Edgar Filing: GEOGLOBAL RESOURCES INC.

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2012;

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________.

Commission file number: 1-32158

GEOGLOBAL RESOURCES INC.
(Exact name of registrant as specified in its charter)

Delaware		33-0464753
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Suite #200, 625 – 4 Avenue SW, Calgary, Alberta, Canada		T2P 0K2
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:		+1 403-777-9250

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ

NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES þ

NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES þ

NO o

The number of shares outstanding of the registrant’s common stock as of August 10, 2012 was 138,343,051.

GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page No.

	PART I FINANCIAL INFORMATION

ITEM 1.	Financial Statements

	Unaudited Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011	3

	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2012 and June 30, 2011 and for the period from inception on August 21, 2002 to June 30, 2012	4

	Unaudited Consolidated Statements of Stockholders' Equity as at June 30, 2012 and December 31, 2011 and for the period from inception on August 21, 2002 to June 30, 2012	5

	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and June 30, 2011 and for the period from inception on August 21, 2002 to June 30, 2012	6

	Notes to the Unaudited Consolidated Financial Statements	7

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	26

ITEM 4.	Controls and Procedures	26

	PART II OTHER INFORMATION

ITEM 1A.	Risk Factors	27

ITEM 2	Unregistered Sales of Equity Securities and use of Proceeds	29

ITEM 6.	Exhibits	30

Page 2

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PART I

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2012			December 31, 2011

Assets
Current
Cash and cash equivalents (note 17)		14,200,551			10,480,734
Accounts receivable (note 17)		16,413,547			19,615,153
Restricted deposits (notes 4 and 17)		30,916,000			40,378,075
Available for sale investment (note 5)		5,319,012			-
Prepaid expenses and deposits (note 17)		661,735			573,300
		67,510,845			71,047,262

Equity method investment (note 7)		2,017,849			1,340,262
Property and equipment (notes 6 and 10)		46,617,746			42,580,105

		116,146,440			114,967,629

Liabilities
Current
Accounts payable (note 17)		68,308,404			72,356,548
Accrued liabilities		2,034,621			555,236
Due to related companies (note 11)		23,422			66,330
		70,366,447			72,978,114

Deferred income taxes		42,980			42,471
Asset retirement obligation		754,229			724,241
		71,163,656			73,744,826
Stockholders' Equity
Capital stock (notes 8, 9 and 10)
Authorized
250,000,000 common shares with a par value of $0.001 each
1,000,000 preferred shares with a par value of $0.01 each
Issued
138,343,051 common shares (December 31, 2011 – 99,213,572)		123,751			84,622
Additional paid-in capital		107,545,291			101,305,069
Accumulated other comprehensive income		201,779			-
Deficit accumulated during the development stage		(62,888,037	)		(60,166,888	)
		44,982,784			41,222,803

		116,146,440			114,967,629

See Going Concern (note 2), Commitments (note 14), Contingencies (note 15), and Subsequent events (notes 4, 5, 8, 9, and 14)

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Three months ended June 30, 2012			Three months ended June 30, 2011			Six months ended June 30, 2012			Six months ended June 30, 2011			Period from Inception, August 21, 2002 to June 30, 2012

Revenue and other income
Oil and gas sales		148,571			108,114			270,313			251,026			2,282,128
Interest income		3,580			9,788			7,514			20,202			5,954,217
Gain on sale of equipment		-			-			-			-			42,228
		152,151			117,902			277,827			271,228			8,278,573

Expenses
Operating		34,741			34,384			72,088			68,230			482,604
General and administrative		361,717			1,219,932			811,910			2,299,619			18,249,369
Consulting fees		147,785			232,190			373,709			427,354			8,551,496
Professional fees		331,038			198,265			504,248			389,533			6,465,064
Depletion and depreciation (note 6)		103,775			80,843			214,330			174,684			2,089,712
Accretion		14,994			14,065			29,988			28,130			212,307
Foreign exchange (gain)/loss		(32,904	)		(15,329	)		(59,543	)		(7,654	)		84,638
Impairment of oil and gas properties		1,039,000			-			1,039,000			-			31,796,015
		2,000,146			1,764,350			2,985,730			3,379,896			67,931,205

Net loss before tax		(1,847,995	)		(1,646,448	)		(2,707,903	)		(3,108,668	)		(59,652,632	)

Current income tax expense		(7,681	)		(14,013	)		(12,737	)		(33,210	)		(118,425	)
Deferred income tax benefit (expense)		2,360			10,778			(509	)		10,778			(42,980	)
Net loss and comprehensive loss		(1,853,316	)		(1,649,683	)		(2,721,149	)		(3,131,100	)		(59,814,037	)

Warrant modification		-			-			-			-			(3,074,000	)

Net loss and comprehensive loss attributable to common stockholders		(1,853,316	)		(1,649,683	)		(2,721,149	)		(3,131,100	)		(62,888,037	)

Basic and diluted net loss per share (note 12)		(0.02	)		(0.02	)		(0.02	)		(0.04	)

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Number of Shares #			Capital Stock $			Additional paid-in capital $			Accumulated Other Comprehensive Income $		Accumulated Deficit $			Stockholders’ Equity $
For the period from inception August 21, 2002 to December 31, 2009
Common stock issued		58,150,068			58,214			76,660,911			-		-			76,719,125
Capital stock of GeoGlobal at August 29, 2003		14,656,688			14,657			-			-		10,914,545			10,929,202
Elimination of GeoGlobal capital stock in recognition of reverse takeover		(1,000	)		(14,657	)		-			-		(10,914,545	)		(10,929,202	)
Share issuance cost		-			-			(4,778,844	)		-		-			(4,778,844	)
2007 Compensation Options		-			-			705,456			-		-			705,456
2005 Stock Purchase Warrant modification		-			-			3,074,000			-		(3,074,000	)		-
2005 Compensation Option & Warrant modification		-			-			504,000			-		-			504,000
Stock-based compensation		-			-			11,988,255			-		-			11,988,255
Net loss		-			-			-			-		(25,696,423	)		(25,696,423	)
Balance as at December 31, 2009		72,805,756			58,214			88,153,778			-		(28,770,423	)		59,441,569


Common stock issued		9,941,177			9,941			8,440,059			-		-			8,450,000
Share issuance costs		-			-			(463,804	)		-		-			(463,804	)
Stock-based compensation		-			-			969,964			-		-			969,964
Net loss		-			-			-			-		(18,788,624	)		(18,788,624	)
Balance as at December 31, 2010		82,746,933			68,155			97,099,997			-		(47,559,047	)		49,609,105

Common stock issued		16,466,639			16,467			3,935,526			-		-			3,951,993
Share issuance costs		-			-			(625,000	)		-		-			(625,000	)
Stock-based compensation		-			-			894,546			-		-			894,546
Net loss		-			-			-			-		(12,607,841	)		(12,607,841	)
Balance as at December, 2011		99,213,572			84,622			101,305,069			-		(60,166,888	)		41,222,803

Common stock issued (note 8)		39,129,479			39,129			6,740,167			-		-			6,779,296
Share issuance costs (note 8)		-			-			(571,447	)		-		-			(571,447	)
Stock-based compensation (note 10)		-			-			71,502			-		-			71,502
Net loss		-			-			-			-		(2,721,149	)		(2,721,149	)
Unrealized gain on available for sale investment		-			-			-			201,779		--			201,779
Balance as at June 30, 2012		138,343,051			123,751			107,545,291			201,779		(62,888,037	)		44,982,784

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended June 30, 2012			Six months ended June 30, 2011			Period from Inception, August 21, 2002 to June 30, 2012
Cash flows provided by (used in) operating activities:
Net loss		(2,721,149	)		(3,131,100	)		(59,814,037	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion expense		29,988			28,130			212,307
Asset impairment		1,039,000			-			31,796,015
Depletion and depreciation		214,330			174,684			2,089,712
Gain on sale of equipment		-			-			(42,228	)
Stock-based compensation (note 10)		59,181			487,898			8,267,375
Compensation option and warrant modification		-			-			504,000
Deferred income taxes benefit (expense)		509			(10,778	)		42,980
Changes in non-cash working capital (note 16)		102,821			(1,363,092	)		468,782
		(1,275,320	)		(3,814,258	)		(16,475,094	)
Cash flows provided by (used in) investing activities:
Oil and natural gas property additions		(5,259,988	)		(3,259,811	)		(71,558,885	)
Other property and equipment additions		(18,662	)		(10,150	)		(1,616,346	)
Proceeds on sale of equipment		-			-			82,800
Cash acquired on acquisition		-			-			3,034,666
Restricted deposits (note 4)		9,462,075			6,318,000			(32,086,000	)
Investment in equity investee		(677,587	)		(948,451	)		(2,017,849	)
Changes in non-cash working capital (note 16)		1,190,135			623,905			53,598,071
		4,695,973			2,723,493			(50,563,543	)
Cash flows provided by (used in) financing activities:
Proceeds from issuance of common stock and warrant (note 8)		1,473,648			-			89,487,806
Share issuance costs		(383,032	)		-			(5,545,224	)
Changes in non-cash working capital (note 16)		(791,452	)		-			(2,703,394	)
		299,164			-			81,239,188
Net increase (decrease) in cash and cash equivalents		3,719,817			(1,090,765	)		14,200,551

Cash and cash equivalents, beginning of the period		10,480,734			7,751,105			-

Cash and cash equivalents, end of the period		14,200,551			6,660,340			14,200,551

Cash and cash equivalents
Current bank accounts		7,614,551			4,460,282			7,614,551
Short term deposits		6,586,000			2,200,058			6,586,000
		14,200,551			6,660,340			14,200,551

Cash taxes paid during the period		43,625			21,295

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

1.	Organization and Nature of Operations

The Company is engaged in the pursuit of oil and natural gas through exploration and development in India, Israel and Colombia. The Company is a Delaware corporation with common stock listed and traded on the NYSE MKT under the symbol GGR.

As of June 30, 2012, the Company has not achieved its planned principal operations from its oil and gas operations. Accordingly, the Company’s activities are considered to be those of a “Development Stage Enterprise”. Among the disclosures required by this status is that the Company’s financial statements be identified as those of a development stage enterprise. In addition, the statements of operations and comprehensive loss, stockholders’ equity and cash flows are required to disclose all activity since the Company’s date of inception. The Company will continue to prepare its financial statements and related disclosures as those of a development stage enterprise until such time that the Company achieves planned principal operations.

2.	Going Concern

The Company has not achieved its planned principal operations and is considered to be in the development stage. The Company’s exploration activities and overhead expenses are financed by way of equity issuance and to-date, oil and gas sales are incidental to the exploration process.

The Company’s financial statements as at and for the period ended June 30, 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the six months ended June 30, 2012, the Company incurred a net loss of approximately $2.7 million, used approximately $1.3 million of cash flow in its operating activities, used approximately $4.7 million in its investing activities and had an accumulated deficit of approximately $62.9 million. As at June 30, 2012, the Company has working capital deficiency of approximately $2.9 million. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s cash balance at June 30, 2012 and anticipated cash flow from operating activities are not sufficient to satisfy its current liabilities and meet its exploration commitments of $18.1 million and $33.6 million, over the twelve months ending June 30, 2013 and the thirty months ending December 31, 2014, respectively. As at June 30, 2012 the Company has $14.2 million of cash and cash equivalents, of which $13.9 million is committed to carry out the exploration activities of the Myra and Sara joint venture – see note 17. The residual cash of $0.3 million is available for general operations of the Company and to meet its current liabilities and exploration commitments of $18.1 million and 33.6 million as described above.

To meet the Company’s obligations, it will be necessary to raise capital through equity markets, debt markets or other financing arrangements, which could include the sale of oil and gas interests or participation arrangements in oil and gas interests. If these activities are unsuccessful, the Company may be forced to substantially curtail or cease exploration, appraisal and development expenditures and possibly curtail other of our activities.

The Company’s ability to continue as a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate profitable operations from its oil and natural gas interests in the future. The Company must make an assessment of its ability to fulfill current liabilities and to meet future exploration requirements in the normal course of business. The assessment requires estimates regarding future uncommitted financing, future costs of exploration programs, timing of activities, future oil and gas prices, amongst other things. Should those estimates be materially incorrect, the Company’s ability to continue as a going concern would be impaired and these unaudited consolidated financial statements could require material adjustments to the value of assets and liabilities. These unaudited consolidated financial statements do not reflect any such adjustments or reclassifications.

As described in note 5, subsequent to June 30, 2012, the Company sold 8,500,000 common shares of ILDE for net proceeds of $1.4 million. As described in note 8(b), on July 31, 2012, ILDE elected not to exercise its right to subscribe for and purchase up to 16,466,639 Units and accordingly those rights expired and were unexercised. In the event that the Company does not obtain the necessary uncommitted financing described above, the Company may be required to liquidate its investment in ILDE shares (see note 5) in the near future, on an off-market basis transaction.

3.	Significant Accounting Policies

Basis of presentation

The accompanying unaudited consolidated financial statements of the Company are presented in United States dollars unless otherwise noted and have been prepared by management in accordance with accounting principles generally accepted in the United States of America.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

In the opinion of management, these unaudited consolidated financial statements reflect all of the normal and recurring adjustments necessary to present fairly the financial position at June 30, 2012 and December 31, 2011, the results of operations and cash flows for the six months ended June 30, 2012 and 2011 and for the period from inception of August 21, 2002 to June 30, 2012.

Certain information, accounting policies, and footnote disclosures normally included in 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-Q pursuant to certain rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Principles of consolidation

These unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. A significant portion of the Company’s activities conducted jointly with others and the unaudited consolidated financial statements reflect only the Company’s proportionate interest in such activities. Investment in companies where the Company has the ability to exercise significant influence but not control, are accounted for using the equity method. All inter-company balances and transactions have been eliminated on consolidation.

Use of estimates

The preparation of these unaudited consolidated financial statements 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 may differ from these estimated amounts due to factors such as fluctuations in interest rates, currency exchange rates, inflation levels and commodity prices, changes in economic conditions and legislative and regulatory changes.

Significant estimates with regard to these unaudited consolidated financial statements include going concern assumptions, the impairment assessment of oil and natural gas properties, the estimated cost and timing related to asset retirement obligations, fair value of non-monetary transactions, stock-based compensation and contingencies.

4.	Restricted Deposits

The Company, on behalf of the Myra and Sara Joint Venture has provided a letter of credit for $38,350,000 (December 31, 2011 - $54,350,000) regarding the mobilization of the rig and rig rental, which is secured by a restricted term deposit from the Company of $27,291,000 (December 31, 2011 - $39,110,000). The balance amount in the letter of credit of $11,059,000 (December 31, 2011 - $15,128,000) is secured by a restricted term deposit pledged from a partner in the Myra and Sara Joint Venture which is included in the Company’s consolidated accounts receivable.

Pursuant to Israeli Customs Authorities, the Company, on behalf of the Myra and Sara Joint Venture, is required to post bank guarantees which represents an 8% to 12% Israeli Custom Duty required to release all imports of oil and gas equipment and supplies from Customs. These bank guarantees are secured by term deposits of the Company. Once the Custom Authorities are provided the appropriate documentation, documenting that these goods and supplies are exempt from Custom Duties under the Israeli Petroleum law, these bank guarantees are refundable. As of June 30, 2012 term deposits amounting to $3,625,000 (December 31, 2011 - $534,000) are expected to be released on or before June 30, 2013.

The restricted term deposits securing these bank guarantees are as follows and are expected to be released/mature in the next 12 months:

	June 30, 2012		December 31, 2011
		$		$
Exploration Blocks – India
Ankleshwar		--		734,075
Exploration Licenses - Israel
Myra and Sara		30,916,000		39,644,000
		30,916,000		40,378,075

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

Export Development Canada (EDC) provided performance security guarantees on behalf of the Company against the bank guarantees provided to the Government of India. The performance security guarantees provided by EDC on behalf of the Company against these bank guarantees are as follows (see note 15):

	June 30, 2012		December 31, 2011
		$		$
Exploration Blocks – India
DS 03		599,000		599,000
DS 04		741,000		728,000
KG Onshore		458,500		458,500
RJ 20		436,000		1,374,500
RJ 21(1)		897,500		897,500
		3,132,000		4,057,500

(1)	Subsequent to June 30, 2012, the Government of India invoked this bank guarantee, which is recorded as accrued liabilities payable to EDC in these unaudited consolidated financial statements (see note 14).

5.	Available For Sale Investment

On March 29, 2012, after receiving stockholder approval, the Company completed a Securities Purchase and Exchange Agreement with The Israel Land Development Company – Energy Ltd. (the “ILDE Transaction”). The Company received 28,402,262 common shares of ILDE in exchange for issuance of certain securities in the Company - see note 8(b). Accordingly, the Company owns 3.05% of ILDE’s outstanding common stock, which are subject to a minimum six month lock-up restriction imposed by the Israeli Securities Law and Regulations. Subsequent to June 30, 2012, the Company sold 8,500,000 common shares of ILDE for net proceeds of $1.4 million, on an off-market basis, due to lock-up restrictions.

ILDE’s common stock is listed and traded on the Tel Aviv Stock Exchange. Fair value of this investment is measured on the reporting date using the closing price of ILDE’s shares traded on Tel Aviv Stock Exchange which is then discounted at 10% to reflect the impact of the lock-up restriction.

6.	Property and Equipment

The amounts capitalized as oil and natural gas properties were incurred for the purchase, exploration and ongoing development of various properties.

	June 30, 2012			December 31, 2011
		$			$
Oil and natural gas properties (using the full-cost method)
Unproved properties		47,443,406			43,540,400
Proved properties		31,734,674			30,348,218
Total oil and natural gas properties		79,178,080			73,888,618
Building		889,609			889,609
Computer, office and other equipment		643,939			625,277
Total property and equipment		80,711,628			75,403,504
Accumulated impairment of oil and natural gas properties		(31,796,015	)		(30,757,015	)
Accumulated depletion		(1,588,500	)		(1,394,200	)
Accumulated depreciation		(709,367	)		(672,184	)
Total property and equipment, net		46,617,746			42,580,105

The Company has capitalized $197,657 for the six months ended June 30, 2012 (June 30, 2011 – $373,934) of general and administrative expenses directly related to exploration activities. These amounts include $12,321 (June 30, 2011 – $185,229) of capitalized stock-based compensation expense and capitalized support equipment depreciation of $17,405 (June 30, 2011 - $19,926).

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

Impairment of Oil and Gas Properties

The Company performed a ceiling test calculation at June 30, 2012, to assess the ceiling limitation of its proved oil properties. At June 30, 2012, the Company’s net capitalized costs of proved oil and natural gas properties were in excess of the ceiling limitation. Accordingly, the Company charged $1,039,000 to the statement of operations for impairment charges.

7.	Equity Method Investments

The Company through its subsidiary, owns a 40% ownership of Adira Geo Global Ltd. which holds a 30% participating interest in the Samuel license in Israel. Adira Geo Global is the designated operator of the Samuel license. The Company’s ownership in Adira Geo Global is accounted for using the equity method.

8.	Capital Stock

a)Private Placement

On March 2, 2012, the Company completed a private placement offering and issued 2,500,000 Units at a price of $0.25 per Unit for gross proceeds of $625,000. Each Unit consists of one common stock and one warrant. The holder of each warrant is entitled to subscribe for and purchase one common stock of the Company at an exercise price of $0.32 per common stock, which may be exercised until March 2, 2014. The placement agent on this transaction was paid cash fees of $28,500 and the Company issued 36,000 common stock and 150,000 warrants.

The proceeds from the issuance of the Units have been allocated between the common stock and warrants based on their relative fair values. The fair value of the common stock of the Company was determined based on their market price of the stock the day private place offering closed. The fair value of the warrants was based on a Black-Scholes option-pricing model and the weighted average assumptions as at the date of the private placement offering closing as follows:

Risk-free interest rate	0.28%
Expected life	2 years
Expected volatility	136.7%
Expected dividend yield	0%

The resulting allocation of the fair value to the common stock and warrants (included as additional paid-in capital) is $354,953 and $213,754 respectively, which is net of $56,293 of related share issuance costs.

b)ILDE Transaction

On March 29, 2012, after receipt of stockholder approval, the Company completed a Securities Purchase and Exchange Agreement with The Israel Land Development Company – Energy Ltd. (the “ILDE Transaction”). The Company received 28,402,262 common shares of ILDE in exchange for issuance of the following securities in the Company:

(i) issued to ILDE 32,740,479 shares of common stock of the Company and 16,466,639 warrants. Each warrant is entitled to subscribe for and purchase one common stock of the Company at an exercise price of $0.30 per common stock, which may be exercised for a period of 12 months commencing September 29, 2012 and expiring on September 29, 2013;

(ii) granted ILDE the right, exercisable in whole or in part through July 31, 2012, to subscribe for and purchase up to 16,466,639 Units at $0.24, with each Unit consisting of one common stock of the Company and one warrant. Each of these warrants is entitled to subscribe for and purchase one common stock of the Company at an exercise price of $0.30 per common stock; and

(iii) issued 987,998 warrants to ILDE at $0.001 per warrant to purchase up to 987,998 common stock of the Company at an exercise price of $ 0.375 per common stock.

The fair value of the ILDE Transaction as described above, which is based on the fair value of the ILDE’s common stock last traded at Tel Aviv Stock Exchange as of the ILDE Transaction date, is allocated between the common stock, warrants and right units based on their relative fair value. The fair value of the common stock of the Company is determined based on the market price of the common stock as at the date of the ILDE Transaction closed. The fair value of the warrants and the right units was based on an option-pricing model and weighted average assumption as at the date of the ILDE Transaction closing as follows:

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

	Warrants	Right Units
Risk-free interest rate	0.26%	0.07%
Expected life	18 months	4 months
Expected volatility	105.4%	55.5%
Expected dividend yield	0%	0%

The Company issued the placement agent on the ILDE Transaction 987,988 warrants to purchase up to 987,998 common stock of the Company at an exercise price of $ 0.375 per common stock. The fair value of these warrants was based on a Black-Scholes option-pricing model and weighted average assumption as at the date of the ILDE Transaction closing as follows:

Risk-free interest rate	1.01%
Expected life	5.5 years
Expected volatility	107.4%
Expected dividend yield	0%

The resulting allocation of the fair value to the common stock, warrants and right units (included as additional paid-in capital) is $3,241,516, $1,305,213 and $303,841 respectively, which is net of $266,663 of related share issuance costs.

On July 31, 2012, ILDE elected not to exercise its right to subscribe for and purchase up to 16,466,639 Units, with each Unit consisting of one common stock of the Company and one warrant.

c) Private Placement

On May 17, 2012, the Company completed a private placement offering and issued 3,853 Units at a price of $220 per Unit for gross proceeds of $847,660. Each Unit consists of 1,000 shares of common stock and 750 warrants expiring on July 31, 2012 (the “July Warrants”) plus 750 warrants expiring on March 31, 2013 (the “March Warrants”). Each July Warrant entitles the holder thereof to acquire one share of common stock at an exercise price of $0.26. Each March Warrant entitles the holder thereof to acquire one share of common stock at an exercise price of $0.30. The placement agent on this transaction was paid cash fees of $56,188.

The proceeds from the issuance of the Units have been allocated between the common stock and warrants based on their relative fair values. The fair value of the common stock of the Company was determined based on their market price of the stock the day private place offering closed. The fair value of the warrants is based on a Black-Scholes option-pricing model and the weighted average assumptions as at the date of the private placement offering closing as follows:

	July Warrants	March Warrants
Risk-free interest rate	0.10%	0.20%
Expected life	0.21 years	0.87 years
Expected volatility	123.0%	186.8%
Expected dividend yield	0%	0%

The resulting allocation of the fair value to the common stock and warrants (included as additional paid-in capital) is $394,694 and $204,475 respectively, which is net of $248,491 of related share issuance costs.

None of the July Warrants were exercised up to July 31, 2012 and have therefore expired.

Warrants

From time to time, the Company may issue compensation options, rights units and or warrants (collectively the “Warrants”) in connection with a finance offering as an incentive to participate in such offerings. The fair value of any Warrants issued is recorded as additional paid-in capital. The fair value of the Warrants is determined using the Black–Scholes option pricing model.

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Activity with respect to all warrants is presented below for the periods as noted:

	June 30, 2012				December 31, 2011
	Warrants #		Weighted Average Exercise Price $		Warrants #			Weighted Average Exercise Price $
Outstanding warrants at the beginning of period		3,117,647		1.00		8,717,363			5.44
Granted		43,338,774		0.28		-			-
Expired		-		-		(5,599,716	)		7.91
Outstanding at the end of period		46,456,421		0.33		3,117,647			1.00
Exercisable at end of period		28,013,786		0.34		3,117,647			1.00

The weighted average remaining life by exercise price as of June 30, 2012 is summarized below:

	Outstanding Warrants #		Weighted Average Remaining Life (Months)		Exercisable Warrants #		Weighted Average Exercise Price $
Stock Purchase Warrants		29,989,782		17.8		11,547,147		0.48
Rights Units		16,466,639		1.0		16,466,639		0.24
		46,456,421		11.8		28,013,786		0.34

Subsequent to June 30, 2012, 2,889,750 Stock Purchase Warrants and 16,466,639 Right Units were unexercised and expired

10.	Stock Options

Stock-based Compensation

The Company recognizes compensation cost for stock-based compensation arrangements with employees, non-employee consultants and non-employee directors based on their fair value using the Black-Scholes option-pricing model, such cost to be expensed over the respective vesting periods. For awards with graded vesting, in which portions of the award vest in different periods, the Company recognizes compensation costs over the vesting periods for each separate vested tranche.

The following table summarizes stock-based compensation for employees, non-employee consultants and independent directors:

	Three months ended June 30, 2012		Three months ended June 30, 2011			Six months ended June 30, 2012		Six months ended June 30, 2011			Period from Inception August 21, 2002 to June 30, 2012
		$		$			$		$			$
Stock-based compensation
Unaudited Consolidated Statements of Operations
General and administrative		22,525		245,955			59,181		490,152			4,853,541
Consulting fees		-		(6,011	)		-		(2,254	)		3,413,834
		22,525		239,944			59,181		487,898			8,267,375
Unaudited Consolidated Balance Sheets
Property and equipment		3,789		86,733			12,321		185,229			5,656,893
		26,314		326,677			71,502		673,127			13,924,268

At June 30, 2012, the total compensation cost related to non-vested awards not yet recognized is $1,341,252 (December 31, 2011 – $64,723) which will be recognized over a weighted-average period of three years. During the three and six months ended June 30, 2012 and 2011, no options were exercised.

No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from the exercise of stock options.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Weighted average assumptions used in the valuation are disclosed in the following table:

	Three months ended June 30, 2012			Three months ended June 30, 2011			Six months ended June 30, 2012			Six months ended June 30, 2011
Fair value of stock options granted (per option)	$	0.30		$	0.40		$	0.30		$	0.60
Risk-free interest rate		0.7	%		3.1	%		0.7	%		3.3	%
Volatility		108	%		114	%		108	%		121	%
Expected life	5.1 years			9.5 years			5.2 years			9.8 years
Dividend yield		0	%		0	%		0	%		0	%

Activity with respect to all stock options is presented below for the periods as noted:

	June 30, 2012					June 30, 2011
	Shares #			Weighted Average Exercise Price $		Shares #			Weighted Average Exercise Price $
Outstanding options at beginning of period		4,590,000			2.53		4,550,000			2.72
Granted		4,480,000			0.39		1,280,000			1.04
Expired		(630,000	)		3.06		(50,000	)		1.18
Outstanding at the end of the period		8,440,000			1.35		5,780,000			2.36

Outstanding aggregate intrinsic value	$	15,500				$	4,500

Exercisable at the end of the period		3,926,667			2.46		4,333,334			2.81

The weighted average remaining life by exercise price as of June 30, 2012 is summarized below:

Range of Exercise Prices $	Outstanding Options #		Weighted Average Remaining Life Months		Exercisable Options #		Weighted Average Exercise Price $
0.01 - 0.99		5,154,800		71.8		641,467		0.42
1.00 - 1.99		1,239,000		94.7		1,239,000		1.36
2.00 - 2.99		323,800		94.9		323,800		2.25
3.00 - 4.99		1,472,400		58.7		1,472,400		3.69
5.00 - 5.99		200,000		41.8		200,000		5.07
6.00 - 6.99		50,000		30.0		50,000		6.81
		8,440,000		72.8		3,926,667		1.35

11.	Related Party Transactions

Related party transactions are measured at the exchange amount which is the amount of consideration established and agreed by the related parties.

Roy Group (Mauritius) Inc.

In March 2003, the Company entered into a Participating Interest Agreement with Roy Group (Mauritius) Inc. (a corporate entity controlled by a principal stockholder of the Company), whereby the Company assigned and holds in trust for Roy Group (Mauritius) Inc. 50% of the benefits and obligations of the production sharing contract covering the KG Offshore Block leaving the Company with a net 5% participating interest in the KG Offshore Block. The assignment of interest is subject to approval by the Government of India.

Under the terms of the Participating Interest Agreement and until approval by the Government of India, the Company retains the exclusive right to deal with Roy Group (Mauritius) Inc. with regard to the KG Offshore Block and is entitled to make all decisions regarding the interest assigned to Roy Group (Mauritius) Inc. The Company has a right of set-off against sums owing to the Company by Roy Group (Mauritius) Inc. In the event that the Indian government consent is delayed or denied, resulting in either Roy Group (Mauritius) Inc. or the Company being denied an economic benefit it would have realized under the Participating Interest Agreement, the parties have agreed to amend the Participating Interest Agreement or take other reasonable steps to assure that an equitable result is achieved consistent with the parties’ intentions contained in the Participating Interest Agreement.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

12.	Per Share Amounts

The following table presents the reconciliation between basic and diluted income per share:

	Three months ended June 30, 2012			Three months ended June 30, 2011			Six months ended June 30, 2012			Six months ended June 30, 2011
		$			$			$			$
Net loss available to common stockholders		(1,853,216	)		(1,649,683	)		(2,721,149	)		(3,131,100	)

Weighted average number of common stock outstanding:
Basic		118,547,180			82,746,933			128,499,202			82,746,933
Impact of securities convertible into common stock		5,723			13,190			5,205			41,603
Diluted		118,552,903			82,760,123			128,504,407			82,788,536

Per share amounts
Basic and diluted		(0.02	)		(0.02	)		(0.02	)		(0.04	)

Securities excluded from denominator as anti-dilutive:
Stock options		8,390,000			5,630,000			8,390,000			5,630,000
Warrants		29,989,782			3,117,647			29,989,782			3,117,647
Right units		16,466,639			--			16,466,639			-
		54,846,421			8,747,647			54,846,421			8,747,647

13.	Segmented Information

The majority of the Company’s oil and natural gas exploration activities is conducted in India. All of the oil and gas sales are generated from India and are sold within Indian markets. Management of the Company considers the operations of the Company on a country-by-country basis. The following information relates to the Company’s geographic areas of operation.

	June 30, 2012		December 31, 2011
		$		$
Property and equipment, net
India		38,562,234		36,965,510
Israel		7,807,932		5,388,030
Colombia and Canada		247,580		226,565
		46,617,746		42,580,105

14.	Commitments

Pursuant to current production sharing contracts, the Company is required to perform minimum exploration activities that include various types of surveys, acquisition and processing of seismic data and drilling of exploration wells. In the event that the Company fails to fulfill minimum exploration activities by the end of the relevant exploration phase or early termination of the contract by the Government of India, the Company is liable to pay to the Government of India the amount which would be required to complete the unfinished portion of the minimum exploration activities. These obligations have not been provided for in the financial statements.

The Company has completed the minimum work programs on the Tarapur, Mehsana, Ankleshwar, and Sanand-Miroli blocks for all the phases. Accordingly, all financial commitments have been met under the terms of the PSCs.

With respect to RJ 21 block, the end date of Phase I expired on January 20, 2012. The joint venture partners had advised they do not intend to complete the minimum work program and to relinquish their interests in this block. The Company however intended to complete its share of the minimum work program and was pursuing possible arrangements. However, such arrangements were not approved by the Government of India and in July 2012, the Government of India invoked the bank guarantee of $897,500 provided for this block and put the joint venture consortium in default forcing the parties to relinquish their interests. Accordingly, the Company has recorded liquidated damage liability of $1.82 million as cost of unfinished minimum work program of Phase I in these unaudited consolidated financial statements in accordance with the terms of the PSC.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

The following table sets forth the end dates to perform minimum work programs pursuant to current production sharing contracts:

	End dates of
	Phase I (1) (2)	Phase II	Phase III
KG Onshore (3)	February 15, 2012	February 15, 2015	N/A
DS 03 (4)	September 3, 2010	September 3, 2011	September 3, 2013
DS 04 (5)	June 6, 2012	June 6, 2015	N/A
RJ 20 (6)	January 20, 2012	January 20, 2015	N/A

(1)

All exploration properties are currently in Phase I.

(2)

Government of India policies provide an option for a six-month extension without penalty to complete the minimum work program commitments. The Company must file an application for the six-month extension, and if approved by the Government of India, the end date for Phase II remains unchanged.

(3)

The end date of Phase I for this block expired on February 15, 2012. The Company applied for a six month extension, which has been approved and accordingly Phase I now expires on August 15, 2012. The Company also experienced delays in obtaining certain pre-requisite permits from local government authorities. Such delays are considered excusable under the Government of India policy, and the Company has applied for an extension equivalent to the time of the delay. If approved, the expiration date for Phase I would be December 10, 2014. The Company anticipates this application will be approved.

(4)

The Company experienced delays in obtaining clearance from various departments of the Government of India which was required to conduct an aeromagnetic survey over the block. Such delays are considered excusable under the Government of India policy, and as a result the Company had applied for an extension equivalent to the time of the delay. In April 2012, the Company proposed to the Government of India to relinquish the block and waive off the unfinished work program of 12,000 line kilometers of aero-magnetic survey on the grounds of delay in obtaining the requisite clearance and approval . Currently, we are waiting for the Government of India’s approval and direction.

(5)

The end date of Phase I for this block expired on June 6, 2012. The Company applied for six months extension of Phase I from June 7, 2012 to December 6, 2012. If approved, the expiration date of Phase I would be December 6, 2012. The Company anticipated this application will be approved.

(6)

The end date of Phase I for this block expired on January 20, 2012. The Company applied for a six month extension, which has been approved and accordingly, Phase I now expires on July 20, 2012. Subsequently, in July 2012, the Company applied for a second extension of twelve months of Phase I from July 21, 2012 to July 20, 2013. If approved, the expiration date for Phase I would be July 20, 2013. The Company anticipates this extension will be approved.

As described in note 2, the Company's existing cash balance at June 30, 2012 and the anticipated cash flow from operating activities are not sufficient to satisfy its current obligations and to meet its exploration commitments over the twelve months ending June 30, 2013 and the thirty months ending December 31, 2014. The Company is considering various alternatives to remedy any future shortfall in capital. The Company deems it necessary to raise capital for continued exploration and development expenditures through equity markets, debt markets or other financing arrangements, which could include the sale of the Company’s oil and gas interests or participation arrangements in those interests. There can be no assurance that these capital resources will be available and if they are not, the Company may be forced to substantially curtail or cease exploration and development expenditures.

The anticipated payments due under these agreements in effect are as follows:

	Operating Leases		Production Sharing Contracts relating to India		Licenses relating to Israel
		$		$		$
2012 (remainder)		103,000		10,626,000		2,253,000
2013		16,000		10,456,000		-
2014		-		10,247,000		-
2015 and thereafter		-		-		-
		119,000		31,329,000		2,253,000

In June 2010, the Operator of the KG Onshore Block approved an increase of the Company’s participating interest from 10% to 20%, subject to Government of India approval. Upon Government of India approval, the Company’s commitments would increase by $4.8 million in 2012, $7.6 million in 2013 and $10.2 million in 2014. To date, the approval has not been granted.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

The Company has office lease commitments in Calgary, Alberta, Canada and Herzliya, Israel which expire in January 2013 and July 2012, respectively.

15.	Contingencies

GSPC Dispute

GSPC, the Operator of the KG Offshore Block in which the Company has a net 5% carried interest, has been seeking from the Company, payment of its pro rata portion of the amount by which the sums expended by GSPC under all phases for the minimum work program as set forth in the PSC for the KG Offshore Block in carrying out exploration activities on the block exceeds the amount that GSPC deems to be the Company’s pro rata portion of a financial commitment under all phases included in the parties’ joint bid for the award of the KG Offshore Block by the Government of India.

GSPC contends that this excess amount is not within the terms of the Carried Interest Agreement and asserts that the Company is required to pay 10% of the exploration expenses over and above gross costs of $109.7 million (10% being $10.97 million) (including the net 5% interest of Roy Group (Mauritius) Inc.) plus interest.

Based upon the audited accounts of the joint venture for the KG Offshore Block, the total costs incurred to March 31, 2010 were $1.447 billion (10% being $144.7 million of which 50% is for the account of Roy Group (Mauritius) Inc.). Further, based upon the budget, the total costs projected for the period April 1, 2010 to June 30, 2012 were $1.622 billion (10% being $162.2 million). Therefore, management estimates that the amount of GSPC’s claim as of June 30, 2012 to be approximately $306.9 million plus interest, if any, of which 50% is for the account of Roy Group (Mauritius) Inc. The Company disputes this assertion of GSPC. The Company believes that the likelihood of an unfavourable outcome of this dispute is remote and accordingly, as at June 30, 2012, no amount has been accrued in the consolidated financial statements. However, the fact of the dispute has been disclosed.

The Company intends to vigorously protect its contractual rights in accordance with the dispute resolution process under the Carried Interest Agreement, the PSC and the Joint Operating Agreement as may be appropriate. In September 2007, the Company commenced discussions with GSPC in an effort to reach an amicable resolution. A number of draft settlement proposals have been put forward by the Company to GSPC seeking to settle this dispute amicably. Subsequent to the October 2010 Management Committee meeting the Company’s management has again met with senior management of GSPC to continue its effort to reach an amicable resolution. However, no settlement agreement has been reached as of August 10, 2012 and there can be no assurance that this matter will be settled amicably.

Export Development Canada

Export Development Canada (EDC) provided the performance security guarantees on behalf of the Company against the bank guarantees provided to the Government of India. These bank guarantees are in the form of irrevocable letters of credit and are provided to the Government of India in the amount of 35% of the participant’s share of the minimum work program for a particular phase and serve as guarantees for the performance of such minimum work programs.

In consideration of EDC providing the performance security guarantees, the Company has agreed to fully indemnify EDC against all claims and demands made in respect of these performance security guarantees.

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GEOGLOBAL RESOURCES INC.

(a development stage enterprise)

Notes to the Unaudited Consolidated Financial Statements

June 30, 2012

16.	Supplemental Disclosure of Cash Flow Information

Changes in non-cash working capital were as follows:

	Six months ended June 30, 2012			Six months ended June 30, 2011
		$			$
(Increase) decrease in non-cash working capital
Accounts receivable		3,201,606			(803,401	)
Prepaid expenses and deposits		(88,435	)		(12,425,435	)
Accounts payable		(4,048,144	)		13,687,353
Accrued liabilities		1,479,385			(1,205,224	)
Due to related companies		(42,908	)		7,520
Net change in non-cash working capital		501,504			(739,187	)
Relating to:
Operating activities		102,821			(1,363,092	)
Investing activities		1,190,135			623,905
Financing activities		(791,452	)		-
		501,504			(739,187	)

17.	Supplemental Disclosure of Joint Venture Working Capital

The Company, through its wholly-owned subsidiary, and as Operator of the Myra and Sara licenses, controls the current assets and current liabilities held on behalf of the Myra and Sara joint venture until those assets are expended or liabilities settled through the exploration activities in the Myra and Sara licenses. The following table outlines the presentation of amounts included in these unaudited consolidated financial statements. The assets are committed to exploration activities in the Myra and Sara licenses and not available to the Company for use in general operations or other exploration activities.

	June 30, 2012		December 31, 2011
		$		$
Cash and cash equivalents		13,932,000		8,964,000
Accounts receivable		12,928,000		15,607,000
Restricted deposits		30,916,000		39,644,000
Prepaid expenses and deposits		390,000		265,000
Accounts payable		58,166,000		64,480,000

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are engaged, through our subsidiaries, in the pursuit of oil and natural gas reserves through exploration and development in India, Israel and Columbia. At June 30, 2012, we had not yet achieved our planned principal operations from our oil and gas exploration activities which commenced on August 29, 2003. Accordingly, our activities are considered to be those of a “Development Stage Enterprise”. The recoverability of the costs we have incurred to date is uncertain and dependent upon achieving commercial production and sale of hydrocarbons, our ability to obtain sufficient financing to fulfill our obligations under the production sharing or other contracts we are a party to with respect to oil and natural gas exploration and development activities in India, Israel and Colombia and upon future profitable operations. At present, our activities are being undertaken in four geological basins located offshore and onshore in India, one geological basin located offshore Israel and one geological basin located onshore in Colombia where reserves of oil or natural gas are believed by our management to exist.

The exploration rights pursuant to PSCs we have entered into with the Government of India are located in the following areas:

·	The Krishna Godavari Basin offshore and onshore in the State of Andhra Pradesh in south eastern India;

·	The Cambay Basin onshore in the State of Gujarat in western India;

·	The Deccan Syneclise Basin onshore in the State of Maharashtra in west central India; and

·	The Bikaner-Nagaur Basin onshore in the State of Rajasthan in north western India.

The exploration rights pursuant to licenses we have been granted in Israel are located in the Levantine Basin located off the coast of Israel with the licenses varying in distances between 6 and 25 miles offshore.

We have entered into a Memorandum of Understanding (MOU) with respect to two exploration blocks located in the Putumayo Basin onshore in southwest Colombia.

All of the exploration activities in which we are a participant should be considered highly speculative.

Unless the context should otherwise require, references to “we,” “us” and “our” in this Quarterly Report on Form 10-Q refer to GeoGlobal Resources Inc. and our wholly-owned consolidated subsidiaries. GeoGlobal Resources (Barbados) Inc. is our wholly-owned subsidiary incorporated under the Companies Act of Barbados that is the contracting party under our four PSCs covering four blocks in the Cambay Basin, our two PSCs covering two blocks in the Deccan Syneclise Basin, our two PSCs covering two blocks in the Bikaner-Nagaur Basin and our PSC covering the KG Onshore Block in the Krishna Godavari Basin, all of which are located in India. GeoGlobal Resources (India) Inc. is our wholly-owned subsidiary continued under the Companies Act of Barbados that is the contracting party under our PSC covering our KG Offshore Block in the Krishna Godavari Basin in India and the Sara, Myra and Samuel licenses in the Levantine Basin in Israel.

The following management’s discussion and analysis of our financial condition and results of operation should be read in conjunction with, and is qualified in its entirety by, the more detailed information including our unaudited consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report. This Quarterly Report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results and business plans discussed in the forward-looking statements. Factors that may cause or contribute to such differences include those discussed in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2011 as well as those discussed elsewhere in this Quarterly Report. For further information, refer to the Consolidated Financial Statements and related Notes and the Management's Discussion and Analysis thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011.

Glossary of Certain Defined Terms:

All dollar amounts are stated in United States dollars

All meterage of drilled wells are measured depths unless otherwise stated

MBbls	-	thousand barrels
MMcf	-	million cubic feet
BOE	-	barrels of oil equivalent
GSPC	-	means Gujarat State Petroleum Corporation Limited of India
OIL	-	means Oil India Limited of India
ONGC	-	means Oil & Natural Gas Corporation Limited of India
PSC	-	means Production Sharing Contract
NELP	-	means National Exploration Licensing Policy
NIS	-	means New Israeli Shekels

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Results of Operations for the three and six months ended June 30, 2012 and 2011

For the three months ended June 30, 2012, we incurred a net loss of $1.853 million compared with a net loss of $1.650 million for the three months ended June 30, 2011.

For the six months ended June 30, 2012, we incurred a net loss of $2.721 million compared with a net loss of $3.131 million for the six months ended June 30, 2011

	Three months ended June 30, 2012		Three months ended June 30, 2011		Six months ended June 30, 2012		Six months ended June 30, 2011
Oil Production (barrels)		1,130		1,070		2,696		2,344
Oil Sales (barrels)		1,106		777		2,013		1,906
Gas Sales (Mcf)		3,278		2,601		5,949		5,145
Oil Sales	$	126,000	$	84,000	$	228,000	$	205,000
Gas Sales	$	23,000	$	24,000	$	42,000	$	46,000
Average Oil Price per Barrel	$	113.76	$	108.47	$	113.55	$	107.47
Average Gas Price per Mcf	$	6.95	$	9.14	$	7.02	$	8.98
Operating Costs	$	35,000	$	34,000	$	72,000	$	68,000
Operating Costs per BOE	$	20.05	$	22.33	$	19.02	$	20.76
Depletion	$	95,000	$	70,000	$	194,000	$	153,000
Depletion per BOE	$	54.82	$	45.47	$	51.26	$	46.55

The calculation of barrels of oil equivalent (BOE) is based on a conversion ratio of six thousand cubic feet (Mcf) of natural gas to one barrel (bbl) of crude oil to estimate relative energy content. Readers are cautioned that this conversion may be misleading, particularly when used in isolation, since the 6Mcf:1 bbl ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent the value equivalency at the wellhead.

Oil and Gas Sales

All of our oil and gas sales are derived from production of six wells in India. There are ten additional wells which are drilled, tested and awaiting tie-in to the oil tank storage facilities. Further, associated natural gas from one gas well is being contained and sold while awaiting approval of a development plan for completion of a pipeline.

Oil and gas sales for the three months ended June 30, 2012 were $149,000 as compared to $108,000 for the three months ended June 30, 2011. This increase is mainly attributable to an increase in the oil and gas production and sales for the three months ended June 30, 2012 combined with an increase in the average oil price when compared to the same quarter for 2011.

Oil and gas sales for the six months ended June 30, 2012 were $270,000 as compared to $251,000 for the six months ended June 30, 2011. This increase is mainly attributable to an increase in the oil and gas production and sales for the six months ended June 30, 2012 combined with an increase in the average oil price when compared to the same quarter for 2011.

Oil sales are currently based on the spot price based on discount to the Nigeria Bonny Light Crude bench mark. To date, none of our production has been hedged. All our associated natural gas is sold to local markets at a firm contract price of $7.00 per Mcf adjusted for rebate/premium on account of calorific value.

Operating

Operating costs for the three months ended June 30, 2012 remained fairly constant at $35,000 or $20.05 per BOE compared to $34,000 or $22.33 per BOE for the three months ended June 30, 2011. The operating costs include handling and processing charges, transportation costs and utilities, maintenance and tank rental charges and contain a fixed and variable portion.

Operating costs for the six months ended June 30, 2012 remained fairly constant at $72,000 or $19.02 per BOE compared to $68,000 or $20.76 per BOE for the six months ended June 30, 2011.

General and Administrative

For the three months ended June 30, 2012, our general and administrative expenses decreased to $362,000 from $1,220,000 for the three months ended June 30, 2011. This decrease is mostly attributable to management’s efforts on overall cost control. These efforts include a decrease in the Directors’ and Special Committee fees by $122,000 and a decrease in salaries and benefits of $53,000.

These decreases combined with a decrease in stock-based compensation costs of $223,000 to $23,000 for the three months ended June 30, 2012 from $246,000 for the comparative three months in 2011. These compensation costs are for stock-based compensation arrangements with employees and directors which are being expensed over their respective vesting periods of the related option grants. Further, there were additional reductions in travel and hotel by $134,000, meals and entertainment of $14,000, dues, subscriptions and training by $16,000, bank guarantee fees of $94,000 and computer hardware and software costs of $13,000 for the three months ended June 30, 2012 when compared to the same three month period in 2011. An increase in our overhead recoveries as a result of our increased activity in Israel further contributed to the reduction in general and administrative costs by $162,000.

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General and administrative expenses also include other costs related to the corporate head office including rent and office costs, insurance, NYSE listing and filing fees, investor relation services and transfer agent fees and services.

For the six months ended June 30, 2012, our general and administrative expenses decreased to $812,000 compared to $2,300,000 for the six months ended June 30, 2011. This decrease is mostly attributable to management’s efforts on overall cost control. The result of these efforts include a reduction of $186,000 in the Directors’ and Special Committee fees and a decrease in salaries and benefits of $176,000, which mostly relate to bonuses in 2011 paid to directors and employees that was not paid in 2012.

These decreases combined with a decrease in stock-based compensation costs by $431,000 to $59,000 for the six months ended June 30, 2012 compared to $490,000 for the six months ended June 30, 2011. These compensation costs are for stock-based compensation arrangements with employees and directors which are being expensed over their respective vesting periods of the related option grants. Further, there were additional reductions in travel and hotel by $98,000 and bank guarantee fees of $142,000 . An increase in our overhead recoveries as a result of our increased activity in Israel further contributed to the reduction in general and administrative costs by $459,000.

Consulting Fees

Consulting fees for the three months ended June 30, 2012 were $148,000, a decrease of $84,000 from $232,000 when compared to the three months ended June 30, 2011. Consulting fees include costs incurred in employing various technical and corporate consultants who advised us on a variety of matters.

This decrease is mostly a result of a decrease in fees paid in the three months ended June 30, 2011 to consultants to assist in our financing efforts and not incurred the current three month period of 2012.

Consulting fees for the six months ended June 30, 2012 were $374,000, a decrease of $53,000 from $427,000 when compared to the six months ended June 30, 2011. Consulting fees include costs incurred in employing various technical and corporate consultants who advised us on a variety of matters.

This decrease is mostly a result of a decrease in fees paid in the three months ended June 30, 2011 to consultants to assist in our financing efforts which was not incurred in the current six month period of 2012.

Professional Fees

Professional fees for the three months ended June 30, 2012 were 331,000 compared with $198,000 for the three months ended June 30, 2011. This increase of $133,000 is mostly a result of additional legal and tax consultant fees incurred during the past three months related to our tax restructuring and our increased presence in Israel. Professional fees include general counsel, audit and review costs and tax advisors to assist with tax and securities compliance.

Professional fees for the six months ended June 30, 2012 were $504,000 compared with $390,000 for the six months ended June 30, 2011. This increase of $114,000 is mostly a result of additional legal and tax consultant fees incurred during the past six months related to our tax restructuring and our increased presence in Israel.

Depletion and depreciation

Depletion and depreciation increased to $104,000 during the three months ended June 30, 2012 from $81,000 during the three months ended June 30, 2011. As a result of our production from the Tarapur 1 field we had depletion of $95,000 or $54.82 per BOE and depreciation of $9,000 for the three months ended June 30, 2012, as compared to depletion of $70,000 or $45.47 per BOE and depreciation of $11,000 for the same three months in 2011. The increase in depletion is a result of a small increase in the oil production for the three months ended June 30, 2012 compared to the three months ended June 30, 2011 and an increase in the amortization base as at June 30, 2012 as compared to June 30, 2011.

Depletion and depreciation increased to $214,000 during the six months ended June 30, 2012 from $175,000 during the six months ended June 30, 2011. As a result of our production from the Tarapur 1 field we had depletion of $194,000 or $51.26 per BOE and depreciation of $10,000 for the six months ended June 30, 2012, as compared to depletion of $153,000 or $46.55 per BOE and depreciation of $22,000 for the same six months in 2011. The increase in depletion is a result of a small increase in the oil production for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 and an increase in the amortization base as at June 30, 2012 as compared to June 30, 2011.

Impairment of oil and gas properties

For the three and six months ended June 30, 2012, we incurred $1.04 million of impairment of oil and gas properties compared to $nil for the three and six months ended June 30, 2011. Any impairment to unproved properties is transferred to our full cost pool of proved properties which is subject to a ceiling test limitations and impairment charges is recorded if the net capitalized cost of proved oil and gas properties exceed the ceiling test limitations.

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Other

We capitalized certain overhead costs directly related to our exploration activities in India. During the three months ended June 30, 2012, we capitalized overhead costs totaling $124,000 as compared to $182,000 during the three months ended June 30, 2011. Included in the amounts above are stock-based compensation costs capitalized of $4,000 for the three months ended June 30, 2012 compared with $87,000 for the three months ended June 30, 2011.

During the six months ended June 30, 2012, we capitalized overhead costs totaling $198,000 as compared to $374,000 during the six months ended June 30, 2011. Included in the amounts above are stock-based compensation costs capitalized of $12,000 for the six months ended June 30, 2012 compared with $185,000 for the six months ended June 30, 2011.

The treatment of capitalized overhead costs remained consistent with the comparable quarter and includes costs relating to personnel, consultants, their travel and stock-based compensation and capitalized depreciation on support equipment directly associated with the advancement of our oil and gas interests.

Reserve Report

As a result of the approval of the Tarapur 1 field development plan by the Management Committee in April 2009 and the completion of an independent reserve report dated January 1, 2012 by Chapman Petroleum Engineering Ltd., we estimate reserves in the Tarapur 1 field as at December 31, 2011 as follows:

Reserves Category	Oil (MBbls)		Natural Gas (MMcf)
PROVED
Developed		23		59
Undeveloped		228		138
TOTAL PROVED		251		197

Probable
Developed		217		312
Undeveloped		260		273
Possible
Developed		-		-
Undeveloped		-		-

Proved Reserves

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether determinable or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

Probable Reserves

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.

Possible Reserves

Possible reserves include those additional reserves that are less certain to be recovered than probable reserves.

Liquidity

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 common stock as well as proceeds from the exercise of warrants and options to purchase common equity.

Our ability to continue as a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate profitable operations from our oil and natural gas interests in the future. We must make an assessment of our ability to fulfill current liabilities and to meet future exploration requirements in the normal course of business. This assessment requires estimates regarding future uncommitted financing, future costs of exploration programs, timing of activities, future oil and gas prices, amongst other things. Should those estimates be materially incorrect, our ability to continue as a going concern would be impaired and our unaudited consolidated financial statements as at and for the six months ended June 30, 2012 could require material adjustments to the value of the assets and liabilities. These unaudited consolidated financial statements do not reflect any such adjustments or reclassifications.

At June 30, 2012, our cash and cash equivalents were $14.2 million (December 31, 2011 - $10.5 million) of which $13.9 million is committed to carry out the exploration activities of the Myra and Sara joint venture and not available to us for use in general operations or other exploration activities. The residual cash of $0.3 million is available to us for general operations. The majority of this balance is being held in U.S. funds, of which $6.6 million is held in term deposits. At June 30, 2012, we had current assets of $67.5 million and current liabilities of $70.4 million, or a working capital deficiency of 2.9 million.

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Our existing cash balance at June 30, 2012 and our anticipated cash flow from operating activities are not sufficient to satisfy our current obligations and meet our exploration commitments of $18.1million and $33.6 million over the twelve months ending June 30, 2013 and the thirty months ending December 30, 2014, respectively. To meet these obligations, we deem it necessary to raise capital through equity markets, debt markets or other financing arrangements, which could include the sale of oil and gas interests or participation arrangements in oil and gas interests. If these activities are unsuccessful, we may be forced to substantially curtail or cease exploration, appraisal and development expenditures and possibly curtail other of our activities.

Subsequent to June 30, 2012, we sold 8,500,000 common shares of ILDE for net proceeds of $1.4 million. On July 31, 2012, ILDE elected not to exercise its right to subscribe for and purchase up to 16,466,639 Units and accordingly those rights expired and were unexercised. In the event that we do not obtain the necessary uncommitted financing as described above, we may be required to liquidate our investments in ILDE shares in the near term, on an off-market basis transaction.

Because of the early stage of our operations and our lack of any material oil and natural gas reserves, there can be no assurance this capital will be available. We believe that we will be able to raise additional capital which combined with our available cash resources will be sufficient to maintain our current level of activities through the next fiscal year.

We believe at this time that the outcome of the GSPC Carried Interest dispute, as further discussed below, will not have a material effect on our liquidity.

Six months ended June 30, 2012 and 2011

Overall cash and cash equivalents increased by $3.7 million from $10.5 million at December 31, 2011 to $14.2 million at June 30, 2012. The reasons for the net increase in cash and cash equivalents can be attributed to the following activities:

Net cash used in operating activities during the six months ended June 30, 2012 was $1.3 million as compared to $3.8 million for the six months ended June 30, 2012. The reduction in the use of cash is mainly related to a reduction of our general and administrative costs and consulting fees offset by an increase in our professional fees.

Net cash provided by our investing activities during the six months ended June 30, 2012 was $4.7 million as compared to $2.7 million during the six months ended June 30, 2012. This increase is a result of a release of $9.5 million of restricted deposits mostly attributable to the return of the restricted term deposit securing the letter of credit of $16 million for the mobilization of the drilling rig in Israel. The increase is offset by the increase in our oil and gas property additions of $5.3 million due mostly to our drilling program in Israel. This compared to oil and gas property additions of $3.4 million for the six months ended June 30, 2011.

Cash provided by financing activities for the six months ended June 30, 2012 $0.3 million as compared to $nil for 2011. During the six months ended June 30, 2012 we completed two private placement offerings.

(i) On March 2, 2012 we issued 2.5 million Units at a price of $0.25 per Unit for gross proceeds of $625,000 less share issuance costs of $134,541. Each Unit consists of one common stock and one warrant. The holder of each warrant is entitled to purchase one common stock of the Company at an exercise price of $0.32 per common stock expiring on March 2, 2014.

(ii) On May 17, 2012, we entered into subscription agreements with certain investors for the issuance of 3,853 Units at US$220 per Unit for gross proceeds of $847,660 less share issuance costs of $248,492. Each Unit consists of 1,000 shares of common stock and 750 warrants expiring on July 31, 2012 (the “July Warrants”) plus 750 warrants expiring on March 31, 2013 (the “March Warrants”). Each July Warrant entitles the holder thereof to acquire one share of common stock at an exercise price of $0.26. Each March Warrant entitles the holder thereof to acquire one share of common stock at an exercise price of $0.30. Net proceeds of $791,452 were received subsequent to June 30, 2012.

Capital Resources

We expect our exploration and development activities pursuant to our PSCs in India will continue through 2012 in accordance with the terms of those agreements. During the year 2012 and up to March 31, 2013, based on the current budgets in India, we anticipate drilling six exploratory wells and ten core wells; completion of the acquisition, processing and interpretation of our DS-04 2D seismic data; and completion of the acquisition, processing and interpretation of our KG Onshore 3D seismic data. We further expect to tie-in additional oil wells in Tarapur along with the Tarapur G gas well and to continue with the construction of the gas gathering and production facilities together with further development drilling on the KG Offshore Block in which we have a carried interest. Additional expenditures may be incurred in connection with additional exploratory, appraisal and development wells we may participate in. If the Government of India approves the increase to our participating interest in the KG Onshore Block to 20%, our obligations to fund the 3D seismic acquisition and the exploratory drilling on the block will increase.

We expect our exploration activities pursuant to our licenses in Israel will continue through 2012 in accordance with the terms of those agreements. During 2012, we expect to complete the drilling of two deepwater exploration wells, one in each of our Myra and Sara licenses. In addition, we expect to complete the processing and interpretation of the recently acquired 43 square kilometers of ocean bottom cable 3D seismic data and commence drilling the first exploration well in our Samuel license.

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In addition, we may during 2012 seek to participate in joint ventures bidding for the acquisition of oil and gas interests in Israel, India, Colombia and other countries. As of August 10, 2012 we have not entered into any binding agreements with respect to such activities. We expect that our interest in any such ventures would involve a minority participating interest in the venture. In addition, although there are no present plans to do so, as opportunities arise we may seek to acquire minority participating interests in exploration blocks where PSCs or Licenses have been heretofore awarded. The acquisition of any such interests would be subject to the execution of a definitive agreement and obtaining the requisite government consents and other approvals.

As of August 10, 2012 the scope of any possible such activities has not been definitively established and, accordingly, we are unable to state the amount of any funds that will be required for these purposes. As a result, no specific plans or arrangements have been made to raise additional capital and we have not entered into any agreements in that regard. We expect that when we seek to raise additional capital it will be through the sale of equity securities, debt or other financing arrangements. We are unable to estimate the terms on which such capital will be raised, the price per share or possible number of shares involved or the terms of any agreements to raise capital under other arrangements.

Off-balance Sheet Arrangements

None.

Contractual Obligations

Our minimum exploration commitments under our production sharing contracts and other future lease payments at June 30, 2012 were not substantially different than at December 31, 2011.

Carried Interest Dispute on the KG Offshore Block

GSPC has advised us that it is seeking from us payment of our pro rata portion of the amount by which the sums expended by GSPC under all phases for the minimum work program as set forth in the PSC for the KG Offshore Block in carrying out exploration activities on the block exceeds the amount that GSPC deems to be our pro rata portion of a financial commitment under all phases included in the parties’ joint bid for the award of the KG Offshore Block by the Government of India.

GSPC contends that this excess amount is not within the terms of the Carried Interest Agreement and that we are required to pay 10% of the exploration expenses over and above gross costs of $109.7 million (10% being $10.97 million) (including the net 5% interest of Roy Group (Mauritius) Inc.) plus interest.

Based upon the audited accounts of the joint venture for the KG Offshore Block, the total costs incurred to March 31, 2010 were $1.447 billion (10% being $144.7 million of which 50% is for the account of Roy Group (Mauritius) Inc.). Further, based upon the budget total costs projected for the period April 1, 2010 to June 30, 2012 were $1.622 billion (10% being $162.2 million). Therefore, we estimate that the amount of GSPC’s claim as of June 30, 2012 to be approximately $306.9 million plus interest of which 50% is for the account of Roy Group (Mauritius) Inc. We believe that the likelihood of an unfavourable outcome of this dispute is remote and accordingly, as at June 30, 2012, no amount has been accrued in the consolidated financial statements. We dispute this assertion of GSPC.

We intend to vigorously protect our contractual rights in accordance with the dispute resolution process under the Carried Interest Agreement, the PSC and the Joint Operating Agreement as may be appropriate. In September 2007, we commenced discussions with GSPC in an effort to reach an amicable resolution. A number of draft settlement proposals have been put forward by us to GSPC seeking to settle this dispute amicably. Subsequent to the October 2010 Management Committee meeting we have again met with senior management of GSPC to continue our effort to reach an amicable resolution. However, no settlement agreement has been reached as of August 10, 2012 and there can be no assurance that this matter will be settled amicably.

Critical Accounting Estimates

The preparation of financial statements under generally accepted accounting principles in the United States requires management to make estimates, judgments 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. On a regular basis we evaluate our assumptions, judgments and estimates. We also discuss our critical accounting estimates with the Audit Committee of the Board of Directors.

We believe that the assumptions, judgments and estimates involved in the going concern assessment, fair value of non-monetary transactions, impairment assessment of oil and gas properties, fair value of available for sale investment, asset retirement obligation and share-based payment arrangements have the greatest potential impact on our unaudited consolidated financial statements. These areas are key components of our results of operations and are based on complex rules which require us to make judgments and estimates, so we consider these to be our critical accounting estimates. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.

Our critical accounting policies and estimates are disclosed in Item 7 of our 2011 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2012, and have not changed materially since the filing of that document.

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Recent Exploration Activities

Below is a summary description relating to certain material developments to our exploration activities. For additional information and a more complete description of the PSCs to which we are a party, reference should be made to our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q as well as our Current Reports on Form 8-K.

KG Offshore Block

During the six months ended June 30, 2012, the Field Development Plan (“FDP”) on the Deen Dayal West (“DDW”) gas condensate field continues to push forward. The FDP envisages a total of 11 new wells and the re-completion of the four existing wells at DDW.

Drilling commenced on September 12, 2011 with the Jack-up rig Deep Driller-1 (“DD-1”). The DD-1 has completed the drilling of the initial section of four development wells from the DDW Well Head Platform. The Nabors platform rig moved to the DDW Well Head Platform to complete the drilling of the four development wells as well as the seven remaining planned development wells. Currently, the Nabors platform rig is drilling the first of eleven wells, theDDW-D1well.

The DD-1 rig now completed drilling an appraisal well, the DDE-A2 to the planned measured depth of 5,705 meters within the Deen Dayal East fault block and the well is currently being tested.

KG Onshore Block

The Operator of the KG Onshore Block has floated tenders for the major components of the drilling program which include the drilling rig, casing, wellhead, liner hanger, cementing, bulk handling plant, directional drilling & measurement while drilling, Mud Engineering & Waste Management and coring. The Company anticipates these tenders to be awarded in the third quarter of 2012. The ancillary tenders for items such as wireline logging, mud logging and well testing are currently being finalized and are expected to be floated shortly.

Management anticipates the drilling of the first of three shallow wells will commence by the end of the third quarter 2012 and one deep high pressure high temperature well will commence drilling by the first quarter of 2013.

Tarapur Block

Currently there is an approved field development plan which covers an area of approximately 2.14 square kilometers within the Tarapur 1 Discovery Mining Lease Area of approximately 9.7 square kilometers, and includes three existing exploratory/appraisal wells (Tarapur 1, Tarapur P and Tarapur 5) and three development wells (TD-1, TD-2 and TD-3).

All six wells are tied into the oil tank storage facilities by way of a gathering system and are on production. There are ten additional wells in the Tarapur 1 Discovery Mining Lease Area which are drilled, tested and awaiting tie-in to the oil tank storage facilities. The preparation and filing of the field development plan for the seven appraisal wells in the TA-6 Discovery is pending approval of a submitted Declaration of Commerciality.

Production from one gas well (Tarapur G) will commence upon approval of the field development plan which GSPC has filed, pursuant to the provisions of the PSC.

Sanand/Miroli Block

In an Operating Committee Meeting held in December 2010, it was agreed that the consortium would apply for a Petroleum Mining Lease to cover three geometrical shapes surrounding the discoveries SE-8 (11.2 square kilometers), SE-4 cluster (18.2 square kilometers) and M1M6 (10.4 square kilometers).

On April 19, 2011, the Operating Committee approved the field development plan of the M1and M6 oil discoveries. GSPC is continuing with the process of preparing and filing the necessary declarations of commerciality and field development plans pursuant to the provisions of the PSC in order to put all these wells into production.

Ankleshwar Block

The Phase I Minimum Work commitments have been met on this block and the consortium elected not to proceed to Phase II but rather develop the existing discoveries. The consortium elected to retain a 172 square kilometer area around the two discoveries ANK-21 and ANK-40S. A field development plan for the ANK-21 has been filed pursuant to the provisions of the PSC and is waiting Government approval and a Declaration of Commerciality for the ANK-40S has been approved by the Operating Committee and submitted for Management Committee approval.

A gas discovery (ANK-41S) has also been notified within this 172 square kilometer area. GSPC, as operator, has submitted an appraisal plan for ANK-41S and is pursuing government approvals for completion of the appraisal program.

GSPC continues to prepare and file the necessary declarations of commerciality and field development plans pursuant to the provisions of the PSC in order to put all these wells into production.

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Mehsana Block

The Phase I exploration and appraisal period are completed and the minimum work commitments have been met on this block. As there is no commercial discovery on this block, the Operating Committee on September 19, 2011 elected to relinquish 100% of the block area back to the Government of India.

DS 03 Block

In August 2011, we applied for a sixteen month extension to Phase I under excusable delay in obtaining requisite clearances and approvals for the aero-magnetic survey of 12,000 line kilometers. In April 2012, we proposed to the Government of India to relinquish the block and waive off the unfinished work program of 12,000 line kilometers of aero-magnetic survey on the grounds of delay in obtaining requisite clearance and approval. Currently, we are waiting for the Government of India’s approval and direction.

DS 04 Block

It is our intention as Operator of this block to drill ten core holes to a depth of 500 meters. The acquisition of a 500 line kilometer 2D seismic survey has been completed. We have applied for six months extension of Phase I from June 7, 2012 to December 6, 2012 and currently, waiting for the Government of India approval.

RJ20 and RJ21 Blocks

The Operator has budgeted to drill two wells during the period April 1, 2012 to March 31, 2013 to a depth of 1,500 meters on the RJ20 Block. On May 7, 2012, OIL spudded a third exploratory well at Punam-1 in the RJ-20 block to a planned target depth of 1,250 meters and on June 22, 2012, drilling operations were completed. This well is currently being tested based on positive indications of oil-bearing formations within the targeted Bilara-Jodhpur reservoirs. The Punam-1 is the third well in a twelve well exploratory program for RJ20 Block. Based on this oil discovery, the consortium applied for a second extension of twelve months of Phase I from July 21, 2012 to July 20, 2013. Currently, we are waiting for the Government of India approval

With regard to Block RJ21, the Operator, along with Hindustan Petroleum Corporation Limited have proposed to relinquish the block without applying for the first six-month extension and has communicated the same to the Government of India. We disagree with this relinquishment and have written to the Government of India to grant us the first six-month extension to allow us to complete our share of the minimum work program commitment. However, such arrangements were not approved by the Government of India and in July 2012, the Government of India invoked the bank guarantee of $897,500 provided for this block and put the joint venture consortium in default forcing all the parties to relinquish their interest. In addition, we have recognized a provision for potential financial penalties of $0.9 million towards estimated costs of the unfinished minimum work program of Phase I.

Myra and Sara Licenses

On October 6, 2010, we commenced exploration activities in Israel by entering into a Joint Operating Agreement with a consortium involved in two existing oil and gas licenses located in deep water off the coast of Israel. We became the operator of both the Myra and Sara licenses and have completed the processing and interpretation of 1,360 square kilometers of previously acquired 3D seismic data.

On April 17, 2012, we finalized the terms of and entered into with a third party a Drilling Contract for an existing Drill Rig and Associated Services for the Semi-submersible Drilling Rig, the Noble Homer Ferrington. Under the terms of the agreement, on December 1, 2011, we posted a letter of credit and made a cash payment on behalf of ourselves and our joint venture partners, to prepay for 118 drilling days for the Drilling Rig. The Noble Homer Ferrington is a 4th Generation Enhanced Pacesetter design Semi-submersible rig capable of drilling in water depths of up to approximately 2,100 meters (7,000 feet).

On June 27, 2012, the drilling of the Myra-1 well commenced. The Myra-1 is located approximately 80 kilometers off the coast of Israel in approximately 1,500 meters of water. The Myra-1 well is to be drilled vertically to an approximate depth of 5,200 meters Total Vertical Depth Subsea (TVDSS). On August 6, 2012, we announced that we had encountered a stuck pipe incident while drilling the well which could not be released. As we could no longer continue the drilling according to the original plan, after consultation with the partners, we decided to side-track the current hole and continue the drilling to reach the gas target.

Upon completion of the Myra-1 well, the drilling rig will move to the Sara-1 location, which is approximately 60 kilometers off the coast of Israel in approximately 1,400 meters of water. The Sara-1 well is planned to be drilled vertically to approximately 4,000 meters TVDSS.

Samuel License

On August 1, 2010, we were granted an offshore license from the state of Israel where we became the co-operator of the Samuel license through our partnership with Adira Energy and a commonly owned Israeli company, Adira Geo Global Ltd.

A 43 square kilometer 3D seismic acquisition program on the Samuel license was completed in July 2011. Internal processing and interpretation of the 3D seismic data is currently underway. The summary interpretation report was submitted to the Ministry prior to the deadline of April 1, 2012. On July 3, 2012 we announced the approval by the Ministry for the extension of the dates for the execution of a drilling contract from July 1, 2012 to October 31, 2012 and the spudding of the first well on the Samuel license from July 1, 2012 to April 30, 2013. A further new milestone to the Samuel license of completing an environmental study by July 10, 2012 was also completed.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from changes in market rates and prices. We are exposed to the impact of market fluctuations associated with the following:

Interest Rate Risk

We consider our exposure to interest rate risk to be immaterial. Interest rate exposures relate entirely to our investment portfolio, as we do not have short-term or long-term debt. Our investment objectives are focused on preservation of principal and liquidity. We manage our exposure to market risks by limiting investments to high quality bank issuers at overnight rates, or government securities of the United States or Canadian federal governments such as Guaranteed Investment Certificates or Treasury Bills. We do not hold any of these investments for trading purposes. We do not hold investments in equity securities. We do not expect any material loss from cash equivalents and therefore we believe our interest rate exposure on invested funds is not material.

Foreign Currency Exchange Risk

Substantially, all of our cash and cash equivalents are held in U.S. dollars or U.S. dollar denominated securities. Certain of our expenses are fixed or denominated by foreign currencies including the Canadian dollar, the Indian rupees and the Israeli shekel. We are exposed to market risks associated with fluctuations in foreign currency exchange rates related to our transactions denominated in currencies other than the U.S. dollar.

At June 30, 2012, we had not entered into any market risk sensitive instruments relating to our foreign currency exchange risk.

Commodity Price Risk

Oil and natural gas prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control. These factors include the level of global demand for petroleum products, international supply of oil and gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions, the price and availability of alternative fuels, overall economic conditions, both international and domestic, and possible international disruptions. We cannot predict future oil and gas prices with any degree of certainty. Sustained weakness in oil and gas prices may adversely affect our ability to obtain capital to fund our activities and could in the future require a reduction in the carrying value of our oil and gas properties. Similarly, an improvement in oil and gas prices can have a favorable impact on our financial condition, results of operations and capital resources.

At June 30, 2012, we had not entered into any market risk sensitive instruments as such term is defined in Item 305 of Regulation S-K, relating to oil and natural gas.

Trading Risks

We have no market risk sensitive instruments held for trading purposes.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2012. Disclosure controls and procedures are defined under SEC rules as controls and other procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based on our evaluation of our disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2012, our disclosure controls and procedures were effective.

Changes in Internal Controls

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Securities Exchange Act), during the six months ended June 30, 2012 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1A.

RISK FACTORS

Risks relating to us are described in detail in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011 filed on March 28, 2012. Changes or additions to certain of those risk factors, or, those which are currently deemed to be material have been included in this Quarterly Report. Reference should be made to our Annual Report as well as to the following for complete information regarding all risk factors material to investors.

We Have A History Of Losses And Our Liquidity Position Imposes Risk To Our Operations

To date, we have not achieved our planned principal operations from our oil and gas operations and we are considered to be in the development stage of our operations. We have incurred negative cash flows from our operations, and at this time all exploration activities and overhead expenses are primarily financed by way of the issue and sale of equity securities with a small portion being financed from oil sales and interest income on our cash balances. The recoverability of the costs we have incurred to date is uncertain and is dependent upon achieving commercial production or sale. Our prospects must be considered in light of the risks, expenses and difficulties which are frequently encountered by companies in their early stage of operations, particularly companies in the oil and gas exploration industry.

Our ability to continue as a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate profitable operations from oil and natural gas interests in the future. Our financial statements as at and for the six months ended June 30, 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We incurred a net loss of $2.7 million, used $1.3 million of cash flow in our operating activities and had an accumulated deficit of $62.9 million. These matters raise substantial doubt about our ability to continue as a going concern.

We expect to incur substantial expenditures to further our exploration and development programs. Our existing cash balance at June 30, 2012 and our anticipated cash flow from operating activities are not be sufficient to satisfy current obligations and meet our exploration and development commitments. Development activities within our blocks and licenses that are unable to achieve production in the short term may need to be deferred or curtailed. We are considering various alternatives to remedy any future shortfall in capital. We deem it necessary to raise capital through equity markets, debt markets or other financing arrangements, which could include the sale of oil and gas interests or participation arrangements in oil and gas interests that may be available. If these activities are unsuccessful, we may be forced to substantially curtail or cease our exploration, appraisal and development expenditures and possibly curtail other of our activities, which could lead to our inability to meet all of our commitments.

Should the going concern assumption not be appropriate and we are not able to realize our assets and settle our liabilities, commitments and contingencies (as more fully described in note 2 of our unaudited consolidated financial statements) in the normal course of operations, adjustments would be required to our unaudited consolidated financial statements to the amounts and classifications of assets and liabilities, and these adjustments could be significant. Our unaudited consolidated financial statements do not reflect the adjustments or reclassifications of assets and liabilities that would be necessary if we are unable to continue as a going concern.

GSPC Is Seeking a Substantial Payment From Us On Account Of GSPC’s Exploration Costs On the KG Offshore Block

For a full description of this matter, see “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Carried Interest Dispute on the KG Offshore Block”.

We estimate the amount of GSPC’s claim as of June 30, 2012 to be approximately $306.9 million plus interest, of which 50% is for the account of Roy Group (Mauritius) Inc.

We dispute these positions of GSPC and the conclusions reached by GSPC and we intend to vigorously protect our contractual rights in accordance with the dispute resolution process under the Carried Interest Agreement, the PSC and the Joint Operating Agreement as may be appropriate. However, there can be no assurance that we will not by operation of law or through the dispute resolution process be required to pay GSPC the full amount it alleges to be owed, nor that adequate capital will be available to us to pay any such amounts, with consequent impact on our ability to continue as a going concern.

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Our Activities Are in Pre-Production Stage And We Have a Very Limited Operating History. Our Reserves Of Oil And Gas Are Not Material. We Anticipate Future Losses and There Is No Assurance Of Our Success

We are in the early stage of developing our operations. We have a very limited operating history and we have realized very limited revenues from our activities. We do not have material reserves of oil and gas as June 30, 2012.

Our activities in the oil and natural gas exploration and production industry have primarily involved entering into ten PSCs with the Government of India. We also have exploration activities in Israel and Colombia; however those activities are in the very early stages of exploration. Our exploration opportunities are highly speculative and should any of these opportunities not result in the discovery of commercial quantities of oil and gas reserves, our investment in the venture could be lost. Our current plans are to conduct the exploration and development activities on the areas offshore and onshore in accordance with the terms of the production sharing and other contracts to which we are a party. There can be no assurance that the exploratory drilling to be conducted on the exploration blocks in which we hold an interest will result in any discovery of hydrocarbons or that any hydrocarbons that are discovered will be in commercially recoverable quantities. Further, the realization of any revenues from commercially recoverable hydrocarbons is substantially dependent upon the ability to deliver, store and market any hydrocarbons discovered. As of June 30, 2012, there are no or limited facilities for the delivery and storage of hydrocarbons in the areas covered by our PSCs and licenses.

As a company engaged in exploratory oil and gas activities we are exposed to a number of special risks including, among others:

We may fail to discover oil and gas in commercial quantities;

There are uncertainties as to the costs to be incurred in our exploratory drilling activities, cost overruns are possible and we may encounter mechanical difficulties and failures in completing wells;

There are uncertain costs inherent in drilling into unknown formations, such as over-pressured zones, high temperatures and tools lost in the hole; and

We may make changes in our drilling plans and locations as a result of prior exploratory drilling.

There can be no assurance that the ventures in which we are a participant or hold an interest will be successful in addressing these risks, and any failure to do so could have a material adverse effect on our prospects for the future.

Cautionary Statement For Purposes Of The “Safe Harbor” Provisions Of The Private Securities Litigation Reform Act Of 1995

With the exception of historical matters, the matters discussed in this Report are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Forward-looking statements made herein include, but are not limited to:

statements in this Report regarding our plans and objectives relating to our future operations,

plans and objectives regarding the exploration, development and production activities conducted on the exploration blocks in India, Israel and Colombia where we have interests,

plans regarding drilling activities intended to be conducted through the ventures in which we are a participant, the success of those drilling activities and our ability and the ability of the ventures to complete any wells on the exploration blocks, to develop reserves of hydrocarbons in commercially marketable quantities, to establish facilities for the collection, distribution and marketing of hydrocarbons, to produce oil and natural gas in commercial quantities and to realize revenues from the sales of those hydrocarbons,

our ability to maintain compliance with the terms and conditions of licenses and our production sharing and other contracts, including the related work commitments, to obtain consents, waivers and extensions under the terms of these licenses and production sharing and other contracts as and when required, and our ability to fund those work commitments,

our plans and objectives to join with others or to directly seek to enter into or acquire interests in additional licenses and production sharing or other contracts in India, Israel, Colombia and elsewhere,

our assumptions, plans and expectations regarding our future capital requirements,

our plans and intentions to raise additional capital we require and our likelihood of success in that regard,

the costs and expenses to be incurred in conducting exploration, well drilling, development and production activities, our estimates as to the anticipated annual costs of those activities and the adequacy of our capital to meet our requirements for our present and anticipated levels of activities are all forward-looking statements.

These statements appear, among other places, in Part I under the caption “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Part II under the caption “Item 1A - Risk Factors”. If our plans fail to materialize, your investment will be in jeopardy.

We cannot assure you that our assumptions or our business plans and objectives will prove to be accurate or be able to be attained.

We cannot assure you that the exploratory drilling to be conducted on the exploration blocks in which we hold an interest will result in a discovery of reserves of hydrocarbons or that any hydrocarbons discovered will be in commercially recoverable quantities. In addition, the realization of any revenues from commercially recoverable hydrocarbons is dependent upon the ability to deliver, store and market any hydrocarbons discovered.

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Our ability to realize material revenues cannot be assured. Our ability to successfully drill, test and complete significant numbers of producing wells cannot be assured.

We cannot assure you that we will have available the capital required to meet our plans and objectives at the times and in the amounts required or we will have available to us the amounts we are required to fund under the terms of the licenses or production sharing and other contracts we are a party to. We cannot assure you that we will be successful in raising the additional capital we currently require.

We cannot assure you that we will be successful in joining any further ventures seeking to be granted licenses or production sharing or other contracts in India, Israel, Colombia or elsewhere or that we will be successful in acquiring interests in existing ventures.

We cannot assure you that we will obtain all required consents, waivers and extensions from a governmental or regulatory body in India, Israel or Colombia as and when required to maintain compliance with the licenses or production sharing or other contracts we have entered into, that we may not be adversely affected by any delays we may experience in receiving those consents, waivers and extensions, and that we may not incur liabilities under the production sharing or other contracts for our failure to maintain compliance with the requirements of and timely complete the related work programs.

We cannot assure you that GSPC will not be successful in its efforts to obtain payment from us on account of exploration costs it has expended on the KG Offshore Block for which it asserts we are liable or otherwise seek to hold us in breach of the PSC or commence arbitration proceedings against us and be successful in its assertion that it can terminate our contract with them or the Government of India.

We cannot assure you of our ability to meet our goals and objectives. The consequences to us from adverse developments in general economic or capital market conditions, events having international consequences, or military or terrorist activities could have a material adverse effect on us.

An investment in shares of our common stock involves a high degree of risk. There can be no assurance that the exploratory drilling to be conducted on the exploration blocks in which we hold an interest will result in any discovery of reserves of hydrocarbons or that any hydrocarbons that are discovered will be in commercially recoverable quantities. In addition, the realization of any revenues from commercially recoverable hydrocarbons is dependent upon the ability to deliver, store and market any hydrocarbons that are discovered.

Our inability to meet our goals and objectives or the consequences to us from adverse developments in general economic or capital market conditions, events having international consequences, or military or terrorist activities could have a material adverse effect on us. We caution you that various risk factors accompany those forward-looking statements and are described, among other places, under the caption “Risk Factors” herein. They are also described in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. These risk factors could cause our operating results, financial condition and ability to fulfill our plans to differ materially from those expressed in any forward-looking statements made in this Report and could adversely affect our financial condition and our ability to pursue our business strategy and plans.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 17, 2012, we entered into subscription agreements with certain investors for the issuance of 3,853 units (“Units”) at US$220.00 per Unit. The offering was made to a small group of investors outside of the United States in reliance on Rule 903 of Regulation S under the Securities Act of 1933 (the “Securities Act”), as amended, for gross proceeds of $847,660. Poalim IBI Underwriting Ltd. and Meitav Issuing and Finance Ltd. acted as placement agents for the transaction and in connection therewith, we paid them an aggregate amount of $56,188 in placement fees.

Under the terms of the Agreements, each Unit consist of 1,000 common shares, par value $0.001 per share (“Common Stock”) and 750 warrants that expired on July 31, 2012 (the “July Warrants”) and 750 warrants expiring on March 31, 2013 (the “March Warrants” and, together with the July Warrants, the “Warrants”). Each Warrant entitles the holder to purchase one share of Common Stock. The July Warrants had an exercise price of US$0.26 per share of Common Stock and the March Warrants have an exercise price of US$0.30 per share of Common Stock. None of the July Warrants were exercised.

The Units were sold without registration under the Securities Act, in reliance on Section 4(2) of the Securities Act and Regulation S promulgated thereunder. The sale was made outside the United States and the Units were sold without any general solicitation by the Company or its representatives.

Pursuant to the terms of the subscription agreements, the Company filed a Form S-3 Registration Statement on May 24, 2012 (as amended by Amendment No. 1, filed June 18, 2012 and declared effective on June 28, 2012, the “Registration Statement”) (file no. 333-181673), to register the Common Stock and the Common Stock underlying the Warrants and thereby enable the resale of the Common Stock. The Company will not receive any proceeds from the resale of the Common Stock under such Registration Statement.

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ITEM 6.

EXHIBITS

31.1*	Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* filed or furnished herewith

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

GEOGLOBAL RESOURCES INC.

August 10, 2012	By: /s/ Sunil S. Karkera
	Sunil S. Karkera
	Chief Financial Officer
	(Signing on behalf of the registrant and as
	Principal Financial and Accounting Officer)

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