~~March~~UNITED ~~31,~~STATES SECURITIES September 30, 2011 2010 (Unaudited) (Audited) ------------ ------------ ASSETS Current Cash and cash equivalents $ 30,497 $ 8,495 Accounts receivable, net 11,389 50,417 ------------ ------------ Total current assets 41,886 58,912 Oil and gas properties, -using full cost accounting 833,724 1,014,599 Less accumulated depletion (109,187) (82,520) ------------ ------------ Oil and gas properties-net 724,537 932,079 Long term assets Participation deposits 57,500 57,500 ------------ ------------ Total long term assets 782,037 989,579 ------------ ------------ Total assets $ 823,923 $ 1,048,491 ============ ============ LIABILITIES AND ~~STOCKHOLDERS'~~EXCHANGE ~~EQUITY (DEFICIT) Current liabilities Accounts payable and accrued liabilities $ 67~~COMMISSION Washington,~~563~~ $ 184,954 Due to related party 32,754 32,754 Advances 89,916 82,416 Notes payable 242,266 242,266 Notes payable-related party 46,126 761,714 ------------ ------------ Total current liabilities 478,625 1,304,104 ------------ ------------ Long term liabilities Asset retirement obligations 24,058 22,912 ------------ ------------ Total long term liabilities 24,058 22,912 ------------ ------------ Total liabilities 502,683 1,327,016 ------------ ------------ Capital stock Authorized: 200,000,000 common stock, $0D.~~001~~C. par value; Issued and outstanding: 84,401,584 common shares (2009: 44,400,000) 84,402 44,400 Additional paid-in capital 846,304 82,691 Accumulated deficit (609,466) (405,616) ------------ ------------ Total stockholders' equity (deficit) 321,240 (278,525) ------------ ------------ Total liabilities and stockholders' equity (deficit) $ 823,923 $ 1,048,491 ============ ============20549

Three Months Ended Six Months Ended March 31, March 31, -------------------------- -------------------------- 2011 2010 2011 2010 ------------ ------------ ------------ ------------ Revenues Oil and gas sales $ 63,017 $ 37,945 $ 106,567 $ 100,957 ------------ ------------ ------------ ------------ Total revenues 63,017 37,945 106,567 100,957 ------------ ------------ ------------ ------------ Expenses Lease operating 50,323 17,570 76,318 23,044 Production taxes 4,511 2,732 7,646 7,268 Bad debts - 13,851 - 13,851 Depletion 13,688 14,413 26,667 39,098 Accretion expense 573 - 1,146 - Legal and accounting 9,863 15,704 18,863 28,399 Impairment on oil and gas properties 118,036 - 118,036 - Loss on sale of oil and gas properties - 9,502 - 9,502 Management fees 5,000 3,000 8,000 6,000 General and administrative 22,892 21,696 36,571 44,714 ------------ ------------ ------------ ------------ Total operating expenses (224,886) (98,468) (293,247) (171,876) ------------ ------------ ------------ ------------ Other income (expense) Interest (9,951) (32,411) (36,753) (57,261) Gain on settlement 19,583 - 19,583 - ------------ ------------ ------------ ------------ Total other Income (expense) 9,632 (32,411) (17,170) (57,261) ------------ ------------ ------------ ------------ Net loss $ (152,237) $ (92,934) $ (203,850) $ (128,180) ============ ============ ============ ============ Basic loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00) ============ ============ ============ ============ Weighted average number of shares outstanding- basic 84,401,584 44,400,000 83,517,571 44,400,000 ============ ============ ============ ============_________________

~~Common~~FORM ~~Shares Addi~~10- ------------------ tional Accum- Par Paid-in ulated Number Value Capital Deficit Total ---------- ------- ------- ---------- ---------- Balance as of Sept. 30, 2010 44,400,000 $44,400 $82,691 $(405,616) $(278,525) Common stock issued for settlement of note payable 40,001,584 40,002 675,586 - 715,588 Interest Forgiven - 88,027 - 88,027 Net loss for the six months (203,850) (203,850) ---------- ------- ------- ---------- ---------- Balance as of March 31, 2011 84,401,584 $84,402 $846,304 $(609,466) $ 321,240 ========== ======= ======== ========== ==========Q

Six months ended March 31, ---------------------- 2011 2010 ---------- ---------- Operating activities Net loss for the period $(203,850) $(128,180) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depletion 26,667 39,098 Impairment on oil and gas property 118,036 - Loss on sale of assets - 9,502 Gain on settlement (19,583) - Accretion expense 1,146 - Changes in operating assets and liabilities Accounts receivable 39,028 (55,535) Other receivables - 10,028 Accounts payable and accrued liabilities (29,364) 68,643 ---------- ---------- Cash used in operating activities (67,920) (56,444) ---------- ---------- Investing activities Acquisition of oil and gas properties (18) (28,634) Sale of oil and gas properties 82,440 65,000 Participation deposits - (11,500) ---------- ---------- Cash provided by (used in) investing activities 82,422 24,866 ---------- ---------- Financing activities Advances 7,500 24,916 Due to related party - - ---------- ---------- Cash provided by financing activities 7,500 24,916 ---------- ---------- Increase (decrease) in cash during the year 22,002 (6,662) Cash, beginning of the period 8,495 12,944 ---------- ---------- Cash, end of the period $ 30,497 $ 6,282 ========== ========== Supplemental disclosure of cash flow information Cash paid during the year for income taxes $ - $ - ========== ========== Cash paid during the year for interest $ - $ - ========== ========== Non-cash investing and financing activities Settlement of promissory note payable for 40,001,584 shares of common stock $(715,588) $ - Interest Forgiven (88,027) -_________________

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

_________________

PRECISION PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

_________________

Nevada	000-53199	71-1029846
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

624 W. Independence, Suite 101 A, Shawnee, OK 74804
(Address of Principal Executive Offices) (Zip Code)

(405) 924-0298
(Registrant’s telephone number, including area code)

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

_________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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 [X] No [ ]

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 o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No [X]

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by SectionS 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Number of shares of common stock outstanding as of August 18, 2011: 84,401,584.

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
Item 5.	Other Information	16
Item 6.	Exhibits	16

PRECISION PETROLEUM CORPORATION
BALANCE SHEETS

					June 30,	September 30,
					2011	2010
					(Unaudited)	(Audited)

				ASSETS

Current
	Cash and cash equivalents				$ 2,109	$ 8,495
	Accounts receivable, net				15,204	50,417

		Total current assets			17,313	58,912

Property and equipment, net					756	-
	Less accumulated depreciation				(19)

	Property and equipment, net				737	-

Oil and gas properties, - using full cost accounting					836,002	1,014,599
	Less accumulated depletion				(112,427)	(82,520)

		Oil and gas properites-Net			723,575	932,079

Long term assets
	Participation deposits				57,500	57,500

		Total long term assets			57,500	57,500

			Total assets		$ 799,125	$ 1,048,491



LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
	Accounts payable and accrued liabilities				$ 79,511	$ 184,954
	Due to related party				32,754	32,754
	Advances				89,916	82,416
	Notes payable				242,266	242,266
	Notes payable-related party				46,126	761,714

		Total current liabilities			490,573	1,304,104

Long term liabilities
	Asset retirement obligations				24,630	22,912

		Total long term liabilities			24,630	22,912

			Total liabilities		515,203	1,327,016

Capital stock
	Authorized:
		200,000,000 common stock, $0.001 par value;
	Issued and outstanding:
		84,401,584 common shares (2009: 44,400,000)			84,402	44,400
Additional paid-in capital					846,683	82,691
Accumulated deficit					(647,163)	(405,616)

			Total stockholders' equity (deficit)		283,922	(278,525)

			Total liabilities and stockholders' equity (deficit)		$ 799,125	$ 1,048,491

PRECISION PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)

			Three Months Ended June 30,		Nine Months Ended June 30,
			2011	2010	2011	2010

Revenues
	Oil and gas sales		$ 43,374	$ 40,104	$ 149,941	$ 141,061

		Total revenues	43,374	40,104	149,941	141,061

Expenses
	Lease operating		29,625	27,224	105,943	50,268
	Production taxes		3,122	2,720	10,768	9,988
	Bad debts		-	-	-	13,851
	Depletion and depreciation		3,259	16,598	29,926	55,696
	Accretion expense		573	-	1,718	-
	Legal and accounting		5,370	7,893	24,590	34,340
	Impairment on oil and gas propeties		-	-	118,036	-
	Loss on sale of oil and gas properties		-	-	-	9,502
	Management fees		3,000	3,000	11,000	9,000
	General and administrative		25,742	19,121	61,957	63,940

		Total operating expenses	70,691	76,556	363,938	246,585

Other income (expense)
	Interest expense		(10,380)	(27,815)	(47,133)	(85,075)
	Gain on settlement		-	-	19,583	-

		Total other income (expense)	(10,380)	(27,815)	(27,550)	(85,075)


Net loss			$ (37,697)	$ (64,267)	$ (241,547)	$ (190,599)


Basic loss per share			$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)

Weighted average number of shares
	outstanding-basic		84,401,584	44,400,000	83,813,325	44,400,000

PRECISION PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)

			Nine months ended
			June 30

			2011	2010

Operating Activities
	Net loss for the period		$ (241,547)	$ (190,599)
	Adjustments to reconcile net loss to net
	cash provided by (used in) operating activities:
		Depletion and depreciation	29,926	55,696
		Impairment on oil and gas property	118,036	-
		Loss on sale of assets	-	9,502
		Gain on settlement	(19,583)	-
		Accretion expense	1,718	-
	Changes in operating assets and liabilities
		Accounts receivable	35,213	(35,817)
		Other receivables	-	9,510
		Accounts payable and accrued liabilities	(17,416)	97,181

Cash used in operating activities			(93,653)	(54,527)

Investing Activities
	Acquisition of oil and gas properties		(2,296)	(30,290)
	Acquisition of property and equipment		(756)
	Sale of oil and gas properties		82,440	65,000
	Participation deposits		-	(11,500)

Cash provided by investing activities			79,388	23,210

Financing Activities
	Return of short swing profit		379	-
	Advances		7,500	24,916

Cash provided by financing activities			7,879	24,916


Decrease in cash during the year			(6,386)	(6,401)

Cash, beginning of the period			8,495	12,944

Cash, end of the period			$ 2,109	$ 6,543


Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes			$ -	$ -
Cash paid during the year for interest			$ -	$ -


Non-cash investing and financing activities
	Settlement of promissory note payable for
	40,001,584 shares of common stock		$ (715,588)	$ -
	Interest forgiven		$ (88,027)	$ -

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Note 1 Interim Reporting

The accompanying financial statements of Precision Petroleum Corporation have not been audited by independent public accountants. In the opinion of management, the accompanying financial statements reflect all adjustments necessary to present fairly our financial position at June 30, 2011 and our income, stockholder’s equity (deficit) and cash flows for the three and nine months ended June 30, 2011 and 2010. All such adjustments are of a normal recurring nature. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.

Certain disclosures have been condensed or omitted from these financial statements. Accordingly, these financial statements should be read with the financial statements included in our 2010 Annual Report on Form 10-K.

Note 2 Nature and Continuance of Operations

Precision Petroleum Corporation (the “Company”) was incorporated under the name of “Tidewater Resources, Inc.” under the laws of the State of Nevada on February 7, 2007. On October 27, 2008 the Company changed its name to Precision Petroleum Corporation. The Company has established its corporate offices in Shawnee, Oklahoma. The Company is engaged primarily in the acquisition, development, production, exploration for, and the sale of oil, gas and natural gas liquids. All business activities are conducted in Oklahoma and the Company sells its oil and gas to a limited number of domestic purchasers. The Company does not operate the leases; they own working and overriding royalty interests and are invoiced monthly for joint operating costs and receive revenues from third party purchasers of oil and gas chosen by the operators.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classifications of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2011, the Company had not yet achieved profitable operations, has an aggregate accumulated deficit of $647,163, has a working capital deficiency of $473,260, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Note 3 Summary of Significant Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates.

The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Reclassification

The Company reclassified $32,754 of accounts payable and accrued liabilities as of June 30, 2011 to due to related party to conform to the current presentation.

The Company reclassified $10,000 of advances as of June 30, 2011 to notes payable-related party to conform to the current presentation. These reclassifications had no effect on the Company’s financial condition, results of operation, or cash flows.

Cash and cash equivalents

The Company considers cash and cash equivalents to be all highly liquid debt instruments with a maturity when purchased of three months or less.

The Company maintains its cash balances in one financial institution in Shawnee, Oklahoma. The balance at this institution is generally insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of June 30, 2011 and September 30, 2010, the Company’s cash in this financial institution was less than the federally insured limits.

Allowance for doubtful accounts

Accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance. Changes in the allowance have not been material to the financial statements.

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Property and equipment

Equipment is recorded at cost. Depreciation is provided using the straight line method.

Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost center) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities.

Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil.

The costs of acquisition and exploration of unproved oil and gas properties, including any related capitalized interest expense, are not subject to depletion, but are assessed for impairment either individually or on an aggregate basis. The costs of certain unevaluated leasehold acreage are also not subject to depletion. Costs not subject to depletion are periodically assessed for possible impairment or reductions in recoverable value. If a reduction in recoverable value has occurred, costs subject to depletion are increased or a charge is made against earnings for those operations where a reserve base is not yet established.

Future net cash flows from proved reserves using period-end, non-escalated prices and costs are discounted to present value and compared to the carrying value of oil and gas properties.

Proceeds from a sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would alter the rate of depletion by more than 25%.

Assets Retirement Obligations

The Company recognizes the fair value of a liability for an assets retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability.

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset.

The Company owns interests in oil and natural gas properties, which may require expenditures to plug and abandon the wells when the oil and natural gas reserves in the wells are depleted. Fair value of legal obligations to retire and remove long-lived assets is recorded in the period in which the obligation is incurred (typically when the asset is installed at the production location). When the liability is initially recorded, this cost is capitalized by increasing the carrying amount of the related properties and equipment. Over time the liability is increased for the change in its present value, and the capitalized cost in properties and equipment is depreciated over the useful life of the remaining asset. The Company does not have any assets restricted for the purpose of settling the liabilities.

The following table shows the activity for the nine months ended June 30, 2011 and September 30, 2010 relating to the Company’s retirement obligation for the liability:

	June 30, 2011	September 30, 2010
Beginning Balance at October 1	$22,912	$ -
Accretion expense	1,718	-

Ending balance at June 30	$24,630	$ -

Impairment of Long-Lived Assets

The Company reviews long-lived assets and certain identifiable intangibles to be held and used for impairment whenever events or changes in circumstances have indicated that the carrying amount of assets might not be recoverable and have appropriately recorded the adjustment.

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Basic and Diluted Loss Per Share

Basic loss per share is computed using the weighted average number of shares outstanding defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share” during the period. Fully diluted earnings (loss) per share are computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculated date. As of June 30, 2011 and 2010, the Company did not have any outstanding stock options or warrants.

Revenue Recognition

Revenue from the sale of the oil and gas production is recognized when title passes from the operator of the oil and gas properties to purchasers.

Note 4 Oil and Gas Properties

a) Effective July 1, 2009, the Company purchased various producing properties located in Garvin County, Pottawatomie County, Nowata County and Seminole County, Oklahoma. The Company utilized short-term financing to acquire these properties. The various net revenue acquired range from .2808% to a 67.97% net revenue interest. The Company also increased their working interest in the Teresa #1 well by 11% and in the Quinlan #1 by 2%.

In November of 2009, the Company acquired a 57.2682% working interest in the Thompson #2 well, located in Garvin County, Oklahoma. They sold 30% of their working interest in the Thompson #2 well for $8,400 in November 2010 and another 13.46774% for $35,016 in January 2011. The Company still owns a 13.80046% working interest in this well.

In June of 2010, the Company acquired an additional 25% working interest in the Mason Burns well in exchange for the assumption of the seller’s debt to the operator of the well in the amount of $1,657.

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

In December 2010, the Company sold 19.003906% of its working interest in the Ward McNeil lease for $19,440. The Company still owns a 10% working interest in this well.

b) In an agreement dated on December 1, 2009, but made effective January 1, 2010, the Company sold all of its working interest in the Heath lease located in Seminole County, Oklahoma. The sales price for this transaction was $55,000, to be paid on or before one year from the date of the agreement. The Company received a payment in the amount of $4,583 from the purchaser with a balance due of $50,417.

On September 16, 2010, the Company, along with Global Energy, LLC (Plaintiffs), filed a joint petition against Reed Power Tongs, Inc. and 4K Energy, LLC (Defendants), alleging breach of contract of the joint operating agreement the Plaintiffs entered into with the Defendants covering the Karsyn No. 1, the Heath well and the Josh well.

On January 19, 2011, the Company along with Global Energy, LLC entered into a settlement agreement in this matter, with the Defendants agreeing to pay the Company $70,000 and for the Company to assign its interest in the Karsyn, Heath and Josh wells. The Company applied $50,417 of the proceeds to the accounts receivable owed to them by the Defendants and applied the balance of the proceeds, $19,583, as a gain on settlement. Additionally, the Company recognized an impairment of $118,036 on the Karsyn well as of June 30, 2011.

c) On February 22, 2010, the Company sold all of its working interest in the Jameson lease, retaining a three percent (3%) overriding royalty interest. The sale price for this transaction was $10,000 and has been paid in full.

d) On January 27, 2009, the Company entered into a Participation Agreement with Nitro Petroleum Incorporated (“Nitro”), pursuant to which the Company obtained from Nitro the right to participate in Phase One of Nitro’s Powder River Basin Project in Montana. Nitro acquired certain oil and gas leases in the Powder River Basin in Montana pursuant to a Memorandum of Understanding dated January 26, 2009 with REDS, LLC.

Pursuant to the terms of the Participation Agreement, Nitro is being carried to the tanks with respect to a 25% working interest in Phase One of the Powder River Basin Project. The Company is acquiring a 37.5% working interest in Phase One of the Powder River Basin Project in exchange for an agreement to pay 50% of the expenses of Phase One of the Powder River Basin Project. Additionally, the Company shall have the right to purchase up to a 37.5% working interest in Phase Two and Phase Three of the Powder River Basin Project upon substantially the same terms as Phase One. Nitro will be the operator of all wells drilled during Phase One of the Powder River Basin Project.

The Company has paid $57,500 towards the Participation Agreement with Nitro. The payments have been recorded in the financial statements as participation deposits.

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Note 5 Notes Payable and Short-Term Financing

At December 23, 2010, the Company has a short term note payable to Sierra Growth, Inc., an investment company located in Charlestown, Nevis, West Indies. This note bears an interest rate of 10% per annum and is due upon demand. If the Holder makes a demand for repayment, the Company must repay the principal balance of this note and accrued and unpaid interest thereon within sixty (60) days. Effective the December 23, 2010, the Company converted $715,588 of this debt into 40,001,584 shares of common stock of the Company. A total of $88,027 of interest related to this principal amount was forgiven. The Company has a short term note payable with Sierra Growth in the amount of $36,126 with accrued interest of $6,315 as of June 30, 2011.

At March 31, 2011, the Company had a short term note payable to Global Energy, LLC, an oil and gas company located in Shawnee, Oklahoma. This note bears an interest rate of 10% per annum and is payable upon demand. If the Holder makes a demand for repayment, the Company must repay the principal balance of this note and accrued and unpaid interest thereon within sixty (60) days. Interest has been accrued in the amount of $42,347 as of June 30, 2011 ($24,227; September 30, 2010) and has a principal balance of $242,266 ($242,266; September 30, 2010).

The Company has also obtained financing from a consultant with a balance of $32,754 ($31,754: September 30, 2010) and also has received advances of $89,916 ($92,416: September 30, 2010) from unrelated third parties and $10,000 ($0: September 30, 2010) from a related party as discussed in Note 6. The balances are due on demand and are not interest bearing. However, Generally Accepted Accounting Principles (GAAP) requires interest expense to be imputed on the outstanding balances of the advances. The Company has accrued interest in the amount of $23,603 for these advances as of June 30, 2011 (2009, $0).

Note 6 Related Party Transactions

During the nine months ended June 30, 2011 and 2010, the Company incurred management fees charged by a director of the Company totaling $11,000 and $9,000, respectively.

As discussed in Note 5, the Company converted a short term payable to Sierra Growth in the amount of $715,588 along with accrued interest in the amount of $88,027 into 40,001,584 shares of its common stock. After this conversion, Sierra Growth owned 47% of the Company’s issued and outstanding common stock.

Also discussed in Note 5, the Company had a short term note payable with Sierra Growth in the amount of $36,126 with accrued interest of $6,315 as of June 30, 2011.

As discussed in Note 5, the Company also has received an advance from Sierra Growth in the amount of $10,000 ($0; September 30, 2010). The balance is due on demand and is not interest bearing. However, Generally Accepted Accounting Principles (GAAP) requires interest expense to be imputed on the outstanding balance of the advance. The Company has accrued interest in the amount of $1,630 for this advance as of June 30, 2011 (2009, $0).

PRECISION PETROLEUM CORPORATION

NOTES TO THE INTERIM FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

Note 7 Common Stock

By written consent of the Board of Directors effective December 23, 2010, the Company and Sierra Growth agreed to convert the $715,588 of principal amount due to Sierra Growth into 40,001,584 common shares of the Company based on the weighted average price of stock from December 8, 2010 to December 21, 2010 which was calculated to be $.017889. Furthermore, an accrued interest expense in the amount of $88,027 was forgiven at the time of conversion. As of June 30, 2011 there were 84,401,584 shares of common stock issued and outstanding. (See Note 5 and 6 for additional discussion).

On May 4, 2011, a director of the Company disclosed that he engaged in a “short-swing transaction” under Section 16(b) of the Securities Exchange Act of 1934. The director returned the profits of the short-swing transaction totaling $379 to the Company and this amount was recognized as an increase in additional paid in capital.

Management's Discussion and Analysis

As used in this Interim Report: (i) the terms "we", "us", "our" and the "Company" mean Precision Petroleum Corporation (ii) "SEC" refers to the Securities and Exchange Commission; (iii) "Exchange Act" refers to the United States Securities Exchange Act of 1934, as amended; and (iv) all dollar amounts refer to United States dollars unless otherwise indicated.

The following is a discussion of our plan of operations, results of operations and financial condition as of and for the three and nine months ended June 30, 2011.

Liquidity and Capital Resources

The Company had a cash balance of $2,109 as of June 30, 2011, compared to cash balance of $8,495 as of September 30, 2010.

The Company will continue to utilize the free labor of its directors and stockholders until such time as funding is sourced from the capital markets. It is anticipated that funding for the next twelve months will be required to maintain the Company.

Results of Operations

For the three months ended June 30, 2011, the Company had revenue of $43,374, as compared to $40,104 for the three months ended June 30, 2010. For the nine months ended June 30, 2011, the Company had revenue of $149,941, as compared to $141,061 for the nine months ended March 31, 2010.

Cost of continued operations and other expenses for the three months ended June 30, 2011 was $70,691 resulting in a net loss for the period of $37,697 compared to costs of continued operations and other expenses of $76,556 for the three months ended June 30, 2010 resulting in a net loss for the period of $64,267. Depletion, legal costs and general and administrative costs were down significantly from the prior quarter. For the nine months ended June 30, 2011, the Company had a net loss of $241,547, as compared to a net loss of $190,599 for the nine months ended June 30, 2010.

The Company expects to continue to receive revenues from the properties on the Oklahoma properties and the Company expects for these revenues to increase. Planned exploration ventures should increase revenues for the fiscal year ending September 30, 2011.

Going Concern

The Company has not attained profitable operations and is dependent upon obtaining financing to pursue any extensive acquisitions and exploration activities. For these reasons, the Company's auditors stated in their report on the Company's audited financial statements that they have substantial doubt the Company will be able to continue as a going concern without further financing.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Plan of Operation for the Next Twelve (12) Months

The following discussion of our plan of operation, financial condition, results of operations, cash flows and changes in financial position should be read in conjunction with our most recent financial statements and notes appearing in our Form 10-K annual report for the year ended September 30, 2010.

Our plan of operations for the next twelve months is to maintain the current properties we have which we feel will generate more revenue.

We estimate that our expenditures over the next twelve months will be $120,000 to cover ongoing general and administrative expenses. As at June 30, 2011, we had cash and cash equivalents of $2,109 and an accumulated deficit of $647,163.

During the twelve-month period following the date of this report, we anticipate that we will continue to generate revenue from our oil and gas leases. However, we anticipate that such revenue will not be sufficient to cover all of our expenses. Accordingly, we will be required to obtain additional financing in order to continue our plan of operations during and beyond the next twelve months. We anticipate that additional funding could be in the form of either debt or equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding to fund our operations. In the absence of such financing, our business plan will fail. Even if we are successful in obtaining financing to fund our operations, there is no assurance that we will obtain the funding necessary to pursue any further exploration of our properties. If we do not obtain additional financing, we may be forced to dispose of operating oil and gas leases located in Oklahoma.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.

Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the current quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Pursuant to Rule 601 of Regulation S-B, the following exhibits are included herein or incorporated by reference.

Exhibit Number	Description
31.1	Section 302 Certification - Chief Executive Officer
31.2	Section 302 Certification - Chief Financial Officer
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer

SIGNATURES

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

Date: August 18, 2011

	Precision Petroleum Corporation
	By: /s/ Richard Porterfield
	Richard Porterfield President (principal executive officer)


	By: /s/ James Kirby
	James Kirby Treasurer (principal financial officer and principal accounting officer)

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