Edgar Filing: TURNER VALLEY OIL & GAS INC

Turner Valley Oils and Gas 10-QSB 3-31-2007

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-QSB

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the First Quarter ended March 31, 2007

Commission File Number: 0-30891

(Exact name of Registrant as specified in its charter)

Nevada		91-1980526
(Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

604-700 West Pender Street, Vancouver, BC		V6C 1G8
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (604) 602-1650

Securities registered pursuant to Section 12(g) of the Act: Common Stock

58,935,584 shares off common stock were outstanding as of March 31, 2007.

Transitional Small Business Disclosure Format (check one): yes o no x

INTRODUCTION

This Registrant (Reporting Company) has elected to refer to itself, whenever possible, by normal English pronouns, such as "We", "Us" and "Our". This Form 8-K may contain forward-looking statements. Such statements include statements concerning plans, objectives, goals, strategies, future events, results or performances, and underlying assumptions that are not statements of historical fact. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements which reflect our current views, with respect to future events or results and future financial performance. Certain words indicate forward-looking statements, words like "believe", "expect", "anticipate", "intends", "estimates", "forecast", "projects", and similar expressions.

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PART I: FINANCIAL INFORMATION

Item 1.Financial Statements.

The financial statements, for the three months ended September 30, 2006, included herein have been prepared by the us, without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnotes disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information not misleading.

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CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2007

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

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TURNER VALLEY OIL & GAS, INC.

(A Development Stage Company)

Consolidated Balance Sheets

ASSETS
	March 31,			December 31,
	2007			2006

CURRENT ASSETS

Cash	$	20,527		$	-
Accounts receivable		4,207			8,910

Total Current Assets		24,734			8,910

OIL AND GAS PROPERTIES USING FULL COST ACCOUNTING

Properties subject to amortization		25,677			28,177
Unproved properties		925,544			925,544

Net Oil and Gas Properties		951,221			953,721

OTHER ASSETS

Investments - Marketable Securities available for sale		256,275			604,349

Total Other Assets		256,275			604,349

TOTAL ASSETS	$	1,232,230		$	1,566,980

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank Overdraft	$	-			3,397
Accounts payable		400,410		$	400,410
Notes payable, related party		23,658			23,658

Total Current Liabilities		424,068			427,465

Total Liabilities		424,068			427,465

Other Commitments or Contingencies		-			-

STOCKHOLDERS' EQUITY

Common stock, 100,000,000 shares authorized of $0.001 par value, 58,535,984 and 58,535,984 shares issued and outstanding, respectively		58,537			58,537
Capital in excess of par value		4,697,260			4,697,173
Accumulated other comprehensive income		158,684			495,283
Deficit accumulated during the development stage		(4,106,319	)		(4,111,478	)

Total Stockholders' Equity		808,162			1,139,515

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,232,230		$	1,566,980

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TURNER VALLEY OIL & GAS, INC.

(A Development Stage Company)

Consolidated Statements of Operations and Comprehensive Income/(Loss)

	For the 3 months Ended For the March 31,						From Inception on April 21, 1999 Through March 31,
	2007			2006			2007
REVENUE

Royalties received	$	401		$	243		$	21,275

EXPENSES

Cost of production		-			-			51,753
Depletion		2,500			2,500			23,267
General and administrative		34,581			291,368			4,729,759

Total Expenses		37,081			293,868			4,804,779

NET OPERATING LOSS		(36,680	)		(293,625	)		(4,783,504	)

OTHER INCOME (EXPENSE)

Gain on sale of investments		41,839			60,161			680,477
Interest expense		-			-			(3,292	)

Total Other Income (Expense)		41,839			60,161			677,185

NET PROFIT/(LOSS) BEFORE INCOME TAX	$	5,159		$	(233,464	)	$	(4,106,319	)

Income tax	$	-		$	-		$	-

NET PROFIT/(LOSS)	$	5,159		$	(233,464	)	$	(4,106,319	)

BASIC LOSS PER COMMON SHARE	$	0.00		$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		58,535,984			53,919,317

COMPREHENSIVE INCOME (LOSS)

NET LOSS	$	5,159		$	(233,464	)	$	(4,106,319	)

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized Gain on Marketable Securities		158,684			-			162,769
Foreign Currency Translation		725			524			(4,085	)

COMPREHENSIVE INCOME (LOSS)	$	164,568		$	(232,940	)	$	(3,947,635	)

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

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Turner Valley Oil & Gas Corporation

(A Development Stage Company)

Statement of Stockholders' Equity and Comprehensive Income

March 31, 2007

					Additional		Comprehensive			Retained			Subscription
	Shares		Amount		Paid-in-Capital		Income/(Loss)			Earnings			Receivable

Balance at inception April 21, 1999		0		0		0

Shares issued for services during 1999		41,080		41		5,094

Shares issued for cash during 1999		16,000		16		99,984

Net Loss for the period ended December 31, 1999											-96,935

Balance at December 31, 1999		57,080		57		105,078		0			-96,935			0

Net Loss for the period ended December 31, 2000											-27,242

Balance at December 31, 2000		57,080		57		105,078		0			-124,177			0

Net Loss for the period ended December 31, 2001											-65,380

Balance at December 31, 2001		57,080		57		105,078		0			-189,557			0

Shares issued for debt reduction during 2002		8,000		8		99,992

Shares issued for services during 2002		2,190,150		2,190		1,092,885

Net Loss for the period ended December 31, 2002											-1,240,008

Balance at December 31, 2002		2,255,230		2,255		1,297,955		0			-1,429,565			0

Shares issued for services at $.02 per share		1,500,000		1,500		298,500

Rounding of shares from reverse split		2,000		2		-2

Shares issued for accounts payable at $.05 Per share		8,000,000		8,000		392,000

Shares issued for services at $.015 per share		31,729,200		31,729		444,209

Shares issued for services at $.015 per share		9,487,504		9,488		132,825

Shares issued pursuant to S-8 registration at $.05 per share		2,000,000		2,000		98,000

Shares issued pursuant to S-8 registration at $.05 per share		650,000		650		31,850

Cancellation of Common Stock		-16,691,520		-16,692		-220,459

Shares issued for cash at $.05 per share		3,000,000		3,000		147,000

Shares issued for cash at $.30 per share		100,000		100		29,900

Shares issued for cash at $.35 per share		528,570		529		184,471

Foreign Currency Translation								-1,718

Net Loss for the period ended December 31, 2003		0		0		0					-1,137,760

Balance at December 31, 2003		42,560,984		42,561		2,836,249		-1,718			-2,567,325			0

Shares issued pursuant to S-8 registration at $.20 per share		932,500		933		185,567

Shares issued pursuant to S-8 registration at $.08 per share		1,597,500		1,598		126,202

Shares issued pursuant to S-8 registration at $.08 per share		1,000,000		1,000		79,000

Shares issued pursuant to S-8 registration at $.11 per share		85,000		85		9,265

30/09/2004
Shares issued pursuant to S-8 registration at $.20 per share		1,385,000		1,385		275,615

Shares issued for Cash at $.05 per share		975,000		975		47,775

Subscription Recievable														-48,750

Foreign Currency Translation								-2,367

Net Loss for the period ended December 31, 2004		0		0		0		0			-784,001

Balance at December 31, 2004		48,535,984		48,537		3,559,673		-4,085			-3,351,325			-48,750

Shares issued pursuant to S-8 registration at $.13 per share		2,850,000		2,850		367,650

Shares issued pursuant to S-8 registration at $.13 per share		2,000,000		2,000		258,000

Foreign Currency Translation								-725

Subscription Recievable														48,750

Net Loss for the period ended December 31, 2005											-472,917

Balance at December 31, 2005		53,385,984		53,387		4,185,323		-4,810			-3,824,242			0

Shares issued pursuant to S-8 registration at $.13 per share		2,000,000		2,000		258,000

Shares issued pursuant to S-8 registration at $.08 per share		1,600,000		1,600		126400

Shares issued pursuant to S-8 registration at $.08 per share		1,450,000		1,450		114,550

Shares issued under Rule 144 at $0.13 per share		100,000		100		12,900

Net Income for the year ended December 31, 2006								500,093			(287,236	)

Balance as at December 31, 2006		58,535,984		58,537		4,697,173		495,283			-4,111,478			0

Net Income/(loss) for the quarter ended March 31, 2007								(336,599	)		5,159

Balance as at March 31, 2007		58,535,984		58,537		4,697,173		158,684			-4,106,319			0

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

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TURNER VALLEY OIL & GAS, INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows

	For the 3 months March 31,						From Inception on April 21, 1999 Through March 31,
	2007			2006			2007

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	5,159		$	(233,464	)	$	(4,106,319	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion		2,500			2,500			23,267
Loss on abandonment of property		-			-			25,481
Gain on sale of Investment		(41,839	)		(66,328	)		(716,052	)
Common stock issued for services rendered		87			260,000			4,241,960
Non-cash Effect from Foreign Currency Translation		-			725			(4,080	)
Changes in operating assets and liabilities:
Increase (Decrease) in bank Overdraft		(3,397	)		-			-
Increase (Decrease) in accounts receivable		4,704			1,294			(4,992	)
Increase (Decrease) in accounts payable - related Party					-			23,659
Increase in accounts payable and accrued expenses		-			4,015			301,276

Net Cash Used in Operating Activities		(32,786	)		(31,258	)		(215,800	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of investments		53,313			74,972			860,835
Investing in new Oil & Gas working interests		-			(43,523	)		(825,544	)
Expenditures for oil and gas property development					-			(312,714	)

Net Cash Used in Investing Activities		53,313			31,449			(277,423	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock		-			-			465,000
Receipt of subscription receivable		-			-			48,750


Net Cash Provided by Financing Activities		-			-			513,750

NET INCREASE (DECREASE) IN CASH		20,527			191			20,527

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		-			78,848			-

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	20,527		$	79,039		$	20,527

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TURNER VALLEY OIL & GAS, INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows (Continued)

	For the Yera Ended March 31				From Inception on April 21, 1999 Through March 31
	2007		2006		2007

SUPPLEMENTAL CASH FLOW INFORMATION

CASH PAID FOR:

Interest	$	-	$	-	$	-
Income taxes	$	-	$	-	$	-

NON-CASH FINANCING ACTIVITIES

Common stock issued for services rendered	$	-	$	260,000	$	3,709,460
Common stock issued for retirement of payables	$	-	$	-	$	532,500

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

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Notes to the Consolidated Financial Statements

March 31, 2007

NOTE 1 -

BASIS OF PRESENTATION

The financial information included herein is un-audited and has been prepared consistent with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, these financial statements do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-KSB for the year ended December 31, 2006. In the opinion of management, these financial statements contain all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period presented.

The results of operations for the three months ended March 31, 2007 are not necessarily indicative of the results to be expected for the full year.

NOTE 2 -

LOSS PER SHARE

Following is a reconciliation of the loss per share for the three months and three months ended March 31, 2007 and 2006:

	For the Three Months Ended March 31,
	2007		2006
Net Profit/(loss) available to common shareholders	$	5,159	$	(233,464	)

Weighted average shares		58,535,984		53,919,317

Basic income per share (based on weighted average shares)	$	0.00	$	0.00

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Notes to the Consolidated Financial Statements

March 31, 2007

NOTE 3 -

OIL AND GAS PROPERTIES

The full cost method is used in accounting for oil and gas properties. Accordingly, all costs associated with acquisition, exploration, and development of oil and gas reserves, including directly related overhead costs, are capitalized. In addition, depreciation on property and equipment used in oil and gas exploration and interest costs incurred with respect to financing oil and gas acquisition, exploration and development activities are capitalized in accordance with full cost accounting. All capitalized costs of proved oil and gas properties subject to amortization are being amortized on the unit-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects not subject to amortization are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. As of March 31, 2007 and December 31, 2006, proved oil and gas reserves had been identified on certain of the Company’s oil and gas properties. During the three months ended March 31, 2007 and 2006, the Company recorded depletion of $2,500 on its producing properties.

NOTE 4 -

INVESTMENT IN WIN ENERGY

During the three months ending March 31, 2007, the Company sold 85,500 shares of its investment in WIN Energy on the open market, realizing a gain of $41,839.

The Company re-valued its investment at an open market price of $0.44, which reduced the value of its investment at March 31, 2007, by $335,167.

NOTE 5 -

SIGNIFICANT TRANSACTIONS

During the three months ended March 31, 2006, the Company issued a total of 2,000,000 shares of common stock, pursuant to an S-8 registration, for consulting and other professional services rendered valued at $260,000. The shares were recorded at $0.13 per share, the market value of the shares on the date of issuance.

Pursuant to the S-8 registration filed with the Securities & Exchange Commission in January 2006, the Company registered a total of 5,000,000 common shares. After the issuance of 2,000,000 shares as described in the preceding paragraph, a total of 3,000,000 of the registered shares remain un-issued at March 31, 2006.

During the three months ended March 31, 2006, pursuant with the Company’s Farm-out agreement with Odin Capital, the Company paid $43,522 for costs on the completion of the exploration well. The costs to date are approximately $207,576 with further authorizations for expenditure expected to complete the exploration well.

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Notes to the Consolidated Financial Statements

March 31, 2007

NOTE 6 -

GOING CONCERN

The Company’s financial statements have been prepared assuming that the Company will continue as a going concern. The Company is dependent upon raising capital to execute its business plan. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management's plan to raise capital in order to execute their business plan, thus creating necessary operating revenues.

Item 2.Discussion and Analysis or Plan of Operation.

(A)

PLAN OF OPERATION.

The Company’s sole focus is on the exploration for, development drilling for, and transmission facilities for the production and sale of oil and gas. The Company has incorporated a wholly owned Canadian subsidiary named T.V Oil & Gas Canada Limited. This Company is a Federal Canadian Registered Company and complies with all applicable laws within Canada.

Our financial statements contain the following additional material notes:

(Note 6-Going Concern) The Company’s financial statements have been prepared assuming that the Company will continue as a going concern. The Company is dependent upon raising capital to execute its business plan. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management's plan to raise capital in order to execute their business plan, thus creating necessary operating revenues.

(Note 3-Development Stage Company) The Company is a development stage company as defined in Financial Accounting Standards Board Statement 7. It is concentrating substantially all of its efforts in raising capital and developing its business operations in order to generate operating revenues.

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(B)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

During the three months ended March 31, 2007 the Company had royalty revenues of $401, from its working interest in the Strachan property as compared to $243 for the corresponding period ending March 31, 2006.

The Company’s Operator has indicated that completion and testing of the Strachan Leduc well will commence once spring break-up has. All the Company’s properties are geologically and physically independent of one another. They are all located in the Western Canadian Geologic Basin centered in Alberta, Canada.

The Strachan Property

On August 20, 2003, the Company entered into a purchase agreement to acquire 1% interest in a producing gas well, located at 2-2-38-9W5 Red Deer, Alberta, Canada. The gas production rate at the time of the acquisition fluctuated between 1.5 and 2 MMCF/Day (million cubic feet of gas per day). The Company’s senior management has set out a rework program for this well. The rework program calls for an acid wash and acid stimulation of the producing formation. The Company has agreed to participate in the program. The program was completed on October 15, 2003 and as of October 20, 2003, the new production rates have stabilized at 2.66 MMCF/Day, representing a 40% increase over initial production rates.

In addition to the preceding acquisition, the Company entered into a purchase agreement to acquire 0.5% interest in 10 Sections (6,400 acres) of drilling rights offsetting Sct. 22-38-9W-5. These offsetting sections have identified seismic anomalies in multiple cretaceous pay zones. The purchase price of the property was $45,114

The Strachan Property - Leduc region

On September 23, 2005 Turner Valley Oil and Gas Inc. through its wholly owned subsidiary TV Oil and Gas Canada Limited, has entered into a farm-out agreement with Odin Capital Inc. of Calgary, Alberta.

The terms of the Farm-Out agreement are as follows:

In exchange for our paying 3.00% of all costs associated with drilling, testing and completing the test well (expected drilling cost - approx. $6.3 million Canadian to the 100% interest) on the property that is referred to as the Leduc Formation test well, we will have earned;

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In the spacing unit for the Earning Well, a 1.500% interest in the petroleum and natural gas below the base of the Mannville excluding natural gas in the Leduc formation, and a 3.00% interest in the natural gas in the Leduc formation before payout subject to payment of an Overriding Royalty which is convertible upon payout at the Royalty Owners option to 50% of our interest.

A 1.200% interest in the rights below the base line of the Shunda formation in Section 10,Township 38, Range 9W5M

A 0.966% interest in the rights below the base of the Shunda formation in sections 15 & 16,Township 38,Range 9W5M, down to the base of the deepest formation penetrated.

ON July 6^th, 2006, the Company purchased an additional 2% from its Chairman & CEO for a total cost of $190,882.

Additionally, the Company incurred $44,405 of further costs associated with the exploration of the well during the quarter.

The total costs are to date are $525,544 for our interest, under the terms of our agreement.

The Strachan Prospect is located 80 miles NW of Calgary, Alberta.

Mississippi Prospect

On August 23^rd, 2006, the Company entered into a joint venture agreement with Griffin & Griffin Exploration, LLC. to acquire an interest in a drilling program comprising 50 natural gas and/or oil wells. The area in which the proposed wells are to be drilled is comprised of approximately 300,000 gross acres of land located between Southwest Mississippi and North East Louisiana. The proposed wells will be targeting the Frio and Wilcox Geological formations. The first 20 proposed wells are located within tie-in range of existing pipeline infrastructures. Turner Valley has agreed to pay 10% of all prospect fees, mineral leases, surface leases and drilling and completion costs to earn a net 8% share of all production zones to the base of the Frio formation and 7.5% of all production to the base of the Wilcox formation. Total Costs to date are $400,000. The is re-evaluating its future interest in this well.

General & Administrative Costs

General and administrative costs for the three months ended March 31, 2007 increased to $34,581, when compared to $33,868, excluding the charge for common stock issued for services of $260,000, for the same period last year after excluding common stock issued for services. The increase was caused by costs relating to rent and telephone expenditures for the period. The total costs including depletion for the three months ended March 31, 2007 was $37,081.

Net Income for the three months ended March 31, 2007 was $5,159 as compared to a Net Loss of $233,464 for the corresponding period ending March 31, 2006. The increase in Net Income was caused by the partial sale of shares in the Company’s investment in Win Energy Corp. (‘WIN”), and the reduction in stock compensation charges.

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Liquidity

The Company’s net working capital for the quarter ended March 31, 2007 increased to $(399,334), from a deficit for the year ended December 31, 2006 of $(418,555). The increase in working capital was caused by the proceeds of sale in the partial sale of the Company’s investment in WIN which was partially offset by increases in general overhead.

To date, we have not invested in derivative securities or any other financial instruments that involve a high level of complexity or risk. We expect that in the future, any excess cash will continue to be invested in high credit quality, interest-bearing securities.

We believe cash from operating activities, and our existing cash resources may not be sufficient to meet our working capital requirements for the next 12 months. We will likely require additional funds to support the Company’s business plan. Management intends to raise additional working capital through debt and equity financing. There can be no assurance that additional financing will be available on acceptable terms, if at all. If adequate funds are not available, we may be unable to take advantage of future opportunities, respond to competitive pressures, and may have to curtail operations.

There are no legal or practical restrictions on the ability to transfer funds between parent and subsidiary companies.

There are no known trends or uncertainties excepting those herein disclosed, that will have a material impact on revenues.

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PART II: OTHER INFORMATION

Item 1.Legal Proceedings. None.

Item 2.Changes in Securities. None.

Item 3.Defaults on Senior Securities. None

Item 4.Submission of Matters to Vote of Security Holders. None.

Item 5.Other Information. None.

Item 6. Exhibits and Reports on Form 8-K.

Exhibit 31. Section 302 Certification

Exhibit 32. Certification Pursuant TO 18 USC Section 1350

The Remainder of this Page is Intentionally left Blank

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-Q Report for the Second Quarter ended March 31, 2007, has been signed below by the following persons on behalf of the Registrant and in the capacity and on the date indicated.

Dated: May 14, 2007

/s/Kulwant Sandher	/s/Donald Jackson Wells	/s/Joseph Kane
Kulwant Sandher	Donald Jackson Wells	Joseph Kane
President / CFO	director	director

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