Stock Options and Warrants

3 Months Ended

Aug. 31, 2011

6. Stock Options and Warrants

Since 2009, the following management options have been awarded to our Board of Directors and management team.

			Weighted
			Average
	Number of		Exercise
	Options		Price

Outstanding at February 28, 2009	925,000	$	1.04
Granted	1,325,000		0.25
Cancelled	(100,000)		1.04

Outstanding at February 28, 2010	2,150,000	$	0.55
Granted	400,000		1.30
Granted	1,100,000		3.01

Outstanding at February 28, 2011	3,650,000	$	1.38

Outstanding at August 31, 2011	3,650,000	$	1.38

The stock options outstanding February 28, 2009 vested over 3 years, with one-third vesting each year. For the stock options granted in 2010 and 2011, two-thirds vest after 2 years and one-third vest after 3 years or when the Company books initial 3P reserves

A recap of the terms of the stock options as at August 31, 2011 is as follows:

Year awarded	Number	Exercise price	Currently Exercisable	Fair Value	Expiry Date
2009	825,000	$1.04	550,000	$653,407	February 2014
2010	1,325,000	$0.25	-	$255,107	February 2015
2010	400,000	$1.30	-	$461,871	November 2015
2011	1,100,000	$3.01	-	$2,528,999	February 2016

The fair value for stock options was estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:

2010 Options		2011 Options
Expected volatility	112.86%	Expected volatility	111.21%
Risk-free interest rate	2.30%	Risk-free interest rate	2.39%
Expected life of options	3 years	Expected life of options	4.5 years
Fair value	$0.188 - $0.201	Fair value	$2.247. - $2.404

During the six month period ended August 31, 2011, the Company recognized $821,070 in stock-based compensation expense ($164,184 in 2010).

As at August 31, 2011, there were $2,042,898 of unrecognized compensation costs related to non-vested stock options.

SENTRY PETROLEUM LTD. 10-Q/A