form10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 
 
For the First Quarter ended June 30, 2008
 
Commission File Number: 0-30891
 
Turner Valley Oil & Gas, Inc. 
 
(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
 
61,335,984 shares off common stock were outstanding as of June 30, 2008.
 
Transitional Small Business Disclosure Format (check one): yes £ no S
 
 
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 six months ended June 30, 2008, 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.
 
The Remainder of this Page is Intentionally left Blank

 
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TURNER VALLEY OIL & GAS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008
 
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
   
June 30,
    
December 31,
  
   
2008
    
2007
  
             
CURRENT ASSETS
            
             
Cash
   $ 11,656     $ 75,688  
Accounts receivable
     13,790       8,088  
                 
Total Current Assets
     25,446       83,776  
                 
OIL AND GAS PROPERTIES USING FULL COST ACCOUNTING
                
                 
Properties subject to amortization
     13,175       18,175  
Unproved properties
     -       -  
                 
Net Oil and Gas Properties
     13,175       18,175  
                 
OTHER ASSETS
                
                 
Investments - Marketable Securities available for sale
     -       -  
                 
Total Other Assets
     -       -  
 
               
TOTAL ASSETS
   $ 38,621     $ 101,951  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                 
CURRENT LIABILITIES
                
                 
                 
Accounts payable
   $ 35,420     $ 4,211  
Notes payable, related party
     23,658       23,658  
                 
Total Current Liabilities
     59,078       27,869  
 
               
Total Liabilities
     59,078       27,869  
                 
Other Commitments or Contingencies
     -       -  
                 
STOCKHOLDERS' EQUITY
                
                 
Common stock, 100,000,000 shares authorized of $0.001par value, 61,335,984 shares issued and outstanding, respectively
     61,337       61,337  
Capital in excess of par value
     4,741,873       4,741,873  
Accumulated other comprehensive income
     (3,357 )     (3,356 )
Deficit accumulated during the development stage
     (4,820,310 )     (4,725,772 )
                 
Total Stockholders' Equity
     (20,457 )     74,082  
 
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 38,621     $ 101,951  

 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 Operations and Comprehensive Income/(Loss)

                           
From
  
                           
Inception on
  
   
For the
    
For the
    
April 21, 1999
  
   
Three Months Ended
    
Six months Ended
    
Through
  
   
June 30,
    
June 30,
    
June, 30
  
   
2008
    
2007
    
2008
    
2007
    
2008
  
REVENUE
                              
                               
Royalties received
   $ 2,285     $ -     $ 3,741     $ 401     $ 28,780  
                                         
EXPENSES
                                        
                                         
Cost of production
     -       -       -       -       51,753  
Depletion
     2,500       2,500       5,000       5,000       35,767  
Abandonment of natural gas and oil property
     -       -       -       -       525,544  
General and administrative
     13,403       65,238       96,459       99,819       5,039,770  
                                         
Total Expenses
     15,903       67,738       101,459       104,819       5,652,834  
                                         
NET OPERATING LOSS
     (13,618 )     (67,738 )     (97,718 )     (104,418 )     (5,624,054 )
                                         
OTHER INCOME (EXPENSE)
                                        
                                         
Gain on sale of investments
             12,537       -       54,376       798,510  
Rent Received
     785               3,178       -       8,526  
Interest expense
     -       -       -       -       (3,292 )
                                         
Total Other Income (Expense)
     785       12,537       3,178       54,376       803,744  
                                         
NET PROFIT/(LOSS) BEFORE INCOME TAX
   $ (12,833 )   $ (55,201 )   $ (94,540 )   $ (50,042 )   $ (4,820,310 )
                                         
Income tax
   $ -     $ -     $ -     $ -     $ -  
                                         
NET PROFIT/(LOSS)
   $ (12,833 )   $ (55,201 )   $ (94,540 )   $ (50,042 )   $ (4,820,310 )
                                         
BASIC LOSS PER COMMON SHARE
   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )        
                                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
     61,335,984       58,535,984       61,335,984       58,535,984          
                                         
COMPREHENSIVE INCOME (LOSS)
                                        
                                         
NET LOSS
   $ (12,833 )   $ (55,201 )   $ (94,540 )   $ (50,042 )   $ (4,820,310 )
                                         
OTHER COMPREHENSIVE INCOME (LOSS)                                        
Unrealized Gain on Marketable Securities
             21,347       -       (407,310 )     (725 )
Foreign Currency Translation
     -       -       -       725       (3,357 )
                                         
COMPREHENSIVE INCOME (LOSS)
   $ (12,833 )   $ (33,854 )   $ (94,540 )   $ (456,627 )   $ (4,824,392 )
 
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
For the period from inception to June 30, 2008

               
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                          
9/30/2004
                                                
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  
                                                 
Realization of unrealized gains on investments Foreign currency transalationIssuance of S-8 stock for services at $0.01
     1,500,000       1,500       13,500                          
                                                 
Issuance of S-8 stock for services at $0.025
     1,300,000       1,300       31,200                          
                                                 
Net Income/(loss) for the year ended December 31, 2007
                                     (614,292 )        
                                                 
Balance as at December 31, 2007
     61,335,984       61,337       4,741,873       (3,357 )     (4,725,770 )        
                                                 
                                                 
Net Income/(loss) for the quarter ended June 30, 2008
                                     -94,540          
                                                 
Balance as at June 30, 2008
     61,335,984       61,337       4,741,873       (3,357 )     (4,820,310 )     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

               
From
  
               
Inception on
  
               
April 21, 1999
  
   
For the 6 months Ended
    
Through
  
   
June 30,
    
June 30,
  
   
2008
    
2007
    
2008
  
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
                   
Net loss
   $ (94,540 )   $ (50,042 )   $ (4,820,310 )
Adjustments to reconcile net loss to net cash used in operating activities:
                        
Depletion
     5,000       5,000       35,767  
Loss on abandonment of property
     -       -       551,025  
Gain on sale of Investment
     -       (54,736 )     (834,085 )
Common stock issued for services rendered
     -       -       4,289,460  
Non-cash Effect from Foreign Currency Translation
     -       -       1,274  
Changes in operating assets and liabilities:
                     (4,085 )
Increase (Decrease) in bank Overdraft
     -       16,055       -  
Increase (Decrease) in accounts receivable
     (5,701 )     2,857       (6,420 )
Increase (Decrease) in accounts payable - related Party
             -       23,659  
Increase in accounts payable and accrued expenses
     31,209       -       326,797  
                         
Net Cash Used in Operating Activities
     (64,032 )     (80,866 )     (436,918 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
                         
Proceeds from sale of investments
     -       80,866       1,073,082  
Investing in new Oil & Gas working interests
     -       -       (825,544 )
Expenditures for oil and gas property development
             -       (312,714 )
                         
Net Cash Used in Investing Activities
     -       80,866       (65,176 )
                         
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
     (64,032 )     -       11,656  
                         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     75,688       -       -  
                         
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $ 11,656     $ -     $ 11,656  
                         
SUPPLEMENTAL CASH FLOW INFORMATION
                        
                         
CASH PAID FOR:
                        
 
                       
Interest
   $ -     $ -     $ -  
Income taxes
   $ -     $ -     $ -  
                         
NON-CASH FINANCING ACTIVITIES
                        
                         
Common stock issued for services rendered
   $ -     $ -     $ 3,756,960  
Common stock issued for retirement of payables
   $ -     $ -     $ 532,500  

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

 
Page - 7
 

Notes to the Consolidated Financial Statements
June 30, 2008

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-Q.  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, 2007.  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 six months ended June 30, 2008 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 six months ended June 30, 2008 and 2007:

   
For the
  
   
Three Months Ended
  
   
June 30,
  
   
2008
    
2007
  
             
Net loss)available to common shareholders
   $ (12,833 )   $ (55,201 )
                 
Weighted average shares
     61,335,984       58,535,984  
                 
Basic income per share (based on weighted average shares)
   $ 0.00     $ 0.00  
 
 
   
For the
  
   
Six Months Ended
  
   
June 30,
  
   
2008
    
2007
  
             
Net loss)available to common shareholders
   $ (94,540 )   $ (50,042 )
                 
Weighted average shares
     61,335,984       58,535,984  
                 
Basic income per share (based on weighted average shares)
   $ 0.00     $ 0.00  


 
Page - 8
 

Notes to the Consolidated Financial Statements
June 30, 2008

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 June 30, 2008 and December 31, 2007, proved oil and gas reserves had been identified on certain of the Company’s oil and gas properties.  During the six months ended June 30, 2008 and 2007, the Company recorded depletion of $5,000 on its producing properties.


 
Page - 9
 
 
Notes to the Consolidated Financial Statements
June 30, 2008

NOTE 4 – 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.
 
Page - 10
 
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.

(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

During the quarter ended June 30, 2008, we had royalty revenues of $3,741 from our working interest in the Strachan property (June 30, 2007: $401). The increase in royalties was caused by an increase in natural gas prices obtained by the operator. All our properties are geographically and physically independent of one another. They are located in the Western Canada Geologic Basin centered in Alberta, Canada.

The Strachan Property. On August 20, 2003, we 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 Strachan Prospect is located 80 miles NW of Calgary, Alberta. 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 approximately 2.66 MMCF/Day, representing a 40% increase over initial production rates.

In addition to the preceding acquisition, we 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 depletion for the six months ended June 30, 2008 was $5,000.  (June 30, 2007: $5,000)

 
Page - 11
 
 
The Strachan Property – Leduc Formation

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;

1)  
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.
2)  
A 1.200% interest in the rights below the base line of the Shunda formation in Section 10,Township 38, Range 9W5M
3)  
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 6th, 2006, the Company purchased an additional 2% from its Chairman & CEO for a total cost of $190,882. The amount was paid in WIN stock at a value of $2 when the market value of the stock was $1.90.

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.  The Company expects testing of this prospect in the near future, which will enable the Company to determine whether to continue or abandon this project.  Testing of the first well showed no economic hydrocarbons and the well was abandoned.

 
Page - 12
 
 
General and Administrative costs

General and Administrative costs for the six months ended June 30, 2008 decreased  to $96,459, when compared to $99,819, for the corresponding period in the prior year.

The Company’s total expenses were $101,459 for the six months ended June 30, 2008 compared to $104,819 for the prior year.

The Net Loss for the year just ended was $(94,540) as compared to a Net Loss of $(50,042) for the corresponding period for the prior year. The increase in loss for the year was caused by a reduction in Other income caused by the gain on sale of investments during the corresponding period in the prior period.

(1) Liquidity. Our net working capital for the quarter ended March 31, 2008 decreased to $(33,632), compared to a surplus of $55,907 for the year ended December 31, 2007. The decrease in working capital was caused the increase in accounts payable for the period.

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

We believe cash from operating activities, and our existing cash sources may not be sufficient to meet our working capital requirements for the next 12 months. We will likely require additional funds to support our business plan. Management intends to raise additional working capital through debt and equity financing.

Off Balance Sheet Arrangements

As of June 30, 2008, there were no off balance sheet arrangements.

Going Concern
 
As shown in the accompanying financial statements, we have incurred a net loss of $4,807,477 since inception. To achieve profitable operations, we require additional capital for obtaining producing oil and gas properties through either the purchase of producing wells or successful exploration activity. We believe that we may not be able to obtain sufficient funding to meet our business objectives, including anticipated cash needs for working capital and is currently evaluating several financing options. However, there can be no assurances can be offering in this regard. As a result of the foregoing, there exists substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition.

Joint Ventures

All exploration and production activities are conducted jointly with others and, accordingly, the accounts reflect only our proportionate interest in such activities.
 
 
Page - 13
 
 
Natural Gas and Oil Properties

We account for our oil and gas producing activities using the full cost method of accounting as prescribed by the United States Securities and Exchange Commission (“SEC”). Accordingly, all costs associated with the acquisition of properties and exploration with the intent of finding proved oil and gas reserves contribute to the discovery of proved reserves, including the costs of abandoned properties, dry holes, geophysical costs, and annual lease rentals are capitalized. All general corporate costs are expensed as incurred. In general, sales or other dispositions of oil and gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded. Amortization of evaluated oil and gas properties is computed on the units of production method based on all proved reserves on a country-by-country basis. Unevaluated oil and gas properties are assessed at least annually for impairment either individually or on an aggregate basis. The net capitalized costs of evaluated oil and gas properties (full cost ceiling limitation) are not to exceed their related estimated future net revenues from proved reserves discounted at 10%, and the lower of cost or estimated fair value of unproved properties, net of tax considerations. These properties are included in the amortization pool immediately upon the determination that the well is dry.

Unproved properties consist of lease acquisition costs and costs on well currently being drilled on the properties. The recorded costs of the investment in unproved properties are not amortized until proved reserves associated with the projects can be determined or until they are impaired.

Revenue Recognition

Revenue from sales of crude oil, natural gas and refined petroleum products are recorded when deliveries have occurred and legal ownership of the commodity transfers to the customers. Title transfers for crude oil, natural gas and bulk refined products generally occur at pipeline custody points or when a tanker lifting has occurred. Revenues from the production of oil and natural gas properties in which we share an undivided interest with other producers are recognized based on the actual volumes sold by us during the period. Gas imbalances occur when our actual sales differ from its entitlement under existing working interests. We record a liability for gas imbalances when we have sold more than our working interest of gas production and the estimated remaining reserves make it doubtful that the partners can recoup their share of production from the field. At June 30, 2008 and 2007, we had no overproduced imbalances.
 
Item 3. 
Quantitative and Qualitative Disclosures About Market Risk

Non-applicable to smaller reporting companies pursuant to Item 305(e) of Regulation S-K.
 
 
Page 14
 
 
Item 4T. 
Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2008.  This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Mr. Christopher Paton-Gay & Mr. Kulwant Sandher.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2007, our disclosure controls and procedures are effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There have been no significant changes in our internal controls over financial reporting during the quarter ended June 30, 2008 that have materially affected or are reasonably likely to materially affect such controls.

 
Page - 15
 
 
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

 
Page - 16
 

SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-Q Report for the Second Quarter ended June 30, 2008, has been signed below by the following persons on behalf of the Registrant and in the capacity and on the date indicated.
 
 
Turner Valley Oil and Gas, Inc. 
 
 
Dated: August 14, 2008
 
 
by
 
 
/s/Kulwant Sandher
  
 
/s/Donald Jackson Wells
  
 
/s/Joseph Kane
Kulwant Sandher 
  
Donald Jackson Wells
  
Joseph Kane
President / CFO
  
director
  
director
 
 
Page - 17