Edgar Filing: NORTHERN OIL & GAS, INC.

April 3, 2006 - June 30, 2006

July 3, 2006 - September 20, 2006

.20

October 2, 2006 - December 29, 2006

.20

December 31, 2006 - March 31, 2007

5.00

1.10

April 1, 2007 - June 30, 2007

5.50

3.40

July 1, 2007 - September 30, 2007

6.50

4.40

These prices were obtained from the National Quotation Bureau, Inc. and do not necessarily reflect actual transactions, retail markups, mark downs or commissions. Stock price data before March 20, 2007 is for the prior shell company, Kentex Petroleum, Inc., and therefore may not be relevant to any analysis of the post-merger Company.

Holders

The number of record holders of the Company’s common stock as of September 15, 2007 is approximately 479.

Incentive Stock Option Plan

The Board of Directors approved the Incentive Stock Option Plan on November 3, 2006. The total number of options that can be granted under the plan will not exceed 2,000,000 shares. Both incentive stock options and non-qualified stock options may be granted by the Board under the plan. Stock options may be granted by the Board of Directors with an option price not less than the fair market value of the shares of common stock to which the non-qualified stock option relates on the date of grant. However, with respect to incentive stock options, the price shall not be less than 110% of the fair market value per share on the date of the grant in the case of an individual then owning more than 10% of the total combined voting power of all classes of stock of the corporation.

Each option granted under the stock option plan will be assigned a time period for exercise not to exceed ten years after the date of the grant. Certain other restrictions will apply in connection with this plan affecting when some awards may be exercised.

In the event of a change of control (as defined in the stock option plan), the date on which all options outstanding under the stock option plan may first be exercised will be accelerated.

This plan is intended to encourage directors, officers, employees and consultants to acquire ownership of common stock. The opportunity so provided is intended to foster in participants a strong incentive to put forth maximum effort for the Company’s continued success and growth, to aid in retaining individuals who put forth such effort, and to assist in attracting the best available individuals to the Company in the future.

As of December 31, 2006, 1,100,000 options have been issued under this plan. The Company has agreed to grant an additional 400,000 options under its 2006 Incentive Stock Option Plan to the four (4) directors appointed on May 3, 2007 (100,000 each to Messrs. O’Toole, Stewart, King and Grabb) upon their election at the next annual meeting of shareholders as well as 100,000 to Mrs. Lisa Bromiley Meier who was appointed on September 12, 2007 on the same terms.

The following table sets forth information as of December 31, 2006 regarding outstanding options granted under the plan and options reserved for future grant under the plan.

Plan Category	Number of shares to be issued upon exercise of outstanding options and rights (a)		Weighted-average exercise price of outstanding options and rights (b)		Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (c)

Equity compensation plans approved by stockholders		1,100,000	$	1.05		900,000

Equity compensation plans not approved by stockholders		—	$	—		—

Total		1,100,000	$	1.05		900,000

DIVIDEND POLICY

We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared by our Board of Directors, based upon the Board’s assessment of:

	·	our financial condition;

	·	earnings;

	·	need for funds;

	·	capital requirements;

	·	prior claims of preferred stock to the extent issued and outstanding; and

	·	other factors, including any applicable laws.

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

Except as discussed below, a discussion of our past financial results is not pertinent to the business plan of the Company on a going forward basis, due to the change in our business which occurred upon consummation of the merger on March 20, 2007.

Overview and Outlook

We are an oil and gas exploration and production company. Our properties are located in Montana and North Dakota. Our corporate strategy is to build value in the Company through the development and acquisition of natural gas and oil assets that exhibit consistent, predictable, and long-lived production.

We initially secured the rights to mineral leases on approximately 71,000 gross acres, 40,000 net acres.

Our goal is to explore for and develop any potential hydrocarbons contained in the mineral rights we control. In order to do this we will need to take the following steps;

	·	Raise the necessary capital required to acquire, explore for and produce oil, conventional natural gas and unconventional natural gas;

	·	Assemble a group of talented and experienced employees, partners and consultants to execute the strategic objectives;

	·	Create value by executing an ‘asset roll up’ business plan, subsequently optimizing the value of each newly acquired property. Executing this phase of the strategy should in turn provide asset value for the acquisition and enhancement of additional properties, and create synergies among these assets, further improving their value.

	·	Identify and utilize industry partners to mitigate risk and leverage resources and acreage through joint ventures, farmout agreements and strategic pooling of acreage.

Results of Operations for the period ended December 31, 2006 and the six months ended June 30, 2007.

The Company is in the early stage of exploring and developing its properties in Montana and North Dakota and currently has no production or revenues from these properties. Its operations to date have been limited to technical evaluation of the properties and the design of exploration and development plans to exploit the oil and gas resources on those properties, as well as seeking financing opportunities to acquire additional oil and gas properties.

Oil and gas revenues for the period ended December 31, 2006, and the quarter ended June 30, 2007, was $0. We will not have any significant production revenue unless and until we are able to establish commercial production in connection with new drilling activities planned for 2007 or in connection with other acquisition activities.

Our expenses to date have consisted principally of general and administrative costs. We expect these costs to increase as we proceed with our exploration and development plans. In the future we expect to incur increased geologic, geophysical, personnel, and engineering costs. Total expenses for the period ended December 31, 2006 were $76,373.93, and for the six months ended June 30, 2007 were $1,406,189. We had a net loss of $76,106.85 for the period ended December 31, 2006, and a net loss of $1,382,396 for the six months ended June 30, 2007.

Operation Plan

During the next twelve months we may need to seek financing opportunities to commence a growth plan that will include the acquisition of additional oil and gas properties as well as begin a larger scale development project on the existing acreage. However, we believe the capital raised through our recent placement of equity allows the Company to continue to expand its acreage position and begin to develop the existing properties for the foreseeable future.

The Company has several other projects that are in various stages of discussions and is continually evaluating oil and gas opportunities in the Continental U.S.

To accelerate the exploration and development program we may continue to take on Joint Venture (JV) or Working Interest (WI) partners that will contribute to the capital costs of drilling and completion and then share in revenues derived from production. This economic strategy may allow us to utilize our own financial assets toward the growth of our leased acreage holdings, pursue the acquisition of strategic oil and gas producing properties or companies and generally expand our existing operations.

Because of our limited operating history we have yet to generate any revenues from the sale of oil or natural gas. Our activities have been limited to the negotiation of WI agreements, mineral lease acquisition and preliminary analysis of reserves and production capabilities. Consequently, we have incurred the expenses of start-up.

Our future financial results will depend primarily on: (i) the ability to continue to source and screen potential projects; (ii) the ability to discover commercial quantities of natural gas and oil; (iii) the market price for oil and gas; and (iv) the ability to fully implement our exploration and development program, which is dependent on the availability of capital resources. There can be no assurance that we will be successful in any of these respects, that the prices of oil and gas prevailing at the time of production will be at a level allowing for profitable production, or that we will be able to obtain additional funding to increase our currently limited capital resources.

2007 Drilling Projects

The Company has currently planned at least 5 - 6 wells for calendar year 2007.

Rincon Exploration

On April 20,2007 we announced a farm out agreement with Rincon Exploration whereby we will contribute acreage to a spacing unit to be created for a Red River Formation test well. Rincon and other partners will bear our share of the costs to the casing point of the well. We will retain an undivided interest of 25% in our share of the spacing unit. This well is expected to be drilled by the fourth quarter 2007. 3-D seismic driven Red River exploration has been very successful in the area to date. The location of the well will be T34N-R57E, Section 1: SE/4.

Brigham Exploration (NASD: BEXP) Joint Venture

On April 23, 2007 Brigham Exploration announced a Williston Basin Joint Venture with us under which Brigham will bear a portion of our costs on a series of wells and begin a continuous drilling program in 2008. Under the terms of the agreement Brigham expects to drill 2 wells in 2007. 1 of these wells will be on our acreage position in Mountrail County ND targeting the Bakken Shale. The approximately 12,000 gross acres included in the Joint Venture are spread between 19 sections in close proximity to the high producing EOG Resources (NYSE:EOG) wells in the Parshall field. Based on current data obtained from the North Dakota Industrial Commission, Department of Mineral Resources, EOG has drilled 23 Bakken wells in the area with 4 additional wells currently drilling and another 15 wells permitted to be drilled. The average initial production rate of these wells is 1,049 barrels of oil and 278 Mcf of gas. Drilling under the Brigham Joint Venture is expected to commence by the early fourth quarter with at least 2 wells drilled in 2007 targeting the Bakken in Mountrail County. On 640 spacing, there are 19 gross wells that could be drilled by Brigham and Northern to fully explore and develop the Joint Venture acreage.

In Sheridan County, Brigham has announced that they expect to drill at least 2 wells under the JV with the first commencing in the early fourth quarter. We will be carried on the first 2 wells with Brigham covering 90% of the cost and the Company earning up to a 37% working interest for our 10% portion of the drilling costs. Beginning in 2008, Brigham will be subject to a 120 day continuous drilling provision whereby it will be required to drill every 120 days in order to retain future drilling opportunity. The first well will likely be a Mission Canyon development well offsetting another operator’s Mission Canyon well that has been a producer of approximately 200,000 barrels of oil to date. The Mission Canyon Target is found at approximately 7,600 feet and it is likely that Brigham will drill this well horizontally with 3,000 feet of lateral displacement. The second 2007 well may also be a Mission Canyon test or possibly a test of a Red River structure, which has established quality Red River production. The Red River Target is encountered at a depth of approximately 11,600 feet and quality Red River producers in the area have made 250,000 to over 1,000,000 barrels of oil. Based on existing production combined with the over 85 mile 3-D seismic database Brigham owns, we believe the Sheridan County acreage provides excellent potential for the discovery and development of significant oil and natural gas reserves. On 160 acre spacing there are 137 possible net wells that could be drilled to fully explore and develop the acreage position.

In addition to the acreage included in the BEXP JV, Northern controls approximately 24,000 Gross (5,000 Net) acres not subject to any drilling agreements. The Company will evaluate potential partners on this property or may choose not to dilute its interest by participating on a heads-up basis with the companies it shares spacing units with.

Liquidity and Capital Resources

Liquidity is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of stock and by borrowings. In the future, we anticipate we will be able to provide the necessary liquidity we need by the revenues generated from the sales of our oil reserves in our existing properties, however, if we do not generate sufficient sales revenues we will continue to finance our operations through equity and/or debt financings.

The following table summarizes total current assets, total current liabilities and working capital at June 30, 2007.

	June 30, 2007 (Unaudited)

Current Assets	$	768,795

Current Liabilities	$	113,649

Working Capital	$	655,146

Satisfaction of our cash obligations for the next 12 months.

A critical component of our operating plan impacting our continued existence is the ability to obtain additional capital through additional equity and/or debt financing and JV or WI partnerships. In the event we cannot obtain the necessary capital to pursue our strategic plan, we may have to cease or significantly curtail our acreage acquisitions. This would materially impact our ability to continue operations. However, due to the low overhead of the Company, we are not dependant on new capital if we do not wish to accelerate our drilling programs and/or buy up working interests in potential wells during the next 24 months. We currently are funded to meet our minimum drilling commitments and expected G&A expenses for the next 24 months.

Since inception, we have financed cash flow requirements through debt financing and issuance of common stock for cash and services. As we expand operational activities, we may continue to experience net negative cash flows from operations, pending receipt of sales or development fees, and will be required to obtain additional financing to fund operations through common stock offerings and debt borrowings to the extent necessary to provide working capital.

Over the next 24 months we believe that existing capital and anticipated funds from operations may not be sufficient to sustain planned expansion, primarily acreage acquisition. Consequently, we may seek additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities. No assurance can be made that such financing would be available, and if available it may take either the form of debt or equity. In either case, the financing could have a negative impact on our financial condition and our stockholders.

We anticipate incurring operating losses over the next twelve months. Our lack of operating history makes predictions of future operating results difficult. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of operations, particularly companies in the oil and gas exploration industry. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Going Concern

The financial statements included in our filings have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern. Management may use borrowings and security sales to improve the Company’s cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence. We believe that the “going concern” disclosure will not be required in our next set of published financials due to the recently completed capital raise.

Summary of product research and development that we will perform for the term of our plan.

We do not anticipate performing any significant product research and development under our plan of operation until such time as we can raise adequate working capital to sustain our operations.

Expected purchase or sale of any significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time or anticipated to be needed in the next twelve months.

Significant changes in the number of employees.

We currently have 2 full time employees (the Officers of the Company). As drilling production activities commence, we may hire additional technical, operational and administrative personnel as appropriate. We do not expect a significant change in the number of full time employees over the next 12 months. We are using and will continue to use the services of independent consultants and contractors to perform various professional services, particularly in the area of land services, reservoir engineering, drilling, water hauling, pipeline construction, well design, well-site monitoring and surveillance, permitting and environmental assessment. We believe that this use of third-party service providers may enhance our ability to contain general and administrative expenses.

Off-Balance Sheet Arrangements

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

DIRECTORS AND EXECUTIVE OFFICERS

Pursuant to the merger with NOG, the officers and directors of NOG became the officers and directors of the Company effective upon closing of the Merger.

Information as to our current directors and executive officers is as follows:

Name and Age		Positions
Michael L. Reger, 31		Director, Chief Executive Officer and Secretary
Ryan R. Gilbertson, 31		Director and Chief Financial Officer
Loren J. O’Toole, 76		Director
Carter Stewart, 49		Director
Jack King, 55		Director
Robert Grabb, 55		Director
Lisa Bromiley Meier, 34__		Director

Michael L. Reger, Director, Chief Executive Officer, Secretary

Mr. Reger has been primarily involved in the acquisition of oil & gas mineral rights for his entire professional life and is a director of Reger Oil based in Billings, Montana. Mr. Reger holds a BA in Finance and an MBA in Finance/Management from the University of St. Thomas in St. Paul, Minnesota. The Reger family has a history of acreage acquisition in the Williston Basin dating to 1952.

Ryan R. Gilbertson, Director and Chief Financial Officer

Mr. Gilbertson is a Principal of Crystal Bay Capital, a boutique investment banking firm focused on small to mid-size companies. Mr. Gilbertson’s last position prior to founding Crystal Bay Companies was Director of Equity Derivative Trading and Strategy at Piper Jaffray in Minneapolis from March 2004 to August 2006. Prior to Piper Jaffray, Ryan was an Equity Derivative Trader at Telluride Asset Management, a multi-strategy hedge fund based in Wayzata, Minnesota. Ryan holds a BA from Gustavus Adolphus College.

Loren J. O’Toole, Director

Mr. O’Toole founded the law firm of O’Toole and O’Toole, based in Plentywood MT. The firm is a leader in the legal profession specializing in oil and gas throughout the Rocky Mountain Region. Mr. O’Toole has over 50 years of experience in oil and gas.

Carter Stewart, Director

Mr. Stewart is a Registered Petroleum Geologist who has been generating prospects in the Williston Basin for 26 years. Mr. Stewart is the founder of Stewart Geological, Inc. Stewart Geological, Inc. is currently participating in wells in Montana, Wyoming, North Dakota, New York and Alberta, Canada. Mr. Stewart has been directly involved in the drilling of over 500 wells during his career, in several different locations within the U.S. and Canada. He holds a Degree in Geology from the University of Montana, 1981.

Jack King, Director

Mr. King is with Hancock Resources, a prominent independent oil and gas exploration and development corporation based in Billings MT. Mr. King’s 30 years in the industry began in petroleum land management in the Northern Rockies . Throughout his career, Mr. King has managed several independent oil and gas companies. Currently Mr. King sits on the boards of The Montana Petroleum Association, The Montana Community Foundation, and The Montana Board of Oil and Gas Conservation Commission, which is Montana’s oil and gas regulatory Board appointed by the Governor. Mr. King holds a degree in Economics from the University of Montana.

Robert Grabb, Director

Mr. Grabb is a Registered Petroleum geologist. He was most recently an integral member of the Newfield Exploration (NYSE: NFX) Geologic Team that conceptualized and commercialized the resource plays that have driven Newfield’s growth. Mr. Grabb holds B.S. and M.S. Degrees in geology from Montana State University. Mr. Grabb is also a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers.

Lisa Bromiley Meier, Director

Lisa Bromiley Meier was appointed Chief Financial Officer of Flotek Industries, Inc. in April 2004, Vice President in January 2005 and Senior Vice President in July 2007. Mrs. Meier has facilitated the turn-around of Flotek with the completion of ten acquisitions, a private equity placement, securing senior credit facilities, and moving the Company onto the American Stock Exchange. Mrs. Meier was awarded Best CFO of the Year 2007 by the Houston Business Journal. Prior to joining Flotek, Mrs. Meier worked in the energy audit practice of PricewaterhouseCoopers, LLP and worked for three Fortune 500 companies. Mrs. Meier served in various accounting, finance, SEC reporting and risk management positions. Mrs. Meier is a Certified Public Accountant. Mrs. Meier is a member of the American Institute of Certified Public Accountants and Financial Executives International. Mrs. Meier holds B.B.A. and Masters of Accountancy degrees from the University of Texas.

Election of Directors and Officers

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified. Officers may be removed by the Board of Directors at any time, with or without cause.

Audit Committee and Financial Expert

We have an Audit Committee; whose members are Messrs. Grabb and O’Toole, and Ms. Meier (Chair). The Audit Committee’s main duties are: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditor’s independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company has a written audit committee charter. Ms. Meier is the Audit Committee’s designated financial expert.

Code of Business Conduct and Ethics

We have not adopted a corporate code of ethics.

Our decision to not adopt such a code of ethics results from our having only two officers operating as the management for the Company. We believe that as a result of the limited interaction which occurs, having such a small management structure for the Company eliminates the current need for such a code, in that violations of such a code would be reported to the party generating the violation.

Nominating Committee

We have a Nominating Committee, whose members are Messrs. Grabb (Chair), King and Stewart. The Nominating Committee has a written charter.

Director Independence

We believe that five member of our Board of Directors, Messrs. O’Toole, Stewart, King, Grabb, and Ms. Meier, would be “independent directors” under the NASDAQ Stock Market’s definition set forth in Marketplace Rule 4200(a)(15), if such rule was applicable to us.

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on September 15, 2007, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers. The percentage of beneficial ownership for the following table is based on 27,699,578 shares of common stock outstanding as of September 21, 2007.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the stockholder has a right to acquire within 60 days after September 15, 2007 through the exercise of any option or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options into shares of our common stock.

*Security Ownership of Certain Beneficial Owners*

Name of Beneficial Owner (1)	Number of Shares		Percent of Outstanding Shares of Common Stock (2)
Joseph A. Geraci, II 80 South 8 ^th Street, Suite 900 Minneapolis, MN 55402	4,160,000	(3)	15.0	%
Douglas M. Polinsky~130 Lake Street West, Suite 300Wayzata, MN 55391	4,432,500	(4)	16.0	%
Millennium Partners, LP c/o Millennium Management, LLC 666 Fifth Avenue, 8^th Floor New York, NY 10103	1,818,182	(5)	6.6	%
Saracen Energy, LP Five Greenway Plaza, Suite 1310 Houston, TX 77046	1,450,890	(5)	5.2	%
Beneficial Owners as a Group	7,687,500	(6)	27.8	%

*Security Ownership of Management*
Michael L. Reger, Director, Chief Executive Officer and Secretary	4,320,000	(7)	15.6	%
Ryan R. Gilbertson, Director and Chief Financial Officer	2,107,500	(8)	7.6	%
Loren J. O’Toole, Director	-		*
Carter Stewart, Director	275,000	(9)	*
Jack King, Director	-		*
Robert Grabb, Director	-		*
Lisa Bromiley Meier	10,000		*
Directors and Officers as a Group	6,712,500		24.2	%

	1.	As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). The address of each member of management is care of the Company.

	2.	Figures are rounded to the nearest tenth of a percent.

	3.	Includes 275,000 shares held directly and 3,885,000 shares held by entities controlled by Mr. Geraci, and of which he may be deemed the beneficial owner. This includes 905,000 shares held by Lantern Advisors, LLC, which is jointly controlled with Mr. Douglas Polinsky, which are also included in his beneficial shareholdings listed above.

	4.	Includes 2,000,000 shares held directly and 2,382,500 shares held by entities owned and/or controlled by Mr. Polinsky which may be deemed to be beneficially owned by him. This includes 905,000 shares held by Lantern Advisers, LLC, which is jointly controlled with Mr. Joseph Geraci, II and which are also included in his beneficial shareholdings listed above. Further, on December 15, 2006, the Company granted 100,000 stock options to Mr. Polinsky in consideration of his services as Director of the Company. 50,000 options vest on June 15, 2007, and the balance vest on December 15, 2007. The 100,000 options are exercisable at $1.05 per share for a period of ten (10) years expiring on December 15, 2016. The 50,000 of these option shares which vest June 15, 2007 are included in these totals, but the 50,000 which vest on December 15, 2007 are not, as those options are not immediately exercisable. Mr. Polinsky was a director of the Company until May 3, 2007.

	5.	Consists of one-half shares of common stock currently owned, and one-half shares issuable upon exercise of warrants which are currently exercisable.

	6.	The 905,000 shares held by Lantern Advisors, LLC are included in Mr. Geraci’s and Mr. Polinsky’s totals above, but they have only been included once in this total, to avoid double-counting.

	7.	Includes 4,069,000 shares held directly and 1,000 shares held by Mr. Reger’s spouse, which may be deemed to be beneficially owned by him. Further, on December 15, 2006, the Company granted 500,000 stock options to Mr. Reger in consideration of his services as Chief Executive Officer of the Company. 250,000 options vest on June 15, 2007, and the balance vest on December 15, 2007. The 500,000 options are exercisable at $1.05 per share for a period of ten (10) years expiring on December 15, 2016. The 250,000 of these option shares which vest on June 15, 2007 are included in these totals, but the 250,000 which vest on December 15, 2007 are not, as those options are not immediately exercisable.

	8.	Includes 407,500 shares held directly and 1,450,000 shares held by entities owned and/or controlled by Mr. Gilbertson, which may be deemed to be beneficially owned by him. Further, on December 15, 2006, the Company granted 500,000 stock options to Mr. Gilbertson in consideration of his services as Chief Financial Officer of the Company. 250,000 options vest on June 15, 2007, and the balance vest on December 15, 2007. The 500,000 options are exercisable at $1.05 per share for a period of ten (10) years expiring on December 15, 2016. The 250,000 of these option shares which vest on June 15, 2007 are included in these totals, but the 250,000 which vest on December 15, 2007 are not, as those options are not immediately exercisable.

	9.	275,000 shares held by Gallatin Resources, LLC, of which Mr. Stewart is a 25% member.

EXECUTIVE COMPENSATION

The following table sets forth the compensation of the Company’s former executive officer, Sarah E. Jenson, and the Company’s current officers as of December 31, 2006. The current officers received no cash compensation in 2006.

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)			Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
(a)	(b)		(c)		(d)		(e)		(f)			(g)		(h)		(i)		(j)
Sarah E. Jenson, Former President ⁽¹⁾		2006		-0-		-0-		-0-		-0-			-0-		-0-		-0-		-0-
Michael Reger, Chief Executive Officer		2006		-0-		-0-		-0-	$	400,000	^{(2) (4)}		-0-		-0-		-0-	$	400,000
Ryan Gilbertson, Chief Financial Officer		2006		-0-		-0-		-0-	$	400,000	^{(3) (4)}		-0-		-0-		-0-	$	400,000

	(1)	Effective as of the closing of the merger with NOG, Sarah E. Jenson was replaced as officer and director by the officers and directors of NOG.

	(2)	On December 15, 2006, the Company granted 500,000 stock options to Mr. Reger in consideration of his services as Chief Executive Officer of the Company. 250,000 options vest on June 15, 2007, and the balance vest on December 15, 2007. The 500,000 options are exercisable at $1.05 per share for a period of ten (10) years expiring on December 15, 2016.

	(3)	On December 15, 2006, the Company granted 500,000 stock options to Mr. Gilbertson in consideration of his services as Chief Financial Officer of the Company. 250,000 options vest on June 15, 2007, and the balance vest on December 15, 2007. The 500,000 options are exercisable at $1.05 per share for a period of ten (10) years expiring on December 15, 2016.

	(4)	See Note 6 to the Company’s December 31, 2006 Financial Statements (attached) for a description of the valuation method and assumptions used in determining the value of the options..

The following table sets forth the outstanding equity awards to the Company’s executive officers as of the year ended December 31, 2006.

Outstanding Equity Awards at Fiscal Year-End
	Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexerciseable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested (#)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
(a)	(b)	(c)	(d)		(e)	(f)	(g)	(h)	(i)	(j)
Michael Reger	0	500,000	0	$	1.05	12/15/16	0	0	0	0
Ryan Gilbertson	0	500,000	0	$	1.05	12/15/16	0	0	0	0

Compensation Committee

We currently do not have a compensation committee of the Board of Directors. Until a formal committee is established our entire Board of Directors will review all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation.

Termination of Employment

There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named above which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person’s employment with the Company, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.

Compensation of Directors

All directors will be reimbursed for expenses incurred in attending Board or, when established, committee meetings. From time to time, certain directors who are not employees may receive shares of our common stock, or options to purchase such shares.

The following table sets forth director compensation for directors who are not also executive officers, for the year ended December 31, 2006.

Director Compensation

Name

Fees Earned or Paid in Cash

Non-Equity Incentive Plan Compensation

($)

Nonqualified Deferred Compensation Earnings

($)

All Other Compensation

On December 15, 2006, the Company granted 100,000 stock options to Mr. Polinsky in consideration of his services as director of the Company. 50,000 options vest on June 15, 2007, and the balance vest on December 15, 2007. The 100,000 options are exercisable at $1.05 per share for a period of ten (10) years expiring on December 15, 2016. Mr. Polinsky was a director of the Company until May 3, 2007.

(2)	See Note 6 to the Company’s December 31, 2006 Financial Statements (attached) for a description of the valuation method and assumptions used in determining the value of the options.

The Company has agreed to issue 100,000 stock options under its 2006 Incentive Stock Option Plan to each new director appointed on May 3, 2007 (Messrs. O’Toole, Stewart, King and Grabb), and Ms. Meier, upon their election at the next annual meeting of shareholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On October 13 and October 21, 2006, NOG borrowed a total of $123,750 from its three directors, Michael Reger, Ryan Gilbertson and Douglas Polinsky pursuant to promissory notes. These promissory notes did not bear interest. On February 1, 2007, the Company repaid the outstanding principal on these Notes.

The Company acquired approximately 3,000 net acres of leases on the Mountrail County, North Dakota acreage, from Southfork Exploration, LLC, for $90 per acre, plus 90 shares of common stock of the Company per acre. The initial closing of this transaction occurred on February 12, 2007. The Company also has the option to acquire approximately an additional 2,000 net acres pursuant to its agreement with Southfork Exploration, LLC. Southfork Exploration, LLC is owned and controlled by Mr. J. R. Reger, the brother of Michael Reger, the Company’s Chief Executive Officer. The Company has also engaged Southfork Exploration to act as its leasing agent on a periodic basis at an agreed upon commission rate. The Company believes these transactions were concluded on terms and conditions which were no less favorable than those which would have been obtained from an unrelated third party.

The Company acquired the Sheridan County, Montana, leasehold interest from Montana Oil Properties, Inc., for a total payment of $825,000 plus 400,000 shares of common stock of the Company. The closing of this transaction was also concluded on February 12, 2007. Montana Oil Properties, Inc. is owned and controlled by Mr. Tom Ryan and Mr. Steve Reger, uncles of Michael Reger, Chief Executive Officer of the Company. The Company believes that the terms and conditions of these transactions were no less favorable than those which would have been obtained from an unrelated third party.

The Company entered into a letter agreement with Gallatin Resources, LLC, to acquire certain oil and gas leases on approximately 10,000 net mineral acres in the Appalachia Basin. The acreage is located in the “Finger Lakes” region in Yates County, New York. The letter agreement gives the Company the option to acquire the subject leases until August 17, 2007, in exchange for consideration of $1.5 million and 275,000 shares of common stock. Mr. Carter Stewart, one of the Company’s directors, owns a 25% interest in Gallatin Resources, LLC. The acquisition was closed and a third party fairness opinion was obtained on September 21, 2007.

The Company acquired approximately 24,000 Gross (5,000 Net) acres from Montana Oil Properties on September 12, 2007. The terms of the agreement call for a total purchase price of $2,500,000 in cash and 115,000 shares of common stock. $1,000,000 of the purchase price was paid by September 12, 2007 with the balance due January 2, 2008. Northern Oil obtained a third party fairness opinion as to the price of the acreage being acquired. As mentioned above, Steve Reger and Tom Ryan are the principals of Montana Oil Properties, both are uncles of Northern Oil’s CEO, Michael Reger.

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

an exchange distribution in accordance with the rules of the applicable exchange;

privately negotiated transactions;

to cover short sales made after the date that this registration statement is declared effective by the Securities and Exchange Commission;

	·	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

	·	a combination of any such methods of sale; and

any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon a selling stockholder’s notification of the Company that any material arrangement has been entered into with a broker-dealer for the sale of such stockholder’s common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act.

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of securities will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such selling stockholder’s business and, at the time of its purchase of such securities such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities. As disclosed in the Selling Stockholder table, three of the selling stockholders are affiliated with a broker-dealer.

The Company has advised each selling stockholder that it may not use shares registered on this registration statement to cover short sales of common stock made prior to the date on which this registration statement shall have been declared effective by the Securities and Exchange Commission. If a selling stockholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders will be responsible to comply with the applicable provisions of the Securities Act and the Securities Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholders in connection with resales of their respective shares under this registration statement.

The Company is paying all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the common stock. The Company has agreed to indemnify certain selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

In order to comply with the securities laws of certain states, if applicable, the shares must be sold in such jurisdiction only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirements is available and is complied with.

We will make copies of this prospectus available to the selling shareholders, and we have informed them of the need to deliver copies of this prospectus to purchasers at or prior to the time of any sale of the shares offered by this prospectus. To the extent required, this prospectus may be amended and supplemented from time to time to describe a specific plan of distribution.

We may suspend the use of this prospectus, in the event that there is a material, or potentially material, development involving the Company, or there is an occurrence of an event that renders the information in this prospectus misleading, incomplete or untrue.

DESCRIPTION OF SECURITIES

Common Stock

Our articles of incorporation authorize the issuance of 100,000,000 shares of common stock, $0.001 par value per share, of which 27,699,578 shares were outstanding as of September 21, 2007. Holders of common stock have no cumulative voting rights. Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared, from time to time by the board of directors in its discretion, from funds legally available to be distributed. In the event of a liquidation, dissolution or winding up of the Company, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common stock. All of the outstanding shares of common stock are validly issued, fully paid and non-assessable.

Warrants

In connection with the private placement concluded on September 10, 2007, the Company issued to investors warrants to purchase a total of 4,818,184 shares of common stock, $0.001 par value per share. These consist of warrants to purchase 2,409,092 shares at $5.00 per share for 18 months from the date of issue, and warrants to purchase 2,409,092 shares at $6.00 per share for 48 months from the date of issue. These warrants contained standard anti-dilution provisions, and limit the holder’s ability to exercise if doing so would cause the holder to beneficially own in excess of 9.99% of the Company’s outstanding common stock.

Description of Options

The Board of Directors approved the Incentive Stock Option Plan on November 3, 2006. The total number of options that can be granted under the plan will not exceed 2,000,000 shares. As of September 15, 2007, 1,100,000 options have been issued under this plan at a price of $1.05, and the Company has agreed to issue an additional 500,000 options (100,000 each) to the directors appointed in 2007.

Transfer Agent

The transfer agent for our common stock is Atlas Stock Transfer Company, 8899 South State, Salt Lake City, Utah 84107.

Indemnification; Limitation of Liability

Under Nevada law, none of our directors will have personal liability to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director. The foregoing provisions do not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under applicable Sections of the Nevada Revised Statutes, (iv) for the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes or, (v) for any transaction from which the director derived an improper personal benefit.

The Bylaws provide for indemnification of the directors, officers, and employees of the Company in most cases for any liability suffered by them arising out of their activities as directors, officers, and employees of the Company, if they were not engaged in willful misfeasance or malfeasance in the performance of their duties; provided that, in the event of a settlement, the indemnification will apply only when the Board of Directors approves such settlement and reimbursement as being for the best interests of the Company. The Bylaws, therefore, limit the liability of directors to the maximum extent permitted by Nevada law.

Our bylaws also provide that the Company may purchase and maintain insurance for the benefit of a person who is or was serving as a director, office, employee or agent of the Company against a liability incurred by him or her as a director, officer, employee or agent.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Anti-Takeover Effects of Provisions of Nevada State Law

The Nevada Business Corporation Law contains a provision governing “Acquisition of Controlling Interest.” This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires “control shares” whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges:

	1.	20 to 33 1/3%,

	2.	33 1/3 to 50%, or

	3.	more than 50%.

A “control share acquisition” is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from the control share acquisition act.

The control share acquisition act is applicable only to shares of “issuing corporations” as defined by the act. An issuing corporation is a Nevada corporation, which;

	1.	has 200 or more stockholders, with at least 100 of such stockholders being both stockholders of record and residents of Nevada; and

	2.	does business in Nevada directly or through an affiliated corporation.

At this time, we do not have 100 stockholders of record resident of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply to us, the provisions of the control share acquisition act may discourage companies or persons interested in acquiring a significant interest in or control of the Company, regardless of whether such acquisition may be in the interest of our stockholders.

The Nevada “Combination with Interested Stockholders Statute” may also have an effect of delaying or making it more difficult to effect a change in control of the Company. This statute prevents an “interested stockholder” and a resident domestic Nevada corporation from entering into a “combination,” unless certain conditions are met. The statute defines “combination” to include any merger or consolidation with an “interested stockholder,” or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an “interested stockholder” having;

	1.	an aggregate market value equal to 5 percent or more of the aggregate market value of the assets of the corporation;

	2.	an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or

	3.	representing 10 percent or more of the earning power or net income of the corporation.

An “interested stockholder” means the beneficial owner of 10 percent or more of the voting shares of a resident domestic corporation, or an affiliate or associate thereof. A corporation affected by the statute may not engage in a “combination” within three years after the interested stockholder acquires its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired such shares. If approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval of the board of directors or a majority of the voting power held by disinterested stockholders, or if the consideration to be paid by the interested stockholder is at least equal to the highest of;

	1.	the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which he became an interested stockholder, whichever is higher;

	2.	the market value per common share on the date of announcement of the combination or the date the interested stockholder acquired the shares, whichever is higher; or

	3.	if higher for the holders of preferred stock, the highest liquidation value of the preferred stock.

LEGAL MATTERS

The validity of the common stock being offered hereby will be passed upon by Best & Flanagan LLP, Minneapolis, Minnesota.

EXPERTS

Mantyla McReynolds, LLC, an independent registered public accounting firm, has audited our financial statements for the years ended December 31, 2006 and 2005, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We are required to comply with the informational requirements of the Securities Exchange Act of 1934, as amended, and accordingly we file annual reports, quarterly reports, current reports, proxy statements and other information with the SEC. You may read or obtain a copy of these reports at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference room and their copy charges by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains registration statements, reports, proxy information statements and other information regarding registrants that file electronically with the SEC. The address of the website is http://www.sec.gov.

We have filed with the SEC a registration statement on Form SB-2 under the Securities Act of 1933, as amended, to register the shares offered by this prospectus. The term “registration statement” means the original registration statement and any and all amendments thereto, including the schedules and exhibits to the original registration statement or any amendment. This prospectus is part of that registration statement. This prospectus does not contain all of the information set forth in the registration statement or the exhibits to the registration statement. For further information with respect to us and the shares we are offering pursuant to this prospectus, you should refer to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete, and you should refer to the copy of that contract or other documents filed as an exhibit to the registration statement. You may read or obtain a copy of the registration statement at the SEC’s public reference facilities and Internet site referred to above.

NORTHERN OIL AND GAS, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Condensed Financial Statements (Unaudited) for the six month period ended June 30, 2007:
Condensed Balance Sheets		F2
Condensed Statements of Operations		F3
Condensed Statements of Cash Flows		F4
Notes to Condensed Financial Statements		F5

Financial Statements (Audited) for the fiscal year ended December 31, 2006:
Report of Independent Registered Public Accounting Firm		F10
Balance Sheet as of December 31, 2006		F11
Statement of Operations from Inception (October 5, 2006) through December 31, 2006		F12
Statement of Cash Flows for the period from Inception (October 5, 2006) through December 31, 2006		F13
Statement of Stockholders’ Deficit for the period from Inception (October 5, 2006) through December 31, 2006		F14
Notes to Financial Statements		F15

F-1

NORTHERN OIL AND GAS, INC.

(an exploration stage company)

CONDENSED BALANCE SHEETS

JUNE 30, 2007 AND DECEMBER 31, 2006

	June 30,			December 31,
	2007			2006
	(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	580,805		$	61,935
Restricted Cash		-			788,000
Receivable		51,776			-
Deferred Offering Costs		111,839			-
Prepaid Expenses		24,375			1,000
Total Current Assets		768,795			850,935

PROPERTY AND EQUIPMENT
Oil and Natural Gas Properties - Unproved, Using Full Cost Accounting:
Leasehold Interest - Montana		1,342,474			-
Leasehold Interest - North Dakota		556,493			-
Total Oil and Natural Gas Properties - Unproved		1,898,967			-
Office Equipment and Furniture, Net		13,562			-
Total Property and Equipment, Net		1,912,529			-

OTHER ASSETS
Deposit - MSP Leasehold		-			165,000
Deposit - Southfork Leasehold		-			65,000
Deposit - KNTX Shell		-			25,000
Deposit - Gallatin Resources Leasehold		10,000			-
Total Other Assets		10,000			255,000

Total Assets	$	2,691,324		$	1,105,935

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable	$	113,649		$	-
Investor Subscriptions Net of Issuance Costs		-			778,067
Convertible Notes Payable		-			365,000
Total Current Liabilities		113,649			1,143,067

LONG-TERM LIABILITIES		-			-

Total Liabilities		113,649			1,143,067

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Par Value $.0001; 100,000 Authorized, 0 Outstanding		-			-
Common Stock, Par Value $.001; 100,000,000 Authorized, 22,809,123
Outstanding (2006 - Par Value $.0001; 18,000,000 Shares Outstanding)		22,809			1,800
Additional Paid-In Capital		4,013,369			38,575
Subscriptions Receivable		-			(1,400	)
Deficit Accumulated during Exploration Stage		(1,458,503	)		(76,107	)
Total Stockholders' Equity (Deficit)		2,577,675			(37,132	)

Total Liabilities and Stockholders' Equity (Deficit)	$	2,691,324		$	1,105,935

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

F-2

NORTHERN OIL AND GAS, INC.

(AN EXPLORATION STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND

FOR THE PERIOD FROM INCEPTION (OCTOBER 5, 2006) THROUGH JUNE 30, 2007

(UNAUDITED)

							From
							Inception on
							October 5,
	Three Months			Six Months			2006
	Ended			Ended			Through
	June 30,			June 30,			June 30,
	2007			2007			2007

REVENUES	$	-		$	-		$	-

EXPENSES
Share - Based Compensation Expense		219,398			436,384			474,959
General and Administrative Expense		889,072			969,805			1,007,604
Total Expenses		1,108,470			1,406,189			1,482,563

LOSS FROM OPERATIONS		(1,108,470	)		(1,406,189	)		(1,482,563	)

OTHER INCOME		13,660			23,793			24,060

LOSS BEFORE INCOME TAXES		(1,094,810	)		(1,382,396	)		(1,458,503	)

INCOME TAX PROVISION (BENEFIT)		-			-			-

NET LOSS	$	(1,094,810	)	$	(1,382,396	)	$	(1,458,503	)

Net Loss Per Common Share - Basic and Diluted	$	(0.05	)	$	(0.06	)	$	(0.07	)

Weighted Average Shares Outstanding - Basic		22,758,134			21,484,560			20,344,630

Weighted Average Shares Outstanding - Diluted		22,758,134			21,484,560			20,344,630

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

F-3

(AN EXPLORATION STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND

FOR THE PERIOD FROM INCEPTION (OCTOBER 5, 2006) THROUGH JUNE 30, 2007

(UNAUDITED)

				From
				Inception on
				October 5,
	Six Months			2006
	Ended			Through
	June 30,			June 30,
	2007			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,382,396	)	$	(1,458,503	)
Adjustments to Reconcile Net Loss to Net Cash Used for Operating Activities:
Depreciation		520			520
Issuance of Stock for Consulting Fees		688,750			688,750
Share - Based Compensation Expense		436,384			474,959
Increase in Receivables		(51,776	)		(51,776	)
Increase in Prepaid Expenses		(23,375	)		(24,375	)
Increase in Accounts Payable		113,649			113,649
Net Cash Used For Operating Activities		(218,244	)		(256,776	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Office Equipment and Furniture		(14,082	)		(14,082	)
Oil and Gas Properties		(948,955	)		(1,203,955	)
Net Cash Used For Investing Activities		(963,037	)		(1,218,037	)


CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of Convertible Notes Payable (Related Party)		(165,000	)		-
Deferred Offering Costs		(111,839	)		(111,839	)
Proceeds from the Issuance of Common Stock - Net of Issuance Costs		1,188,990			2,167,457
Net Cash Provided by Financing Activities		912,151			2,055,618

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(269,130	)		580,805

CASH AND CASH EQUIVALENTS - BEGINNING		849,935			-

CASH AND CASH EQUIVALENTS - ENDING	$	580,805		$	580,805


Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for Interest	$	-		$	-
Cash Paid During the Period for Income Taxes	$	-		$	-

Non-Cash Financing and Investing Activities:
Purchase of Oil and Gas Properties through Issuance of Common Stock	$	705,012		$	705,012
Payment of Consulting Fees through Issuance of Common Stock	$	688,750		$	688,750

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

F-4

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2007 AND DECEMBER 31, 2006

NOTE 1 ORGANIZATION AND NATURE OF BUSINESS

Effective March 20, 2007, immediately following the merger described below, Kentex Petroleum, Inc. (“Kentex”) completed a so-called short-form merger with its wholly-owned subsidiary, Northern Oil and Gas, Inc., in which Northern Oil and Gas, Inc. merged into Kentex, and Kentex was the surviving entity. As part of this short-form merger, Kentex changed its name to Northern Oil and Gas, Inc. (“the Company”).

Management has determined that the Company should focus on projects in the oil and gas industry primarily based in the Rocky Mountain and Finger Lakes Regions of the U.S., specifically the Williston and Appalachia Basins. This is based upon a belief that the company is able to create value via strategic acreage acquisitions and convert the value or portion thereof into production by utilizing experienced industry partners specializing in the specific areas of interest. The Company has targeted specific prospects and intends to engage in the drilling for oil and gas. The Company is currently an exploration stage company.

The Company has two employees at this time, CEO Michael Reger and CFO Ryan Gilbertson. Michael Reger has a great deal of experience in the oil and gas industry. The Company will seek to retain independent contractors to assist in operating and managing the prospects as well as to carry out the principal and necessary functions incidental to the oil and gas business. With the intended acquisition of oil and natural gas, the Company intends to continue to establish itself with industry partners best suited to the areas of operation. Once the Company can establish a revenue base with cash flow, it may seek opportunities more aggressive in nature.

On March 20, 2007, Kentex Petroleum, Inc. (“Kentex”) acquired Northern Oil and Gas, Inc. (“NOG”) through the merger of a wholly owned subsidiary with and into NOG. As a result of the merger, NOG became a wholly-owned subsidiary of Kentex. The merger has been accounted for as a reverse acquisition using the purchase method of accounting. Although the merger was structured such that NOG became a wholly-owned subsidiary of Kentex, NOG has been treated as the acquiring company for accounting purposes under Statement of Financial Accounting Standards No. 141, Business Combinations: due to the following factors: (1) NOG’s stockholders received the larger share of the voting rights in the merger; (2) NOG received the majority of the members of the Board of Directors; and (3) NOG’s senior management prior to the merger dominated the senior management of the combined company.

Prior to the Merger, Kentex was a “shell company,” meaning that it had no material assets or operations other than to acquire another business or company; and NOG was a recently formed exploration stage company that has just commenced operations. Privately-held companies desiring to “go public” in a manner other than an Initial Public Offering (“IPO”) often seek a reorganization or merger with a thinly capitalized publicly-held company. This process avoids the high cost of the registration of securities for public sale, including attendant legal and accounting expenses, and the usually lengthy process involved in the registration of securities.

As an independent oil and gas producer, the Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices of natural gas and oil. Historically, the energy markets have been very volatile and it is likely that oil and gas prices will continue to be subject to wide fluctuations in the future. A substantial or extended decline in natural gas and oil prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows and access to capital, and on the quantities of natural gas and oil reserves that can be economically produced.

NOTE 2 BASIS OF PRESENTATION

The financial information included herein is unaudited, except the balance sheet as of December 31, 2006, which has been derived from our audited financial statements as of December 31, 2006. However, such information includes all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for an entire year.

Certain information, accounting policies, and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-QSB pursuant to certain rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the audited financial statements and notes for the year ended December 31, 2006.

As a result of the reverse acquisition discussed in Note 1, the historical financial statements presented for periods prior to the acquisition date are the financial statements of NOG. The operations of Kentex have been included in the financial statements from the date of acquisition. The common stock per share information in the condensed financial statements for the six months ended June 30, 2007 and for the period from inception (October 5, 2006) through June 30, 2007 and related notes have been retroactively adjusted to give effect to the reverse merger on March 20, 2007.

F-5

NOTE 3 SIGNIFICANT ACCOUNTING PRACTICES

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

As of June 30, 2007 the company has no production or reserves, therefore, we have minimal accounting practices at this time. In the future, as operations occur, we will publish our accounting practices as such. To this point we have essentially been a “checkbook” company with no operations and no material revenues.

Receivable

The Company has a receivable from Kodiak Oil & Gas Corp. for a refund of drilling cost overpayment at June 30, 2007.

Deferred Offering Costs

The Company has capitalized costs directly attributable to capital raising activities. These capitalized costs will be charged against the gross proceeds of the offering or expensed if the offering is aborted.

Full Cost Method

The Company follows the full cost method of accounting for oil and gas operations whereby all costs related to the exploration and development of oil and gas properties are initially capitalized into a single cost center (“full cost pool”). Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities. Currently, we own approximately 21,354 acres of total net leasehold, in Sheridan County, MT, and control approximately 3,016 net acres in Mountrail County, ND (See Note 4). Capitalized amounts for these properties as of June 30, 2007 consist of $1,815,293 of acquisition costs and $83,674 of exploration costs. Of these leaseholds, all acres are undeveloped and unproved. We plan to commence drilling two wells on each of the leaseholds early in the fourth quarter of 2007. See Note 4 for an explanation of activities on these properties.

Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full costs pool.

Costs capitalized will be depleted and amortized on the unit-of-production method based on the estimated gross proved reserves as determined by independent petroleum engineers. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.

The following table sets forth a summary of unproved oil and gas property costs, consisting of acquisition and exploration costs, not being amortized as of June 30, 2007.

		For the Six Months ended June 30, 2007		For the Period from Inception (October 5, 2006) through December 31, 2006
Property Acquisition Costs	$	1,815,293	$	-
Exploration Costs		83,674		-
Total	$	1,898,9670	$	-

The Company will begin amortizing costs when each project location is evaluated post drilling, which is currently estimated to be late in the fourth quarter of 2007 or early first quarter of 2008.

The Company’s unproved properties consist of leasehold acquisition and exploration costs in the following areas:

		Total		Montana		North Dakota
2006 (From Inception on October 5, 2006)	$	-	$	-	$	-
2007 (Six Months Ended June 30)		1,898,967		1,342,474		556,493
Total	$	1,898,967	$	1,342,474	$	556,493

F-6

Net Income (Loss) Per Common Share

Net Income (loss) per common share is based on the Net Income (loss) less preferred dividends divided by weighted average number of common shares outstanding.

Diluted earnings per share is computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period using the treasury stock method. As the Company has a loss for the period ended June 30, 2007 the potentially dilutive shares are anti-dilutive and are thus not added into the earnings per share calculation.

As of the period ended June 30, 2007 there were 550,000 potentially dilutive shares from stock options that became exercisable on June 15, 2007 (See Note 7).

NOTE 4 OIL AND GAS PROPERTIES

Acquisition

NOG acquired from Montana Oil Properties, Inc. (MOP) certain oil leases in Sheridan County Montana for a total purchase price of $825,000 and 400,000 shares of NOG restricted common stock for approximately 21,354 net acres. MOP retained an overriding Royalty Interest equal to 7.5%. The principals of MOP are Mr. Steven Reger and Mr. Tom Ryan, both are uncles of our CEO, Michael Reger.

On February 12, 2007, South Fork Exploration, LLC (SFE), a Montana Limited Liability Company assigned an 80% net revenue interest in leases for approximately 3,016 net acres in Mountrail County, North Dakota to Northern Oil and Gas, Inc. NOG paid $271,481 in cash and issued 271,440 shares of restricted common stock. Additionally NOG had the right to purchase up to a total of 5,000 acres for the same consideration per acre up to August, 1, 2007. The Company has determined that it will allow the balance of the acreage option to lapse due to the specific location of the additional acreage. SFE’s president is J. R. Reger, brother of NOG CEO Michael Reger. J. R. Reger is also a shareholder in NOG.

NOG has entered into a letter agreement with Gallatin Resources, LLC to acquire certain oil and gas leases on approximately 10,000 net mineral acres in the Appalachia Basin. The acreage is located in the "Finger Lakes" region of Yates County, New York. The letter agreement gives the company the option to acquire the subject leases until August 17, 2007, in exchange for consideration of $1.5 million and 275,000 shares of common stock. Carter Stewart, one of the Company’s directors, owns a 25% interest in Gallatin Resources, LLC.

Rincon Exploration

On April 20, 2007 we announced a farm out agreement with Rincon Exploration whereby we will contribute acreage to a spacing unit to be created for a Red River Formation test well. Rincon and other partners will bear our share of the costs to the casing point of the well. We will retain an undivided interest of 25% in our share of the spacing unit. This well is expected to be drilled by the forth quarter 2007. 3-D seismic driven Red River exploration has been very successful in the area to date. The location of the well will be T34N-R57E, Section 1: SE/4.

Brigham Exploration (NASD: BEXP) Joint Venture

On April 23, 2007 Brigham Exploration announced a Williston Basin Joint Venture with us under which Brigham will bear a portion of our costs on a series of wells and begin a continuous drilling program in 2008. Under the terms of the agreement Brigham expects to drill 4 wells in 2007. 2 of these wells will be on our acreage position in Mountrail County ND targeting the Bakken Shale. The approximately 12,000 gross acres included in the Joint Venture are spread between 19 sections in close proximity to the high producing EOG Resources (NYSE:EOG) wells in the Parshall field. Based on current data obtained from the North Dakota Industrial Commission, Department of Mineral Resources, EOG has drilled six Bakken wells in the area with three additional wells currently drilling and another 12 wells permitted to be drilled. The average initial production rate of these wells is 1,049 barrels of oil and 278 Mcf of gas. Drilling under the Brigham Joint Venture is expected to commence in the early forth quarter with at least 2 wells drilled in 2007 targeting the Bakken in Mountrail County. On 640 spacing, there are 19 gross wells that could be drilled by Brigham and Northern to fully explore and develop the Joint Venture acreage.

NOTE 5 PREFERRED AND COMMON STOCK

There are currently no shares of Preferred stock outstanding. There have been 100,000 shares authorized, and there are no rights and privileges currently defined for preferred stock.

On October 5, 2006 the Company issued for cash and subscriptions receivable, 18,000,000 shares of par value common stock.

F-7

At December 31, 2006, a total of 18,000,000 common shares were issued and outstanding.

In October 2006, the Company began a private placement offering of a maximum of 4,000,000 shares for sale for $1.05 (the “Offering”). A minimum of 2,000,000 shares was needed to close on the Offering. As of December 31, 2006, the Company had sold 750,476 shares for total consideration of $788,000. These funds were kept in a separate escrow account and were released upon the attainment of the minimum in the offering of 2,000,000 shares. Therefore these funds were recorded as a liability on the Balance Sheet as of December 31, 2006 but have subsequently moved to stockholders’ equity. The Offering was a private placement made under Rule 506 promulgated under the Securities Act of 1933, as amended. The securities offered and sold (or deemed to be offered and sold, in the case of underlying shares of common stock) in the Offering have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The disclosure about the private placement contained in this report does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as required under applicable law and related reporting requirements, and as permitted under Rule 135c under the Securities Act.

On February 1, 2007, the Offering closed with $2,626,650.60 being raised and 2,501,573 common shares being issued.

On May 3, 2007 the Company issued 100,000 shares to Insight Capital Consultants Corporation and 45,000 shares of commons stock to Ibis Consulting Group, LLC pursuant to consulting agreements with them. The stock issued was valued at $688,750 and expensed to general and administrative expense. The shares were valued based on the market price of the Company’s stock on the date of issuance.

NOTE 6 RELATED PARTY TRANSACTIONS

NOG has purchased a leasehold interest from South Fork Exploration, LLC (SFE). SFE’s president is J.R. Reger, the brother of Michael Reger, CEO of NOG. J.R. Reger is also a shareholder in NOG. See Note 4.

NOG purchased a leasehold interest from Montana Oil Properties, Inc. (MOP). MOP is controlled by Mr. Tom Ryan and Mr. Steven Reger, both are uncles of the Company’s CEO, Michael Reger. See Note 4.

NOTE 7 STOCK OPTIONS/STOCK BASED COMPENSATION

The Company’s board of directors approved a stock option plan in October 2006 (“2006 Stock Option Plan”) to provide incentives to employees, directors, officers, and consultants and under which 2,000,000 shares of common stock have been reserved for issuance. The options can be either incentive stock options or non-statutory stock options and are valued at the fair market value of the stock on the date of grant. The exercise price of incentive stock options may not be less than 100% of the fair market value of the stock subject to the option on the date of the grant and, in some cases, may not be less than 110% of such fair market value. The exercise price of non-statutory options may not be less than 100% of the fair market value of the stock on the date of grant. As of June 30, 2007, 1,100,000 options were granted at a price of $1.05 per share. 500,000 options were granted to each Michael Reger and Ryan Gilbertson, and 100,000 options were granted to Douglas Polinsky. As stated above, these options have an exercise price of $1.05 per share. These options will vest at a rate of 50% on June 15, 2007 and 50% on December 15, 2007.

The Company accounts for stock-based compensation under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share Based Payment. This statement requires us to record an expense associated with the fair value of stock-based compensation. We currently use the Black-Scholes option valuation model to calculate stock based compensation at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate. We have used a basket of comparable companies to determine the volatility input. We believe this fairly represents the volatility we may trade on were we a public company at the time of issuance. The total fair value of the options will be recognized as compensation over the one year vesting period. For expense purposes these options have been valued using the Black-Scholes formula with the following inputs; Interest Rate of 4.75%, Volatility 64%, Time 10 Years, Stock Price $1.05. The volatility number was selected by creating a basket of four companies we believe accurately represent our market position upon becoming publicly-traded. The Company received no cash consideration for these option grants, their vesting is contingent upon the Grantee’s continued employment with the Company.

Currently Outstanding Options

1,100,000 with an Exercise price of $1.05 and a term of ten years.

No options were exercised or forfeited during the period from inception to June 30, 2007.

550,000 of these options are exercisable as of June 30, 2007.

The company recorded compensation expense related to these options of $38,575 for the period from inception through December 31, 2006 and $436,384 for the six months ended June 30, 2007.

The remaining cost of the options will be recognized in 2007 as a compensation expense of $405,041.

F-8

NOTE 8 GOING CONCERN

Management believes that the cash position is sufficient to sustain current operations through 2007. They plan to mitigate capital expenditures through the use of farm-out agreements utilizing various partners’ drilling capital to develop the properties in exchange for working interest. It should also be noted that the company pays no salaries at this time. However, should the Company decide to enter into agreements to develop properties with its own capital, it would need to raise additional funds. There can be no assurances such funds would be available and in the event they were not the Company may be unable to continue to operate. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Northern Oil and Gas, Inc.

We have audited the accompanying balance sheet of Northern Oil and Gas, Inc. [an exploration stage company] as of December 31, 2006, and the related statements of operations, stockholders' deficit, and cash flows for the period from inception [October 5, 2006] through December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Northern Oil and Gas, Inc., as of December 31, 2006, and the results of their operations and their cash flows for the period from inception [October 5, 2006] through December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

Mantyla McReynolds LLC

Salt Lake City, Utah

March 14, 2007

F-10

(an Exploration Stage Company)

BALANCE SHEET

December 31, 2006

ASSETS
CURRENT ASSETS
Cash	$	61,935
Restricted Cash		788,000
Prepaid Rent		1,000
Total Current Assets		850,935

OTHER ASSETS
Deposit - MOP Oil Lease		165,000
Deposit - South Fork Oil Lease		65,000
Deposit - KNTX Shell		25,000
Total Other Assets		255,000

Total Assets	$	1,105,935
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Investor Subscriptions Net of Issuance Costs	$	778,067
Convertible Notes Payable (Related Party)		365,000
Total Current Liabilities		1,143,067

LONG-TERM LIABILITIES		—

Total Liabilities		1,143,067

STOCKHOLDERS' DEFICIT
Preferred Stock, Par Value $.0001; 100,000 Authorized, 0 Outstanding		—
Common Stock, Par Value $.0001; 100,000,000 Authorized, 18,000,000 Outstanding		1,800
Additional Paid-in Capital		38,575
Stock Subscriptions Receivable		(1,400	)
Deficit Accumulated during Exploration Stage		(76,107	)
Total Stockholders' Deficit		(37,132	)

Total Liabilities and Stockholders' Deficit	$	1,105,935

See accompanying Notes to Financial Statements

F-11

For the Period from Inception (October 5, 2006) Through December 31, 2006

STATEMENT OF OPERATIONS

REVENUES	$	—

EXPENSES

Share - Based Compensation Expense		38,575
General and Administrative Expense		37,799
Total Expenses		76,374

LOSS FROM OPERATIONS		(76,374	)

OTHER INCOME		267

LOSS BEFORE INCOME TAXES		(76,107	)

INCOME TAX PROVISION (BENEFIT)		—

NET LOSS	$	(76,107	)

Net Loss Per Common Share - Basic and Diluted	$	(0.004	)

Weighted Average Shares Outstanding Basic and Diluted		18,000,000

See accompanying Notes to Financial Statements

F-12

For the Period from Inception (October 5, 2006) Through December 31, 2006

STATEMENT OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(76,107	)
Adjustments to Reconcile Net Loss to Net Cash Used for Operating Activities:
Increase in Prepaid Rent		(1,000	)
Share - Based Compensation Expense		38,575
Net Cash Used For Operating Activities		(38,532	)

CASH FLOWS FROM INVESTING ACTIVITIES
Deposits		(255,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Investor Subscriptions - Net of Issuance Costs		778,067
Proceeds from Convertible Notes Payable (Related Party)		365,000
Proceeds From Issuance of Common Stock		400
Net Cash Provided by Financing Activities		1,143,467

NET INCREASE IN CASH		849,935

CASH - BEGINNING		—

CASH - ENDING	$	849,935


Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest	$	—
Cash paid during the year for income taxes	$	—

See accompanying Notes to Financial Statements

F-13

STATEMENT OF STOCKHOLDERS’ DEFICIT

For the Period from Inception (October 5, 2006) Through December 31, 2006

	Common Stock Shares		Common Stock Amount		Additional Paid-in Capital		Stock Subscriptions Receivable			Accumulated Deficit During Exploration Stage			Total Stockholders' Deficit
Balance at Inception (October 5, 2006)	—	$	—	$	—	$	—		$	—		$	—

Common Stock Issued	18,000,000		1,800		—		(1,400	)		—			400

Compensation Related
Stock Option Grants	—		—		38,575		—			—			38,575

Net Income (Loss)	—		—		—		—			(76,107	)	$	(76,107	)

Balance - December 31, 2006	18,000,000	$	1,800	$	38,575	$	(1,400	)	$	(76,107	)	$	(37,132	)

See accompanying Notes to Financial Statements

F-14

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2006

NOTE 1 - CURRENT BUSINESS OF THE COMPANY

Northern Oil and Gas Inc. was incorporated under the laws of the State of Nevada on October 5, 2006.

Management has determined that the Company should focus on projects in the oil and gas industry primarily based in the Rocky Mountain Region of the U.S., specifically the Williston Basin. This is based upon a belief that this industry is an economically viable and fast growing sector in which to conduct business operations. The Company has targeted specific prospects and intends to engage in the drilling for oil and gas. The company is currently an exploration stage company. Michael Reger, the Company’s President, has a great deal of experience in the oil and gas industry.

The Company has two employees at this time, CEO Michael Reger and CFO Ryan Gilbertson. It will seek to retain independent contractors to assist in operating and managing the prospects as well as to carry out the principal and necessary functions incidental to the oil and gas business. With the intended acquisition of oil and natural gas, the Company intends to establish itself with an industry partner or partners. Once the Company can establish a revenue base with cash flow, it will seek opportunities more aggressive in nature.

During the fourth quarter of 2006, the Company evaluated two opportunities, one from Montana Oil Properties, Inc and one from South Fork Exploration, LLC. Under the Montana Oil Properties Inc. agreement, Northern Oil and Gas, Inc. (NOG) agreed to acquire from Montana Oil Properties, Inc. (MOP) certain oil leases in Sheridan County Montana for a total purchase price of $825,000 and 400,000 shares of NOG common stock for 21,354 net acres. MOP will also retain an overriding Royalty Interest equal to 7.5%. A deposit of $165,000 was paid to MOP in fourth quarter 2006, with a closing date of February 12, 2007. The Montana Oil Properties Acquisition closed as planned on February 12, 2007. The principals of MOP are Mr. Steven Reger and Mr. Tom Ryan, both are uncles of our CEO, Michael Reger.

Under the South Fork Exploration, LLC (SFE) agreement, NOG agreed to acquire 3,016 net acres from SFE for $90 per acre and 90 shares of NOG per acre. The initial closing will take place February 12, 2007. Additionally NOG has the right to purchase up to a total of 5000 acres for the same consideration up to August 1, 2007. At this point The Company anticipates closing on or near the full acreage amount. These leases are Bakken Prospects located in Mountrail County, North Dakota. SFE shall convey all purchased leases unto NOG utilizing a mutually acceptable form of assignment and shall deliver 80% net revenue interest in purchased leases to NOG. A deposit of $65,000 was paid to SFE in fourth quarter 2006, with an initial closing date of February 12, 2007. Subsequently, on February 12, 2007 the SFE acquisition closed as planned. SFE’s president is J.R. Reger, brother of NOG CEO Michael Reger.

NOTE 2 - SIGNIFICANT ACCOUNTING PRACTICES

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

As of December 31, 2006 the company owns no properties and has no production or reserves, therefore we have minimal accounting practices at this time. In the future as property acquisitions are closed we will publish our accounting practices as such. To this point we have essentially been a “checkbook” company with no operations and no material revenues. Subsequent to this reporting period, we have, however, closed on approximately 25,000 net acres as mentioned previously.

New Accounting Pronouncements

In September 2005, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty. This issue addresses the question of when it is appropriate to measure purchase and sales of inventory at fair value and record them in cost of sales and revenues and when they should be recorded as exchanges measured at the book value of the item sold. The EITF concluded that purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another should be combined and recorded as exchanges measured at the book value of the item sold. The consensus has been applied to new arrangements entered into and modifications or renewals of existing agreements, beginning in the second quarter of 2006. The adoption of this statement did not have a material impact on our results of operations or financial position.

In June 2003, the Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Commencing with the Company’s Annual Report for the year ending December 31, 2007, the Company is required to include a report of management on the Company’s internal control over financial reporting. The internal control report must include a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the Company; of management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of year end; of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting; and beginning with the Company’s Annual Report for the year ending December 31, 2008, that the Company’s independent accounting firm has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting, which report is also required to be filed as part of the Annual Report on Form 10-KSB.

F-15

In February 2006, the Financial Accounting Standards Board (FASB) issued statement 155, Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements no. 133 and 140. This statement resolves issues addressed in Statement 133 Implementation Issue no. D1 “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This implementation guidance indicated that entities could continue to apply guidance related to accounting for beneficial interests in paragraphs 14 and 362 of Statement 140, which indicate that any security that can be contractually prepaid or otherwise settled in such a way that the holder of the security would not recover substantially all of its recorded investment should be subsequently measured like investments in debt securities classified as available for sale or trading, and may not be classified as held to maturity. Also, Implementation issue D1 indicated that holders of beneficial interests in securitized financial assets that are not subject to paragraphs 14 and 362 of Statement 140 are not required to apply Statement 133 to those beneficial interests, pending further guidance. Statement 155 eliminates the exemption from Statement 133 for interests in securitized financial assets. It also allows the preparer to elect fair value measurement at acquisition, at issuance or when a previously recognized financial instrument is subject to a remeasurement event. We do not expect the adoption of this statement will have a material impact on our results of operations or financial position.

In March 2006, the FASB issued statement 156 Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140. Under statement 140, servicing assets and servicing liabilities are amortized over the expected period of estimated net servicing income or loss and assessed for impairment or increased obligation at each reporting date. This statement requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. Subsequent measurement of servicing assets and servicing liabilities at fair value is permitted, but not required. If derivatives are used to mitigate risks inherent in servicing assets and servicing liabilities, those derivatives must be accounted for at fair value. Servicing assets and servicing liabilities subsequently measured at fair value must be presented separately in the statement of financial position and there are additional disclosures for all separately recognized servicing assets and servicing liabilities. We do not expect the adoption of this statement will have a material impact on our results of operations or financial position.

In June 2006, the FASB issued interpretation no 48 Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109. Recognition of a tax position should be based on whether it is more likely than not that a tax position will be sustained. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. This interpretation is effective for fiscal years beginning after December 15, 2006. We do not expect the adoption of this interpretation will have material impact on our results of operations or financial position.

In September 2006, the Securities and Exchange Commission (SEC) release Staff Accounting Bulletin (SAB) No. 108 regarding the effects of prior year misstatements in considering current year misstatements for the purpose of a materiality assessment. The opinion in SAB 108 is that in the case of an error that has occurred and been immaterial in a number of previous years, the cumulative effect should be considered in assessing the materiality of the error in the current year. If the cumulative effect of the error is material, then the current year statements, as well as prior year statements should be restated. In the case of restated prior year statements, previously filed reports do not need to be amended, if the error was considered immaterial to previous year’s financial statements. However the statements should be amended the next time they are filed. The effects of this guidance should be applied cumulatively to fiscal years ending after November 15, 2006. Additional disclosure should be made regarding any cumulative adjustments made in the current year financial statements. We do not expect the adoption of this SAB will have material impact on our results of operations or financial position.

Cash and Equivalents

Our cash positions represent assets held in Checking and Money Market Accounts. These assets are available to us on a daily basis and are highly liquid in nature. Pursuant to the terms of our Private Placement the money raised was held in escrow pending the attainment of the minimum offering of 2,000,000 shares. Subsequently, on February 1, 2007 the minimum was reached and the proceeds were merged into operating and unrestricted investment accounts. Due to the balances being greater than 100,000, we do not have FDIC coverage on the entire amount of bank deposits. The company believes this risk is minimal.

Stock-Based Compensation

The Company has accounted for stock-based compensation under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R ) , Share Based Payment. This statement requires us to record an expense associated with the fair value of stock-based compensation. We currently use the Black-Scholes option valuation model to calculate stock based compensation at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate. We have used a basket of comparable companies to determine the volatility input. We believe this fairly represents the volatility we may trade on were we a public company at the time of issuance. The total fair value of the options will be recognized as compensation over the 1 year vesting period.

The following assumptions were used for the Black-Scholes model:

	December 31,
	2006
Risk free rates		4.75	%
Dividend yield		0	%
Expected volatility		64	%
Weighted average expected stock option life		10 Years

F-16

The weighted average fair value at the date of grant for stock options granted is as follows:

Weighted average fair value per share	$	1.05
Total options granted		1,100,000
Total weighted average fair value of options granted	$	880,000

Income Taxes

The Company accounts for income taxes under FASB Statement No. 109, Accounting for Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

At December 31, 2006, the Company has a net operating loss carryforward for Federal income tax purposes of $30,636 that expires in 2026. The full amount of the benefit of $7,659 (25% of net operating loss) associated with the carryforward has been reserved and not recognized because realization of that benefit cannot be estimated at this time. Below are the reductions in the Bookkeeping loss for tax purposes. The current year change in the valuation allowance is $7,659.

Reconciliation between income taxes at the statutory tax rate (25%) and the actual income tax provision for continuing operations follows:

Operating Loss	$	(76,107	)
Statutory Rate		x 25	%
Expected Tax Benefit		(19,027	)
Effects of:
Option expense		9,644
Non-Deductible Meals and Entertainment		1,724
Increase in valuation allowance		7,659
Reported Provision/(Benefit)	$	—

Use of Estimates

The preparation of financial statements under generally accepted accounting principles (“GAAP”) in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Income (Loss) Per Common Share

Net Income (loss) per common share is based on the Net Income (loss) less preferred dividends divided by weighted average number of common shares outstanding.

Diluted earnings per share is computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period using the treasury stock method. As the Company has a loss for the period ended December 31, 2006 the potentially dilutive shares are anti-dilutive and are thus not added into the earnings per share calculation.

As of the period ended December 31, 2006 there were 347,619 potentially dilutive shares resulting from the issuances of convertible debt.

NOTE 3 - PREFERRED AND COMMON STOCK

There are currently no shares of Preferred stock outstanding. There have been 100,000 shares authorized, and there are no rights and privileges currently defined for preferred stock.

On October 5 ^th , 2006 the Company issued for cash and subscriptions receivable, 18,000,000 shares of par value common stock.

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At December 31, 2006, a total of 18,000,000 common shares were issued and outstanding.

In October 2006, the Company began a private placement offering of a maximum of 4,000,000 shares for sale for $1.05 (the “Offering”). A minimum of 2,000,000 shares is needed to close on the Offering. As of December 31, 2006, the Company had sold 750,476 shares for total consideration of $788,000. These funds are kept in a separate escrow account and will be released upon the attainment of the minimum in the offering of 2,000,000 shares. Therefore these funds are recorded as a liability on the Balance Sheet as of 12-31-06 but have subsequently moved to stockholders’ equity. The Offering is a private placement made under Rule 506 promulgated under the Securities Act of 1933, as amended. The securities offered and sold (or deemed to be offered and sold, in the case of underlying shares of common stock) in the Offering have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The disclosure about the private placement contained in this report does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as required under applicable law and related reporting requirements, and as permitted under Rule 135c under the Securities Act.

On February 1, 2007, the Offering closed with $2,626,650.60 being raised and 2,501,573 common shares being issued.

NOTE 4 - CONVERTIBLE DEBT

There are a total of $365,000 in convertible notes bearing 0% interest that are convertible to stock at a price of $1.05 per share, for a total of 347,619 shares. Of this amount $123,750 are held by our three directors, in the amounts of $41,250 each. These notes were issued in October 2006, and $200,000 of notes converted into common shares of the Company on February 1, 2007 at the Offering price of $1.05 per share. The balance of the notes was repaid without interest, as per the covenants subsequent to the balance sheet date. All note holders were directors and/or shareholders in the company.

NOTE 5 - RELATED PARTY TRANSACTIONS

NOG has entered into an agreement with South Fork Exploration LLC (SFE) to acquire approximately 5,000 net acres of mineral leases in Mountrail County, North Dakota as described above. SFE’s president is J.R. Reger, the brother of Michael Reger, CEO of NOG. J.R. Reger is also a shareholder in NOG. See Note 1.

NOG has also entered into an acreage acquisition agreement with Montana Oil Properties (MOP). MOP is controlled by Mr. Tom Ryan and Mr. Steven Reger, both are uncles of the Company’s CEO, Michael Reger. See Note 1.

With the exception of the aforementioned convertible notes, and subscriptions for common stock receivable there are no monies due to or from related parties.

NOTE 6 - STOCK OPTIONS

The Company’s board of directors approved a stock option plan in October 2006 (“2006 Stock Option Plan”) to provide incentives to employees, directors, officers and consultants and under which 2,000,000 shares of common stock have been reserved for issuance. The options can be either incentive stock options or non-statutory stock options and are valued at the fair market value of the stock on the date of grant. The exercise price of incentive stock options may not be less than 100% of the fair market value of the stock subject to the option on the date of the grant and, in some cases, may not be less than 110% of such fair market value. The exercise price of non-statutory options may not be less than 100% of the fair market value of the stock on the date of grant. As of December 31, 2006, 1,100,000 options were granted at a price of $1.05 per share. 500,000 options were granted to each Michael Reger and Ryan Gilbertson, and 100,000 options were granted to Douglas Polinsky. As stated above, these options have an exercise price of $1.05 per share. These options will vest at a rate of 50% on June 15, 2007 and 50% on December 15, 2007. For expense purposes these options have been valued using the Black-Scholes formula with the following inputs; Interest Rate of 4.75%, Volatility 64%, Time 10 Years, Stock Price $1.05. The volatility number was selected by creating a basket of 4 companies we believe accurately represent our market position upon becoming publicly traded. The company received no cash consideration for these option grants, their vesting is contingent upon the Grantee’s continued employment with the company.

Currently Outstanding Options

	·	1,100,000 with an Exercise price of $1.05 and a term of 10 years

	·	No options were exercised or forfeited during the period from inception to 12-31-06

	·	No options are exercisable as of 12-31-06

	·	The remaining cost of the options will be recognized in 2007 as a compensation expense of $841,425

NOTE 7 - RESTRICTED CASH

Per the terms of NOG’s Private Placement dated November 7, 2006, until the company reaches a minimum of 2,000,000 shares or $2,100,000 raised, the proceeds from the offering will be deposited into a separate account at US Bank. These funds are held in two accounts at US Bank, one an interest bearing money market account. On February 1, 2007, the offering closed with $2,626,650.60 being raised and the money was released from the escrow accounts.

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NOTE 8 - SUBSEQUENT EVENTS

On December 18, 2006, NOG entered into a Letter of Intent with Kentex Petroleum, Inc. (KNTX), a Nevada Corporation, for the exchange of shares of KNTX for all of the issued and outstanding shares of NOG. A $25,000 deposit was deposited into a trust account in December 2006. Upon closing, NOG shall pay to certain KNTX shareholders $390,000. The closing is set for March 2007.

On February 12, 2007, Montana Oil Properties, A Montana Corporation, assigned 21,354 +/- net acres in Sheridan County Montana to Northern Oil and Gas, Inc. NOG paid $825,000 in cash and 400,000 shares of restricted stock.

On February 12, 2007, South Fork Exploration, LLC, a Montana Limited Liability Company assigned 3,016 +/- net acres in Mountrail County, North Dakota to Northern Oil and Gas, Inc. NOG paid $271,481 in cash and will issue 271,440 shares of restricted stock.

NOTE 9 - GOING CONCERN

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a history of net losses that are likely to continue in the future. As of December 31, 2006, the Company had negative working capital of ($292,132); however, with the closing of the Private Placement (Note 3), the Company had positive working capital of approximately $2,000,000 beginning in February 2007.

Management believes that the cash position is sufficient to sustain current operations through 2007. They plan to mitigate capital expenditures through the use of farm-out agreements utilizing various partners’ drilling capital to explore and develop the properties in exchange for working interest. It should also be noted that the company pays no salaries at this time. However should the Company decide to enter into agreements to explore and develop properties with its own capital, it would need to raise additional funds. There can be no assurances such funds would be available and in the event they were not the Company may be unable to continue to operate. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

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9,363,639 Shares of Common Stock