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 June 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
000-50173
87-0537621(state of
incorporation)
(Commission File Number)
(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 August 16, 2004, there were 9,924,464 shares of the Registrant's Common Stock, par value $0.001 per share, outstanding.





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











TABLE OF CONTENTS


PagePART I - FINANCIAL INFORMATION
3Item 1. Financial Statements
3Item 2. Managements Discussion and Analysis or Plan of Operation
12Item 3. Controls and Procedures
13PART II - OTHER INFORMATION
14Item 1. Legal Proceedings
14Item 2. Changes in Securities
14Item 3. Defaults Upon Senior Securities
14Item 4. Submission of Matters to a Vote of Security Holders
14Item 5. Other Information
14Item 6. Exhibits and Reports on Form 8-K
14SIGNATURES
15




2





PART I - FINANCIAL INFORMATION





Item 1. Financial StatementsPAGEIndependent Accountants Review Report
4Balance Sheets June 30, 2004 (unaudited)
5Statements of Operations for the Three and Six MonthsEnded June 30, 2004 and 2003 (unaudited)
6Statements of Cash Flows for the Three and Six MonthsEnded June 30, 2004 and June 30, 2003 (unaudited)
7Notes to Financial Statements June 30, 2004 and 2003 (unaudited)
8
































3








Independent Accountants Review Report
 
 
 Board of Directors and Stockholders
 Superior Oil and Gas Co.
 
 We have reviewed the accompanying balance sheet of Superior Oil and Gas Co. (the Company) as of June 30, 2004 and the related statements of operations and the statements of cash flows for the three and six months ended June 30, 2004 and 2003 in accordance with Statements on Standards for accounting and Review Services issued by the American Institute of Certified Public Accountants. These financial statements are the responsibility of the Companys management
 
 A review of interim financial statements consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
 
 Based on our review we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
 
 The December 31, 2003 financial statements for Superior Oil and Gas Co. were audited by us and we expressed an unqualified opinion in our report dated February 16, 2004 but we have not performed any auditing procedures since that date.
 
 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, there has been a judgment filed against the Company. Based upon the current financial condition of the Company, management does not anticipate the ability to satisfy the judgment. Additionally as discussed in Note 3 to the financial statements the Company surrendered the right to the working interest in oil and gas leases, which were the Companys remaining assets at that time. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
 
 /s/ Sutton Robinson Freeman & Co., P.C.
 
 Sutton Robinson Freeman & Co., P.C.
 Certified Public Accountants
 
 Tulsa, Oklahoma
 August 12, 2004
  4
  SUPERIOR OIL and GAS CO.BALANCE SHEETJUNE 30, 2004(Unaudited)June 30,2004AssetsAssets

$
-Liabilities and Shareholders' EquityCurrent liabilities


51,552Other liabilitiesLegal judgment


496,862Total liabilities


548,414Shareholders' EquityCommon stock, $0.001 par value,200,000,000 shares authorized 9,124,464shares outstanding


9,124Additional paid-in capital


580,450Accumulated deficit


(1,137,988
)Total shareholders' equity


(548,414
)Total liabilities and shareholders' equity

$
-See Accompanying Notes to Financial StatementsSee Accountant's Review Report
  5
  SUPERIOR OIL and GAS CO.STATEMENTS OF OPERATIONSFOR THE THREE and SIX MONTHS ENDEDJUNE 30, 2004 and 2003(Unaudited)Three Months


Six Months2004


2003


2004


2003Revenue

$
-

$
-

$
-

$
-Operating ExpensesOffice


3,102


1,592


15,726


2,558Consulting


65,000


-


65,000


-Judgment


8,442


8,442


16,884


16,88476,544


10,034


97,610


19,442Loss before income taxes


(76,544
)

(10,034
)

(97,610
)

(19,442
)Income tax expense (benefit)


-


-


-


-Net loss

$
(76,544
)
$
(10,034
)
$
(97,610
)
$
(19,442
)Loss per Share:Weighted average shares outstanding


8,557,000


8,274,000


8,416,000


8,274,000Earnings (loss) per share

$
(0.01
)

(nil
)
$
(0.01
)

(nil
)See Accompanying Notes to Financial StatementsSee Accountant's Review Report
  6
 SUPERIOR OIL and GAS CO.STATEMENTS OF CASH FLOWSFOR THE THREE and SIX MONTHS ENDEDJUNE 30, 2004 and 2003(Unaudited)Three Months

Six Months2004


2003


2004


2003Cash flows from operating activities:Net loss

$
(76,544
)
$
(9,408
)
$
(97,610
)
$
(19,442
)Adjustment to reconcile net loss to net cashprovided by (used) by operating activities:Increase (decrease) in liabilities:Accounts payable


11,544


9,408


32,610


19,442Net cash flows from operating activities


(65,000
)

-


(65,000
)

-Cash flows from investing activities:Issuance of common stock


65,000


-


65,000


-Cash flows from financing activities


-


-


-


-Decrease in cash


-


-


-


-Cash beginnings of year


-


-


-


-Cash end of period

$
-

$
-

$
-

$
-See Accompanying Notes to Financial StatementsSee Accountants Review Report
  7
  Superior Oil and Gas Co.
 Notes to Financial Statements
 June 30, 2004 and 2004
 (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.
 8
  Superior Oil and Gas Co.
 Notes to Financial Statements
 June 30, 2004 and 2004
 (unaudited)
  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 a 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.
  9
  Superior Oil and Gas Co.
 Notes to Financial Statements
 June 30, 2004 and 2004
 (unaudited)
 Note 4 - Income Taxes
 
 As of June 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 dependant 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 $496,862 judgment filed against the Company. 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 four other related party companies. 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  Subsequent Event
 
 On June 1, 2004 the Company announced the purchase of a 26,000-foot right-of-way in the Bureau of Land Managements White River Resource Area of Rio Blanco County, Colorado. The right-of-way grants the right to construct, operate, maintain and terminate a 4-inch, buried natural gas pipeline. The transaction was not completed at June 30, 2004. Under the terms of the purchase the Company will issue 600,000 common shares of stock plus 5 additional shares for each dollar of revenue received from the operation of the pipeline until the purchase price equal 2,500,000 shares.
 
 10
  **Superior Oil and Gas Co.**
**Notes to Financial Statements**
**June 30, 2004 and 2004**
**(unaudited)**
 Note 7  Subsequent EventContinued)
 
 
 On July 12, 2004 the Company acquired a 112-acre lease in Cooke County, Texas in exchange for 358,400 common shares of Company stock.
 
               11
   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 six-month period ended June 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.
 
 On July 12, 2004 we acquired an oil and gas lease on a 112-acre tract in Cooke County, Texas in exchange for 358,400 shares of our common stock. The acreage offsets several gas wells producing from the Barnett Shale field. Subject to our acquiring the estimated $860,000 needed to drill, complete and equip a well, we plan to drill a well on our acreage during the third fiscal quarter of 2004. 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.
 
 **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.
 
 12
  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 oil and gas properties with a book value of $0 and total liabilities of $548,414.
 
 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.
 
 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 June 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.
 
 13
  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 June 30, 2004, the amount of the judgment including interest was $496,862 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. Changes in Securities
 
 None.
 
 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 and Reports on Form 8-K
 
 (a)  Exhibits
 
 The following exhibits are filed, by incorporation by reference, as part of this Form 10-QSB:
 
 14
  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; incorporated herein.
 
 
 (b)  **Forms 8-K**
 
 None
 
 **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:  August 18, 2004
By:
/s/ Daniel LloydDaniel LloydChief Executive Officer
  15
 
 **Superior Oil & Gas Co.**
 Commission File No. 000-50173
 
 Form 10-QSB
 For the quarterly period ended June 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; incorporated herein.
 
 1