UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended ~~July~~January 31, ~~2014~~2015

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

For the Transition Period from _________ to _________

Commission file number: 000-51427

BLACKSANDS PETROLEUM, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-1740044
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

800 Bering, Suite 250

Houston, Texas 77057

(Address of principal executive offices) (zip code)

(713) 554-4490

(Registrant’s telephone number, including area code)

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 ¨ No 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. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

As of ~~September~~March 1211, ~~2014~~2015, there were 18,~~756~~872,~~199~~832 shares of registrant’s common stock outstanding.

BLACKSANDS PETROLEUM, INC.

FORM 10-Q

For the Quarter Ended ~~July~~January 31, ~~2014~~2015

Table of Contents

PART I FINANCIAL INFORMATION		~~Page~~	Page
Item 1.	Financial Statements
	Consolidated Balance Sheets as of July 31, 2014 and October 31, 2013 (unaudited)		3
	Consolidated Balance Sheets as of January 31, 2015 and October 31, 2014 (unaudited)			3
	Consolidated Statements of Operations for the nine and three months ended July 31, 2014 and 2013 (unaudited)		4
	Consolidated Statements of Operations for the three months ended January 31, 2015 and 2014 (unaudited)			4
	Consolidated Statements of Cash Flows for the nine months ended July 31, 2014 and 2013 (unaudited)		5
	Consolidated Statements of Cash Flows for the three months ended January 31, 2015 and 2014 (unaudited)			5
	Condensed Notes to Consolidated Financial Statements (unaudited)		6	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		16	13
Item 4.	Controls and Procedures		16	13
PART II OTHER INFORMATION
Item 1.	Legal Proceedings		18	15
Item 1A.	Risk Factors		18	15
Item 2.	Unregistered Sales of Securities and Use of Proceeds		18	15
Item 3.	Defaults Upon Senior Securities		18	15
Item 4.	Mine Safety Disclosures		18	15
Item 5.	Other Information		18	15
Item 6.	Exhibits		19	16
SIGNATURES			20	17

Blacksands Petroleum, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	July 31,2014				October 31,2013
		January 31,2015				October 31,2014
ASSETS
Current Assets:
Cash and cash equivalents	$	~~719,586~~$	521,585		$	~~1,335,237~~$	678,940
Accounts receivable		~~197,610~~	47,934			~~417,597~~	210,577
Prepaid expenses		~~12,660~~	452,484			--	522,073
Total Current Assets		~~929,856~~	1,022,003			~~1,752,834~~	1,411,590
Oil and gas property costs (successful efforts method of accounting)
Proved, net of accumulated depletion of 7,368,699 and 6,309,607		4,015,072				2,077,872
Proved			452,705				735,756
Other assets		~~50,000~~	50,000			~~50,312~~	50,000
TOTAL ASSETS	$	~~4,994,928~~$	1,524,708		$	~~3,881,018~~$	2,197,346
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities:
Note payable	$	~~60,000~~$	60,000		$	~~280,000~~$	60,000
Accounts payable		478,650				523,365
Notes payable related party			3,220,000				--
Accrued expenses		4,011,483				3,121,900
Accounts payable			172,533				129,400
Total Current Liabilities		4,550,133				3,925,265
Accrued expenses			2,293,411				2,372,075
Notes Payable, net of discount of $-- and $1,329,581		5,820,000				4,270,419
Total Current Liabilities			5,745,944				2,561,475
Convertible debenture net of discount of $1,337,497 and $--		162,503				--
Notes Payable, net of discount of $1,281,429 and $1,312,873			2,818,571				2,787,127
Asset Retirement obligation		48,081				649,233
Notes payable related party			--				3,220,000
Total Liabilities		10,580,717				8,844,917
Asset retirement obligation			92,842				91,707
Stockholders’ Deficit:
Total Liabilities			8,657,357				8,660,309
Preferred stock - $0.001 par value; 10,000,000 shares authorized:
Stockholders’ Deficiency:
Series A - $.001 par value, 310,000 shares authorized, nil shares issued and outstanding		--				--
Preferred stock - $0.01 par value; 10,000,000 shares authorized:
Series B - $.001 par value, 2,217,281 shares authorized, 500,000 shares issued and outstanding		500				--
Series A - $.001 par value, 310,000 shares authorized, nil shares issued and outstanding			--				--
Common stock - $0.001 par value; 100,000,000 shares authorized;
Series B - $.001 par value; 2,217,281 shares authorized, 500,000 shares issued and outstanding			500				500
17,725,610 and 17,719,360 shares issued and outstanding at July 31, 2014 and October 31, 2013, respectively		17,726				17,720
Series C - $.001 par value; 1,750,000 shares authorized, 1,000,000 shares issued and outstanding			1,000				1,000
Additional paid-in capital		25,559,704				23,726,191
Common stock - $0.001 par value; 100,000,000 shares authorized; 19,372,774 and 19,278,017 shares issued and outstanding at January 31, 2015 and October 31, 2014, respectively			19,373				19,278
Accumulated deficit		(31,163,719	)			(28,707,810	)
Additional paid-in capital			28,570,437				28,440,320
Total Stockholders’ Deficit		(5,585,789	)			(4,963,899	)
Accumulated deficit			(35,723,959	)			(34,924,061	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	4,994,928			$	3,881,018
Total Stockholders’ Deficiency			(7,132,649	)			(6,462,963	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY		$	1,524,708			$	2,197,346

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Blacksands Petroleum, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

		Nine Months Ended July 31,						Three Months Ended July 31,
		Three months endedJanuary 31,
		2014			2013			2014			2013
		2015			2014
Revenue:
~~Oil and gas revenue~~	Oil and gas revenue	$	1133,~~062,491~~555		$	1328,~~303,045~~297		$	~~465,791~~		$	~~467,879~~
Expenses:
	Selling, general and administrative		~~960~~205,~~706~~325			1341,~~107,685~~635			~~244,723~~			~~336,255~~
	Depreciation and depletion		~~366~~48,~~501~~780			~~375~~197,~~257~~801			~~69,924~~			~~138,211~~
	Accretion expense		15,648			31,287			1,707			8,525
	Accretion		1,135			8,444
	Lease operating expenses		~~430~~175,~~473~~476			~~507~~178,~~585~~780			~~129,902~~			~~152,460~~
	Gain on sale of interest in Cabeza Creek Field		(645,323	)		--			--			--
	Gain on sale of oil and gas properties		--			(621,670	)
	Gain on transfer of interest to PIE Holdings		(1,760,390	)		--			--			--
	Impairment of oil and gas property interest		269,906			2,219,813
	Oil and gas exploration costs		--			220,000			--			220,000
	Total expenses		700,622			2,324,803
	Impairment of oil and gas property interest		2,219,813			--			--			--
Loss from Operations			(567,067	)		(1,996,506	)
	Total expenses		1,587,428			2,241,814			446,256			855,451
Other income and expense:
Gain (loss) from operations			(524,937	)		(938,769	)		19,535			(387,572	)
	Interest expense		(232,831	)		(508,457	)
	Other income and (expense):
	Total Other Income (Expense)		(232,831	)		(508,457	)
Interest expense			(1,941,519	)		(955,918	)		(769,317	)		(360,411	)
Loss before provision for income taxes			(799,898	)		(2,504,963	)
Other income			10,547			27,763			10,547			--
Provision for income taxes			--			--
	Total other income (expense)		(1,930,972	)		(928,155	)		(758,770	)		(360,411	)
Net Loss			(799,898	)		(2,504,963	)
Loss before provision for income taxes			(2,455,909	)		(1,866,924	)		(739,235	)		(747,983	)
Preferred stock dividends			11,250			--
Provision for income taxes			--			--			--			--
Net loss attributable to common shareholders		$	(811,148	)	$	(2,504,963	)
Net loss			(2,455,909	)		(1,866,924	)		(739,235	)		(747,983	)
Loss Per Share attributable to common shareholders
Preferred stock dividends			2,500			150,000			2,500			50,000
	Basic and diluted	$	(0.04	)	$	(0.14	)
Deemed dividend			450,000			--			450,000			--
Weighted Average Shares Outstanding
Net loss attributable to common shareholders		$	(2,908,409	)	$	(2,016,924	)	$	(1,191,735	)	$	(797,983	)
	Basic and diluted		19,324,366			17,719,530
Loss per share attributable to common shareholders
Basic		$	(0.16	)	$	(0.12	)	$	(0.07	)	$	(0.04	)
Diluted		$	(0.16	)	$	(0.12	)	$	(0.07	)	$	(0.04	)
Weighted Average Shares Outstanding
Basic			17,721,546			16,388,648			17,722,655			16,389,738
Diluted			17,721,546			16,388,648			17,722,655			16,389,738

The accompanying notes are an integral part of these unaudited consolidated financial statements.

BLACKSANDS PETROLEUM, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the ~~Nine~~Three Months Ended ~~July~~January 31, ~~2014~~2015 and ~~2013~~2014

(Unaudited)

	2014			2013
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2799,~~455,909~~898	)	$	(12,~~866~~504,~~924~~963	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash flows from operating activities:
Impairment of oil and gas property costs		2269,~~219,813~~906			--2,219,813
Equity compensation expense		~~(15,980~~--	)		~~236~~15,~~526~~024
Amortization of debt discount		131,~~342,084~~444			~~433~~325,~~032~~177
Gain on transfer of interest to PIE Holdings		(1,760,392	)		--
Depreciation, depletion and accretion		49,915			206,245
Depreciation, depletion and accretion		382,148			406,544
Gain on sale of oil and gas properties		--			(621,670	)
Gain on sale of oil and gas properties		(645,323	)		--
Changes in operating assets and liabilities:
Accounts receivable		~~219~~162,~~987~~643			~~161~~151,~~185~~626
Prepaid expense and other current assets		~~(12~~69,~~660~~589	)		~~169~~(27,~~611~~539	)
Accounts payable		~~(12~~94,~~753~~148	)		~~315~~316,~~562~~234
Net cash flows from operating activities		(~~738~~122,~~985~~253	)		~~(144~~79,~~464~~947	)
CASH FLOWS FROM INVESTING ACTIVITIES
Oil and gas property costs		(135,~~926,666~~102	)		(~~390~~712,~~401~~472	)
Proceeds from the sale of Cabeza Creek		50,000			--
Net cash flows from investing activities		(35,102	)		(712,472	)
Net cash flows from investing activities		(1,876,666	)		(390,401	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(157,355	)		(632,525	)
CASH FLOWS FROM FINANCING ACTIVITIES:
CASH AND CASH EQUIVALENTS - Beginning of period		678,940			1,335,237
Borrowings on debt		1,500,000			--
CASH AND CASH EQUIVALENTS - End of period	$	521,585		$	702,712
Proceeds from preferred stock subscription		500,000			--
Net cash flows from financing activities		2,000,000			--
NET DECREASE IN CASH AND CASH EQUIVALENTS		(615,651	)		(534,865	)
CASH AND CASH EQUIVALENTS - Beginning of period		1,335,237			1,160,320
CASH AND CASH EQUIVALENTS - End of period	$	719,586		$	625,455
Supplemental Disclosures
Cash paid for interest	$	~~252~~84,~~252~~995		$	~~167~~85,~~240~~004
Cash paid for income taxes	$	--		$	--
Supplemental non-cash activities:
Oil and gas costs in accounts payable	$	858,009		$	--
Payment of accrued interest to related party through issuance of common stock	$	130,212		$	--
Discount on debt	$	1,350,000		$	--
Oil and gas property costs in accounts payable	$	--		$	1,680,897

The accompanying notes are an integral part of these unaudited consolidated financial statements

BLACKSANDS PETROLEUM, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. The Company and Summary of Significant Accounting Policies

Blacksands Petroleum, Inc. (hereinafter referred to as the “Company”) was incorporated in the State of Nevada on October 12, 2004. Since August 2007, the Company has been engaged in the exploration, development, exploitation and production of oil and natural gas. The Company sells its oil and gas products primarily to domestic pipelines and refineries. Its operations are presently focused in the States of Colorado, Texas and New Mexico.

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in annual report on Form 10-K for the year ended October 31, ~~2013~~2014 filed with the SEC on February 1411, ~~2014~~2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the ~~2013~~2014 annual report on Form 10-K have been omitted.

Oil and Gas Properties

The Company follows the successful efforts method of accounting for its oil and natural gas properties. Oil and gas properties are periodically assessed to determine whether they have been impaired. Any impairment in value of unproved properties is charged to exploration expense. The costs of unproved properties, which are determined to be productive, are transferred to prove oil and gas properties and amortized on an equivalent unit-of-production basis. Exploratory expenses, including geological and geophysical expenses and delay rentals for unevaluated oil and gas properties, are charged to expense as incurred. Exploratory drilling costs are initially capitalized as unproved property but charged to expense if and when the well is determined not to have found proved oil and gas reserves. In accordance with ASC No. 935, exploratory drilling costs are evaluated within a one-year period after the completion of drilling. For proved properties, we compare expected undiscounted future cash flows at a producing field level to the unamortized capitalized cost of the asset. If the future undiscounted cash flows, based on our estimate of future natural gas and crude oil prices, operating costs, anticipated production from proved reserves and other relevant date, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is calculated by discounting the future cash flows at an appropriate risk-adjusted discount rate.

During the three months ended January 31, 2015 and 2014, the Company impaired its oil and gas properties by $269,906 and $2,219,813, respectively, which is reflected in the consolidated ~~statement~~statements of operations. ~~This impairment was the result of the additional costs incurred in the AP Clark Field related to the three wells on which the drilling was commenced in November 2013.~~

Subsequently, during the three months ended April 30, 2014, the Company recorded income of $1,760,392 in connection with the transfer of some of the Company’s interest in three wells to PIE Holdings, LP on which drilling commenced in November 2013. This income is included in the income statement as an operating expense.

Going Concern

As shown in the accompanying consolidated financial statements, the Company has incurred an accumulated deficit of $3135,~~163~~723,~~719~~959 through ~~July~~January 31, ~~2014~~2015. In addition, ~~at July 31, 2014,~~ the Company had a working capital deficit of $34,~~620~~723,~~277,~~941 ~~a stockholders’ deficit of $5,585,789~~ and cash and cash equivalents of $~~719~~521,~~586~~585 at January 31, 2015.

The current rate of cash usage raises substantial doubt about the Company’s ability to continue as a going concern, absent the raising of additional capital, ~~restructuring or extending the terms on its current debt~~ and/or additional significant ~~revenue~~revenues from new oil production. The Company’s financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue in existence.

Reclassifications

Certain amounts included in the information for the quarter ended January 31, 2014 have been reclassified to conform to the presentation in the quarterly information included in the Form 10-Q for the quarter ended January 31, 2015.

2. Asset Retirement Obligation

The following table summarizes the change in the asset retirement obligation (“ARO”) for the periods ended ~~July~~January 31, ~~2014~~2015:

Beginning balance at November 1, 2013	$	649,233
Beginning balance at November 1	$	91,707
Liabilities settled		--
Liabilities incurred through acquisition of assets		--
Liabilities incurred through acquisition of assets Liabilities settled through sale of assets		-- --
Liabilities settled through sale of assets		(616,800	)
Accretion expense		1,135
Accretion expense		15,648
Ending balance at January 31	$	92,842
Ending balance at July 31, 2014	$	48,081

The ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation and similar activities associated with the Company’s oil and gas properties. Inherent in the fair value calculation of the ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance.

3. Commitments and Contingencies

The Company, as an owner or lessee and operator of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks. The Company is not aware of any environmental claims existing as of ~~July~~January 31, ~~2014~~2015, which have not been provided for, covered by insurance or otherwise have a material impact on its financial position or results of operations. There can be no assurance, however, that current regulatory requirements will not change, or past noncompliance with environmental laws will not be discovered on the Company’s properties.

InOn ~~June~~January ~~2014~~26, ~~the~~2015, ~~Company~~David ~~received~~DeMarco, ~~notice~~a ~~that~~former itChief ~~owed~~Executive toOfficer ~~PIE~~and ~~Holdings~~director LPof ~~approximately~~the ~~$485~~Company,~~000~~ ~~for~~filed ~~the~~a ~~completion~~complaint ~~costs~~against ~~related to~~ the ~~three~~Company ~~new wells~~ in the APDistrict ~~Clark~~Court ~~Field.~~of ~~According~~Harris ~~to the Joint Operating Agreement the Company has with PIE Holdings~~County, LPTexas, ~~these~~alleging ~~amounts~~that ~~are~~pursuant ~~required~~ to bea ~~paid~~contract ~~within~~for ~~seven~~work ~~days~~performed ofand/or ~~the~~services ~~notification~~rendered, ~~that~~Mr. ~~fracking~~DeMarco ~~activities~~is ~~commenced.~~due ~~These~~$151,000 ~~amounts~~in ~~have~~deferred ~~not~~compensation ~~been~~that ~~paid~~accrued toduring ~~date.~~his ~~According~~tenure toas ~~the~~Chief ~~Joint~~Executive ~~Operating~~Officer ~~Agreement,~~of the Company. ~~could~~Mr. beDeMarco ~~forced~~is toseeking ~~give~~between up$200,000 ~~all~~and or$1 amillion ~~portion~~in damages. Service of ~~its~~process ~~interest~~was ineffected ~~these~~on ~~wells~~February ~~for~~17, ~~non-payment~~2015. The Company has ~~not~~reported ~~been~~$151,000 ~~notified~~in toaccrued ~~date of any actions to be taken for the non-payment of these completion costs~~expenses.

4. Stockholders’ Equity

~~Series~~Issuance Bof ~~Convertible~~Common ~~Preferred~~ Stock

In ~~June~~December 2014, ~~the~~20,183 ~~Company~~and ~~designated 2~~74,~~217,281~~574 shares ofwere ~~preferred~~issued ~~stock~~to asa ~~non-voting~~related ~~Redeemable~~party ~~Convertible~~for ~~Series~~interest Btotaling ~~Preferred~~$32,818 ~~Stock~~and ~~(“Series~~$97,394 Baccruing ~~Preferred”)~~for ~~(See~~the ~~Note~~month ~~6). Each share~~ of ~~Series~~July B2014 ~~Preferred~~and isfor ~~entitled to a dividend of 3% payable annually through~~ the ~~issuance~~quarter ofended ~~additional~~October ~~Series~~31, B2014, ~~Preferred~~respectively. ~~Each~~The ~~share~~Company ofhas ~~Series~~reported Ba ~~Preferred~~gain ~~may~~on ~~be converted at~~ the ~~option~~issuance of ~~the~~these ~~holder~~shares ~~any~~totaling ~~time on or prior to May 30~~$87,748, ~~2017~~which ~~into~~because ~~shares of~~ the ~~Company’s~~shares ~~common~~were ~~stock~~issued atto a ~~conversion~~related ~~price of $1.00 per share~~party, ~~which~~ is ~~subject~~reflected toas ~~adjustment.~~an ~~The~~increase ~~Company has the right to redeem the shares,~~ in ~~whole~~additional orpaid in ~~part, any time after May 30, 2017 at $1~~capital.~~00 per share.~~

Under the terms set forth in the Certificate of Designation, the holders of Series B Preferred stock have the exclusive right, voting separately as a class, to elect one director of the Board (“Series B Director”), who must be reasonably acceptable to the Company. The Series B Director must be appointed by the holders of a majority of the issued and outstanding shares of Series B Preferred Stock. The Series B Director was appointed to the Board in June 2014.

Stock Options

A summary of the Company’s stock option activity and related information is as follows:

	Number of Shares			Weighted Average Exercise Price
		Number ofShares				Weighted Average Exercise Price
Outstanding at November 1, 2013		1,046,333		$	3.13
Outstanding at November 1, 2014			66,667			$	3.00
Granted		-	-		-		-
Exercised		-	-		-		-
Cancelled		~~27,500~~	-	$	~~4.50~~		-
Outstanding at July 31, 2014		1,018,833		$	3.09
Outstanding at January 31, 2015			66,667			$	3.00
Exercisable at July 31, 2014		1,018,833		$	3.09
Exercisable at January 31, 2015			66,667			$	3.00

During the ~~nine~~three months ended ~~July~~January 31, ~~2014~~2015 and ~~2013~~2014, the Company recorded stock-based compensation of ~~$(15,980)~~nil and $~~236~~15,~~526~~024, respectively, as general and administrative expenses. At ~~July~~January 31, ~~2014~~2015, the weighted average remaining life of the stock options is 65.0237 years. There were no unamortized amounts of stock-based compensation at January 31, 2015.

Warrants

A summary of the Company’s warrant activity and related information is as follows:

	Number of Shares		Weighted Average Exercise Price
Outstanding at November 1, 2013	2,057,268		$	4.50
Granted		-		-
Exercised		-		-
Expired		2,057,268	$	4.50
Outstanding at July 31, 2014		--		--
Exercisable at July 31, 2014		--		--

5. Sale of Cabeza Creek Field

In January 2014, the Company sold its interest in all of the wells in the Cabeza Creek Field for all depths from the surface to 8,500 feet below the surface in exchange for $50,000 and the assumption of all future liabilities associated with the plugging and abandoning of all wells in the Cabeza Creek Field ($616,800).

The following is a summary of the pro forma information for the nine months ended July 31, 2014 and 2013 assuming the sale of the Cabeza Creek field had occurred as of the beginning of each fiscal year presented:

	2014			2013
Oil and gas revenue	$	1,062,491		$	1,149,001
Expenses
Selling, general and administrative		1,018,271			1,107,685
Depreciation and depletion		366,501			301,620
Accretion		15,648			1,143
Lease operating expense		430,473			447,579
Impairment of oil and gas property interest		2,219,813			--
Oil and gas exploration costs		--			220,000
Total expenses		4,050,706			2,078,027
Loss from operations		(2,988,215	)		(929,026	)
Other income (expense)		(230,952	)		(928,155	)
Net loss	$	(3,219,167	)	$	(1,857,181	)

6. Subscription Agreement

On June 6, 2014, the Company entered into a subscription agreement with Pacific LNG Operations Ltd., a company incorporated in the British Virgin Islands (“Pacific LNG”), whereby the Company issued to Pacific LNG, in exchange for $2,000,000, a (i) $1,500,000 principal face amount 5% Convertible Debenture (“Debenture”) convertible into shares of Series B Preferred (Note 5) at a conversion price of $1.00 per share, and (ii) $500,000 in exchange for 500,000 shares of Series B Preferred.

The Debenture accrues interest at the rate of 5% per annum, payable semi-annually in arrears, and matures on June 6, 2017. Pacific LNG has the right, at any time prior to June 6, 2015, to convert the outstanding principal and interest, if any, of the Debenture into shares of Series B Preferred at a price of $1.00 per share of Series B Preferred.

Each share of Series B Preferred has a stated value of $1.00 (“Stated Value”) and accrues a dividend of 3% of the Stated Value per annum, which is payable in additional shares of Series B Preferred annually on December 31 in arrears. Each share of Series B Preferred may be converted at any time on or prior to May 30, 2017 into such number of shares of the Company’s common stock equal to the Stated Value divided by $1.00 per share. The Company has the right, at any time after May 30, 2017, to redeem the Series B Preferred at a price of $1.00 per share. Management has evaluated the Series B Preferred and its related terms and determined there are no embedded derivatives.

In connection with the issuance of the Debenture, the Company has reported a beneficial conversion feature for the difference between the conversion price pursuant to the Debenture and the quoted price of the Company’s common stock on the date of the agreement. On the date of the agreement, a discount totaling $1,350,000 was recorded. The unamortized discount which at July 31, 2014 was $1,337,497, will be amortized over the remaining term of the Debenture using the effective interest method. In addition, a deemed dividend totaling $450,000 was recorded in connection with the beneficial conversion feature associated with the conversion features in the Series B Preferred.

7. Subsequent Events

Amendment to Silver Bullet Notes Payable

In August 2014, the Company and Silver Bullet Property Holdings SDN BHD (“Silver Bullet”) entered into an Amendment and Exchange Agreement (the “August 2014 Amendment”). Pursuant to the August 2014 Amendment, all accrued and unpaid interest through June 30, 2014 on the outstanding notes issued to Silver Bullet, totaling $1,052,407, was exchanged for 1,052,407 shares of the Company’s common stock. In addition, interest accrued on the notes is to be paid quarterly in arrears in shares of the Company’s common stock based upon the average common stock price for the last five trading days of the quarter. The due dates on each of the notes payable to Silver Bullet were extended to December 31, 2015.

Development Agreement with Adwar Drilling Fund III

In August 2014, ApClark, LLC, a wholly-owned subsidiary of the Company, entered into a Participation and Development Agreement with Adwar Drilling Fund III, LP. (“Adwar III”). Pursuant to the agreement, Adwar III has the right to invest up to $7.5 million in contributions to acquire working interests of up to 50% in certain future development wells.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of its management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to us could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that its assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of the Company. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to, expected market demand for the Company’s services, fluctuations in pricing for materials, and competition.

Overview

We currently focus ~~our~~on oil and natural gas exploration, exploitation and development operations on projects located in Colorado, New Mexico and Texas. The higher potential impact projects (“Core Focus ~~Area~~Areas”) are concentrated inon ~~the~~(i) Spraberry, Wolfberry, Cline, Strawn and Mississippian formations in the Permian Basin (Midland Basin) in W. Texas. We also have interests in (i) conventional reef structures in the Pedregosa Basin in S.W. New Mexico, (ii) conventional structure and stratigraphic formations and unconventional resource formations in Southern Colorado and (iii) Beech Creek Field in Hardin County, Texas (“Non-core Properties”).

As of ~~July~~January 31, ~~2014~~2015, we owned interests in approximately (i) ~~approximately~~ 7,700 gross (34,~~900~~000 net) acres in the Midland Basin, (ii) ~~approximately~~ 108,715 gross (54,357 net) acres in the Pedregosa Basin, and (iii) ~~approximately~~ 3,300 gross (1,650 net) acres in Colorado.

We have approximately 112,793 gross acres (56,100 net acres) held by production and continuous drilling operations. This includes approximately 3,100 gross acres (1,~~145~~ 150 net acres) in Midland Basin and 108,715 gross acres (54,357 net acres) in the Pedregosa Basin. InWe ~~addition,~~also we own between a 24% and 30% working interest in two wells in the Beech Creek Field, which are operated by Gaither Petroleum Corp. WeThe ~~have~~Corporation has no production in Colorado.

We began oil and gas operations in the United States on November 1, 2009, with the purchase of a producing conventional oil and gas field, located in the Gulf Coast region of Texas, from Pioneer Natural Resources. Additionally, we acquired interests in two (2) properties located in the Gulf Coast region of Texas and one property in our Core Focus Area located in the Midland Basin in West Texas.

The Core Focus ~~Area~~Areas ~~provides~~provide us with the opportunity to grow reserves and cash flow by drilling and developing the properties. The Core Focus ~~Area~~Areas we currently plan to concentrate on developing isare in the AP Clark Field. The three wells that we commenced drilling on in the AP Clark Field in November 2013 were completed and have been producing. ~~During the three months ended July 31, 2014, our portion of the production amounted to approximately 1,000 barrels of oil.~~ These wells came online in the month of May 2014 with ~~our~~the Corporation’s portion of the production averaging approximately 18 barrels of oil per day~~, which had decreased to approximately 4 barrels of oil per day at July 31, 2014~~. During August 2014, the wells were shut in for completion and fracking. WeThe ~~are~~Corporation is still testing zones on the wells and ~~are~~is waiting for the formations to come back in. WeThe Corporation will need to raise additional capital in order to drill any potential future wells.

109

We continue to pursue avenues to reduce or eliminate our financial exposure on a case by case basis for each project., ~~Joint~~including joint venture arrangements where others may beparticipate ~~considered~~in ~~for~~the ~~others~~well torevenue, ~~participate~~in exchange for a disproportionate share of the initial leasing and/or drilling costs, thus further reducing ~~our~~its economic exposure. In order to maintain our financial position, we have sold equity and used joint venture agreements with other industry companies to limit or eliminate ~~our~~its financial exposure in early drilling.

We have not entered into any commodity derivative arrangements or hedging transactions. Although we have no current plans to do so, we may enter into commodity swap and/or hedging transactions in the future in conjunction with oil and gas production. We have no off-balance sheet arrangements.

Consolidated Results of Operations for the ~~Nine and~~ Three Months Ended ~~July~~January 31, ~~2014~~2015 Compared to the ~~Nine and~~ Three Months Ended ~~July~~January 31, ~~2013~~2014

~~Revenue~~Revenues for the ~~nine~~three months ended ~~July~~January 31, ~~2014~~2015 totaled $1133,~~062,491~~555 as compared to $1328,~~303,045~~297 for the ~~nine~~three months ended ~~July~~January 31, ~~2013~~2014. ~~Revenue~~The ~~for the three months ended July 31~~decrease, ~~2014~~totaling ~~totaled~~ $~~465~~194,~~791~~742, asresulted ~~compared~~primarily tofrom ~~$467,879~~a ~~for~~decrease ~~the~~in ~~three~~oil ~~months~~production ~~ended~~volume ~~July~~valued ~~31,~~at ~~2013.~~approximately $~~154~~96,~~044~~840 ofand ~~the~~a ~~$240,554~~drop ~~reduction~~ in the ~~revenue~~average ~~during~~price ~~the~~of ~~nine~~oil ~~months~~of ~~ended July 31~~$92,254. ~~2014~~We ~~resulted~~anticipate ~~from~~that the ~~sale~~production offor the ~~Cabeza~~older ~~Creek~~wells ~~Field~~will incontinue ~~January~~at ~~2014~~low levels and ~~the~~expect ~~lack of production in~~ that ~~field~~as ~~for several months prior to being sold. The balance of~~ the ~~decrease~~three ~~in revenue comes from lower production from the Beech Creek and older AP Clark~~ wells. ~~Revenue~~completed ~~for~~during the ~~three~~fiscal ~~months~~year ended ~~July~~October 31, 2014 ~~remained~~test ~~flat~~additional ~~as compared to the three months ended July 31~~formations, ~~2013. We were able to replace the revenue lost as a result of the sale of the Cabeza Creek Field and lower~~ production from ~~the~~those ~~existing~~ wells inmay ~~the~~increase APduring ~~Clark Field with the production from the three completed wells in the AP Clark Field drilled in the first quarter of fiscal 2014~~2015.

Selling, general and administrative expenses decreased $~~146~~136,~~979~~310 from $1341,~~107,685~~635 in the ~~nine~~three months ended ~~July~~January 31, ~~2013~~2014 to $~~960~~205,~~706~~325 in the ~~nine~~three months ended ~~July~~January 31, ~~2014~~2015. This decrease is primarily the result of a decrease of $~~252~~119,~~507~~621 in ~~the~~payroll ~~stock based compensation recorded in the nine months ended July 31, 2014 from reduced vesting of previously granted stock options, which was partially offset by additional consulting fees of $63,114~~ and ~~professional~~payroll ~~services~~related ofcharges ~~$37,423. There were no options granted during the nine months ended July 31, 2014. Selling, general~~ and ~~administrative~~a ~~expenses decreased~~ $9112,~~532~~500 ~~from $336,255 in the three months ended July 31, 2013 to $244,723 in the three months ended July 31, 2014. This~~ decrease ~~is primarily the result of a decrease of $102,488~~ in ~~the~~director ~~stock based compensation recorded in the three months ended July 31, 2014 from reduced vesting of previously granted stock options, which was partially offset by additional consulting~~ fees ~~of $15,000~~.

Depreciation, depletion and accretion decreased $24156,~~395~~330 from $~~406~~206,~~544~~245 in the ~~nine~~three months ended ~~July~~January 31, ~~2013~~2014 to $~~382~~49,~~149~~915 for the ~~nine~~period ~~months~~ ended ~~July~~January 31, ~~2014~~2015. ~~Depreciation,~~The ~~depletion~~decrease ~~and~~is ~~accretion~~the ~~decreased~~result ~~$75,105~~of ~~from~~a ~~$146,736~~decrease in ~~the~~production ~~three~~from ~~months~~the ~~ended~~existing ~~July~~wells ~~31,~~as ~~2013~~well toas ~~$71,631 for~~ the ~~three~~lower ~~months~~carrying ~~ended~~value ~~July~~for ~~31,~~the ~~2014.~~properties ~~The~~as ~~decreases are primarily~~ a result of ~~the~~impairment ~~depletion~~changes ~~expense for the costs related to the decrease~~ in ~~production~~2013 ~~of the older AP Clark Field wells~~ and ~~the loss of production from the sale of the Cabeza Creek Field~~2014.

Lease operating expenses decreased by $773,~~112~~304 from $~~507~~178,~~585~~780 in the ~~nine~~three months ended ~~July~~January 31, ~~2013 to $430,473 in the nine months ended July 31,~~ 2014. ~~Lease operating expenses decreased by $22,558 from $152,460 in the three months ended July 31, 2013~~ to $~~129~~175,~~902~~476 in the three months ended ~~July~~January 31, ~~2014~~2015. The ~~decreases~~decrease ~~were~~was ~~primarily~~ the result of ~~the~~lower ~~costs~~production ~~eliminated~~and aspartially aoffset ~~result~~by ofworkover ~~the~~activities ~~sale~~on of the ~~Cabeza~~wells ~~property~~ in ~~January~~the ~~2014~~Beech Creek Fields.

During the ~~nine~~three months ended ~~July~~January 31, 2015 and 2014, wethe Company tested and reported an impairment of our oil and gas properties ~~totaling $2,219,813. These impairment charges resulted from the carrying~~ costs ofin ~~the~~our AP Clark Field, ~~including~~totaling ~~the costs of the three new wells exceeding the estimated fair value of the field based on estimated future cash flows. There were no impairments during the three months ended July 31~~$269,906 ~~2014 or the three~~ and ~~nine months ended July 31~~$2,219,813, ~~2013~~respectively.

~~The~~Interest ~~gain~~expense ondecreased ~~the~~by ~~sale~~$275,626 offrom ~~oil and gas properties of~~ $~~645~~508,~~323~~457 in the ~~nine~~three months ended ~~July~~January 31, 2014 ~~was~~to ~~the~~$232,831 ~~result of selling our rights~~ in the ~~Cabeza~~three ~~Creek~~months ~~Field. In~~ended January ~~2014~~31, we2015. ~~sold~~This ~~our~~decrease ~~interest~~is inprimarily ~~all~~related ofto ~~the~~a ~~wells~~$325,177 decrease in the ~~Cabeza~~amortization ~~Creek~~of ~~Field for all depths from~~ the ~~surface~~discount toon ~~8,500 feet below~~ the ~~surface~~amounts indue ~~exchange~~to ~~for~~KP-Rahr ~~$50~~Ventures III,~~000~~ LLC and ~~the~~partially ~~assumption~~offset by ~~the~~additional ~~purchaser~~interest of $~~617~~18,~~189~~750 ~~in current liabilities~~ and ~~all~~the ~~future~~amortization ~~liabilities~~of ~~associated~~$31,444 ~~with~~on the ~~plugging~~convertible ~~and~~debenture ~~abandoning~~to ofPacific ~~all~~LNG ~~wells~~Operations ~~in the Cabeza Creek Field~~Ltd.

11The gain on the sale of oil and gas properties of $621,670 in the three months ended January 31, 2014, was the result of selling our rights in the Cabeza Creek Field. In January 2014, we sold our interest in all of the wells in the Cabeza Creek Field for all depths from the surface to 8,500 feet below the surface in exchange for $50,000 and the assumption of $593,536 in current liabilities and all future liabilities associated with the plugging and abandoning of all wells in the Cabeza Creek Field. There were no sales of oil and gas properties in the three months ended January 31, 2015.

~~The~~We ~~gain~~incurred ona ~~sale~~net ofloss ~~interest to PIE Holdings of $1,760,392~~ for the ~~nine~~period ~~months~~ ended ~~July~~January 31, ~~2014~~2015 ~~is the result~~ of ~~the partial transfer of our interest in three wells in the AP Clark Field~~$799, ~~ranging from between 38.6% and 50.0%~~898, compared to ~~PIE Holdings, LP. In connection with these transfers, PIE Holdings paid~~ a ~~purchase~~net ~~price~~loss of $~~20.00 and assumed aggregate obligations of approximately $1.3 million~~2,504,963 ~~which~~for ~~related to expense obligations incurred in relation to~~ the ~~wells~~period ~~and~~ended ~~related~~January ~~interests~~31, 2014.

Interest expense increased by $985,601 from $955,918 in the nine months ended July 31, 2013 to $1,941,519 in the nine months ended July 31, 2014. These increases are primarily related to an $896,549 increase in the amortization of the discount on the amounts due to KP-RAHR Ventures III, LLC, which represents the balance of the discount on the amounts due KP-RAHR Ventures III, LLC using the effective interest method of amortization, amortization totaling $12,503 on the discount of Pacific LNG convertible note, interest of $19,746 on the additional loan made by Silver Bullet in the last half of 2013 and $26,507 from the Pacific LNG convertible debenture.

Interest expense increased by $408,976 from $360,411 in the three months ended July 31, 2013 to $769,387 in the three months ended July 31, 2014. These increases are primarily related to a $385,503 increase in the amortization of the discount on the amounts due to KP-RAHR Ventures III, LLC, which represents the balance of the discount on the amounts due KP-RAHR Ventures III, LLC using the effective interest method of amortization, amortization totaling $12,503 on the discount of Pacific LNG convertible note, interest of $6,654 on the additional loan made by Silver Bullet in the fourth quarter of fiscal 2013 and $2,178 from the Pacific LNG convertible debenture issued during the quarter ended July 31, 2014.

We incurred a net loss for the nine months ended July 31, 2014 of $2,455,909, compared to a net loss of $1,866,924 for the nine months ended July 31, 2013. We incurred a net loss for the three months ended July 31, 2014 of $739,235, compared to a net loss of $747,983 for the three months ended July 31, 2013.

Liquidity and Capital Resources

WeThe Company had cash and cash equivalents of $~~719~~521,~~586~~585 as of ~~July~~January 31, ~~2014~~2015. The ~~accompanying~~Company ~~consolidated~~owes ~~financial~~approximately ~~statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business~~$2.5 Asmillion ~~reflected~~ in ~~the~~currently ~~accompanying~~due ~~consolidated~~accounts ~~financial~~payable ~~statements,~~and asaccrued ~~of July 31~~expenses, ~~2014, we had $719,586 in cash~~ and ~~cash equivalents on hand, a working capital deficiency of approximately~~ $3.622 million, ain ~~stockholders’~~notes ~~deficit~~payable ofto ~~approximately~~Silver ~~$5.6~~Bullet ~~million~~Property ~~and~~Holdings anSDN ~~accumulated~~BHD, ~~deficit~~which ofmature ~~approximately~~on $December 31, ~~million~~2015. As such, we currently do not have sufficient cash to engage in any further drilling or exploration activities. In addition, our cash balances are not sufficient to satisfy our anticipated cash requirements for normal operations, or to meet our immediate accounts payable, ~~accrued expenses~~ and other obligations regarding our indebtedness or capital expenditures for the foreseeable future.

We have incurred substantial losses since inception and we are not operating at cash flow breakeven. Our cash balance at July 31, 2014 is not sufficient to fully fund our business plan or to satisfy our cash requirements for normal operations, to meet our immediate accounts payable or other obligations regarding our indebtedness or our anticipated development activities over the next twelve months. In view of our capital requirements, current cash resources, nondiscretionary expenses, debt and near term accounts payable and accrued expenses obligations, we may explore all strategic alternatives to maintain our business as a going concern including, but not limited to, a sale of assets of our company, or one or more other transactions that may include a comprehensive financial reorganization of our company.10

InThe ~~order~~accompanying toconsolidated ~~continue~~financial ~~operations~~statements ~~and~~have ~~engage~~been inprepared ~~development of our properties, we will be dependent~~ on ~~raising~~a ~~capital,~~going ~~debt~~concern ~~or equity~~basis, ~~from~~which ~~outside~~contemplates ~~sources~~the torealization ~~pay for further expansion, exploration and development~~ of ~~our~~assets ~~business,~~ and ~~to meet current obligations. Such capital may not be available to us when we need it on terms acceptable to us if at all, particularly in~~ the ~~current~~settlement ~~global economic conditions. The issuance~~ of ~~additional~~liabilities ~~equity~~and ~~securities~~commitments ~~by us will result~~ in ~~a dilution to our current stockholders, which could depress~~ the ~~trading~~normal ~~price~~course of ~~our common stock~~business. ~~Obtaining~~As ~~debt~~reflected ~~financing will increase our liabilities and future cash commitments. If we are unable to obtain financing~~ in the ~~amounts~~accompanying ~~and~~consolidated onfinancial ~~terms~~statements, ~~deemed~~as ~~acceptable~~of toJanuary us31, 2015, we ~~may~~had be$521,585 ~~unable~~in tocash ~~continue our business~~ and ~~may~~cash beequivalents ~~required~~on ~~to scale back~~hand, ~~sell~~ a ~~portion~~working ofcapital ordeficiency ~~cease~~of ~~our~~approximately ~~operations~~$4.7 ~~The~~million ~~terms of securities we issue in future capital transactions may be more favorable to our new investors,~~ and ~~may~~an ~~include~~accumulated ~~preferences,~~deficit ~~superior voting rights and the issuance~~ of ~~warrants~~approximately or$35.7 ~~other derivative securities, and issuances of incentive awards under equity employee incentive plans, which may have a further dilutive effect~~million.

12We have incurred substantial losses since inception and we are not operating at cash flow breakeven. Our cash balance at January 31, 2015 is not sufficient to fully fund our business plan or to satisfy our cash requirements for normal operations, to meet our immediate accounts payable, accrued expenses and other obligations regarding our indebtedness or our anticipated development activities over the next twelve months. In view of our capital requirements, current cash resources, nondiscretionary expenses, debt and near term accounts payable and accrued expenses obligations, we may explore all strategic alternatives to maintain our business as a going concern including, but not limited to, a sale of assets of our company, or one or more other transactions that may include a comprehensive financial reorganization of our company.

In order to continue operations and engage in development of our properties, we will be dependent on raising capital, debt or equity, from outside sources to pay for further expansion, exploration and development of our business, and to meet current obligations. Such capital may not be available to us when we need it on terms acceptable to us if at all, particularly in the current global economic conditions. The issuance of additional equity securities by us will result in a dilution to our current stockholders which could depress the trading price of our common stock. Obtaining debt financing will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and may be required to scale back, sell a portion of or cease our operations. The terms of securities we issue in future capital transactions may be more favorable to our new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, and issuances of incentive awards under equity employee incentive plans, which may have a further dilutive effect.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which may adversely impact our financial condition. However, there is no assurance that we will be able to obtain sufficient funds on terms acceptable to us or at all. If adequate additional funding is not available, we may be forced to limit our activities.

If we are not able to obtain sufficient capital either from the sale of assets or external sources of capital to fund our immediate operating requirements, we may determine that it is in the Company’s best interests to seek relief through a pre-packaged, pre-negotiated or other type of filing under Chapter 11 of the U.S. Bankruptcy Code.

In the event we seek protection under Chapter 11 of the U.S. Bankruptcy Code, it may be necessary, in order to obtain the approval of our creditors and the Bankruptcy Court to a plan of reorganization for the Company, to eliminate and cancel all existing equity of the Company, including common stock, options, warrants and other securities that are linked to our equity, which will result in a loss of the entire investment of the holders of such securities, including our stockholders. Further, if we were unable to implement a plan of reorganization or if sufficient debtor-in-possession financing were not available, we could be forced to liquidate under Chapter 7 of the U.S. Bankruptcy Code, which would result in a loss of your entire investment.

June 2014 Financing

On June 6, 2014, the Company entered into a subscription agreement with Pacific LNG Operations Ltd., a company incorporated in the British Virgin Islands (“Pacific LNG”), whereby the Company issued to Pacific LNG a (i) $1,500,000 principal face amount 5% Convertible Debenture (“Debenture”) convertible into shares of Series B Preferred Stock (as hereinafter defined) at a conversion price of $1.00 per share and (ii) 500,000 shares of Series B Convertible Preferred Stock (“Series B Preferred Stock”) at a price of $1.00 per share.

The Debenture accrues interest at the rate of 5% per annum, payable semi-annually in arrears, and matures on June 6, 2017. Pacific LNG has the right, at any time prior to June 6, 2015, to convert the outstanding principal and interest, if any, of the Debenture into shares of Series B Preferred Stock at a price of $1.00 per share of Series B Preferred Stock.

Each share of Series B Preferred Stock has a stated value of $1.00 (“Stated Value”) and accrues a dividend of 3% of the Stated Value per annum, which is payable in additional shares of Series B Preferred Stock annually on December 31 in arrears. Each share of Series B Preferred Stock may be converted at any time on or prior to May 30, 2017 into such number of shares of the Company’s Common Stock equal to the Stated Value divided by $1.00 per share. The Company has the right, at any time after May 30, 2017, to redeem the Series B Preferred Stock at a price of $1.00 per share.

Amendment to Silver Bullet Notes Payable

Development Agreement with Adwar Drilling Fund III

In August 2014, ApClark, LLC, a wholly-owned subsidiary of the Company, entered into a Participation and Development Agreement with Adwar III. Pursuant to the agreement, Adwar has the right to invest up to $7.5 million in contributions to acquire working interests up to 50% in certain future development wells.

Net Cash Used In Operating Activities

Cash used in operating activities ~~for~~in the ~~nine~~period ~~months~~ ended ~~July~~January 31, ~~2014~~2015 was $~~738~~122,~~985~~253, compared to $~~144~~79,~~464~~947 ~~for~~cash ~~the~~provided ~~nine~~by ~~months~~operating activities in the period ended ~~July~~January 31, ~~2013~~2014. The increase in cash used in operating activities was primarily a result of a ~~noncash~~$293,733 ~~gain~~decrease onin the ~~transfer~~amortization of ~~interest~~debt indiscounts, ~~oil~~a ~~and gas properties to PIE Holdings of~~ $1,~~760~~949,~~392,~~907 adecrease ~~non-cash~~in ~~gain~~the ofimpairment ~~$645,323~~costs onfor ~~the~~oil ~~sale~~and ofgas ~~the~~properties ~~Cabeza~~and ~~Creek Field,~~ a $~~588,985~~ ~~increase in the net loss~~222,086 ~~a $328,315~~ decrease in accounts payable ~~and~~ a $~~252~~156,~~506~~330 decrease in ~~equity~~depletion ~~compensation~~and ~~expense,~~accretion and which was partially offset by a $21,~~219~~705,~~813~~065 ~~increase~~decrease in the ~~impairment~~net ~~costs~~loss, ~~for oil~~ and ~~gas~~a ~~properties~~2014 ~~and~~gain aof $~~909~~621,~~052~~670 ~~increase~~on in the ~~amortization~~sale of ~~debt~~the ~~discounts~~Cabeza Creek Field.

Cash Flows Used In Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~July~~January 31, ~~2014~~2015 was $135,~~876,666~~102 compared to $~~390~~712,~~401~~472 ~~for~~in the ~~nine~~period ~~months~~ ended ~~July~~January 31, ~~2013~~2014. ~~Investing~~The ~~activities~~costs for both periods presented relate to our oil and gas acquisitions and development activity. The costs ~~for~~in the ~~nine~~three months ended ~~July~~January 31, 2014 ~~represented~~represent ~~$1,926,666~~the costs paid to drill the three new, completed wells in the AP Clark Field~~, offset in part by $50,000 of cash received from the sale of Cabeza Creek~~. There were no acquisitions of additional leaseholds incurred in either ~~period~~quarter.

Cash Flows From Financing Activities

During the nine months ended July 31, 2014, we obtained additional financing totaling $2 million. On June 6, 2014, we entered into a subscription agreement with Pacific LNG, whereby, in exchange for the $2 million previously received, we issued to Pacific LNG the (i) $1,500,000 Debenture and (ii) 500,000 shares of Series B Preferred Stock. There was no cash provided by financing activities ~~during~~for the ~~nine~~quarters ~~months~~ ended ~~July~~January 31, ~~2013~~2015 and 2014.

Critical Accounting Policies

Oil and Gas Accounting

Accounting for oil and gas exploratory activity is subject to special accounting rules unique to the oil and gas industry. The acquisition of geological and geophysical seismic information, prior to the discovery of proved reserves, is expensed as incurred, similar to accounting for research and development costs. However, leasehold acquisition costs and exploratory well costs are capitalized on the balance sheet pending determination of whether proved oil and gas reserves have been discovered on the prospect.

Property Acquisition Costs

For individually significant leaseholds, management periodically assesses for impairment based on exploration and drilling efforts to date. For leasehold acquisition costs that individually are relatively small, management exercises judgment and determines a percentage probability that the prospect ultimately will fail to find proved oil and gas reserves and pools that leasehold information with others in the geographic area. For prospects in areas that have had limited, or no, previous exploratory drilling, the percentage probability of ultimate failure is normally judged to be quite high. This judgmental percentage is multiplied by the leasehold acquisition cost, and that product is divided by the contractual period of the leasehold to determine a periodic leasehold impairment charge that is reported in exploration expense.

This judgmental probability percentage is reassessed and adjusted throughout the contractual period of the leasehold based on favorable or unfavorable exploratory activity on the leasehold or on adjacent leaseholds, and leasehold impairment amortization expense is adjusted prospectively. Management periodically assesses individually significant leaseholds for impairment based on the results of exploration and drilling efforts and the outlook for project commercialization.

Exploratory Costs

For exploratory wells, drilling costs are temporarily capitalized, or “suspended,” on the balance sheet, pending a determination of whether potentially economic oil and gas reserves have been discovered by the drilling effort to justify completion of the find as a producing well. If exploratory wells encounter potentially economic quantities of oil and gas, the well costs remain capitalized on the balance sheet as long as sufficient progress assessing the reserves and the economic and operating viability of the project is being made. The accounting notion of “sufficient progress” is a judgmental area, but the accounting rules do prohibit continued capitalization of suspended well costs on the mere chance that future market conditions will improve or new technologies will be found that would make the project’s development economically profitable. Often, the ability to move the project into the development phase and record proved reserves is dependent on obtaining permits and government or co-~~venture~~venturer approvals, the timing of which is ultimately beyond our control. Exploratory well costs remain suspended as long as we are actively pursuing such approvals and permits, and believe they will be obtained. Once all required approvals and permits have been obtained, the projects are moved into the development phase, and the oil and gas reserves are designated as proved reserves. Once a determination is made the well did not encounter potentially economic oil and gas quantities, the well costs are expensed as a dry hole and reported in exploration expense.

Management reviews suspended well balances quarterly, continuously monitors the results of the additional appraisal drilling and seismic work, and expenses the suspended well costs as a dry hole when it determines the potential field does not warrant further investment in the near term. Criteria utilized in making this determination include evaluation of the reservoir characteristics and hydrocarbon properties, expected development costs, ability to apply existing technology to produce the reserves, fiscal terms, regulations or contract negotiations, and our required return on investment.

Proved Reserves

Engineering estimates of the quantities of proved reserves are inherently imprecise and represent only approximate amounts because of the judgments involved in developing such information. Reserve estimates are based on geological and engineering assessments of in-place hydrocarbon volumes, the production plan, historical extraction recovery and processing yield factors, installed plant operating capacity and operating approval limits. The reliability of these estimates at any point in time depends on both the quality and quantity of the technical and economic data and the efficiency of extracting and processing the hydrocarbons.

Despite the inherent imprecision in these engineering estimates, accounting rules require disclosure of “proved” reserve estimates due to the importance of these estimates to better understand the perceived value and future cash flows of a company’s exploration and production operations. There are several authoritative guidelines regarding the engineering criteria that must be met before estimated reserves can be designated as “proved.” Our reservoir engineers have policies and procedures in place consistent with these authoritative guidelines.

Proved reserve estimates are adjusted annually and during the year if significant changes occur, and take into account recent production and subsurface information about each field. Also, as required by current authoritative guidelines, the estimated future date when a field will be permanently shut down for economic reasons is based on 12-month average prices and year-end costs. This estimated date when production will end affects the amount of estimated reserves. Therefore, as prices and cost levels change from year to year, the estimate of proved reserves also changes.

Our proved reserves include estimated quantities related to production sharing contracts, which are reported under the “economic interest” method and are subject to fluctuations in prices of crude oil, natural gas and natural gas liquids;, recoverable operating expenses;, and capital costs. The estimation of proved developed reserves also is important to the statement of operations because the proved developed reserve estimate for a field serves as the denominator in the unit-of-production calculation of depreciation, depletion and amortization of the capitalized costs for that asset.

Impairment of Oil and Gas Properties

For proved properties, we compare expected undiscounted future cash flows at a producing field level to the unamortized capitalized cost of the asset. If the future undiscounted cash flows, based on our estimate of future natural gas and crude oil prices, operating costs, anticipated production from proved reserves and other relevant date, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is calculated by discounting the future cash flows at an appropriate risk-adjusted discount rate.

Asset Retirement Obligations

Under various contracts, permits and regulations, we have material legal obligations to remove tangible equipment and plug wells at the end of operations at operational sites. The fair values of obligations for dismantling and removing these facilities are accrued at the installation of the asset based on estimated discounted costs. Estimating the future asset removal costs necessary for this accounting calculation is difficult. Most of these removal obligations are many years, or decades, in the future and the contracts and regulations often have vague descriptions of what removal practices and criteria must be met when the removal event actually occurs. Asset removal technologies and costs, regulatory and other compliance considerations, expenditure timing, and other inputs into valuation of the obligation, including discount and inflation rates, are also subject to change.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required under Regulation S-K for “smaller reporting companies.”

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our interim president and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of ~~July~~January 31, ~~2014~~2015. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our interim president and chief financial officer concluded that, as of July 31, 2014 our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are: 13

a)Based ~~Due~~on management’s ~~to our small size~~evaluation, ~~we did not have sufficient personnel in~~ our ~~accounting~~interim president and chief financial ~~reporting~~officer ~~functions~~concluded ~~nor~~that, doas ~~we have a proper segregation~~ of ~~duties.~~January ~~During the period ended July~~ 31, ~~2014,~~2015 weour ~~had~~disclosure ~~limited~~controls ~~staff~~and ~~that~~procedures ~~performed~~are ~~nearly~~not ~~all~~designed ~~aspects~~at ofa ~~our~~reasonable ~~financial~~assurance ~~reporting~~level ~~process,~~and ~~including,~~are ~~but~~ineffective ~~not limited~~ to, ~~access~~provide toreasonable ~~the~~assurance ~~underlying~~that ~~accounting~~information ~~records~~we ~~and~~are ~~systems,~~required ~~the ability~~ to ~~post~~disclose ~~and~~in ~~record~~reports ~~journal~~that ~~entries~~we ~~and~~file ~~responsibility~~or ~~for~~submit ~~the~~under ~~preparation of~~ the ~~financial~~Exchange ~~statements.~~Act ~~This~~is ~~creates~~recorded, ~~certain~~processed, ~~incompatible~~summarized, ~~duties~~ and areported ~~lack~~within ~~of review over~~ the ~~financial~~time ~~reporting~~periods ~~process~~specified ~~that would likely result~~ in aSEC ~~failure~~rules toand ~~detect errors in spreadsheets~~forms, ~~calculations, or assumptions used to compile the financial statements~~ and ~~related~~that ~~disclosures~~such asinformation ~~filed~~is ~~with~~accumulated ~~the Securities~~ and ~~Exchange~~communicated ~~Commission.~~to Inour ~~addition~~management, weincluding ~~have~~our ~~had~~chief anexecutive ~~overreliance~~officer onand ~~consultants~~chief ~~involved in our~~ financial ~~statement~~officer, ~~closing~~as ~~process.~~appropriate, ~~As a result we were not able~~ to ~~achieve~~allow ~~adequate~~timely ~~segregation~~decisions ofregarding ~~duties~~required ~~and were not able to provide for adequate reviewing of the financial statements~~disclosure. ~~This~~The ~~control~~material ~~deficiency~~weaknesses, which isrelate ~~pervasive~~to ininternal ~~nature,~~control ~~results~~over infinancial areporting, ~~reasonable possibility~~ that ~~material~~were ~~misstatements~~identified ~~of the financial statements will not be prevented or detected on a timely basis; and~~are:

		a)	Due to our small size, we did not have sufficient personnel in our accounting and financial reporting functions nor do we have a proper segregation of duties. During the period ended January 31, 2015, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the Securities and Exchange Commission. In addition, we have had an overreliance on consultants involved in our financial statement closing process. As a result we were not able to achieve adequate segregation of duties and were not able to provide for adequate reviewing of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis; and

		b)	Our executive officers only work for the Company on a part-time basis, have outside interests and are unable to devote all of their business time and effort to the Company. As a result, they may be unable to provide the level of oversight required.

b) Our executive officers only work for the Company on a part-time basis, have outside interests and are unable to devote all of their business time and effort to the Company. As a result, they may be unable to provide the level of oversight required.

Management’s Remediation Plans

We are committed to improving our financial organization. When funds are available, we will look to increase our personnel resources and technical accounting expertise within the accounting function to resolve non-routine or complex accounting matters. As our operations are relatively small and we continue to have net cash losses each quarter, we do not anticipate being able to hire additional internal personnel until such time as our operations are profitable on a cash basis or until our operations are large enough to justify the hiring of additional accounting personnel. As necessary, we will engage consultants in the future in order to ensure proper accounting for our consolidated financial statements.

Management believes that hiring additional knowledgeable personnel with technical accounting expertise will remedy the following material weakness: insufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of GAAP commensurate with our complexity and our financial accounting and reporting requirements.

Management believes that the hiring of additional personnel who have the technical expertise and knowledge with the non-routine or technical issues we have encountered in the past will result in both proper recording of these transactions and a much more knowledgeable finance department as a whole. Due to the fact that our internal accounting staff consists of a Chief Financial Officer and a bookkeeper, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turn over issues within the department occur. We believe this will greatly increase our internal control procedures in the future.

In addition to the accounting personnel to be hired in the future, we are actively searching for a full time Chief Executive Officer to oversee our operations.

(b) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~July~~January 31, ~~2014~~2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

1714

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

WeOn ~~are~~January ~~currently~~26, ~~not~~2015, David DeMarco, a ~~party~~former Chief Executive Officer and director of the Company, filed a complaint against the Company in the District Court of Harris County, Texas, alleging that pursuant to ~~any~~a ~~material~~contract ~~legal~~for ~~proceedings~~work performed and/or ~~claims~~services rendered, Mr. DeMarco is due $151,000 in deferred compensation that accrued during his tenure as Chief Executive Officer of the Company. Mr. DeMarco is seeking between $200,000 and $1 million in damages. Service of process was effected on February 17, 2015.

Item 1A. Risk Factors.

Not required under Regulation S-K for “smaller reporting companies.”

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

~~During~~In ~~the~~December ~~quarter ended July 31~~2014, ~~2014~~20,183 3and 74,~~125~~575 shares ofwere aissued ~~restricted~~for ~~stock~~interest ~~award~~accruing ~~granted~~for tothe ~~Richard~~month ~~Hunter~~of ~~vested~~July 2014 and ~~were~~for ~~deemed~~the ~~issued~~quarter ended October 31, 2014, respectively.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On July 9, 2014 but effective as of March 31, 2014, ApClark, LLC (“APC”), Blacksands Petroleum Texas, LLC (“Blacksands Texas”), NRG Assets Management, LLC (“NRG”) and Adwar Drilling Fund II, LP (“Adwar”) (collectively, the “Parties”) amended (“Amendment II”) the Development Agreement, dated September 3, 2013 and amended on January 1, 2014 (the “Development Agreement”)None. Pursuant to Amendment II, all references to Blacksands Texas in the Development Agreement were deemed to refer to APC. In addition, Adwar’s acquisition was amended to an undivided working interest in and to three (3) development wells: the Livestock Well No. 7-2, the Livestock Well No. 18-2 and the BVR Well No. 5-1 (the “Development Wells”). Also pursuant to Amendment II, the Parties (i) acknowledged the receipt by APC from Adwar of $630,000 under the Development Agreement and (ii) agreed that of such funds, $10,000 shall be designated as “Upfront Monies” paid with respect to the Livestock Well No. 7-2, $10,000 shall be designated as “Upfront Monies” paid with respect to Livestock Well No. 18-2 and $10,000 shall be designated as “Upfront Monies” paid with respect to the BVR Well No. 5-1. The remaining $600,000 of funds shall be credited to Adwar’s earned working interest in the Development Wells as follows: (i) $200,000 shall be credited to Adwar’s earned working interest in the Livestock Well No. 7-2, (ii) $200,000 shall be credited to Adwar’s earned working interest in the Livestock Well No. 18-2 and (iii) $200,000 shall be credited to Adwar’s earned working interest in the BVR Well No. 5-1. The Parties also acknowledged under Amendment II that PIE Operating, LLC, has obtained the exclusive appointment as operator for the Livestock Well No. 7-2, Livestock Well No. 18-2 and BVR Well No. 5-1, effective March 17, 2014.

1815

Item 6. Exhibits.

10.01		Amendment 2 to Development Agreement, dated July 9, 2014, by and among ApClark, LLC, Blacksands Petroleum Texas, LLC, NRG Assets Management, LLCand Adwar Drilling Fund II, LP
31.01	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.02		Participation and Development Agreement, dated August 9, 2014, by and between ApClark, LLC and Adwar Drilling Fund III, L.P.
31.02	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.01		Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certifications of Principal Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.02		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
32.01		Certifications of Principal Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH	XBRL Taxonomy Extension Schema Document
101.INS **		XBRL Instance Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.SCH **		XBRL Taxonomy Extension Schema Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document
101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **		XBRL Taxonomy Extension Label Linkbase Document
101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

~~___________~~16

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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.

	BLACKSANDS PETROLEUM, INC.
Date: September 15, 2014	By:	/s/ RHONDA ROSEN
Date: March 13, 2015	By:	/s/ RHONDA ROSEN
	Name:	Rhonda Rosen
	Title:	Interim President (Principal Executive Officer)
Date: March 13, 2015	By:	/s/ DONALD GIANNATTASIO
	Name:	Donald Giannattasio
	Title:	Chief Financial Officer

Date: September 15, 2014	By:	/s/ DONALD GIANNATTASIO
	Name:	Donald Giannattasio
	Title:	Chief Financial Officer

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