U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





**FORM 10-QSB**


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2004





OR





[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ________ to ________








**Superior Oil and Gas Co.**


(Exact name of registrant as specified in its charter)







NEVADA
(state of
incorporation)
000-50173
(Commission File Number)
87-0537621
(IRS Employer
I.D. Number)





14910 Northwest 36 Street


Yukon, OK 73099


405-350-0404


____________________________________________________


(Address and telephone number of registrant's principal


executive offices and principal place of business)





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 twelve 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  [ ]





As of November 16, 2004, there were 10,205,714 shares of the Registrant's Common Stock, par value $0.001 per share, outstanding.





Transitional Small Business Disclosure Format (check one): Yes [ ] No  [X]





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TABLE OF CONTENTSPage3PART I - FINANCIAL INFORMATIONItem 1.  Financial Statements
3Item 2.  Managements Discussion and Analysis or Plan of Operation
10Item 3.  Controls and Procedures
12PART II - OTHER INFORMATION
12Item 1.  Legal Proceedings
12Item 2.  Unregistered Sales of Equity Securities
12Item 3.  Defaults Upon Senior Securities
12Item 4.  Submission of Matters to a Vote of Security Holders
12Item 5.  Other Information
13Item 6.  Exhibits and Reports on Form 8-K
13SIGNATURES
14




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**PART I - FINANCIAL INFORMATION******
****
******Item 1. Financial Statements**PAGEBalance Sheet September 30, 2004 (unaudited)

4Statements of Operations for the Three and Nine MonthsEnded September 30, 2004 and 2003 (unaudited)

5Statements of Cash Flows for the Nine MonthsEnded September 30, 2004 and September 30, 2003 (unaudited)

6Notes to Financial Statements, September 30, 2004 and 2003 (unaudited)

7




3




**Superior Oil and Gas Co.****Balance Sheet****September 30, 2004****(Unaudited)******
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**September 30,**
********
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**2004**
******Assets**
****
****Assets

$
890**Liabilities and Shareholders' Equity**Current liabilities


79,211Other liabilitiesLegal judgment


505,304Total liabilities


584,515Shareholders' EquityCommon stock, $0.001 par value,200,000,000 shares authorized 10,094,464shares outstanding


10,094Additional paid-in capital


627,980Accumulated deficit


(1,221,699
)Total shareholders' equity


(583,625
)Total liabilities and shareholders' equity

$
890See Accompanying Notes to Financial StatementsSee Accountant's Review Report


4    **Superior Oil and Gas Co.****Statements of Operations****For the Three and Nine Months Ended September 30, 2004 and 2003****(Unaudited)******
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**Three Months**************
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**Nine Months**************
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**2004**
****
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**2003**
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**2004**
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**2003**Revenue

$
-

$
-

$
-

$
-Operating ExpensesOffice


27,769


188


43,495


2,746Consulting


47,500


200


112,500


200Judgment


8,442


8,442


25,326


25,32683,711


8,830


181,321


28,272Loss before income taxes


(83,711
)

(8,830
)

(181,321
)

(28,272
)Income tax expense (benefit)


-


-


-


-Net loss

$
(83,711
)
$
(8,830
)
$
(181,321
)
$
(28,272
)Loss per Share:Weighted average shares outstanding


10,037,000


8,274,000


8,956,000


8,274,000Earnings (loss) per share

$
(0.01
)

(nil
)
$
(0.01
)

(nil
)See Accompanying Notes to Financial StatementsSee Accountant's Review Report
  5    **Superior Oil and Gas Co.****Statements of Cash Flows****For the Nine Months Ended September 30, 2004 and 2003****(Unaudited)******
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**Nine Months**
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**2004**
****
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**2003**Cash flows from operating activities:Net loss

$
(181,321
)
$
(28,272
)Adjustment to reconcile net loss to net cashprovided by (used) by operating activities:Common stock issued for expenses


113,500


200Increase (decrease) in liabilities:Accounts payable


68,711


28,072Net cash flows from operating activities


890


-Cash flows from investing activities:Issuance of common stock


-


-Cash flows from financing activities


-


-Increase in cash


890


-Cash, beginning of year


-


-Cash, end of period

$
890

$
-See Accompanying Notes to Financial StatementsSee Accountants Review Report
  6    **Superior Oil and Gas Co.**
**Notes to Financial Statements**
**September 30, 2004 and 2003**
**(unaudited)** 
 Note 1 - Organization
 
 Superior Oil and Gas Co. (the Company) was incorporated on February 22, 1989, as a Utah corporation under the name Western States Resources, Inc. On March 31, 1997, the Company was merged with another company, Western States Resources US, Inc. (a Nevada corporation) under the pooling of interests method and immediately changed its name to Red River Resources, Inc. On June 4, 1997, the Company changed its name to Superior Oil and Gas Co. The purpose of the Company has been to engage in the development of oil and gas properties.
 
 
 Note 2 - Summary of Significant Accounting Policies
 
 Method of accounting:
 
 The Company recognizes income and expenses based on the accrual method of accounting.
 
 Earnings per share:
 
 Earnings (loss) per share amounts are computed on the weighted average number of shares actually outstanding.
 
 Cash and cash equivalents:
 
 For purposes of reporting cash flows, the Company considers cash in checking accounts, savings accounts and certificates of deposit to be cash equivalents.
 
 Use of estimates:
 
 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities disclosed at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
 Fixed assets:
 
 The Company records all purchases of fixed assets and oil and gas leases at cost.
 7
  **Superior Oil and Gas Co.**
**Notes to Financial Statements**
**September 30, 2004 and 2003**
**(unaudited)**   Note 2 - Summary of Significant Accounting Policies (Continued)
 
 Income taxes:
 
 Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes.
 
 The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.
 
 Note 3 - Related Party Transactions
 
 During 1999 and a portion of 2000 the Company held an assignment of a working interest in oil and gas leases from a related party company. During this time period the Company also absorbed and paid operating costs to the related party company for its interest percentage in the leases.
 
 In February 2000 the Board of Directors of the Company elected to return to the related party all of the Companys working interest in the oil and gas leases in consideration for the cancellation of a payable due the related party company. The payable due the related party company was the result of the Companys inability to keep current with the interest percentage of the operating costs associated with the leases. The related company is majority owned and controlled by the majority shareholder of the Company.
 
 The officers and directors of the Company are involved in other business activities and they may, in the future, become involved in additional business ventures, which also may require their attention. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has formulated no policy for the resolutions of such conflicts.
 
 The Company shares office facilities with a related party company, but is not obligated to pay rent to the related party company.
 8
 **Superior Oil and Gas Co.**
**Notes to Financial Statements**
**September 30, 2004 and 2003**
**(unaudited)**  Note 4 - Income Taxes
 
 As of September 30, 2004 the Company had substantial net operating losses. Net operating losses and book and tax differences are required by generally accepted accounting standards to be recorded. Book and tax differences are not required to be recorded when the consequences of these differences might not be realized. The Company has substantial net operating losses, which will expire over the next 5 to 15 years, which may or may not be realized, which would be dependent on future earnings, which are currently uncertain.
 
 Note 5 - Going Concern
 
 The Companys financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in note 3, the Company has relinquished all income generating assets and currently has a $505,304 judgment filed against it. The judgment will continue to accrue interest at 10% per year. The Company is currently unable to pay any of the judgment amount filed against it. This judgment has also been filed against three other related parties. Management is still unclear as to what steps it needs to implement in regards to acquiring any new interests in the oil and gas industry or developing other forms of working capital. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
 Note 6 - Earnings per Share
 
 The Company computes net income (loss) per share in accordance with SFAS No. 128, Earnings per Share and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98 basic net income (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period.
 
 Note 7 - Other
 
 On September 24, 2004 the Company signed a letter of intent to acquire 100% of the outstanding stock of TDC Energy LLC a limited liability company organized under the laws of the state of Louisiana.
 9
 Item 2. Management's Discussion and Analysis or Plan of Operation
 
 The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto for the three-month period ended September 30, 2004 and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere. See "Item 1. Financial Statements." The discussion includes managements expectations for the future.
 
 Such expressions of expectation are not historical in nature and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially from those expressed in any forward-looking statement. Such risks and uncertainties are discussed in the Risk Factors section of our Annual Report on Form 10-KSB. Copies of that filing may be obtained by contacting Gayla McCoy of our company at 14910 Northwest 36 Street, Yukon, OK 73099, telephone (405) 350-0404.
 
 In May 2004, we entered into an agreement to acquire a 50-foot wide and 26,000-foot long Bureau of Land Management right-of-way in the White River Resource Area of Rio Blanco County, Colorado. The purchase price for the right-of-way is 600,000 shares of common stock plus five additional shares of common stock for each dollar of revenue received from the operation of a planned gas pipeline until the purchase price should equal 2,500,000 shares of stock. The 29.84-acre right-of-way grants us "the right to construct, operate, maintain and terminate a four-inch, buried natural gas pipeline." The area of interest surrounding this right-of-way contains thirteen completed but shut-in natural gas wells and drilling locations for six new wells. We estimate it will cost us approximately $1 million and take us approximately six to eight weeks to build the pipeline. We have not yet secured the acquisition of these funds, and we can give no assurance that we will be able to secure these funds or, if secured, that we can secure the funds on favorable terms.
 
 In October 2004 we signed a letter of intent to acquire all the outstanding capital stock of TDC Energy, Inc., a New Orleans- and Houston, Texas-based oil and gas exploration and development company. The purchase price to our company is $8 million in cash and 1 million shares of our common stock.
 
 TDC Energy owns approximately 75,000 gross mineral acres with 23 producing oil and gas wells offshore Texas and Louisiana. An independent petroleum engineering firm, H.J. Gray & Associates, evaluated TDC Energys net proved producing and net proved non-producing oil and gas reserves, as of July 1, 2004, at $63,899,000 or, when future production is discounted to present date at a 10 percent discount rate, $52,127,000.
 
 The producing wells are currently producing natural gas to TDC Energys net revenue interest at the rate of 14 million cubic feet a day.
 
 Closing of the transaction is subject to Superior Oil and Gas Co.s raising the funds needed to purchase the outstanding stock of TDC Energy. We do not have a committed source of these funds yet, and there is no assurance that we will be able to raise the necessary funds.
 10
 
 **Plan of Operation for the Next Twelve Months**
 
 Our current business plan is to seek, investigate, and, if warranted, acquire one or more oil, gas or related properties, and to pursue other activities intended to enhance shareholder value. The acquisition of a property or a business opportunity may be made by purchase, merger, exchange of stock, or otherwise, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership. We intend to seek opportunities demonstrating the potential of long-term growth as opposed to short-term earnings.
 
 We are in the development stage and, since inception, have experienced significant liquidity problems and have no capital resources or stockholders equity. We have assets consisting of cash on hand of $890 and total liabilities of $584,515.
 
 We propose to carry out our plan of business as discussed above. We cannot predict to what extent our lack of liquidity and capital resources will impair the consummation of a purchase or whether we will incur further operating losses through any properties or business entity which we may eventually acquire.
 
 For the current fiscal year, we anticipate incurring a loss as a result of legal and accounting expenses, expenses associated with registration under the Securities Exchange Act of 1934, and expenses associated with locating and evaluating property acquisition candidates. We anticipate that until a business combination is completed with an acquisition candidate, it will not generate revenues other than interest income, and may continue to operate at a loss after completing a business combination, depending upon the performance of the acquired business.
 
 Need for Additional Financing
 
 We do not have capital sufficient to meet our cash needs during the next twelve months, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934. We will have to seek loans or equity placements to cover such cash needs. Due to our recurring losses and stockholders deficiency, there can be no assurance that we will be able to obtain the additional funds, which may impact our ability to continue as a going concern. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue operations as a going concern.
 
 No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to the company to allow it to develop its properties or cover its expenses as they may be incurred.
 
 Irrespective of whether our cash assets prove to be inadequate to meet our operational needs, we might seek to compensate providers of services by issuances of stock in lieu of cash.
 11
 
 Off-Balance Sheet Arrangements

Our company has not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have

·
an obligation under a guarantee contract,·
a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,·
any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or·
any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.
 Item 3.Controls and Procedures
 
 Evaluation of disclosure controls and procedures . The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures as of September 30, 2004. Based on this evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective for gathering, analyzing and disclosing the information the Company is required to disclose in the reports it files under the Securities Exchange Act of 1934, within the time periods specified in the SECs rules and forms.
 
 Changes in internal controls . There were no significant changes in internal controls or other factors that could significantly affect our internal controls subsequent to the date of our evaluation.
 
 **PART II - OTHER INFORMATION**
 
 Item 1.Legal Proceedings.
 
 We are not, and none of our property is, a party to any pending legal proceedings, and no such proceedings are known to be contemplated. We are, however, a judgment debtor in the case of Gotz Werner & Roman Werner v. Daniel Lloyd, McCoy Energy Co., Superior Oil and Gas Co., and Big Daddys BBQ Sauce & Spices Co ., Superior Court of Arizona, Maricopa County, No. CV 99-11813. The principal amount of the judgment is $337,686 with ten percent interest accruing from and after October 14, 1999. As of September 30, 2004, the amount of the judgment including interest was $505,304 with interest accruing in the quarterly amount of $8,442.
 
 Daniel Lloyd, McCoy Energy Co. and Big Daddys BBQ Sauce & Spices Co. are also judgment debtors in this litigation, each to the same extent and in the same amount as our company. Daniel Lloyd is the chief executive officer, chief financial officer and a director of our company. McCoy Energy Co. is under the control of Gayla McCoy, the secretary and treasurer of our company. Big Daddys BBQ Sauce & Spices Co. is under the control of Mr. Lloyd and Ms. McCoy.
 
 **Item 2.**
****
**Unregistered Sales of Equity Securities** 
 None.
 
 **Item 3.**
****
**Defaults Upon Senior Securities** 
 None.
 
 **Item 4.**
****
**Submission of Matters to a Vote of Security Holders** 
 None.
 12
 
 **Item 5.**
****
**Other Information** 
 None.
    **Item 6.**
****
**Exhibits and Reports on Form 8-K** 
 (a)
Exhibits 
 The following exhibits are filed, by incorporation by reference, as part of this Form 10-QSB:
 
 **Exhibit**
**Description**3(i)
Articles of Incorporation
*3(ii)
Bylaws
*16
Letter on Change in Certifying Accountant
*31
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.1
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.1
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
Previously filed with Form 10-SB on January 31, 2003, EDGAR Accession #0001060830-03-000019; incorporatedherein. 
 (b) Forms 8-K
 
 None
 13
 
 **SIGNATURES**
 
 Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 Superior Oil and Gas Co.Date: November 17, 2004
By:
/s/ Daniel LloydDaniel LloydChief Executive Officer
 
 
 14
 **Superior Oil & Gas Co.**
 Commission File No. 000-50173
 
 **Form 10-QSB**
 **For the quarterly period ended September 30 2004**
 
 
 **Index to Exhibits**
 
 
 The following exhibits are filed with this Form 10-QSB Quarterly Report:
 
 Exhibit
Description3(i)
Articles of Incorporation
*3(ii)
Bylaws
*16
Letter on Change in Certifying Accountant
*31
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.1
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.1
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
Previously filed with Form 10-SB on January 31, 2003, EDGAR Accession #0001060830-03-000019; incorporatedherein.
 1