---

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

FORM 10-QSB

> [ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
>   ACT OF 1934 
>         For the quarterly period ended

OR

[ ] TRANSITION REPORT UNDER SECTION
  13 OR 15(d) OF THE EXCHANGE ACT 
       For the transition period from __________
  to ___________

Commission File Number 000-33193

TEXEN OIL & GAS INC.

Nevada
      90-0082485(State or other jurisdiction of incorporation or organization)
      (IRS
      Employer Identification No.)


2401 Fountain View Drive 
Suite 1008 
Houston, Texas 77057 (Address of principal executive offices)

(713) 782-5758 (Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
[ ]

1

---



TEXEN OIL & GAS, INC.

CONSOLIDATED BALANCE SHEETS

|                                    | September 30, |              | June 30,
|----------------------------------- | ------------- | ------------ | --------
|                                    |               | 2004         |         
|                                    | (Unaudited)   | (Unaudited) 
|ASSETS                              |               |              |         
|CURRENT ASSETS                      |               |              |         
|Cash                                | $             | 95,348       | $       
|Accounts receivable - related party |               | 436,567      |         
|Accrued oil and gas sales           |               | 98,000       |         
|Prepaid insurance                   |               | 5501         |         
|                                    |               |              |         
|Total Current Assets                | $             | 635,416      | $       
|                                    |               |              |         
|OIL AND GAS
    PROPERTIES, ON      |               |              |         
|THE BASIS OF
    SUCCESSFUL         |               |              |         
|EFFORTS ACCOUNTING                  |               |              |         
|Unproved property                   |               | 147,108      |         
|Proved Property, developed and      |               |              |         
|undeveloped wells, related          |               |              |         
|equipment and facilities            |               |              |         
|                                    |               | 26,015,406   |         
|Less accumulated depreciation,      |               |              |         
|depletion, and amortization and     |               |              |         
|impairments                         |               | (21,740,606) |         
|                                    |               |              |         
|Net
    Oil and Gas Properties      | $             | 4,421,908    | $       
|OTHER PROPERTY AND                  |               |              |         
|EQUIPMENT                           |               |              |         
|Other property and equipment        |               | 275,867      |         
|Less accumulated depreciation       |               | (88,320)     |         
|Total Other Property and            |               |              |         
|Equipment                           |               | 187,547      |         
|                                    |               |              |         
|TOTAL ASSETS                        | $             | 5,244,871    | $       

See notes to interim financial statements. 
F-1

2

---



TEXEN OIL & GAS, INC.

CONSOLIDATED BALANCE SHEETS (continued)

|                                             | September 30, |              | June 30,
|-------------------------------------------- | ------------- | ------------ | --------
|                                             |               | 2004         |         
|                                             |               | (Unaudited)  |         
|LIABILITIES AND
    STOCKSHOLDERS' EQUITY    |               |              |         
|(DEFICIT)                                    |               |              |         
|CURRENT LIABILITIES                          |               |              |         
|Accounts payable                             | $             | 1,858,407    | $       
|Accounts payable - related party             |               | 555,366      |         
|Advances from affilites                      |               | 866,920      |         
|Notes payable - related party                |               | 150,000      |         
|                                             |               |              |         
|Total Current Liabilities                    |               | 3,430,693    |         
|                                             |               |              |         
|TOTAL LIABILITIES                            | $             | 3,430,693    | $       
|                                             |               |              |         
|SHAREHOLDERS' EQUITY                         |               |              |         
|Common stock, 100,000,000 shares authorized, |               |              |         
|$0.00001 par value                           |               | 925          |         
|Additional paid-in capital                   |               | 29,886,441   |         
|Stock options                                |               | 95,175       |         
|Accumulated deficit                          |               | (28,168,363) |         
|TOTAL STOCKHOLDERS'
    EQUITY               |               | 1,814,178    |         
|                                             |               |              |         
|TOTAL LIABILITIES
    AND STOCKHOLDERS'      |               |              |         
|EQUITY                                       | $             | 5,244,871    | $       

See notes to interim financial statements. 
F-2

3

---



TEXEN OIL & GAS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                              |   | Three Months Ended
|--------------------------------------------- | - | ------------------
|                                              |   | September 30      
|                                              |   | 2004              
|                                              |   | (Unaudited)       
|REVENUES                                      |   |                   
|Oil
    and gas sales                         | $ | 286,640           
|Drilling revenues                             |   | -                 
|TOTAL REVENUES                                |   | 286,640           
|                                              |   |                   
|COST OF REVENUES                              |   |                   
|Drilling costs                                |   | 25,964            
|                                              |   |                   
|GROSS PROFITS FROM
    DRILLING               |   |                   
|AND PRODUCTION                                | $ | 260,676           
|E X P E N S E S                               |   |                   
|Lease operating                               |   | 604,811           
|Oil
    and gas leases                        |   | -                 
|Compensation                                  |   | 25,000            
|General and administrative expense            |   | 70,831            
|Legal and accounting                          |   | 50,000            
|Dry
    hole costs                            |   | -                 
|Depreciation, depletion and amortization      |   | 211,466           
|Production taxes included in lease operating) |   |                   
|TOTAL EXPENSES                                | $ | 962,108           
|OPERATING LOSS                                | $ | (701,432)         
|OTHER EXPENSES                                |   |                   
|Interest and finance expenses                 |   | -                 
|TOTAL OTHER EXPENSES                          | $ | (701,432)         
|LOSS BEFORE INCOME
    TAXES                  | $ | (701,432)         
|INCOME TAXES                                  |   | -                 
|NET LOSS                                      | $ | (701,432)         
|NET LOSS PER COMMON
    SHARE,                |   |                   
|BASIC AND DILUTED                             | $ | (0.01)            
|                                              |   |                   
|WEIGHTED AVERAGE
    NUMBER OF                |   |                   
|COMMON STOCK SHARES                           |   |                   
|OUTSTANDING, BASIC AND DILUTED                |   | 92,517,643        

See notes to interim financial statements. 
F-3

4

---



TEXEN OIL & GAS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                      |   | Three Months Ended
|----------------------------------------------------- | - | ------------------
|                                                      |   | September 30, 2004
|                                                      |   | 2004              
|                                                      |   | (Unaudited)       
|CASH FLOWS FROM
    OPERATING ACTIVITIES              |   |                   
|Net
    loss                                          | $ | (701,432)         
|Adjustments to reconcile net loss to net cash used by |   |                   
|operating activities:                                 |   |                   
|Depreciation, depletion and amortization              |   | 211,466           
|Common stock issued for accrued consulting fees       |   | -                 
|Increase in accounts receivable - related party       |   | 38,850            
|Decrease in advances receivable from related party    |   | -                 
|Decrease in accrued oil and gas sales                 |   | (54,650)          
|Decrease in prepaid insurance                         |   | -                 
|Increase in employee advances                         |   | -                 
|Decrease in leasehold costs                           |   | -                 
|Decrease in intangible drilling costs                 |   | -                 
|Increase in accounts payable                          |   | 563,080           
|Increase in accounts payable - related party          |   | 179,938           
|Decrease in accrued consulting - related party        |   | -                 
|Increase (decrease) in accrued expenses               |   | -                 
|Increase in accrued interest - related party          |   | -                 
|Decrease in settlements payable                       |   | -                 
|Increse in advances from related party                |   | -                 
|Cash Adjustment                                       |   | (27,000)          
|Net cash used by
    operating activities             | $ | 210,252           
|CASH FLOWS FROM
    INVESTING ACTIVITIES              |   |                   
|Purchase of wells, related equipment and facilities   |   | 161,199           
|Purchase of machinery and equipment                   |   | -                 
|Net cash used by
    investing activities             |   | 161,199           
|                                                      |   |                   
|CASH FLOWS FROM
    FINANCING ACTIVITIES              |   |                   
|Proceeds from loans payable - related parties         |   | -                 
|Payment to related party payable                      |   | -                 
|Net cash provided by
    financing activities         |   | -                 
|Net increase
    (decrease) in cash                   |   | 49,053            
|Cash, beginning of
    period                         |   | 46,295            
|Cash, end of period                                   | $ | 95,348            

See notes to interim financial statements. 
F-4

5

---



TEXEN OIL & GAS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

|                                            | Three Months Ended
|------------------------------------------- | ------------------
|                                            | September 30, 2004
|                                            |                   
|                                            |                   
|SUPPLEMENTAL
    DISCLOSURES:               |                   
|Interest paid                               | $                 
|Income taxes paid                           | $                 
|NON-CASH INVESTING AND
    FINANCING        |                   
|TRANSACTIONS:                               |                   
|Stock issued for accrued consulting fees -  | $                 
|related party                               |                   
|                                            |                   
|Loan payable - related party for payment of | $                 
|delinquent note                             |                   

See notes to interim financial statements. 
F-5

6

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2004

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Basis of Presentation

The accompanying interim condensed financial statements are prepared in
accordance with rules set forth in Regulation SB of the Securities and Exchange
Commission. As said, these statements do not include all disclosures required
under generally accepted principles and should be read in conjunction with the
audited financial statements for the year ended June 30, 2004. In the opinion of
management, all required adjustments, which consist of normal re-occuring
accruals, have been made to the financial statements. The results of operations
for the three months ended September 30, 2004, are not necessarily indicative of
the results that may be expected for the year ending June 30, 2005.

TexEn Oil & Gas, Inc. (hereinafter "TexEn" or "the Company") filed for
incorporation on September 2, 1999 under the laws of the State of Nevada
primarily for the purpose of acquiring, exploring, and developing mineral
properties. The Company changed its name from Palal Mining Corporation to TexEn
Oil & Gas, Inc. on May 15, 2002 upon obtaining approval from its shareholders
and filing an amendment to its articles of incorporation. The Company shall be
referred to as "TexEn" or "TexEn Oil & Gas, Inc." even though the events
described may have occurred while the Company's name was Palal Mining
Corporation. The Company's fiscal year end is June 30.

On July 1, 2002, TexEn developed a plan for acquisition, development,
production, exploration for, and the sale of, oil, gas and natural gas liquids
and accordingly ended its exploration stage as a mineral properties exploration
company. The Company sells its oil and gas products primarily to domestic
pipelines and refineries. These acquisitions were accounted for using the
purchase method. Prior to this, TexEn conducted its business as an exploration
stage company, meaning that it intended to acquire, explore and develop mineral
properties.

The Company's wholly owned subsidiaries consist of Texas Brookshire Partners,
Inc. ("Brookshire"), Texas Gohlke Partners, Inc, ("Gohlke"), Brookshire Drilling
Services, Inc. ("Drilling"), Yegua, Inc. ("Yegua") and BWC Minerals, LLC ("BWC").

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and have been
consistently applied in the preparation of the financial statements.

Accounting Method

The Company uses the accrual method of accounting in accordance with
accounting principles generally accepted in the United States of America.

Use of Estimates

The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.

F-6

7

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS September 30, 2004

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and Equipment

Support equipment, trucks etc are other property and equipment and other
property equipment are carried at cost. Depreciation is computed on the
straight-line method over the estimated useful lives of the related assets,
which range from five to twenty years. Accumulated Depreciation amounted to
$88,320 and $45,552, respectively, for the periods ended September 30, 2004 and
2003.

Going Concern

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.

As shown in the accompanying financial statements, the Company incurred a net
loss in the amount of $701,432 during the three months ended September 30, 2004.

Management has plans to seek additional capital through a private placement
at market value and public offering of its common stock as well as obtaining
additional financing in the form of loans. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.

Revenue Recognition

Oil and gas revenues are recorded using the sales method. Under this method,
the Company recognizes revenues based on actual volumes of oil and gas produced.

NOTE 3 - COMMON STOCK

During the year ended June 30, 2004, the Company issued a total of 47,333,333
shares of its common stock as follows: 40,000,000 shares issued to Tatiana
Golovina for conversion of debt; 1,333,333 shares issued to Crescent Fund for
public relations consulting; 2,500,000 shares issued to non-associated financing
parties for additional compensation on financing; 500,000 shares issued to
Pinnacle Research for consulting services; 1,250,000 to Woodburn Holdings for
consulting services; 1,500,000 shares issued to associated consultants for
consulting services, and 250,000 shares issued to MJB Limited for consulting
services. As of June 30, 2004, the Company had 92,517,643 shares issued and
outstanding.

During the three months ended September 30, 2003 and included in the June 30,
2004 summary, a former officer, to whom options with a fair market value of
$653,800 had been previously issued, exercised the options and purchased
1,000,000 shares of common stock. The exercise price of the stock of $100,000
was exchanged for accrued consulting fees due to this former officer.

During the three months ended September 30, 2004, the Company issued not
additional common stock, options or warrants.

F-7

8

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2004

NOTE 4 - RELATED PARTIES

During 2004 and 2003, Tatiana Golovina, a shareholder and previous President
of the Company, advanced and loaned the Company approximately $866,000 and
$1,646,000, respectively. The advance totaling $1,646,508 in 2003 was converted
into 40,000,000 shares of common stock.

During the three months ended September 30, 2003, the Company converted its
past due note with Mathon Fund, LLC in the amount of $1,200,000 to a loan
payable to a related party.

In February 2003, the Company entered into a consulting agreement with
Woodburn Holdings Ltd. ("Woodburn") which was made effective June 1, 2002 and
calls for monthly consulting fees in the amount of $15,000. Under terms of this
agreement, Woodburn's designated consultant provides managerial, administrative
and other services as the Company's chief executive officer. Although the
consulting agreement had an original length of eighteen months, the agreement
was rescinded subsequent to the date of these financial statements in October
2003. See Note 5.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Regulatory Issues

The oil and gas exploration and development industry is inherently
speculative and subject to complex environmental regulations. As of June 30,
2003, the Company has accrued $10,750 as a settlement loss for environmental
cleanup as assessed by the Texas Railroad Commission, which was paid in 2004.
The Company is unaware of any other pending litigation or of past or prospective
environmental matters which could impair the value of its properties. As of
September 30, 2004, the Company is not aware of any pending litigation of
regulatory issues.

Farmout Agreements

There were no significant farm out agreements entered into during 2003 or
through September 30, 2004.

Consulting Agreements

During the first quarter ending September 30, 2004 no significant consulting
agreements were entered into.

During the year ending June 30, 2004, the Company entered into a consulting
agreement with Pinnacle Research and Consulting Group Ltd. ("Pinnacle") to
provide consulting services for oil and gas operations. This agreement became
effective December 18, 2003 and options to acquire 500,000 shares of common
stock were given as compensation and exercised. During the year ending June 30,
2004, the Company entered into consulting agreements with Woodburn Holdings Ltd.
("Woodburn") to provide consulting services for oil and gas operations. Stock
options to acquire 1,250,000 shares of common stock were given as compensation
and exercised. During the year ending June 30, 2004, the Company entered into a
consulting agreement with Crescent Fund, Inc. to provide public relations
consulting services. 1,333,333 shares of common stock were issued under the SEC
Rule 144. Subsequently, the Company rescinded and canceled its agreement with
Crescent Fund, Inc., and issued an administrative order to cancel the 1,333,333
shares and demanded the return of said stock certificate. The outcome of this
situation has yet to be determined. In addition, during the year ending June 30,
2004, the Company entered into various consulting agreements and issued
1,500,000 shares for field operating consulting and accounting consulting.

F-8

9

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2004

NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)

Consulting Agreements

In February 2003, the Company entered into a consulting agreement with
Woodburn Holdings Ltd. ("Woodburn") effective June 1, 2002 which calls for
monthly consulting fees in the amount of $15,000. Under terms of this agreement,
Woodburn's designated consultant provides managerial, administrative and other
services as the Company's chief executive officer. The consulting agreement is
effective for eighteen months. See Note 4. In the attached financial statements,
the Company has recorded $5,000 and $135,000 as accrued consulting fees -
related party at September 30, 2003 and June 30, 2003, respectively. This
agreement was subsequently terminated during October 2003.

Leases

The Company has a lease on office space requiring payments of $5,584 every
six months, which is accounted for as an operating lease. The currently monthly
obligations are $1,607.

NOTE 6 - NOTES AND LOANS PAYABLE

At September 30, 2004 and September 30, 2003 the Company's notes and loans
payable consisted of the following:

|                                                                           |   | September 30, |   | September 30,
|-------------------------------------------------------------------------- | - | ------------- | - | -------------
|                                                                           |   | 2004          |   | 2003         
|                                                                           |   |               |   |              
|                                                                           |   |               |   |              
|                                                                           |   |               |   |              
|Tatiana Golovina, (an
    officer and shareholder of the Company),         |   |               |   |              
|unsecured, interest at
    10%, due on February 14, 2004                   | $ | 0             | $ | 155,347      
|                                                                           |   |               |   |              
|Tatiana Golovina, (an
    officer and shareholder of the Company),         |   |               |   |              
|unsecured, interest at
    10%, dated September 17, 2002, due on September |   |               |   |              
|17, 2004.                                                                  |   | 150,000       |   | 150,000      
|                                                                           |   |               |   |              
|Tatiana Golovina, (an
    officer and shareholder of the Company),         |   |               |   |              
|unsecured, interest at
    18%, dated August 15, 2003, due on demand.      |   | 0             |   | 1,200,000    
|                                                                           |   |               |   |              
|Note payable                                                               |   | 150,000       |   | 1,505,347    
|                                                                           |   |               |   |              
|Less current portion
    of notes and loans payable                        |   | 150,000       |   | 1,200,000    
|                                                                           |   |               |   |              
|                                                                           |   |               |   |              
|                                                                           |   |               |   |              
|Total long term
    portion                                                | $ | 0             | $ | 305,347      

F-9

10

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2004

NOTE 7 - CONCENTRATION OF RISK

The Company derives its sales and accounts receivable from primarily two
affiliated customers and these receivables are not collateralized. At September
30, 2004 and June 30, 2004, the Company's accounts receivable from these
customers totaled $397,717 and $436,567, respectively.

NOTE 8 - STOCK OPTIONS

The following is a summary of the status of these performance-based options
during the year ended June 30, 2004 and the quarter ended September 30, 2004:

|                                                              | Number        |   | Weighted
    Average Exercise
|------------------------------------------------------------- | ------------- | - | -----------------------------
|                                                              | of
    Shares |   | Price
    per share          
|                                                              |               |   |                              
|Outstanding at July
    2003                                  | 1,500,000     | $ | 0.10                         
|Granted                                                       | 1,250,000     |   | 0.10                         
|Exercised, expired or forfeited                               | 1,500,000     |   | 0.10                         
|Outstanding at June
    30, 2004                              | 250,000       | $ | 0.10                         
|                                                              |               |   |                              
|Options outstanding
    and exercisable at September 30, 2004 | 250,000       | $ | 0.10                         

The following table gives information about the Company's common stock that
may be issued upon the exercise of options under all of the Company's existing
stock option plans as of September 30, 2004.

|         |               | Weighted | Remaining   |             | Weighted
|-------- | ------------- | -------- | ----------- | ----------- | --------
|         |               | Average  | Contractual |             | Average 
|Exercise | Number
    of | Exercise | Life        | Number      | Exercise
|Prices   | Options       | Price    | (in years)  | Exercisable | Price   
|         |               |          |             |             |         
|$0.10    | 250,000       | $0.10    | 1.61        | 250,000     | $0.10   

F-10

11

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2004

NOTE 9 - IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," the Corporation recorded an impairment loss on its oil
and gas proved and unproved properties and its leasehold costs of oil and gas
producing properties. The engineering reports on the oil and gas properties
indicated that the undiscounted future cash flows from these properties would be
less than the carrying value of the long-lived assets. The engineer reports also
indicated that net leasehold acreage did not support the value carried by the
Company. Accordingly, during the year ended June 30, 2003, the Company
recognized an asset impairment loss of $20,407,559 ($0.46 per share). This loss
was the difference between the carrying value of the oil and gas properties and
the fair value of these properties based on discounted estimated future cash
flows.

NOTE 10 - INCOME TAXES

At September 30, 2003 and June 30, 2003, the Company had net deferred tax
assets of approximately $1,216,000 and $778,000, calculated at projected income
tax rates of 34%. The deferred tax assets are principally derived from net
operating loss carryforwards for income tax purposes. As management of the
Company cannot determine that it is more likely than not that the Company will
realize the benefit of the net deferred tax asset, a valuation allowance equal
to the net deferred tax asset has been recorded. The significant components of
the deferred tax assets at September 30, 2004 and June 30, 2004 are as follows:

|                                                       |   | September 30, |   | June 30, 
|------------------------------------------------------ | - | ------------- | - | ---------
|                                                       |   | 2003          |   | 2004     
|                                                       |   |               |   |          
|Net operating loss
    carryforward before adjustments | $ | 2,877,441     | $ | 3,563,988
|                                                       |   |               |   |          
|Less:                                                  |   |               |   |          
|Loss for quarter                                       |   | 701,432       |   | 1,276,250
|Stock options issued
    under non-qualified plans     |   |               |   |          
|                                                       |   |               |   |          
|Effective net
    operating loss carryforward          |   | 3,578,873     |   | 2,287,738
|Expected tax rate                                      |   | 34%           |   | 34%      
|                                                       |   |               |   |          
|Deferred tax asset                                     |   | 1,216,000     |   | 777,000  
|Deferred tax asset
    valuation allowance             |   | 1,216,000     |   | (777,000)
|                                                       |   |               |   |          
|Deferred tax asset
    after valuation allowance       | $ | -             | $ | -        

F-11

12

---



TEXEN OIL & GAS, INC. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2004

NOTE 11 - SUBSEQUENT EVENTS

Officers and Directors

During the year ending 2004, the Company appointed Tatiana Golovina as the
new President and Secretary. Subsequent to these financial statements, in July
2004, Tatiana Golovina resigned and Michael Sims was appointed as the new
President and Secretary.

F-12

13

---



ITEM 1. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This discussion includes a number of forward looking statements that reflect
our current views with respect to future events and financial performance.
Forward looking statements are often identified by words like: believe, expect,
estimate, anticipate, intend, project and similar expressions, or words which,
by their nature, refer to future events. You should not place undue certainty on
these forward looking statements, which apply only as of the date of this
discussion. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or our predictions.

Factors that may affect such forward-looking statements include, but are not
limited to:

> 1) The Company's ability to generate additional capital to complete its
>   planned drilling and exploration activities;
>   2) Risks inherent in oil and gas acquisitions, exploration, drilling,
>   development and production;
>   3)

4)

5)

6)

7) Economic, market or business conditions in the oil and gas industry and
  in the energy business generally;

8)

9) Financial condition and operating performance of the other companies
  participating in the exploration, development and production of oil and gas
  ventures that we are involved in. In addition, the Company may be in position
  to control costs, safety and timeliness of work as well as other critical
  factors affecting a producing well or exploration and development activities.

We are in an early stage of development with a few proven properties
currently producing. Most of our properties are still awaiting additional
exploration and development work.

Our auditors have issued a going concern opinion. This means that our
auditors believe there is doubt that we can continue as an on-going business for
the next twelve months unless we obtain additional capital to pay our bills.
This is because we have generated limited revenues and expected revenues during
the ensuing period are subject to fluctuation based on the availability of
additional capital necessary in order to fully exploit the unproven potential of
our Oil & Gas portfolio. Accordingly, we must raise cash from sources other than
from the sale of Oil & Gas found on our properties. Our only other source for
cash at this time is investments by others in our company. We must raise cash to
implement our project and stay in business.

14

---



ITEM 1. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(continued)

Limited Operating History: Need for Additional Capital

There is no historical financial information about our company upon which to
base an evaluation of our performance. We have limited Oil & Gas production that
has yet to achieve predictable sustained production from operations. We cannot
guarantee we will be successful in our business operations. Our business is
subject to risks inherent in the establishment of a new business enterprise,
including limited capital resources, possible delays in the exploration of our
properties and fluctuations in Oil & Gas sales and prices.

To become profitable and competitive, we need to fully exploit the
undeveloped potential of our exploration properties. If successful, additional
funds will be required in order to complete successful wells and place them on
production. We are seeking equity financings to provide for our capital
requirements in order to implement our exploration plans.

We have no assurances that future financings will be available to us on
acceptable terms. If financings are not available on satisfactory terms, we may
be unable to continue, develop or expand our operations. Equity financings could
result in additional dilution to existing shareholders.

Results from Operations

Overview

Our source of operating revenue is from the sale of produced oil, natural
gas, and natural gas liquids. The level of our revenues and earnings are
affected by prices at which natural gas, oil and natural gas liquids are sold.
Therefore, our operating results for any prior period are not necessarily
indicative of future operating results because of fluctuations in price and
production levels.

15

---



ITEM 1. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION 
(continued)

|Oil and Gas                                       |                                |                               
|------------------------------------------------- | ------------------------------ | ------------------------------
|                                                  |                                |                               
|                                                  | For
    the Three Months Ended | For
    the Three Months Ended
|                                                  | September 30, 2004             | September 30, 2003            
|                                                  |                                |                               
|Production:                                       |                                |                               
|Oil (bbls)                                        | 3,780                          | 3,562                         
|Gas (mcf)                                         | 27,720                         | 5,721                         
|Average Sales
    Price:                          |                                |                               
|Oil (per bbl)                                     | 40.56                          | 18.50                         
|Gas (per mcf)                                     | 5.02                           | 4.28                          
|                                                  |                                |                               
|Revenue                                           |                                |                               
|Oil & Gas                                         | 286,640                        | 124,513                       
|Drilling                                          | (25,964)                       | 114,127                       
|                                                  |                                |                               
|Total Revenue                                     | 260,676                        | 238,640                       
|Costs                                             |                                |                               
|Development Costs                                 | 161,199                        | 55,229                        
|Lifting Costs                                     | 604,811                        | 195,202                       
|Production Taxes
    (Including in lifting costs) | 0                              | 5,861                         
|                                                  |                                |                               
|Operating Margin                                  | (505,334)                      | (17,652)                      

16

---



ITEM 1. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION (continued)

Revenue

Oil and gas revenue increased from $124,513 for the three
months ended September 30, 2003 to $286,640 for the three months ended September
30, 2004 primarily as a result of increased gas production in the Gohlke Field
coupled with the increase in product prices. The oil and gas revenues were
offset by a decrease in drilling revenues of $114,127 for the period.

Capital Expenditure

The company had capital expenditures of $161,199 during the
period ending September 30, 2004, which included several workovers in the Gohlke
Field. All costs incurred were developmental.

Depreciation, Depletion and Amortization

Depreciation, Depletion and Amortization increased for the
period ending September 30, 2004 due to increased gas production.

Production Expenses

Production expenses increased to $604,811 for the period. This
was a result of accruals made for the contract operator for the period.
Management is currently in the process of reviewing all the charges and
proposing settlement terms with the contract operator.

General and Administrative Expenses

All cost associated with the general and administrative
function remain constant with the prior year.

Exploration Outlook

We expect to continue with the development of our current
asset portfolio and we will be seeking new opportunities during the current
fiscal year.

Financial Condition, Liquidity and Capital Resources

Our cash at September 30, 2004 is $95,348. Our current assets
at September 30, 2004 is $635,416. Our current liabilities are $3,430,693 at
September 30, 2004. Our working capital deficit at September 30, 2004 is
$2,795,277. We currently generate approximately $87,000 per month in revenues.
Our cost of operations is approximately $201,000. We continue to operate at a
loss. In the event we are unable to develop a positive cash flow, we will have
to cease operations or sell off sufficient producing properties to begin
operating profitably.

17

---



ITEM 1. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION 
(continued)

Recent Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" (hereinafter "SFAS
No. 150"). SFAS No. 150 establishes standards for classifying and measuring
certain financial instruments with characteristics of both liabilities and
equity and requires that those instruments be classified as liabilities in
statements of financial position. Previously, many of those instruments were
classified as equity. SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003 and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
has not yet determined the impact of the adoption of this statement.

In April 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" (hereinafter "SFAS No. 149").
SFAS No. 149 amends and clarifies the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities". This statement is effective for contracts entered into
or modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The adoption of SFAS No. 149 is not expected to have a material
impact on the financial position or results of operations of the Company as the
Company has not issued any derivative instruments or engaged in any hedging
activities as of June 30, 2004.

ITEM 2. CONTROLS AND PROCEDURES

At September 30, 2004, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
the Company's Principal Executive Officer and Principal Financial Officer, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Rule 13a-15 under the Securities Exchange
Act of 1934, as amended. Based upon that evaluation, the Principal Executive
Officer and Principal Financial Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company required to be included in the Company's
periodic SEC filings. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect the
Company's controls subsequent to the date of that evaluation, and no corrective
actions with regard to significant deficiencies and material weaknesses.
Management is currently reevaluating control procedures.

PART II - OTHER INFORMATION

ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits Item Description

|31.1 | Certification of
    Principal Executive Officer and Principal Financial Officer pursuant to Rule
    13a-15 and
|---- | ----------------------------------------------------------------------------------------------------------------
|     | Rule 15d-15(a),
    promulgated under the Securities and Exchange Act of 1934, as amended.                      
|     |                                                                                                                 
|32.1 | Certification pursuant
    to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-   
|     | Oxley Act of 2002
    (Chief Executive Officer and Chief Financial Officer).                                    

18

---



(b) Reports on Form 8-K

We filed the following reports on Form 8-K during the three months ended
September 30, 2004:

On July 21, 2004, we filed a Form 8-K reporting the following events: Announced that it has named Mr. Michael Sims as President and CEO

On July 22, 2004, we filed a Form 8-K reporting the following events: 
Continues its turn around operations by reworking and testing a salt water
disposal well required by the Texas Railroad Commission.

On July 30, 2004, we filed a Form 8-K reporting the following events: Completes the First of Several Re-works as Part of Reorganization Strategy

On August 3,

On August 11, 2004 we filed a Form 8-K reporting the following events: Pleased to announce that it is currently negotiating the acquisition of up
to a 25% interest in approximately 1,500 acres of additional oil and gas leases
in the Brookshire Salt Dome, a 6.7 million barrel producing field

On August 18, 2004 we filed a Form 8-K reporting the following events: We have successfully completed the initial rework phase for the Brookshire
Property, as part of its ongoing focus to increase production from its existing
field operations.

On August 26, 2004 we filed a Form 8-K reporting the following events: President and CEO Michael Sims, conducted an online interview with Senior
Analyst, Mr. Todd Santorelli of WallStreetReporter.com

On August 25, 2004 we filed a Form 8-K reporting the following events: We have completed the rework program for the Brookshire Property.

On September 27, 2004 we filed a Form 8-K reporting the following events: Pleased to announce that it has commenced the scheduled workover program in
the Helen Gohlke Field, with the initial re-work on the Charles Kuester 20.

19

---



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on this 15th day of November 2004.

TEXEN OIL & GAS,
      INC.(Registrant)BY:
      /s/ Michael SimsMichael Sims,
      President, Principal Executive Officer, Treasurer,Principal Financial
      Officer and a member of the Board of Directors.


20

---