedly agreed to repurchase 100,000 shares of stock from plaintiffs as part of the consideration for making the loan. There was no such cost in 2008.

Depreciation and amortization is from amortization expense on leasehold improvements over a 10-year life and depreciation on furniture and fixtures of over a 7-year life. The expenses were $55,705 for amortization and $9,673 for depreciation in 2009 as compared to $27,852 and $7,565, respectively, in 2008. The increases of $27,852 and $2,108 are because the assets were in service for the entire year in 2009 while they were in service for only a partial year in 2008.

Gain from sale of scrap equipment is from the sale of some scrap equipment on one of the wells.

Other income is the gain from the settlement of some of the company’s accounts payable for less than what was owed.

Net Income (Loss)

We suffered a net loss of $2,494,230 in FY 2009 and a net loss of $2,214,299 in FY 2008. The decrease in net loss is attributable primarily to a gross profit gain of $13,928 in FY 2009 compared to a gross profit gain $89,410 in FY 2008, or a decrease in gross profit of $75,482.

We had an increase in general and administrative expenses of $724,381, an increase in depreciation and amortization expense of $29,961. We also had decrease in impairment costs of $725,802, exploration costs of $57,200, gain from sale of scrap equipment of $23,000 and other income of $30,341. In addition, we incurred legal expenses in relation to summary judgment against the company in the amount of $286,448. All of this amounted to our loss being $279,931 more in 2009 than in 2008.

We financed our FY 2009 loss of $2,494,230 primarily with stock-based compensation of $740,000, stock-based dispute settlement of $960,000, depreciation expense of $65,378, impairment expense of $220,801, a decrease in accounts receivable of $77,472, an increase in debtor judgment payable of $33,768, an increase in accrued expenses of $53,975, borrowings from shareholders of $113,215, an increase in accounts payable of $259,468, and offset by a gain on the settlement of accounts payable of $30,341, which resulted in a decrease in cash of $494.

Off-Balance Sheet Arrangements

Our company has not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have

an obligation under a guarantee contract,

a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,

an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or

an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to, us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging, or research and development services with, us.

ITEM 8.

FINANCIAL STATEMENTS.

	Page

Report of Independent Registered Public Accounting Firm	23
Balance Sheets at December 31, 2009 and 2008	24
Statements of Operations for the Years Ended December 31, 2009 and 2008	25
Statement of Changes in Stockholders’ Deficits for the Years Ended December 31, 2009 and 2008	26
Statements of Cash Flows for the Years Ended December 31, 2009 and 2008	27
Notes to Financial Statements	28

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Superior Oil & Gas Co.

Yukon, Oklahoma

We have audited the accompanying balance sheets of Superior Oil & Gas Co. as of December 31, 2009 and 2008, and the related statements of operations, cash flows, and changes in stockholders’ deficits for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Superior Oil & Gas Co. as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 8 to the financial statements the Company is a judgment debtor in a case filed against the Company. Based upon the current financial condition of the Company, management does not anticipate the ability to satisfy the judgment. Additionally the Company has experienced significant liquidity problems and has no capital resources and limited stockholders’ equity. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ MALONEBAILEY, LLP

www.malonebailey.com

Houston, Texas

April 9, 2010

Superior Oil and Gas Co.

Balance Sheets

	December 31,			December 31,
	2009			2008
ASSETS

Current Assets
Cash	$	218		$	712
Accounts receivable		1,616			79,088

Total Current Assets		1,834			79,800

Property and Equipment
Oil and gas properties
Pipeline Right of Way		111,600			111,600
Unproved property		189,581			437,938
		301,181			549,538
Other property and equipment
Leasehold improvements		553,170			557,041
Furniture and fixtures		67,714			67,714
		620,884			624,755
Less accumulated depreciation and amortization		(100,795	)		(35,417	)
		520,089			589,338

Total Property and Equipment		821,270			1,138,876

Total Assets	$	823,104		$	1,218,676

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities
Accounts payable	$	1,438,156		$	1,240,456
Accrued salaries		323,975			270,000
Debtor judgment payable		682,588			648,820
Advances from shareholders		293,528			180,313
Total Liabilities		2,738,247			2,339,589

Shareholders' Deficit
Common stock, $0.001 par value per share 200,000,000 shares authorized, 56,234,082 outstanding at December 31, 2009 and 27,258,082 at December 31, 2008		56,235			27,259
Additional paid-in capital		6,485,226			4,814,202
Accumulated deficit		(8,456,604	)		(5,962,374	)

Total Shareholders' Deficit		(1,915,143	)		(1,120,913	)

Total Liabilities and Shareholders' Deficit	$	823,104		$	1,218,676

See notes to the financial statements.

The accompanying notes are an integral part of these financial statements

Superior Oil & Gas Co.

Statement of Operations

For the Years Ended

December 31, 2009 and 2008

	2009			2008

Revenue
Oil	$	29,551		$	67,564
Gas		5,930			30,464
Total Revenue		35,481			98,028

Operating Expenses:
Lease operating expenses		21,553			8,618
Impairment of assets		220,801			946,603
Exploration costs		-			57,200
General and administrative		1,955,102			1,230,721
Judgment interest		33,770			33,768
Depreciation and amortization		65,378			35,417
Gain on the sale of scrap equipment		(23,000	)		-
		2,273,604			2,312,327

Loss from operations		(2,238,123	)		(2,214,299	)

Loss on legal settlement		(286,448	)		-
Gain on settlement of liabilities		30,341			-

Loss before income taxes		(2,494,230	)		(2,214,299	)

Income tax expense (benefit)		-			-

Net loss	$	(2,494,230	)	$	(2,214,299	)

Loss per Share:
Weighted average shares outstanding		39,820,499			26,488,203
Loss per share	$	(0.06	)	$	(0.08	)

The accompanying notes are an integral part of these financial statements

Superior Oil and Gas Co.

Statement of Changes in Stockholders' Deficits

For the Years Ended

December 31, 2009 and 2008

	Common						Additional
	Shares			Common			Paid-In			Subscription			Accumulated
	Outstanding			Stock			Capital			Receivable			Deficit			Totals

Balance December 31, 2007		25,315,214		$	25,316		$	4,493,314		$	(63,584	)	$	(3,748,075	)	$	706,971

Common stock issued:
For cash		2,500			3			497			-			-			500
For services		1,200,000			1,200			163,800			-			-			165,000
For capital services		265,038			265			37,291			-			-			37,556
For settlement of accounts payable		475,330			475			66,071			-			-			66,546
Leases purchased for subscriptions receivable		-			-			(63,584	)		63,584			-			-
Stock based compensation		-			-			116,813			-			-			116,813
Net loss for the year														(2,214,299	)		(2,214,299	)

Balance December 31, 2008		27,258,082		$	27,259		$	4,814,202		$	-		$	(5,962,374	)	$	(1,120,913	)

Common stock issued:
Stock based compensation		13,000,000			13,000			727,000			-			-			740,000
For settlement of dispute		16,000,000			16,000			944,000			-			-			960,000
Cancelled shares		(24,000	)		(24	)		24			-			-			-
Net loss for the year														(2,494,230	)		(2,494,230	)

Balance December 31, 2009		56,234,082		$	56,235		$	6,485,226		$	-		$	(8,456,604	)	$	(1,915,143	)

The accompanying notes are an integral part of these financial statements

Superior Oil and Gas Co.

Statements of Cash Flows

For the Years Ended

December 31, 2009 and 2008

	2009			2008
Cash flows from operating activities:

Net loss	$	(2,494,230	)	$	(2,214,299	)

Adjustment to reconcile net loss to net cash provided by (used by operating activities):

Gain from settlement of accounts payable	$	(30,341	)	$	-
Gain on the sale of scrap equipment		(23,000	)		-
Depreciation and amortization		65,378			35,417
Impairment expense		220,801			946,603
Common stock issued for services		740,000			281,812
Common stock issued for settlement		960,000			-
(Increase) decrease in accounts receivable		77,472			(62,570	)
Increase (decrease) in accounts payable		259,468			128,795
Increase in accrued salaries		53,975			90,000
Increase in debtor judgment		33,768			33,768

Net cash used in operating activities		(136,709	)		(760,474	)

Cash flows from investing activities
Sale of scrap equipment		23,000			-
Purchase of oil & gas leases & undeveloped wells		-			(287,705	)
Sale of oil & gas leases & undeveloped wells		-			1,000,000
Purchase of furniture & fixtures and leasehold improvements		-			(588,800	)

Net cash provided from investing activities		23,000			123,495

Cash flows from financing activities

Net increase in advances from shareholders		113,215			81,204
Sale of common stock		-			500
Net cash provided by financing activities		113,215			81,704

Increase (decrease) in cash		(494	)		(555,275	)

Cash at beginning of period		712			555,987

Cash at end of period	$	218		$	712

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest	$	-		$	-
Income taxes	$	-		$	-

Non Cash Investing and Financing Activities
Common stock issued for leases	$	-		$	-

Common stock issued for undeveloped wells	$	-		$	37,555

Reduction of accounts receivable for leases	$	-		$	37,381

Common stock issued for accounts payable settlement	$	-		$	66,546

Deferred drilling cost capitalized to leases	$	-		$	519,188

The accompanying notes are an integral part of these financial statements

Note 1 – Organization and Nature of Business

Superior Oil and Gas Co. (the Company) was incorporated on February 22, 1989, as a Utah corporation as Western States Resources, Inc. On March 31, 1997, the Company was merged with Western States Resources US, Inc. (a Nevada corporation) and immediately changed its name to Red River Resources, Inc. On June 4, 1997, the Company changed its name to Superior Oil and Gas Co. The Company is engaged in the exploration, development and production of oil and gas properties.

Note 2 – Summary of Significant Accounting Policies

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents:

For purposes of the Statements of Cash Flows, cash in checking accounts, savings accounts, certificates of deposit, and short-term investments, which have a maturity of ninety days or less, are considered cash equivalents.

Property and Equipment:

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided by using the straight-line method over the estimated useful lives. Expenditures for maintenance and repairs are charged to operations when incurred. Major betterments and renewals that extend the useful life of the related asset are capitalized and depreciated over the asset’s remaining useful life. Depreciation expense recorded in 2009 and 2008 was $65,378 and $35,417 respectively.

Oil and Gas Properties

Oil and gas investments are accounted for by the successful efforts method of accounting. Accordingly, the costs incurred to acquire property (proved and unproved), all development costs, and successful exploratory costs are capitalized, whereas the costs of unsuccessful exploratory wells are expensed.

Depletion of capitalized oil and gas well costs is provided using the units of production method based on estimated proved developed oil and gas reserves of the respective oil and gas properties.

Asset Retirement Obligations

In August 2001, the FASB issued ASC 410-20,"Accounting for Asset Retirement Obligations" (ASC 410-20). ASC 410-20 requires that the fair value of an asset retirement cost, and corresponding liability, should be recorded as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long lived assets such as oil and gas properties and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of the fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

Impairment of unproved oil and gas properties is determined by ASC 932, “Extractive Activities – Oil and Gas” Impairment charges on oil and gas properties in 2009 and 2008 amounted to $220,801 and $946,603 respectively.

Income taxes:

The Company accounts for income taxes based on ASC 740, “Accounting for Income Taxes”. ASC 740 requires the recognition of deferred tax assets and liabilities for the future consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, ASC 740 requires the recognition of future tax benefits, such as net operating loss carry forwards, to the extent that realization of such benefits are more likely than not. The amount of deferred tax liabilities or assets is calculated by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable, currently or in future years.

The principal temporary differences giving rise for the recognition of deferred tax liabilities and assets are the depreciation of property and equipment and the net operating losses. The deferred tax assets and liabilities represent the future income tax consequences of those differences.

Net Income (Loss) Per Share:

The Company computes net income (loss) per share in accordance with ASC 260, “Earnings Per Share”, and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). Under the provisions of ASC 260, basic net income (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period.

Recent Accounting Pronouncements:

In June 2009, the FASB issued ASU No. 2009-01, Generally Accepted Accounting Principles (ASU 2009-01). ASU 2009-01 establishes “The FASB Accounting Standards Codification,” or Codification, which became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. On the effective date, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. ASU 2009-01 is effective for interim and annual periods ending after September 15, 2009. The Company adopted the provisions of ASU 2009-01 for the period ended September 30, 2009. There was no impact on the Company’s operating results, financial position or cash flows.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (ASC 855) to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC 855 is effective for interim and annual reporting periods ending after June 15, 2009. The Company adopted the provisions of ASC 855 for the period ended June 30, 2009. There was no impact on the Company’s operating results, financial position or cash flows.

In December 2008, the SEC issued Release No. 33-8995, Modernization of Oil and Gas Reporting (ASC 2010-3), which amends the oil and gas disclosures for oil and gas producers contained in Regulations S-K and S-X, as well as adding a section to Regulation S-K (Subpart 1200) to codify the revised disclosure requirements in Securities Act Industry Guide 2, which is being eliminated. The goal of Release No. 33-8995 is to provide investors with a more meaningful and comprehensive understanding of oil and gas reserves. Energy companies affected by Release No. 33-8995 are now required to price proved oil and gas reserves using the unweighted arithmetic average of the price on the first day of each month within the 12-month period prior to the end of the reporting period, unless prices are defined by contractual arrangements, excluding escalations based on future conditions. SEC Release No. 33-8995 is effective beginning for financial statements for fiscal years ending on or after December 31, 2009. The impact on the Company’s operating results, financial position and cash flows has been recorded in the financial statements.

Note 3 – Income Taxes

As of December 31, 2009 and 2008, the Company had substantial net operating losses. Net operating losses and book and tax differences are required by generally accepted accounting standards to be recorded. Book and tax differences are not required to be recorded when the consequences of these differences might not be realized. The substantial net operating losses will expire over the next 4 to 20 years. The net operating losses may or may not be realized which will be dependent on future earnings, which are currently uncertain. All deferred tax assets related to the net operating losses carry forward are fully reserved.

Note 4 – Common Stock Transactions

During 2009 and 2008, the Company issued shares for cash, compensation to employees and consultants, and payment for debt.

During 2009, the Company:

Issued 13,000,000 common shares to various individuals for services, and the shares have a fair value of $740,000.

Issued 16,000,000 common shares in settlement of a dispute, the shares have a fair value of $960,000.

During 2008, the Company:

Sold 2,500 common shares for $500 cash.

Issued 1,200,000 common shares to various individuals for services, the shares have a fair value of $165,000.

Issued 265,038 common shares to various individuals for the development of wells. The shares have a fair value of $37,556.

Issued 475,330 common shares with a fair value of $66,546 for settlement of accounts payable.

Note 7– Related Party Transactions

The officers and directors of the Company are involved in other business activities and they may, in the future, become involved in additional business ventures, which also may require their time and attention. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has formulated no policy for the resolutions of such conflicts. An officer of the Company provides the Company’s office facilities at a cost of $2,000 per month.

Through December 31, 2009 our officers have not received compensation for their time and the company has determined the unpaid salaries for time spent through December 31, 2009 and 2008 was $323,975 and 270,000, respectively.

Through December 31, 2009 certain employees have not been reimbursed for company expenses, payment of office supplies, and utilities. The unpaid balance as of December 31, 2009 and 2008 was $165,323 and $180,313, respectively. Since these employees are also major shareholders, the amounts have been classified under loans from shareholders on the balance sheet.

During the year ended December 31, 2009 the company received advances from shareholders totalling $128,196. Though December 31, 2009 there have been no repayments on these advances.

Note 8 – Going Concern Uncertainties

The accompanying financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As shown in the financial statements, the Company has incurred significant operating losses resulting in an accumulated deficit and a working capital deficit. Additionally, the Company, is judgment debtor in a case filed in the Superior Court of Arizona, Maricopa County. The principal amount of the judgments is $337,686 with ten percent interest accruing from and after October 14, 1999. As of December 31, 2009, the amount of the judgment, including accrued interest was $682,588. The judgment will continue to accrue interest in the amount of $8,442 per quarter. The Company is currently unable to pay the debtor judgment. Due to recurring losses and the accumulated deficit, there can be no assurance that the Company will be able to continue as a going concern for a reasonable period of time.

The financial statements do not include any adjustments relating to the recoverability of assets classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required, and ultimately to sustain profitability.

The Company is continuing to seek, investigate, and, if warranted, acquire oil and gas properties, and to pursue activities intended to enhance stockholder value.

Note 9 – Stock Option Plan

The Board of Directors adopted the Superior Oil and Gas Co. 2005 Stock Option Plan (the “Plan”) on December 6, 2005. The Plan became effective on that date subject only to the approval by the majority of the stockholders within twelve months.

The maximum number of shares of stock, which may be optioned and sold under the Plan, is 10,000,000 shares. Options granted under the Plan may be incentive stock options (as defined under Internal Revenue Service Code Section 422) or nonqualified stock options, as determined by the administrator (the Board of Directors or an Option Committee appointed by the Board of Directors) of the Plan. The terms of the Plan provides that the per share option exercise price to an employee owning more than 10% of the voting power shall be no less than 110% of the fair market value on the date of grant. The per share option price to any other employee shall be no less than 100% of the fair market value on the date of grant.

The term of the option shall be the term stated in the option agreement; provided however, the incentive stock options shall have a term of no longer than ten years from the date of grant and options granted to those who represent more than 10% of the voting power shall have a term of five years or such shorter term as provided in the option agreement.

On December 6, 2005 the Company granted eight million share options at $0.10 per share, including two million non-qualified options that are now exercisable. Additionally six million incentive stock options were granted, of which one million were vested on December 7, 2005, one million vested on January 31, 2006, one million vested January 31, 2007 one million vested January 31, 2008. During the year, due to the death of the option holder the remaining unvested options were forfeited. The remaining vested shares options expired in June 2009.

Summary of the options for the years ended December 31, 2008 and 2009 are as follows:

					Average
					Remaining
	Number of		Weighted		Contractual		Intrinsic
Options	Options		Average Price		terms in years.		Value

Balance at 12/31/07		8,000,000	$	0.10		1.5	$	-
Granted		0
Exercised		0
Forfeited		2,000,000
Balance at 12/31/08		6,000,000	$	0.10		.5	$	-
Granted		0
Exercised		0
Forfeited		6,000,000
Balance at 12/31/09		-	$	0.10		0	$	-

Note 10 – Warrants

The company sold a fifty percent working interest in the two wells in Blaine and Garfield Counties in Oklahoma for cash in 2007. The price received for the working interests was $3,000,000. The company also issued to the buyer six million warrants to purchase its common stock. Three million of the warrants are exercisable at ten cents ($0.10) per share and three million of the warrants are exercisable at twenty-five cents ($0.25) per share at anytime before November 15, 2009. Of the $3,000,000 received in the transaction, $1,139,548 was applied to the value of the warrants and credited to paid in capital. The balance of $1,860,452 was used to offset the cost of the wells.

					Average
					Remaining
	Number of		Weighted		Contractual		Intrinsic
Warrants	Warrants		Average Price		Terms in years.		Value

Balance at 12/31/07		6,000,000	$	0.18		1.87	$	-
Granted		-
Exercised		-
Balance at 12/31/08		6,000,000	$	0.18		0.87	$	-
Granted		-
Exercised		-
Forfeited		6,000,000
Balance at 12/31/09		-	$	0.18		0	$	-

Note 11 – Litigation

Following is a synopsis of lawsuits that have a potential impact on Superior Oil and Gas Company.

Note 12 – Lease Commitments

The company does not have any lease commitments.

Note 13 – Subsequent Events

On March 13, 2010, the Company purchased 50% interest in three oil and gas leasehold estates located in Logan County, Oklahoma for 140 million shares of common stock.

In connection with the purchase, the Company plans to amend its articles of incorporation to increase its authorized capital stock to 500 million shares of Common Stock and 100 million shares of Preferred Stock. 10 million shares of the Preferred Stock are to be designated as Class A Voting Convertible Preferred Stock. Each share of the Class A Preferred will have the right to cast 14 votes, the right to be converted into 14 shares of Common Stock and the rights of the Common Stock in all other respects. The 10 million shares of Series A Voting Convertible Preferred Stock will be issued to certain members of the Company’s management and its agents in payment of unpaid services already rendered by such persons to the Company.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

During the past two years or interim periods prior to December 31, 2009, there were no disagreements between Superior and our principal independent registered public accountants, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of such accountants, would have caused them to make reference to the subject matter of the disagreements in their reports on the financial statements.

ITEM 9A(T).

CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective and are designed to provide reasonable assurances that the information the Company is required to disclose in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period required by the Commission's rules and forms. Further, the Company’s officers concluded that its disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. There were no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Internal control over financial reporting.

Management’s annual report on internal control over financial reporting. The registrant’s management recognizes its responsibility for establishing and maintaining adequate internal control over financial reporting for the registrant. Currently, the registrant is operating as a caretaker entity, keeping the corporation alive and in good standing with the Commission. All debit and credit transactions with the company’s bank accounts are reviewed by the officers as well as all communications with the company’s creditors. The directors meet frequently – as often as weekly – to discuss and review the financial status of the company and all developments regarding its search for a reverse merger partner. All filings of reports with the Commission are reviewed before filing by all directors.

Management assesses the company’s control over financial reporting at the end of its most recent fiscal year to be effective. It detects no material weaknesses in the company’s internal control over financial reporting.

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Commission rules that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION.

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The directors and executive officers currently serving the company are as follows:

Person	Office	Held Since	Term Expires

Bill Sparks, 80	Director, CEO, CFO	02-97	5-10
Gayla McCoy, 56	Secretary, Treasurer	02-99	5-10
W.R. Lott III, 56	Director	02-97	5-10

The directors named above will serve until the next annual meeting of the company's stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between the directors and officers of the company and any other person pursuant to which any director or officer was or is to be selected as a director or officer.

The directors of the company will devote such time to the company's affairs on an "as needed" basis, but less than 10 hours per month. As a result, the actual amount of time which they will devote to the company's affairs is unknown and is likely to vary substantially from month to month.

Biographical Information

Bill Sparks. Mr. Sparks is a geologist and has been employed since 1998 as the geologist of Blue Sky Oil Co. of Irving, Texas, a company under the control of Mr. Jerry Jones, the owner of the Dallas Cowboys football team.

Gayla McCoy. Ms. McCoy has been employed since 1998 as the corporate secretary and treasurer of Big Daddy’s BBQ Racing Co. and since 1999 as the corporate secretary and treasurer of Big Daddy’s BBQ Sauce & Spices Co., affiliated companies based in Yukon, Oklahoma, whose principal businesses are the manufacturing and distribution of food products. She has also been employed since 1995 as the president of McCoy Energy Co. of Yukon, Oklahoma, an oil and gas exploration company. In 1999 she became the secretary and treasurer of Superior Oil and Gas Co. Ms. McCoy devotes 100 percent of her time to the affairs of Superior Oil and Gas Co.

W.R. Lott III. From 1992 to the present, Mr. Lott has been and still is the president of Lott Properties, a real estate company in Greenwood, Mississippi. From 2008 to present, Mr. Lott has been a Vice President of Prime Mortgage, Inc. From 1992-2007, he was vice president of Coats & Co., Inc., a mortgage company, of Greenwood, Mississippi.

No executive officer, director, person nominated to become a director, promoter or control person of our company has been involved in legal proceedings during the last five years such as

None of the directors holds any directorships in any company with a class of securities registered under the Exchange Act or subject to the reporting requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

Involvement in certain legal proceedings. During the past five years, none of the directors has been involved in any of the following events:

A petition under the Federal bankruptcy law or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

Engaging in any type of business practice; or

Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; or

Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated.

Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Future Trading Commission has not been subsequently reversed, suspended or vacated.

Code of Ethics. We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics is filed as an exhibit to Form 10-KSB Annual Report for the year ended December 31, 2004 (Exhibit 14 incorporated herein by reference). We undertake to provide to any person without charge, upon request, a copy of such code of ethics. Such a request may be made by writing to the company at its address at 844 South Walbaum Road, Calumet, OK 73014.

Corporate Governance.

Security holder recommendations of candidates for the board of directors. Any shareholder may recommend candidates for the board of directors by writing to the president of our company the name or names of candidates, their home and business addresses and telephone numbers, their ages, and their business experience during at least the last five years. The recommendation must be received by the company by April 20 of any year or, alternatively, at least 60 days before any announced shareholder annual meeting.

Audit committee. We have no standing audit committee. Our directors perform the functions of an audit committee. Our limited operations make unnecessary a standing audit committee, particularly in view of the fact that we have only two directors at present. Neither of our directors is an audit committee financial expert, but the directors have access to consultants that can provide such expertise when such is needed.

Compliance with Section 16(a) of the Securities Exchange Act.

Based solely upon a review of Forms 3 and 4 furnished to the company under Rule 16a-3(e) of the Securities Exchange Act during its most recent fiscal year and Forms 5 furnished to the company with respect to its most recent fiscal year and any written representations received by the company from persons required to file such forms, the following persons – either officers, directors or beneficial owners of more than ten percent of any class of equity of the company registered pursuant to Section 12 of the Securities Exchange Act – failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act during the most recent fiscal year or prior fiscal years:

ITEM 11.

EXECUTIVE COMPENSATION.

The following information concerns the compensation of the named executive officers for each of the last two completed fiscal years:

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary		Bonus		Total

Bill Sparks, President	2009	$	0	$	0	$	0
Daniel H. Lloyd, CEO (deceased) (1)	2008	$	30,000	$	0	$	0

(1) Accrued but not paid.

The following information concerns unexercised stock options, stock that has not vested, and equity incentive plan awards for each named officer outstanding at the end of the last fiscal year:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date

Bill Sparks		500,000		0		0	$	0.10	12-06-2015
W.R. Lott III		500,000		0		0	$	0.10	12-06-2015

Compensation of Directors

The directors of Superior Oil and Gas Co. and its subsidiaries received the following compensation in 2009 for their services as directors.

DIRECTOR COMPENSATION

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensa- tion ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensa- tion ($)		Total ($)

Bill Sparks		0		0		0		0		0		0		0
W.R. Lott III		0		0		0		0		0		0		0
J. Michael Sherrod		0		0		0		0		0		0		0

Our standard for determining the dollar amount of stock awards is based upon the amount of service each director performs for the company.

Compensation Committee. We do not have a compensation committee. We have only three directors. The directors deliberate from time to time concerning the ability of the company to pay compensation to any officer or director and the type and amount of such compensation.

Related Transactions. During the last two fiscal years and the period since the end of the last fiscal year, there have been no transactions, or any currently proposed transaction, in which the company was or is to be a participant with a related person, such as the directors or officers, where the transaction exceeds $120,000 and the related person had or will have a direct or indirect material interest.

Equity Compensation Plans.

We have no equity compensation plans.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The table below sets forth, as of March 16, 2010, the number of shares of Common Stock of the company beneficially owned by each officer and director of the company, individually and as a group, and by each person known to the company to be the beneficial owner of more than five percent of the Common Stock.

Person	No. of Shares			Percent of Outstanding Shares

Gayla McCoy 844 South Walbaum Road Calumet, OK 73014		4,500,400			8.1	%
Bill Sparks P.O. Box 14428 Oklahoma City, OK 73113		1,300,000	(1)		2.4	%
W.R. Lott III 107 Fulton Street Greenwood, MS 38935		950,000	(1)		1.7	%
Thomas Becker 11108 NW 115 Street Yukon, OK 73099		3,290,407			6.0	%
Dan Lloyd, Jr. 844 South Walbaum Road Calumet, OK 73014		5,500,000			10.0	%

Officers and Directors as a Group (4 persons)		12,250,000			22.2	%

(1) 500,000 of these shares represent shares underlying presently exercisable stock options.

Changes in Control

There are no arrangements which may result in a change in control of the company.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

See “Related Transactions” above regarding the absence or presence of material transactions between the company and related persons.

None of our directors is “independent” as that term is defined in any national securities exchange or in an inter-dealer quotation system that requires that a majority of the board members be independent. However, two of our directors, Bill Sparks and W.R. Lott III, are “independent” in accordance with our definition of “independence.” Our definition of “independence” is whether a director is a principal executive officer, or employee or is the beneficial owner of more than five percent of our outstanding common stock.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for its professional services rendered for the audit of our annual financial statements and review of financial statements included in our Form 10-Q reports or other services normally provided in connection with statutory and regulatory filings or engagements for those two fiscal years:

Fiscal Year ended December 31, 2009		$	52,600
Fiscal Year ended December 31, 2008		$	70,840

Audit-Related Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for assurance and related services reasonably related to the performance of the audit or review of our financial statements and not reported above under “Audit Fees”:

Fiscal Year ended December 31, 2009		$	-0-
Fiscal Year ended December 31, 2008		$	-0-

Tax Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for professional services rendered for tax compliance, tax advice and tax planning:

Fiscal Year ended December 31, 2009		$	-0-
Fiscal Year ended December 31, 2008		$	-0-

All Other Fees. Our principal independent accountant billed us, for each of the last two fiscal years, the following aggregate fees for products and services provided by it, other than the services reported in the above three categories:

Fiscal Year ended December 31, 2009		$	-0-
Fiscal Year ended December 31, 2008		$	-0-

Pre-Approval of Audit and Non-Audit Services. The Audit Committee charter requires that the committee pre-approve all audit, review and attest services and non-audit services before such services are engaged. None of the fees described above were pre-approved before the services were performed.

PART IV

ITEM 15.

EXHIBITS.

The following exhibits are filed, by incorporation by reference, as part of this Form 10-K:

3(i)	Articles of Incorporation	*
3(ii)	Bylaws	*
10.5	Purchase and Sale Agreement entered into December 13, 2005 between Superior Oil and Gas Co. and William H. Foster.	**
10.6	Purchase and Sale Agreement entered into April 24, 2006 between Enerhance Energy, Inc. and Superior Oil and Gas Co.	**
10.7	Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Kingfisher County, Oklahoma	***
10.8	Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Canadian County, Oklahoma	***
10.9	Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Pushmataha County, Oklahoma	***
14	Code of Ethics for the Chief Executive Officer and Senior Financial Officers.	+++
16	Letter on Change in Certifying Accountant	+
31	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Previously filed with Form 10-SB on January 31, 2003, EDGAR Accession #0001060830-03-000019; incorporated herein.

+++

Previously filed with Form 10-KSB, SEC #000-50173, on April 19, 2005; incorporated herein.

Previously filed with Form 10-QSB 03-31-06 on May 22, 2006, EDGAR Accession #0001010549-06-000326; incorporated herein.

***

Previously filed with Form 8-K Current Report 05-23-06 on May 30, 2006, EDGAR Accession #0001010549-06-000348; incorporated herein.

Previously filed with Form 8-K Current Report 12-13-07 on March 11, 2008, EDGAR Accession #0001144204-08-014453; incorporated herein.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SUPERIOR OIL AND GAS CO.

		/s/ Bill Sparks
Date: April 9, 2010	By
		Bill Sparks, Chief Executive Officer

In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	/s/ Bill Sparks
Date: April 9, 2010
	Bill Sparks, Chief Executive Officer,
	Chief Financial Officer and Director

	/s/ Gayla McCoy
Date: April 9, 2010
	Gayla McCoy, Secretary-Treasurer

	/s/ W.R. Lott III
Date: April 9, 2010
	W.R. Lott III, Director

EXHIBIT INDEX

FORM 10-K

For the fiscal year ended December 31, 2009

The following exhibits are filed, by incorporation by reference, as part of this Form 10-K:

3(i)	Articles of Incorporation	*
3(ii)	Bylaws	*
10.5	Purchase and Sale Agreement entered into December 13, 2005 between Superior Oil and Gas Co. and William H. Foster.	**
10.6	Purchase and Sale Agreement entered into April 24, 2006 between Enerhance Energy, Inc. and Superior Oil and Gas Co.	**
10.7	Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Kingfisher County, Oklahoma	***
10.8	Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Canadian County, Oklahoma	***
10.9	Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Pushmataha County, Oklahoma	***
14	Code of Ethics for the Chief Executive Officer and Senior Financial Officers.	+++
16	Letter on Change in Certifying Accountant	+
31	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Previously filed with Form 10-SB on January 31, 2003, EDGAR Accession #0001060830-03-000019; incorporated herein.

+++

Previously filed with Form 10-KSB, SEC #000-50173, on April 19, 2005; incorporated herein.

Previously filed with Form 10-QSB 03-31-06 on May 22, 2006, EDGAR Accession #0001010549-06-000326; incorporated herein.

***

Previously filed with Form 8-K Current Report 05-23-06 on May 30, 2006, EDGAR Accession #0001010549-06-000348; incorporated herein.

Previously filed with Form 8-K Current Report 12-13-07 on March 11, 2008, EDGAR Accession #0001144204-08-014453; incorporated herein.

No. of Late Reports

No. of Transactions
Not Timely Reported

No. of Failures

to File a
Required Report

Gayla McCoy

Bill Sparks

W.R. Lott III

Thomas Becker