10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2011
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to _______________

Commission file number:  0-26402

THE AMERICAN ENERGY GROUP, LTD.

 (Exact name of Registrant as specified in its charter)

Nevada	87-0448843
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1 Gorham Island, Suite 303
Westport, Connecticut	06880
(Address of principal executive offices)	(Zip code)

203-222-7315

(Registrant’s telephone number including area code)

___________________________

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, Par Value $.001 Per Share

___________________________

Check whether the issuer (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 x  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 "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes x  No o

APPLICABLE ONLY TO CORPORATE ISSUERS

As of May 16, 2011, the number of Common shares outstanding was 34,213,826

Transitional Small Business Issuer Format (Check one) Yes o  No x

THE AMERICAN ENERGY GROUP, LTD.

INDEX TO FORM 10-Q

PART I-FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition And Results of Operations	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Items 4 and 4T.	Controls and Procedures	11
PART II-OTHER INFORMATION
Item 1.	Legal Proceedings	12
Item 1A	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Submission of Matters to a Vote of Security Holders	12
Item 5.	Other Information	12
Item 6.	Exhibits	12

- 2 -

PART I-FINANCIAL INFORMATION

THE AMERICAN ENERGY GROUP, LTD.

Balance Sheets

Assets
	March 31, 2011 (Unaudited)			June 30, 2010
Current Assets
Cash	$	467,952		$	25,585
Funds reserved for acquisitions – related party		-			392,500
Total Current Assets
		467,952			418,085
Property and Equipment
Office equipment		29,265			27,421
Leasehold improvements		26,458			26,458
Accumulated depreciation		(30,904	)		(25,983	)
Net Property and Equipment		24,819			27,896
Other Assets
Investment in oil and gas working interest – related party		1,583,914			1,583,914
Security deposit		26,209			26,209
Total Other Assets		1,610,123			1,610,123
Total Assets	$	2,102,894		$	2,056,104
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	74,966		$	62,757
Security deposits		13,200			13,200
Accrued liabilities		831,000			651,500
Total Current Liabilities		919,166			727,457
Total Liabilities		919,166			727,457
Stockholders’ Equity
Common stock, par value $0.001 per share; authorized 80,000,000 shares; 34,213,826 and 33,171,807 shares issued and outstanding, respectively		34,213			33,172
Capital in excess of par value		10,845,005			10,313,546
Accumulated deficit		(9,695,490	)		(9,018,071	)
Total Stockholders’ Equity		1,183,728			1,328,647
Total Liabilities and Stockholders’ Equity	$	2,102,894		$	2,056,104

See accompanying unaudited notes to the financial statements.

- 3 -

THE AMERICAN ENERGY GROUP, LTD.

Statements of Operations

For the Three Months and Nine Months Ended March 31, 2011 and 2010

Unaudited

	Three Months Ended						Nine Months Ended
	March 31, 2011			March 31, 2010			March 31, 2011			March 31, 2010
Revenue	$	0		$	0		$	0		$	0
Cost of Goods Sold		0			0			0			0
Gross Profit		0			0			0			0
Expenses
Administrative salaries		118,600			122,102			344,500			387,102
Legal and professional		31,713			30,068			93,357			102,188
General and administrative		48,174			51,567			118,020			125,321
Office overhead expenses		38,358			24,141			104,550			42,823
Depreciation		1,763			1,743			4,921			5,228
Total Expenses		238,608			229,621			665,348			662,662
Net Operating (Loss)		(238,608	)		(229,621	)		(665,348	)		(662,662	)
Other Income and (Expense)
Interest expense		(4,545	)		(1,629	)		(12,071	)		(4,937	)
Total Other Income (Expense)		(4,545	)		(1,629	)		(12,071	)		(4,937	)
Net (Loss) Before Tax		(243,153	)		(231,250	)		(677,419	)		(667,599	)
Income Tax		0			0			0			0
Net (Loss)	$	(243,153	)	$	(231,250	)	$	(677,419	)	$	(667,599	)
Basic Loss Per Common Share	$	(.01	)	$	(.01	)	$	(.02	)	$	(.02	)
Weighted Average Number     Of Shares Outstanding		34,213,826			32,385,087			33,213,826			32,190,968

See accompanying unaudited notes to the financial statements.

- 4 -

THE AMERICAN ENERGY GROUP, LTD.

Statements of Cash Flows

For the Nine Months Ended March 31, 2011 and 2010

(Unaudited)

	2011			2010
Cash Flows From Operating Activities
Net loss	$	(677,419	)	$	(667,599	)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation		4,921			5,228
Common stock issued for debt and services		32,500			71,460
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable		12,209			(7,578	)
Increase (decrease) in accrued expenses and other current liabilities		179,500			132,040
Net Cash (Used In) Operating Activities		(448,289	)		(466,449	)
Cash Flows From Investing Activities
Funds (reserved for) / released from acquisitions		392,500			537,000
Expenditures for office equipment		(1,844	)		-
Expenditures for oil and gas working interest		-			(100,000	)
Net Cash Provided By Investing Activities		390,656			437,000
Cash Flows From Financing Activities
Proceeds from the issuance of stock		500,000			-
Net Cash Provided By Financing Activities		500,000			-
Net Increase (Decrease) in Cash		442,367			(29,449	)
Cash and Cash Equivalents, Beginning of Period		25,585			33,879
Cash and Cash Equivalents, End of Period	$	467,952		$	4,430
Cash Paid For:
Interest	$	12,071		$	4,776
Taxes	$	0		$	0
Non-Cash Financing Activities:
Common stock issued for payment of debt	$	32,500		$	19,500
Common stock issued for services rendered	$	-		$	51,960
Common stock issued for oil and gas working interest	$	-		$	1,440,000
Warrants issued for oil and gas working interest	$	-			24,431

See accompanying unaudited notes to the financial statements.

- 5 -

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Financial Statements

March 31, 2011

Note 1 - General

The accompanying unaudited condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in its June 30, 2010 Annual Report on Form 10-K. Operating results for the three months and nine months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending June 30, 2011.

Note 2 – Basic Loss Per Share of Common Stock

	Three Months Ended						Nine Months Ended
		March 31, 2011			March 31, 2010			March 31, 2011			March 31, 2010
Loss (numerator)	$	(243,153	)	$	(231,250	)	$	(677,419	)	$	(667,599	)
Shares (denominator)		34,213,826			32,385,087			33,213,826			32,190,968
Per Share Amount	$	( 0.01	)	$	( 0.01	)	$	( 0.02	)	$	( 0.02	)

The basic loss per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements.  Stock warrants convertible into 3,707,326 shares of common stock are not included in the basic calculation because their inclusion would be antidilutive, thereby reducing the net loss per common share.

Note 3 - Common Stock

During July, 2010, the Company issued 9,155 shares of common stock for payables valued at $6,500.

During September, 2010, the Company issued 17,514 shares of common stock for payables valued at $13,000.

During October, 2010, the Company issued 15,350 shares of common stock for payables valued at $13,000.

During March, 2011, the Company issued 1,000,000 shares of common stock for $500,000 cash.

- 6 -

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Financial Statements

March 31, 2011

Note 4 – Investment in Oil and Gas Working Interest – Related Party

During the quarter ended December 31, 2009, the Company executed an agreement to acquire from Hycarbex – American Energy, Inc. (Hycarbex), a related party, a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. In exchange for the working interest, the Company issued (1) 2,000,000 shares of common stock to Hycarbex, (2) 100,000 warrants with a three year duration to purchase an additional 100,000 shares at $1.75 per share and (3) $100,000 in cash. In addition, the purchase agreement requires Hycarbex to transfer $50,000 per month of the funds remaining in escrowed funds reserved for acquisitions to the Company until such time as the Company has received $200,000 in royalty payments from the Haseeb Exploratory Well No. 1. Once the Company has received $200,000 of royalty payments from the Haseeb Exploratory Well No. 1, any remaining balance in the funds reserved for acquisitions, currently $142,500, will be forfeited to Hycarbex for additional consideration of the acquisition of the oil and gas working interests.

The Company has the option to convert the two and one half percent working interests described above to a one and one half percent gross royalty working interest at any time.

Note 5 - Foreign Operations Risk

The Company intends to conduct activities in multiple foreign markets including countries with developing economies. Some of these countries may have experienced recently, or are experiencing currently, economic or political instability. Hyperinflation, volatile exchange rates and rapid political and legal change, often accompanied by military insurrection, have been common in these and certain other emerging markets in which the Company may conduct business. The Company may be materially adversely affected by possible political or economic instability in these countries. The risks include, but are not limited to terrorism, military repression, expropriation, changing fiscal regimes, extreme fluctuations in currency exchange rates, high rates of inflation and the absence of industrial and economic infrastructure. Changes in investment policies or shifts in the prevailing political climates in which the Company conducts business activities could adversely affect the Company's business. Operations may be affected in varying degrees by government regulations with respect to production restrictions, price controls, export controls, income and other taxes, expropriation of property, maintenance of claims, environmental legislation, labor, welfare benefit policies, land use, land claims of local residents, water use and mine and rig safety. The effect of these factors cannot be accurately predicted and, therefore, no adjustments have been made to the accompanying financial statements.

Note 6 – Subsequent Events

In accordance with ASC 855-10, management of the Company has reviewed all material events through the date the financial statements were available to be issued and has determined that there were no material events that would warrant any additional disclosure.

- 7 -

ITEM 2- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

               This report contains statements about the future, sometimes referred to as “forward-looking” statements.  Forward-looking statements are typically identified by the use of the words “believe,” “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “project,” “propose,” “plan,” “intend” and similar words and expressions.  We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act.  Statements that describe our future strategic plans, goals or objectives are also forward-looking statements.

Readers of this report are cautioned that any forward-looking statements, including those regarding the Company or its management’s current beliefs, expectations, anticipations, estimations, projections, proposals, plans or intentions, are not guarantees of future performance or results of events and involve risks and uncertainties, such as:

.  The future results of drilling individual wells and other exploration and development activities;

.  Future variations in well performance as compared to initial test data;

.  Future events that may result in the need for additional capital;

.  Fluctuations in prices for oil and gas;

.  Future drilling and other exploration schedules and sequences for various wells and other activities;

.  Uncertainties regarding future political, economic, regulatory, fiscal, taxation and other policies in Pakistan;

.  Our future ability to raise necessary operating capital.

The forward-looking information is based on present circumstances and on our predictions respecting events that have not occurred, which may not occur or which may occur with different consequences from those now assumed or anticipated.  Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the risk factors detailed in this report.  The forward-looking statements included in this report are made only as of the date of this report.  We are not obligated to update such forward-looking statements to reflect subsequent event or circumstances.

Overview

Drilling of the first well in Pakistan as to which our overriding royalty pertains, named the Haseeb No. 1 Well, was successfully completed by Hycarbex-American Energy, Inc. (“Hycarbex”), the owner and operator of the Yasin 2768-7 Block, in the fourth quarter of the fiscal year ended June 30, 2005.  All testing to date by Hycarbex indicates that the Haseeb No. 1 well will be a significant commercial gas well.

The drilling of Al-Ali #1 Well, the second well to which our overriding royalty pertains, was undertaken by Hycarbex to fulfill the work obligations for the third contract year under the Concession License and was not commercially successful.   The well was plugged.  The drilling data is being studied by Hycarbex in order to determine if further operations would likely yield commercial volumes of gas.

In 2008, Hycarbex drilled the Yasin Exploratory Well #1.  After drilling to the Sui Main Limestone, which was only one of the target zones for the well, mechanical difficulties were encountered in the hole.  The Sui Main Limestone showed strong intermittent gas during the drilling, but a steady flow was not achieved.  Hycarbex spent several months attempting to resolve the mechanical difficulties and considering alternative remedial operations while simultaneously evaluating the geologic data obtained from the drilling.  After evaluation, Angular redrilling in the same wellbore and other remedial measures targeted at saving the wellbore were decided against because the preliminary data collected by Hycarbex indicates that the drilling placement was not at the optimum position on the producing structure.  Hycarbex plans to perform additional seismic to refine the preliminary data obtained from the drilling process.  Since the drilling reaffirmed Hycarbex’s belief that the structure is very promising, a nearby replacement well is expected to be drilled after completion of the additional seismic.

On October 29, 2009, we executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan.    Each concession block is operated by Heritage Oil and Gas Limited.  Heritage Oil and Gas Limited is an

- 8 -

affiliate of Heritage Oil, plc, an independent oil and gas company which focuses its oil and gas operations on Africa, the Middle East, and Russia.  In addition to Hycarbex, other working interest participants in the two Blocks are Sprint Energy (Private) Limited, an affiliate of Pakistan-based JS Group, and Trakker Energy (Private) Limited, an affiliate of Pakistan-based TPL Holdings, Ltd.  Under the terms of the agreement, our 2-1/2% working interests will be deemed “carried” by Hycarbex for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block.  The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes on production) shall be borne entirely by Hycarbex.  Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block are not carried.  After the initial carried wells have been drilled, we are required to bear our proportionate share of drilling and exploration costs in subsequent wells.  The agreement provides us with the option to convert our working interest in any well at any time to a 1.5% gross royalty interest free of any exploration costs, operating costs or deductions related to the well in which the conversion has been made other than applicable production taxes assessed against the royalty

Results of Operations

Our operations for the three months and nine months ended March 31, 2011 reflected  net operating losses of $238,608  and $665,348 , respectively, as compared to $229,621 and $662,662 for the three months and nine months ended March 31, 2010, related to salaries, office rental and overhead charges and legal and professional fees.  Through the fiscal period ending March 31, 2010, we had no recurring income stream and relied upon the proceeds of securities sales, including $500,000 received for the issuance of stock during the quarter ended March 31, 2011. We anticipate future royalty proceeds to be derived from gas sales from the Haseeb No 1 Well based upon the anticipated near-term resolution of the mechanical and technical problems which were encountered with the gas processing facility after the pipeline connection of the Haseeb No. 1 Well for the Extended Well Test.  Royalty income is anticipated to commence during the third calendar quarter of 2011 based upon the expected resumption of gas sales under the Extended Well Test .

Liquidity and Capital Resources

We have historically funded our operations through private loans, all of which have been repaid, and through the private sale of securities. During the fourth quarter of the 2006 year, we sold $3.9M of our Common Stock. Of this amount, we deposited $2,100,000 with Hycarbex in trust for future acquisitions of additional royalty interests in Pakistan, but we made periodic withdrawals from this escrow to fund ongoing administrative expenses due to unanticipated delays in the commencement of the Haseeb No. 1 gas sales.  The periodic withdrawals from this escrow have exhausted the escrow as of March 31, 2011 eliminating it as a source of working capital going forward.

The initial connection to the marketing pipeline under the Extended Well Test occurred in September 2010.  Subsequent mechanical  and technical problems were encountered with the recently commissioned  gas processing facility which interrupted the continuous gas deliveries under the Extended Well Test.  These problems included intermittent failures of the diesel-powered generators which supply electricity to critical facility components and in the analysis functions of the gas chromatograph.   These problems are believed to have been satisfactorily diagnosed and have been rectified or will be rectified upon the installation of certain replacement components according to Hycarbex management.  The resumption of gas sales under the Extended Well Test is anticipated within weeks following this report and such sales are expected to provide future cash flows sufficient to meet the Company’s ongoing expenses as well as to make investment in other oil and gas opportunities.  The Pakistan Government has extended the time period for the Extended Well Test by nine (9) months following April 6, 2011.  Until such a royalty stream commences and continues on a consistent basis, we will rely upon available working capital from a recent sale of securities and potential future sales of securities..  While royalty income is expected to commence during the third calendar quarter of 2011, there can be no assurance that the combination of the proceeds from securities sales and near-term royalty revenues from anticipated gas sales will be sufficient to meet the Company’s short-term financial obligations.

- 9 -

Operational Developments

In September 2010, after months of delay caused by monsoon rains and flooding, Hycarbex completed its initial pipeline connection and commenced gas sales to Sui Southern Gas Company under the Extended Well Test Gas Sales Agreement covering the sale of gas from the Haseeb Gas Field on  Yasin Block (2768-7) signed by the parties in December, 2009.  Initial production into the line commenced at five (5) million cubic feet of gas per day (MMCFD) but was interrupted soon after the connection due to mechanical and technical problems with the gas processing facility.  These problems included intermittent failures of the diesel-powered generators which supply electricity to critical facility components and in the analysis functions of the gas chromatograph.   These problems are believed to have been satisfactorily diagnosed and have been rectified or will be rectified upon the installation of certain replacement components according to Hycarbex management. These mechanical and technical problems relating to the gas processing facility have delayed the commencement of our royalty revenue stream from the well.  However, Hycarbex’s engineering personnel believe that the mechanical problems have been rectified, or will be rectified upon the installation of certain replacement components, and have not altered their opinions regarding well productivity, pressure, gas quality and the size of the geologic structure.  Hycarbex’s personnel strongly believe that the Haseeb No. 1 Well and the geologic structure in which it is completed will produce significant commercial quantities of high quality gas.  The Pakistan Government has extended the time period for the Extended Well Test by nine (9) months following April 6, 2011 to accommodate the delays encountered by Hycarbex.  Once the Extended Well Test is resumed, the gas sales under the Extended Well Test are expected to be gradually increased to approximately fifteen (15) MMCFD. After evaluation of the data to be collected from the Extended Well Test, the working interest owners will evaluate the prospects for additional drilling in the Haseeb discovery area with the objective of increasing the production rate in excess of the 15 MMCFD.

The Yasin Block, to date, has no Proved Reserves as that term and the calculation for discounted future net cash flows for reporting purposes is mandated by the Financial Accounting Standards Board in Statement of Financial Accounting Standards No. 69, titled “Disclosure About Oil and Natural Gas Producing Activities”. However, based upon test results of the Haseeb No. 1  and other data collected   by Hycarbex from its drilling and seismic activities, we strongly believe that the Yasin Block acreage contains oil and gas physical structures which are worthy of further exploration. Hycarbex plans to perform and evaluate 50 linear kilometers of 2D seismic during calendar 2011.  If the Yasin Block is further successfully developed, our reserved 18% overriding royalty interest will likely be a good source of cash revenues because the royalty, by its nature, entitles us to share in gross, rather than net, production. We expect to use the anticipated revenues for further investment in other generating assets or business activities.

On October 29, 2009, the Company executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan, concessions, each of which is operated by Heritage Oil and Gas Limited. Heritage is an affiliate of Heritage Oil, PLC, an independent oil and gas company which focuses its oil and gas operations in Africa, the Middle East, and Russia. Heritage’s shares trade on the London Stock Exchange under the symbol HOIL with a secondary listing on the Toronto Stock Exchange under the symbol HOC. Heritage owns a 54% interest in the Zamzama North Block and a 48% interest in the Sanjawi Block.  Other working interest participants in the two Blocks are Sprint Energy (Private) Limited, an affiliate of Pakistan-based JS Group, and Tracker Energy (Private) Limited, an affiliate of Pakistan-based TPL Holdings, Ltd.

Under the terms of the agreement with Hycarbex, the American Energy Group, Ltd’s 2-1/2% working interests are “carried” by Hycarbes for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block. The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes and production) shall be borne by Hycarbex. Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block are not carried. After the initial carried wells have been drilled, American Energy Group, Ltd. shall bear its proportionate share of drilling and exploration costs. The agreement provides and option to American Energy group, Ltd. to convert its working interest in any well at any time to a 1.5% gross royalty interest free of any exploration costs or operating costs.

According to information set forth on Heritage’s website [www.heritageoilplc.com], the Sanjawi Block is considered a very viable prospect due to the recent oil discovery to the West, a number of gas fields to the Southeast and the presence of oil seeps. The Sanjawi Block is dominated by a series of broad East-West trending surface features including the Dabbar and Warkan Shah anticlines. These are large structures, with the Dabbar anticline

- 10 -

being some 300 square kilometers in area.  The Zamzama North Block is immediately to the North of the Zamzama Gas Field, a major Upper Cretaceous gas accumulation.  Heritage has acquired approximately 750 kilometers of fair to good quality, 2D seismic and has mapped a number of structural leads. According to Heritage, further seismic is being acquired and a new well on the Zamzama North Block is planned during the latter part of 2011 after the challenges created by the devasting July and August, 2010 floods are resolved.

Recent Pakistan Political Developments

On October 6, 2007 President Pervez Musharraf was reelected. On November 3, 2007 President Musharraf declared a state of emergency in Pakistan. The declaration was accompanied by a suspension of the constitution. The state of emergency was lifted and the constitution was reinstated on December 15, 2007. The Parliamentary elections originally slated for January, 2008, were postponed after the death of Benazir Bhutto on December 27, 2007 until February 18, 2008. The opposition parties assumed control through these elections and President Pervez Musharraf later resigned on August 19, 2008. He was succeeded on September 6, 2008 by President Asif Ali Zardari, the widower of Benazir Bhutto. President Zardari made numerous cabinet and ministry appointments in the latter part of 2008 and the early part of 2009, including the Ministry of Petroleum and Natural Resources.

Incidents of violence and political protest continue to occur within the country according to international news sources. These political events have not impacted our ownership of the overriding royalty or the ongoing business practices within the country, including oil and gas exploration, development and production by Hycarbex and other major operators doing business in Pakistan. We cannot predict the effect of future political events or political changes upon Hycarbex’s operations and our expectations of deriving revenues through the sale of gas into Pakistan’s pipeline infrastructure.

Galveston County, Texas Leases

We believe that the deeper zones which we currently hold may have development potential.   We have not yet determined the best course for these assets and near term activity with respect to these assets is not planned.  These leases are held in force by third party production and, therefore, the leases do not require development of these rights by a certain date.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during the six months ended March 31, 2011.

ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not a party to nor does it engage in any activities associated with derivative financial instruments, other financial instruments and/or derivative commodity instruments.

ITEMS 4 AND 4T - CONTROLS AND PROCEDURES

           In conjunction with this Report on Form 10-Q and the certification of the disclosures herein, and as required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s principal executive officer and principal financial officer, Pierce Onthank, evaluated the effectiveness of the Company’s disclosure controls and procedures and the Company’s internal control over financial reporting as of March 31, 2011. The assessment was conducted in accordance with the Internal Control—Integrated Framework  issued by the Committee of Sponsoring Organizations of the Treadway Commission.   Based on this assessment, the Company’s management concluded that there was no material weakness in the Company’s internal control over financial reporting, and concluded that the Company’s disclosure controls and procedures and the Company’s financial control over financial reporting are effective as of March 31, 2011.  The Company is extremely small and once the Company begins receiving revenues from gas royalties (expected to begin during the third calendar quarter of 2011), management believes that the internal control over financial reporting should be improved through an increase in staff size, segregation of financial duties and responsibilities and appointment of an audit committee by the Board of Directors.

- 11 -

There have been no  changes in the Company’s internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 which occurred during the fiscal quarter ended March 31, 2011, that have materially affected or are reasonably likely to materially affect  the internal control over financial reporting.  This report does not include an attestation report of the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission because the attestation rules are not yet applicable to the Company.

PART II-OTHER INFORMATION

ITEM 1-LEGAL PROCEEDINGS

There were no legal proceedings affecting the Company during the quarter ended March 31, 2011.

ITEM 1A-RISK FACTORS

Not applicable.

ITEM 2-UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company sold one million (1,000,000) shares of restricted Common Stock to a private investor for $500,000 during the quarter.  The proceeds of the sale will be used for working capital to fund the Company’s operations.

ITEM 3-DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5-OTHER INFORMATION

None.

ITEM 6-EXHIBITS

The following documents are filed as Exhibits to this report:

Exhibit 31.1 – Certification by R. Pierce Onthank, President, Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a);

Exhibit 32.1 – Certification by R. Pierce Onthank, President, Chief Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Section 1350(a) and (b).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

THE AMERICAN ENERGY GROUP, LTD.
By:	/s/ R. Pierce Onthank
R. Pierce Onthank, President, Chief Executive
Officer, Principal Financial Officer and Director

DATED:  May 16, 2011

-12-

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. PIERCE ONTHANK, President, chief executive officer and chief financial and accounting officer of The American Energy Group, Ltd., certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 of The American Energy Group, Ltd..

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   I am the registrant’s sole certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure the material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting, and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5.           I am the registrant’s sole certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATED: May 16, 2011

/s/ R. Pierce Onthank

Printed Name: R. PIERCE ONTHANK

President, Chief Executive Officer and

Principal Financial Officer

EX-32.1

EXHIBIT 32.1

THE AMERICAN ENERGY GROUP, LTD.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION

906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of The American Energy Group, Ltd. (the “Company”) for the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Pierce Onthank, President and chief executive and chief financial and accounting officer of the Company, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

     2. The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ R. Pierce Onthank
	R. Pierce Onthank
	President, Chief Executive Officer and
	Principal Financial Officer