XOTC:PKPL Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to _____

Commission File Number: 000-51712

PARK PLACE ENERGY CORP.
(Exact name of small business issuer as specified in its charter)

Nevada 71-0971567
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
300, 400 - 5th Avenue SW  
Calgary, Alberta, Canada T2P 0L6
(Address of principal executive offices) (Zip Code)

403-539-8710
Registrant’s telephone number, including area code

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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[ x ] No[   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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[ x ] No[   ]

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 the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ] Accelerated filer [   ]
Non-accelerated filer [   ]
(Do not check if a smaller reporting company)
Smaller reporting company [ x ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes[   ] No[ x ]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date 20,667,581 shares of common stock as of August 10, 2012.



PARK PLACE ENERGY CORP.
 
Quarterly Report On Form 10-Q
For The Quarterly Period Ended
June 30, 2012
 
INDEX

PART I – FINANCIAL INFORMATION 3
   Item 1. Financial Statements 3
   Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
   Item 3. Quantitative and Qualitative Disclosures About Market Risk 7
   Item 4. Controls and Procedures 7
     
PART II – OTHER INFORMATION 7
   Item 1. Legal Proceedings 7
   Item 1A. Risk Factors 7
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 7
   Item 3. Defaults Upon Senior Securities 7
   Item 4. (Removed and Reserved) 7
   Item 5. Other Information 7
   Item 6. Exhibits 7

2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PARK PLACE ENERGY CORP.
(An exploration stage company)
Consolidated financial statements
June 30, 2012
(Expressed in Canadian dollars)
(unaudited)

Index
Consolidated balance sheets F–1
Consolidated statements of operations F–2
Consolidated statements of cash flows F–3
Notes to the consolidated financial statements F–4


PARK PLACE ENERGY CORP.
(An exploration stage company)
Consolidated balance sheets
(Expressed in Canadian dollars)

    June 30,     December 31,  
    2012     2011  
  $   $  
    (unaudited)        
ASSETS            
Current assets            
   Cash   163,733     432,535  
   Amounts receivable   18,769     15,646  
   Prepaid expenses and deposits   10,793     17,558  
   Due from related party (Note 6)   5,187     3,200  
Total current assets   198,482     468,939  
   Property and equipment   5,862     6,768  
   Oil and gas properties (Note 3)   307,571     183,549  
Total assets   511,915     659,256  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)            
Current liabilities            
   Accounts payable and accrued liabilities   53,679     61,328  
Total liabilities   53,679     61,328  
Nature of operations and continuance of business (Note 1)            
Commitments and contingencies (Note 7)            
Stockholders’ equity (deficit)            
   Common stock 
   Authorized: 40,000,000 shares, par value US$0.00001 
   Issued and outstanding: 20,667,581 shares (2011 – 20,667,581 shares)
  212     212  
   Additional paid-in capital   12,811,461     12,811,461  
   Accumulated other comprehensive income   207,406     195,570  
   Deficit accumulated during the exploration stage   (12,560,843 )   (12,409,315 )
Total stockholders’ equity   458,236     597,928  
Total liabilities and stockholders’ equity   511,915     659,256  

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

F-1


PARK PLACE ENERGY CORP.
(An exploration stage company)
Consolidated statements of operations
(Expressed in Canadian dollars)
(unaudited)

                            Accumulated  
                            from May 4,  
    Three months     Three months     Six months     Six months     2006 (date of
    ended     ended     ended     ended     inception) to  
    June 30,     June 30,     June 30,     June 30,     June 30,  
    2012     2011     2012     2011     2012  
  $   $   $   $   $  
                               
Oil and gas revenue           3,391         1,652,573  
                               
Direct costs                              
   Depletion                   1,256,066  
   Production costs   1,054         4,365         1,167,947  
                               
Total direct costs   1,054         4,365         2,424,013  
                       
    (1,054 )       (974 )       (771,440 )
                               
Expenses                              
                               
   Consulting   15,230     38,072     25,876     44,643     1,979,513  
   Depreciation   453     471     906     940     7,146  
   Exploration costs                   308,534  
   Foreign exchange loss   3,828     2,572     (3,494 )   3,432     121,718  
   Impairment (recovery) of oil and gas costs       (35,364 )       (35,364 )   4,304,265  
   Investor relations   1,345     7,423     1,720     7,525     910,367  
   Management fees   12,211     15,630     24,235     15,630     701,738  
   Office and general   16,277     15,691     33,155     24,225     770,675  
   Professional fees   19,484     42,580     53,275     42,036     1,072,472  
   Stock-based compensation                   2,014,106  
   Travel   11,284         14,881         218,580  
                               
Total expenses   80,112     87,075     150,554     103,067     12,409,114  
                               
Loss before other income (expense)   (81,166 )   (87,075 )   (151,528 )   (103,067 )   (13,180,554 )
                               
Other income (expense)                              
                               
   Accretion of discount on convertible note payable       (13,958 )       (13,958 )   (146,205 )
   Gain on marketable securities                   4,635  
   Gain on sale of oil and gas properties                   381,166  
   Gain on settlement of debt       4,885         4,885     346,663  
   Interest expense                   (7,862 )
   Interest and other revenue       6,700         19,678     109,705  
   Loss on sale of oil and gas properties                   (53,869 )
   Loss on write-down of promissory note                   (254,997 )
                               
Total other income (expense)   -     (2,373 )       10,605     379,236  
                               
Loss before income taxes   (81,166 )   (89,448 )   (151,528 )   (92,462 )   (12,801,318 )
                               
Deferred income tax recovery                   291,060  
                               
Net loss for the period   (81,166 )   (89,448 )   (151,528 )   (92,462 )   (12,510,258 )
                               
Other comprehensive income (loss)                              
                               
   Foreign currency translation adjustment   5,865     1,067     11,836     1,122     207,406  
                               
Comprehensive loss   (75,301 )   (88,381 )   (139,692 )   (91,340 )   (12,302,852 )
                               
Loss per share, basic and diluted       (0.01 )   (0.01 )   (0.01 )      
                               
Weighted average number of shares outstanding   20,667,581     8,917,590     20,667,581     7,267,417      

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

F-2


PARK PLACE ENERGY CORP.
(An exploration stage company)
Consolidated statements of cash flows
(Expressed in Canadian dollars)
(unaudited)

                Accumulated from  
    Six months     Six months     May 4, 2006  
    ended     ended     (date of inception)  
    June 30,     June 30,     to June 30,  
    2012     2011     2012  
  $   $   $  
                   
Operating activities                  
                   
   Net loss for the period   (151,528 )   (92,462 )   (12,510,258 )
                   
   Adjustments to reconcile net loss to net cash used in operating activities:            
       Accretion of discount on convertible note payable       13,958     146,205  
       Deferred income tax recovery           (291,060 )
       Depletion           1,256,066  
       Depreciation   906     940     7,146  
       Gain on sale of marketable securities           (4,635 )
       Gain on sale of oil and gas properties           (381,166 )
       Gain loss on settlement of debt       (4,885 )   (346,663 )
       Impairment of oil and gas costs           2,984,236  
       Interest accrued on notes payable           20,392  
       Shares and warrants issued for services           386,975  
       Shares issued for consulting services           508,785  
       Stock-based compensation           2,014,106  
       Write-off of exploration advances           37,558  
                   
   Changes in operating assets and liabilities                  
       Amounts receivable   (3,123 )   (34,281 )   (18,769 )
       Prepaid expenses and deposits   6,765     (657 )   (10,833 )
       Accounts payable and accrued liabilities   (7,649 )   (30,426 )   1,013,631  
       Due from related parties   (1,987 )       60,262  
                   
Net cash used in operating activities   (156,616 )   (147,813 )   (5,128,022 )
                   
Investing activities                  
                   
   Cash acquired through recapitalization           320  
   Exploration advances           (270,919 )
   Loan receivable           (572,000 )
   Proceeds from sale of oil and gas properties           50,000  
   Proceeds from sale of marketable securities           79,635  
   Oil and gas properties expenditures   (124,022 )       (4,052,553 )
   Purchase of property and equipment           (13,008 )
                 
Net cash used in investing activities   (124,022 )       (4,778,525 )
                   
Financing activities                
                   
   Proceeds from loans payable       145,550     770,550  
   Proceeds from issuance of common stock/ subscriptions received           9,094,933  
   Repurchase of common stock           (15,028 )
                   
Net cash provided by financing activities       145,550     9,850,455  
                   
Effect of exchange rate changes on cash   11,836     3,640     219,825  
                   
Change in cash   (268,802 )   1,377     163,733  
                   
Cash, beginning of period   432,535     22      
                   
Cash, end of period   163,733     1,399     163,733  

Supplementary cash flow information (Note 8)

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

F-3


PARK PLACE ENERGY CORP.
(An exploration stage company)
Notes to the consolidated financial statements
June 30, 2012
(Expressed in Canadian dollars)
(unaudited)

1.

Nature of Business and Continuance of Operations

   

The accompanying consolidated financial statements of Park Place Energy Corp. (the “Company”) should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

   

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

   

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has a history of negative cash flows from operating activities and the continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at June 30, 2012, the Company has an accumulated deficit of $12,560,843 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

   
2.

Recent Accounting Pronouncements

   

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

   
3.

Oil and Gas Properties


      June 30,     December 31,  
      2012     2011  
    $   $  
               
  Unproven Properties            
     Bulgaria   307,571     183,549  

The Company presently holds a 98,000 square kilometer exploration claim in the Dobroudja Basin located in northeast Bulgaria (the “Vranino Block”). The Company intends to conduct exploration activities over a 5 year period including seismic processing and the drilling of, at minimum, six test wells for a minimum cost of approximately US$5,000,000. On October 25, 2010, an appeal against the Bulgarian Council of Ministers decision to award the Vranino Block to the Company was filed with the Supreme Administrative Court of Bulgaria and on March 26, 2012 the Court upheld the Company’s claim to the Vranino property and rejected the appeal.

   
4.

Stock Options

   

The following table summarizes the continuity of the Company’s stock options:


            Weighted     Weighted        
            average     average     Aggregate  
            exercise     remaining     intrinsic  
      Number     price     contractual life     value  
      of options     US$     (years)   $  
                           
  Outstanding, December 31, 2011   594,881     0.30              
                           
     Expired   (294,881 )   0.51              
  Outstanding and exercisable, June 30, 2012   300,000     0.10     4.4      

F-4


PARK PLACE ENERGY CORP.
(An exploration stage company)
Notes to the consolidated financial statements
June 30, 2012
(Expressed in Canadian dollars)
(unaudited)

4.

Stock Options (continued)

   

Additional information regarding stock options as of June 30, 2012, is as follows:


      Exercise        
  Number of   price        
   options   US$     Expiry date  
               
   300,000   0.10     November 21, 2016  

As of June 30, 2012, the Company had no unrecognized compensation expense relating to unvested options.

   
5.

Share Purchase Warrants

   

The following table summarizes the continuity of share purchase warrants:


            Weighted  
            average  
            exercise  
      Number of     price  
      warrants     US$  
               
  Balance, December 31, 2011   254,523     0.27  
               
     Expired   (254,523 )   0.27  
  Balance, June 30, 2012        

6.

Related Party Transactions

     
(a)

During the six months ended June 30, 2012, the Company incurred consulting fees of $nil (2011 - $7,143) to the President of the Company.

     
(b)

During the six months ended June 30, 2012, the Company incurred management fees of $24,235 (US$24,000) (2011 – $15,630) to a company controlled by the President of the Company.

     
(c)

As at June 30, 2012, the amount of $3,200 (December 31, 2011 - $3,200) is due from a company controlled by the President of the Company which is non-interest bearing, unsecured, and due on demand.

     
(d)

As at June 30, 2012, the amount of $1,987 (December 31, 2011 – $nil) is due from the President of the Company which is non-interest bearing, unsecured, and due on demand.

     
(e)

As at June 30, 2012, the Company owed $5,690 (US$5,673) (December 31, 2011 - $5,308 (US$5,398)) to a company controlled by a director of the Company which is included in accounts payable and accrued liabilities. This amount owing is non-interest bearing, unsecured, and due on demand.

     
(f)

As at June 30, 2012, the Company owed $nil (December 31, 2011 - $1,967) to a company controlled by the President of the Company which is included in accounts payable and accrued liabilities. This amount owing is non-interest bearing, unsecured, and due on demand.

     
7.

Commitments and Contingencies

     
(a)

The Company’s Vranino 1-11 oil and gas exploration claim in Bulgaria was the subject of an appeal before the Supreme Administrative Court of Bulgaria whereas a competitive bidder sought to overturn the award. The court denied the appeal of the competitive bidder.

     
(b)

The Company is obligated to perform a five year work program on the Vranino 1-11 block of North East Bulgaria which total cost is estimated at US$5,000,000, subject to the finalization of the permit award in favor of the Company.

F-5


PARK PLACE ENERGY CORP.
(An exploration stage company)
Notes to the consolidated financial statements
June 30, 2012
(Expressed in Canadian dollars)
(unaudited)

8.

Supplementary Cash Flow Information


                  Accumulated from  
      Six Months     Six Months     May 4, 2006 (date
      Ended     Ended     of inception) to  
      June 30     June 30,     June 30,  
      2012     2011     2012  
    $   $   $  
                     
  Non-cash investing and financing activities:                  
     Common stock issued to settle debt       473,127     636,638  
     Common stock issued for conversion of note payable and interest           315,091  
     Marketable securities received for assignment of oil and gas interest       75,000     75,000  
                     
  Supplemental disclosures:                  
     Interest paid            
     Income taxes paid            

9.

Segmented Information

   

The Company’s operations are in the resource industry in Canada and Bulgaria. Geographical information is as follows:


  June 30, 2012   Canada     Bulgaria     Total  
    $   $   $  
  Revenue   3,391         3,391  
  Property and equipment   5,862         5,862  
  Oil and gas properties       307,571     307,571  
               
  June 30, 2011    Canada     Bulgaria     Total  
    $   $   $  
  Revenue            
  Property and equipment   6,890         6,890  
  Oil and gas properties   75,039         75,039  

F-6


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.

Overview of our Business

Name and Organization

We were incorporated under the laws of the State of Nevada on August 27, 2004 under the name ST Online Corp. On June 22, 2007, we entered into a business combination agreement with Park Place Energy Inc., a private company incorporated under the laws of the Province of Alberta, Canada, and 0794403 B.C. Ltd., a wholly-owned subsidiary of our company incorporated under the laws of British Columbia. Pursuant to this business combination agreement, Park Place Energy Inc. and 0794403 B.C. Ltd. amalgamated under the provisions of the British Columbia Business Corporations Act and continued as Park Place Energy Inc., a company governed by the British Columbia Business Corporations Act.

On July 6, 2007, we completed a forward split of our shares of common stock on the basis of eight new shares of common stock for each one share of common stock outstanding on that date and increased the authorized share capital from 100,000,000 shares of common stock to 800,000,000 shares of common stock. At the same time, we merged with our wholly-owned subsidiary, Park Place Energy Corp. which we incorporated under the laws of the State of Nevada in contemplation of the acquisition of all of the issued and outstanding shares of Park Place Energy Inc. and our name was then changed to Park Place Energy Corp.

On July 23, 2007, we completed a forward split of our shares of common stock on the basis of one and one-half new shares of common stock for each one share of common stock outstanding on that date and increased the authorized share capital from 800,000,000 shares of common stock to 1,200,000,000 shares of common stock.

On July 30, 2007, pursuant to the terms of a business combination agreement, we issued to each shareholder of record of Park Place Energy Inc. one share of our common stock for every two shares they held of Park Place Energy Inc. As a result, we issued 8,995,662 shares of common stock (299,855 shares on a post March 24, 2010 reverse split basis) shares of common stock to the former shareholders of Park Place Energy Inc. Additionally, as part of this transaction, a total of 45,000,000 shares of our common stock (1,500,000 shares on a post March 24, 2010 reverse split basis) held by former principals of our company were surrendered for cancellation. We thereby acquired Park Place Energy Inc. For accounting purposes, the acquisition was treated as a recapitalization with Park Place Energy Inc. being the accounting acquirer and the go-forward financial statements reflect the history of Park Place Energy Inc. from its inception on May 4, 2006. As a result of the acquisition, the business of our company is now the acquisition and exploration of oil and gas properties.

On August 31, 2009, we completed a forward split of our shares of common stock on the basis of ten new shares of common stock for each one share of common stock outstanding on that date and increased the authorized share capital from 1,200,000,000 shares of common stock to 12,000,000,000 shares of common stock.

On March 24, 2010, we completed a reverse split of our shares of common stock on the basis of one new share of common stock for each three hundred shares of common stock outstanding on that date and decreased our authorized share capital from 12,000,000,000 shares of common stock to 40,000,000 shares of common stock.

General

Park Place Energy Corp. is an exploration stage company engaged in exploring for oil and natural gas. Throughout this Quarterly Report on Form 10-Q, the terms "Park Place" "we" "us," "the Company", "our" and "our company" refer to Park Place Energy Corp. and its subsidiaries.

3


Today, the operations of our company and its subsidiaries concentrate on CBM and tight gas exploration and development in the Dobrich region in north eastern Bulgaria. Our goal is to become a recognized producer of gas in Bulgaria and in CBM property acquisition, exploration, development and production in Europe. Our principal business offices are located at Suite 300, 4-5th Avenue SW, Calgary, AB, Canada, T2P 0L6 and our telephone number is (403) 537-8710.

We currently have interests in oil and gas properties in the Canadian province of Saskatchewan and in Eastern Bulgaria. See “Properties” for more information about our interests. On October 12, 2010 the Bulgarian Council of Ministers granted to the Company a permit for the exploration and prospecting of oil and natural gas in the Dobroudja Basin. The Permit is for a five year period. On October 25, 2010, an appeal against the Bulgarian Council of Ministers decision to award the Vranino Block to the Company was filed with the Supreme Administrative Court of Bulgaria and on March 26, 2012 the Court upheld the Company’s claim to the Vranino property and rejected the appeal.

Park Place believes that good environmental, social, health and safety performance is an integral part of our business success. Our commitment to these principles is demonstrated by the fact that we have had no lost-time accidents in over six years and no major environmental incidents. We conduct our business with respect and care for our employees, contractors, communities, and the environments in which we operate. Our vision is zero harm to people and the environment while creating value for our shareholders as well as for Bulgaria, including the regions and communities within which we operate. We have a commitment to be a good corporate citizen of the countries in which our properties are located, striving to emphasize and utilize very high levels of local personnel, services, and equipment.

Our Website

Our website can be found at www.parkplaceenergy.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with or furnished to the U.S. Securities and Exchange Commission ("SEC"), pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act"), can be accessed free of charge by linking directly from our website under the "Investor Relations - SEC Filings" caption to the SEC's Edgar Database.

Vranino 1-11 exploration block, Bulgaria

In 2010, we revamped our business strategy to focus on obtaining European properties for both conventional and unconventional gas (shale, tight gas and coal bed methane). We retained consultants with specialized technical expertise in unconventional gas exploration to assist us in locating, assessing and planning suitable exploration and development of potential opportunities. In October of 2010, we were awarded an exploration permit for the “Vranino 1-11 block” located in Dobroudja Basin by the Bulgarian Counsel of Ministers, with terms and conditions of the permit as follows:

  • Five year term exploration program;

  • Perforate and re-test the Vranino #1 well previously drilled;

  • Initiate a comprehensive 2-D and 3-D seismic program over the license area,

  • Drill and complete a 5 additional test wells in the eastern up-thrown block within the license area

Our minimum work commitment as required by the permit broken down by year is as follows:

Year Exploration activity Budgeted cost
Year 1 Complete the Vranino #1 well, Identify existing seismic lines that would be good candidates for reprocessing, Purchase and reprocess existing seismic data. $350,000
Year 2 Design and make initial arrangements for acquisition of 2-D seismic, Acquisition of new 2-D high resolution seismic; Process and interpret 2-D seismic; Incorporate data (2-D) into geologic model; Design and make initial arrangements for new 3-D high resolution seismic acquisition $275,000
Year 3 Acquisition of new 3-D high resolution seismic; Process and interpret 3-D seismic; Incorporate data (3-D) into geologic model. $350,000
Year 4 Design drilling program; Drill and complete first of five wells; Test and evaluate production; Design drilling program for remaining four wells of 5- Spot based on results of evaluation of first well. $800,000

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Year 5 Drill and complete remaining four wells of 5-Spot; Design gathering system for five wells; Prepare Summary Report of project results. $3,050,000
  Total estimated work program budget $4,825,000

Our work relating to the Vranino 1-11 block has not yet commenced due to the fact the a competing bidder filed an appeal of the decision. On July 17, 2012 the Supreme Administrative Court in Bulgaria ruled in Park Place’s favor and upheld the company’s license and rejecting the appeal. The Company awaits news whether a subsequent appeal will be taken.

Overview

Our Plan of Operations is to focus on exploring and developing the Vranino 1-11 exploration claim in Bulgaria and acquiring interests in other exploration claims in Bulgaria or other regions.

Once the appeal issue is ultimately resolved, it is management’s intention to raise additional capital to facilitate the additional operations relating to Bulgaria.

Park Place intends to raise additional capital within the next twelve months to pay for the balance of the work program relating to Vranino 1-11 in Bulgaria.

Management intends to gather geological information regarding Vranino 1-11 from previously drilled wells, additional 2-D and 3-D seismic processing, the reprocessing of historical seismic data, and the purchase of additional seismic data held by third parties. Park Place plans to further test the existing Vranino #1 well over the next twelve months. Park Place estimates that the first year work program will cost approximately $800,000, assuming the permit dispute is resolved in our favor.

We anticipate spending approximately $350,000 over the next 12 months in office and general expenses.

Management is actively seeking further oil and gas opportunities either through direct acquisition or joint venture agreements in the region.

Working Capital

Based on our current plan of operations as set forth above, we estimate that we will require approximately $1,250,000 to pursue our plan of operations over the next 12 months. As at June 30, 2012, we had cash of $163,733 and working capital of $144,803.

We anticipate that additional funding will be in the form of equity financing from the sale of our common stock will be required to complete our plan of operations. If we do not continue to obtain additional financing going forward, we will reevaluate our plans.

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended June 30, 2012 which are included herein.

Revenue

We had oil and gas revenue of $3,391 for the six months ended June 30, 2012, compared to $nil for the six months ended June 30, 2011.

Since inception, we have earned oil and gas revenues of $1,652,573 relating to our successful exploration efforts and incurred depletion costs of $1,256,066 and production costs of $1,167,947. We have written off expenditures of $4,304,265 relating to exploration efforts that did not yield productive results.

Expenses

Our total operating expenses for the six months ending June 30, 2012 total $150,554 compared to $103,067 for the same period in 2011.

Our primary expense categories are described below:

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Office and General Expenses

Our office and general expenses increased to $33,155 for the six months ended June 30, 2012 from $24,225 for the six months ended June 30, 2011.

Professional Fees

Our professional fees increased to $53,275 for the six months ended June 30, 2012 from $42,036 for the six months ended June 30, 2011.

Management and Consulting

Our management and consulting fees decreased to $50,111 for the six months ended June 30, 2012 from $60,273 for the six months ended June 30, 2011.

Investor Relations Expenses

Our investor relations expense for the six months ended June 30, 2012 decreased to $1,720 compared to $7,525 for the six months ended June 30, 2011.

Loss

Our net loss before other items for the six months ended June 30, 2012 was $151,528, compared to $103,067 for the six months ended June 30, 2011.

Liquidity and Capital Resources

Overview

From May 4, 2006 (date of inception) to June 30, 2012, we raised net proceeds of $9,094,933 in cash from the issuance of common stock and share subscriptions received, $770,550 from loans payable for a total of $9,850,455 of cash provided by financing activities for the period.

We used net cash of $156,616 in operating activities for the six months ended June 30, 2012 compared to $147,813 for the same period in 2011. We used net cash of $5,128,022 in operating activities for the period from May 4, 2006 (date of inception) to June 31, 2012.

The following table summarizes our liquidity position as of June 30, 2012:

    As at     As at  
    June 30, 2012     December 31, 2011  
    (Unaudited)     (Audited)  
Cash $ 163,733   $ 432,535  
Working capital   144,803     407,611  
Total assets   511,915     659,256  
Total liabilities   53,679     61,328  
Shareholders’ equity   458,236     597,928  

We anticipate that we will require approximately $625,000 to pursue our plan of operations over the next 12 months. As at June 30, 2012, we had cash of $163,733 and working capital of $144,803. We require additional financing to pursue our plan of operations over the next 12 months. We anticipate raising additional funds over the next twelve months to pay for our exploration commitments in Bulgaria.

Cash Flow from Investing Activities

Net cash used in investing activities in the six months ended June 30, 2012 was $124,022 compared to $nil used in investing activities in the six months ended June 30, 2011.

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Cash Provided By Financing Activities

For the six months ended June 30, 2012, received cash of $nil compared to $145,550 for the six months ended June 30, 2011.

Off-Balance Sheet Arrangements

There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, which individually or in the aggregate is material to our investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures

Disclosure of Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2012 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures contained certain material weaknesses.

No Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We currently are party to legal proceedings in Bulgaria where a competitive bidder seeks to overturn the Bulgarian Counsel of Minister’s award of the Vranino 1-11 exploration claim to us. The Ministry of Energy, Environment and Tourism continues to support the granting of the award to Park Place. On July 17, 2012 the Supreme Administrative Court in Bulgaria ruled in our favor and dismissed the appeal and upheld the award of the Vranino permit to us. It is uncertain as to whether or not the competitor will take a subsequent appeal.

Item 1A. Risk Factors

Not applicable because we are a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None,

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

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Articles of Incorporation and By-laws
3.1 Articles of Incorporation(1)
3.2 Bylaws(2)
3.3 Certificate of Change Effective August 31, 2009(7)
3.4 Certificate of Change Effective March 24, 2010(8)
Material Contracts
10.1 Amalgamation agreement dated July 30, 2007 among the Company, Park Place Energy Inc., and 0794403 B.C. Ltd. (1)
10.2 Farmout Agreement dated May 30, 2006 between Bounty Developments Ltd. and the Company(1)
10.3 Oil Sands Lease No. 7406080083 dated August 10, 2006 (1)
10.4 Oil Sands Lease No. 7406080084 dated August 10, 2006 (1)
10.5 Seismic Option Agreement dated September 22, 2006 among the Company, Bounty Developments Ltd. and Damascus Energy Inc. (1)
10.6 Farmout and Option Agreement dated September 25, 2006 between the Company and Patch Energy Inc. (1)
10.7 Farmout Participation and Option Agreement dated October 12, 2006 among the Company, Terra Energy Corp., Regal Energy Ltd. and Patch Energy Inc. (1)
10.8 Amendment Agreement dated November 2, 2006 among Pine Petroleum Limited, Tidewater Resources Inc. and the Company (1)
10.9 Letter Agreement dated March 27, 2007 between the Company and Great Northern Oilsands, Inc. (1)
10.10 Letter Agreement dated April 4, 2007 between the Company and Great Northern Oilsands, Inc. (1)
10.11 Letter Agreement dated April 30, 2007 between the Company and Great Northern Oilsands, Inc. (1)
10.12 Earning Agreement dated June 1, 2007 among the Company, Great Northern Oilsands Inc. and Tidewater Resources Inc. (1)
10.13 Letter Agreement dated July 6, 2007 between Britcana Energy Ltd. and the Company (1)
10.14 Letter Agreement dated November 30, 2007 between Great Northern Oilsands, Inc. and the Company (5)
10.15 Participation Agreement dated August 8, 2007 between Montello Resources Ltd. and Great Northern Oilsands, Inc. (5)
10.16 Consulting Agreement dated January 1, 2007 between the Company and David Stadnyk(1)
10.17 Change of Control Agreement dated December 1, 2007 between the Company and Merchant Equities Capital Corp. (5)
10.18 Park Place Energy Corp. 2007 Stock Option Plan (5)
10.19 Park Place Energy Corp. 2007 Stock Option Plan, as amended June 2009(10)
10.20 Purchase and Sale Agreement dated February 15, 2008 among the Company, Panther Minerals Inc. and Brasam Extracao Ltda.(3)
10.21 Amended Management Services Agreement dated April 10, 2008 between the Company and David Stadnyk (5)
10.22 Termination Agreement regarding the Worsley Area Properties between the Company and Bounty Developments Ltd. dated June 25, 2008(6)
10.23 Termination Agreement regarding the Atlee Buffalo Area Properties between the Company and Bounty Developments Ltd. dated June 25, 2008(6)
10.24 Offer to Purchase Agreement regarding the Kerrobert Area Properties between the Company and True Energy Inc. dated June 25, 2008(6)
10.25 Purchase and Sale Agreement between the Company and Brasam Extracao Minerals Ltda. dated June 26, 2008(6)
10.26 Petroleum and Natural Gas Lease dated July 24, 2008(6)
10.27 Termination Agreement regarding the Cecil (Eureka) Area Properties between the Company and Bounty Developments Ltd. dated March 30, 2009(6)
10.28 Seismic Earning Agreement dated August 19, 2009(7)
10.29 Purchase and Sale Agreement dated September 16, 2009(9)
10.30 Notice of Assignment(9)
10.31 Assignment Agreement dated May 11, 2010 with Canadian Rigger Energy Inc. (11)
10.32 Convertible Promissory Note dated April 6, 2011 with Pikka Asset Management Ltd (12)
10.33 Consulting agreement between the Company and 1651993 Alberta Ltd. (12)
14.1 Code of Ethics (4)
Subsidiaries of the Small Business Issuer  
21.1

Subsidiaries of Small Business Issuer:
Name of Subsidiary
Park Place Energy (Canada) Inc.

Jurisdiction of Incorporation
British Columbia

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  Park Place Energy (International) Inc. British Columbia
Certifications
31.1 Certification of Chief Executive and Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended(12)
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(12)

Notes  
(1) Incorporated by reference from our Current Report on Form 8-K/A, filed with the SEC on August 8, 2007.
(2) Incorporated by reference from our registration statement on Form SB-2, filed with the SEC on December 9, 2004.
(3) Filed with our Current Report on Form 8-K, filed with the SEC on March 6, 2008.
(4) Incorporated by reference from our Annual Report of Form 10-KSB, filed with the SEC on October 11, 2006.
(5) Incorporated by reference from our Annual Report on Form 10-KSB, filed with the SEC on April 15, 2008.
(6) Incorporated by reference from our Annual Report on Form 10-K, filed with the SEC on March 31, 2009.
(7) Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on September 3, 2009.
(8) Incorporated by reference form our Current Report on Form 8-K, filed with the SEC on March 29, 2010.
(9) Incorporated by reference form our Current Report on Form 8-K, filed with the SEC on November 11, 2009.
(10) Incorporated by reference from our Annual Report on Form 10-K, filed with the SEC on April 15, 2010.
(11) Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on May 25, 2010.
(12) Filed herewith.

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SIGNATURES

Pursuant to 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.

PARK PLACE ENERGY CORP.

By: “David Johnson”
  David Johnson
  President, Chief Executive Officer, Secretary,
  Treasurer and a Director
  (Principal Executive Officer and Principal Financial Officer)
  Date: August 13, 2012


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