Blaine Exploration Ltd.

Balance Sheets

(Unaudited)

Dec 31,

Dec 31,

2010

2009

Assets

Current Assets

Cash

$

1,232

$

9,399

Accounts Receivable

15,055

8,200

Electrical Deposits

100

100

Prepaid Expenses

753

544

17,140

18,243

Property and Equipment (Note 2)

173,752

158,956

Investments (Note 3)

178,789

167,718

Total Assets:

$

369,681

$

344,917

Liabilities and Shareholders Equity

Current Liabilities

Operating Loans

$

Accounts Payable and accruals

8,028

6,036

Payments to Government Agencies

3,022

1,419

11,050

7,455

Long Term Debt

248,011

235,559

Shareholders' Equity

Opening retained earnings

101,803

84,927

Distribution to Shareholders

(25,707)

(27,247)

Share capital (Note 5)

100

100

Paid in Capital Surplus

0

0

Profit/(loss)

34,424

44,123

110,620

101,903

Total Liabilities:

$

369,681

344,917

Approved by the Directors

See accompanying notes

_______________________

Statements of Income and Retained Earnings

(Unaudited)

Year ended

Year ended

March 31,

March 31,

2010

2009

Revenues

Management Consulting

$

2,200

$

6,100

Financial Consulting

6,000

9,850

Exploration Consulting

1,000

Geological Consulting

Computer & Programing

Engineering Consulting

9,200

15,950

Operational Services

153,474

129,500

Seismic Acquisition

Technical Services

Total Services Income:

153,474

129,500

Property Rental

3,900

3,900

Capital Gains - Stocks

0

4,265

Oil & Gas Royalty

2,500

2,116

Interest and other

16,344

10,091

Total Investment Income:

22,744

20,372

Total Income:

185,418

165,822

Expenses

Operations and Field

Operations Payroll

88,240

62,450

Contract Labor

585

Health/ Life/ WC Insurance

14,598

14,977

Expenses/supplies

154

Training

864

Travel Expenses

1,705

1,697

Travel Meals

Communications

Repairs and maint.

105,282

79,988

2010

2009

Office and Administrative

Office Payroll

$

$

Rent

Expenses/supplies

2,122

334

Training

1,205

Legal/accounting

Communications

1,777

1,725

Utilities

2,200

1,907

Security

1,374

1,584

Building Maintenance

87

Insurance

992

912

Taxes

3,367

3,138

Meals & Entertainment

Travel Meals

41

Travel Expenses

324

Interest Expenses

17,229

16,191

Capital Loss on Investment

Depreciation and amortization

14,994

15,920

$

45,712

$

41,711

Total expenses:

$

150,994

$

121,699

Net (loss)/gain:

$

34,424

$

44,123

Retained Earnings

Beginning of year

101,803

84,927

Distributions to Shareholders

(25,707)

(27,247)

Retained earnings at end of year

110,520

101,803

Note 1 - Accounting Policies

Blaine Exploration Ltd. was incorporated under the laws of the State of Oklahoma May 21, 1998. The Corporation has current activities in Oklahoma and Kansas. On June 2, 1998 an election was file with the Internal Revenue Service to classify Blaine Exploration Ltd. as an S-Corporation. On March 31, 1998 the assets of Blaine Exploration Ltd., an Alberta, Canada Corporation, U.S. division were sold at book value to A. Blaine and Cindy A. Hanks for proceeds of $3300. The Corporation is engaged in exploration consulting and technical services. Significant accounting policies of the Corporation are summarized below:

(a) Basis of Presentation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles.

(b) Property and Equipment

Equipment is recorded at cost and depreciated over the estimated useful lives of the various classes of assets.

Note 2 - Property and Equipment

2010

2009

5 Year Office Equipment

$

3,843

$

3,843

7 Year Furniture & Equipment

2,016

2,016

Computer Equipment

36,035

35,441

Computer Software

979

979

Automobiles

83,620

67,500

Automobile Equipment

5,829

5,829

Seismic Equipment

50,137

50,137

5 Year Tools & Equipment

868

98

7 Year Tools & Equipment

190

190

Buildings

204,343

192,037

$

387,860

$

358,070

Less depreciation & depletion & Amortization

(214,108)

(199,114)

$

173,752

$

158,956

Note 3 - Investments

2010

2009

Land

21,270

21,270

Stocks & Brokerage Account

132

132

Loans to Employees

100

0

Private Loans to Third Parties

4,593

8,266

Loans to Hanks Oilfield Services

0

0

Loans to Gateway Resources USA

119,164

105,342

Employee Travel Plan

33,530

32,708

178,789

167,718

Note 4 - Indebtedness

2010

2009

Checks issued in excess of cash

$

0

$

0

Arvest Credit Line

38,161

38,772

Arvest Roof Loan

9,601

0

66 Credit Union

1,800

0

Capital One - Discover Credit Line

19,459

25,885

Seismic Equipment Loan

6,754

15,917

Arvest Pulling Unit Credit Line

24,464

8,996

BofA Credit Line

5,485

7,413

Auto

8,396

0

Building Loan from Gateway Resources

32,236

30,062

Buildings

101,655

108,514

248,011

235,559

Note 5 - Share Capital

2010

2009

Common shares, no par value

$

100

$

100

Authorized - 10,000

Issued - 10,000

Shareholders A. Blaine Hanks 5,100 Shares

Heidi B. Hanks 4,900 Shares