UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended               September 30, 2000
                               -------------------------------------------------

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ________________ to ____________________

Commission file number     1-3793
                       --------------

                         CANADA SOUTHERN PETROLEUM LTD.
 ................................................................................
             (Exact name of registrant as specified in its charter)

     NOVA SCOTIA, CANADA                                    98-0085412
 ................................................................................
   (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                         Identification No.)

         #505, 706 - 7th Avenue, S.W., Calgary, Alberta, Canada T2P 0Z1
 ................................................................................
(Address of principal executive offices)                      (Zip Code)

                                 (403) 269-7741
 ................................................................................
              (Registrant's telephone number, including area code)


 ................................................................................
              (Former name, former address and former fiscal year,
                          if changed since last report)

         Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
                                                         |X|  Yes     |_|  No

         Indicate the number of shares  outstanding  of the issuer's  classes of
common stock as of the latest practicable date:

         Limited Voting Shares,  par value $1.00 (Canadian) per share 14,284,970
shares outstanding as of November 10, 2000.


<PAGE>


                         CANADA SOUTHERN PETROLEUM LTD.

                                    FORM 10-Q

                               SEPTEMBER 30, 2000

                                Table of Contents


                         PART I - FINANCIAL INFORMATION


ITEM 1   Financial Statements                                              Page
                                                                           ----
         Consolidated balance sheets at September 30, 2000 and
         December 31, 1999                                                   3

         Consolidated statements of operations and deficit for the three and
         nine months ended September 30, 2000 and September 30, 1999         4

         Consolidated statements of cash flows for the nine months ended
         September 30, 2000 and September 30, 1999                           5

         Notes to consolidated financial statements                          6

ITEM 2   Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                               9

ITEM 3   Quantitative and Qualitative Disclosure About Market Risk          17

                           PART II - OTHER INFORMATION

ITEM 5   Other Information                                                  18

ITEM 6   Exhibits and Reports on Form 8-K                                   18

         Signatures                                                         19


<PAGE>


18

                         CANADA SOUTHERN PETROLEUM LTD.
                                    FORM 10-Q
                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                           CONSOLIDATED BALANCE SHEETS
                         (Expressed in Canadian dollars)
<TABLE>
                                                                             September 30,           December 31,
                                                                                  2000                   1999
                                                                          --------------------------------------------
                                Assets                                           (Unaudited)                (Note)
                                ------

Current assets:
<S>                                                                             <C>                   <C>
  Cash and cash equivalents                                                     $  1,698,600          $  3,045,530
  Marketable securities                                                                    -               568,374
  Accounts receivable                                                                438,063               360,752
  Other assets                                                                       543,788               307,519
                                                                               -------------         -------------
Total current assets                                                               2,680,451             4,282,175
                                                                                 -----------          ------------

Oil and gas properties and equipment
  (full cost method)                                                               9,407,222            10,207,294
Future tax asset                                                                   1,649,000             1,583,475
                                                                                 -----------           -----------
Total assets                                                                     $13,736,673           $16,072,944
                                                                                 ===========           ===========

                 Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                                                             $     445,266         $     634,600
  Accrued liabilities                                                                211,422                18,256
                                                                                    --------              --------
Total current liabilities                                                            656,688               652,856
                                                                                     -------               -------

Future site restoration costs                                                        137,675               174,696

Shareholders' Equity
  Limited Voting Shares, par value $1 per share
  Authorized - 100,000,000 shares
  Outstanding -14,284,970 shares                                                  14,284,970            14,284,970
  Contributed surplus                                                             26,502,342            26,502,342
                                                                                ------------          ------------
Total capital                                                                     40,787,312            40,787,312
  Deficit                                                                        (27,845,002)          (25,541,920)
                                                                                -------------         -------------
Total shareholders' equity                                                        12,942,310            15,245,392
                                                                                ------------          ------------
Total liabilities and shareholders' equity                                       $13,736,673           $16,072,944
                                                                                 ===========           ===========
</TABLE>

Note: The balance sheet at December 31, 1999 has been derived from the audited
           consolidated financial statements at that date.

                             See accompanying notes.

<PAGE>


                         CANADA SOUTHERN PETROLEUM LTD.

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                         (Expressed in Canadian dollars)
                                   (Unaudited)
<TABLE>
                                                           Three months ended                         Nine months ended
                                                               September 30,                              September 30,
                                                   -------------------------------------------------------------------------
                                                    2000                   1999                 2000                 1999
                                                   -------------------------------------------------------------------------
                                                                        (Restated)                                (Restated)
                                                                         (Note 3)                                   (Note 3)
Revenues:
<S>                                          <C>                      <C>                <C>                   <C>
  Oil sales                                  $      6,276             $    39,461        $      14,430         $    103,136
  Gas sales                                       115,895                   1,981              160,110               30,339
  Proceeds from carried interests                 310,026                 178,471              859,580              306,166
  Interest and other income                        46,034                  54,123              127,573              199,221
                                                   ------               ---------          -----------            ---------
  Total revenues                                  478,231                 274,036            1,161,693              638,862
                                                  -------            ------------         ------------           ----------

Costs and expenses:
  General and administrative                      293,160                 216,981            1,164,862              970,827
  Legal                                           452,736                 354,039            1,562,224            1,473,252
  Lease operating costs                            19,968                  50,024               41,299              118,140
  Depletion, depreciation
     and amortization                              58,500                  91,500              177,500              279,700
  Foreign exchange loss (gain)                    (10,194)                (50,511)             (50,167)              41,734
  Abandonments and write downs                          -                       -              634,582                    -
                                                ---------            ------------         ------------         ------------
  Total costs and expenses                        814,170                 662,033            3,530,300            2,883,653
                                                ---------            ------------          -----------          -----------
  Loss before income taxes                       (335,939)               (387,997)          (2,368,607)          (2,244,791)
  Income tax recovery (provision)                (177,000)                 35,377               65,525              108,573
                                               -----------            -----------          -----------        -------------
Net loss                                         (512,939)               (352,620)          (2,303,082)          (2,136,218)
  Deficit - beginning of period               (27,332,063)            (24,324,094)         (25,541,920)         (22,540,496)
                                              ------------            ------------         ------------       --------------
  Deficit - end of period                    $(27,845,002)           $(24,676,714)        $(27,845,002)        $(24,676,714)
                                             =============           =============        =============        =============

Average number of shares outstanding           14,284,970              14,255,490           14,284,970           14,234,740
                                               ==========              ==========           ==========           ==========

Net loss per share (basic & diluted)                $(.04)                 $(.02)               $(.16)               $(.15)
                                                    ======                 ======               ======               ======
</TABLE>


<PAGE>


                         CANADA SOUTHERN PETROLEUM LTD.
                                    FORM 10-Q

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (Expressed in Canadian dollars)
<TABLE>
                                                                                    Nine months ended
                                                                                      September 30,
                                                                          ------------------------------------------
                                                                                 2000                   1999
                                                                              (Unaudited)            (Restated)
Cash flows from operating activities:
<S>                                                                         <C>                    <C>
    Net loss                                                                $  (2,303,082)         $  (2,136,218)
    Adjustments to reconcile net loss
    to net cash used in operating activities
      Depreciation, depletion and amortization                                    177,500                279,700
      Future site restoration costs                                               (37,021)               (35,181)
      Future tax recovery                                                         (65,525)              (108,573)
      Abandonments and write downs                                                634,582                      -
    Change in current assets and liabilities:
      Accounts and interest receivable                                            (77,311)               (83,443)
      Other assets                                                                (33,881)               (28,726)
      Accounts payable                                                           (189,334)               (16,915)
      Accrued liabilities                                                         193,166               (117,448)
                                                                               -----------           ------------
  Net cash used in operations                                                  (1,700,906)            (2,246,804)
                                                                               -----------           ------------

Cash flows from investing activities:
  Additions to oil and gas properties                                            (348,010)              (746,428)
  Proceeds from sale of properties                                                336,000                      -
  Sale of marketable securities                                                   568,374                751,511
                                                                                ---------               --------
Net cash provided by investing activities                                         556,364                  5,083
                                                                                ---------               --------

Cash flows from financing activities:
  Other assets                                                                   (202,388)                     -
  Exercise of stock options                                                             -                286,444
                                                                                ---------              ---------
Net cash provided by (used in) investing activities                              (202,388)               286,444
                                                                                 ---------               -------

Decrease in cash and cash equivalents                                          (1,346,930)            (1,955,277)
Cash and cash equivalents at beginning of period                                3,045,530              6,208,634
                                                                                ---------             ----------
Cash and cash equivalents at the end of period                                 $1,698,600             $4,253,357
                                                                               ==========             ==========

                             See accompanying notes.
</TABLE>


<PAGE>


                         CANADA SOUTHERN PETROLEUM LTD.
                                    FORM 10-Q
                         PART I - FINANCIAL INFORMATION

                               September 30, 2000
                         (Expressed in Canadian Dollars)


Item 1.  Financial Statements - Notes

Note 1.  Basis of Presentation

         The accompanying  unaudited condensed consolidated financial statements
include the accounts of Canada  Southern  Petroleum  Ltd.  and its  wholly-owned
subsidiaries,  Canpet Inc. and C.S. Petroleum Limited. and have been prepared in
accordance  with  accounting   principles  generally  accepted  in  Canada.  The
financial statements conform in all material respects with accounting principles
generally  accepted in the United  States  ("U.S.  GAAP") for interim  financial
information and with the  instructions to Form 10-Q and Rule 10-01 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management,  all adjustments considered necessary
for a fair presentation have been included. All such adjustments are of a normal
recurring  nature.  Operating results for the three and nine month periods ended
September  30, 2000 are not  necessarily  indicative  of the results that may be
expected for the year ending December 31, 2000. For further  information,  refer
to the consolidated  financial  statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.

Note 2.  Revenue Recognition

          In  December  1999,  the  Company  filed a motion to have the Court of
Queen's Bench direct the working interest parties in the Kotaneelee gas field to
make timely payments of all current and future amounts due from its share of the
Kotaneelee gas field revenues.  During April 2000, the trial court dismissed the
Company's  motion  pending  the  Court's  ultimate  determination  of the issues
surrounding the Kotaneelee field carried-interest  account. The Alberta Court of
Appeal in Canada  recently  stayed  the  Company's  appeal.  See Item 5. - Other
Information.

          In view of the Court's  decisions,  the Company's motion,  the Company
will not accrue any revenues from the Kotaneelee  gas field until  collection of
the amounts due is reasonably assured.

         Since  March  2000,  the  Operator  of the  Kotaneelee  field  has been
reporting the amount of the Company's  share of net revenues being  deposited in
escrow.  The October 2000 report provided  information for production during the
month of July 2000.  Based on the reported data, the Company  believes the total
amount due the Company is $6,101,777,  of which $2,023,121 has been deposited in
escrow.



<PAGE>


Item 1.  Financial Statements - Notes (Cont'd)

Note 3.  Accounting Policy Changes

         In  1999,  under  new  recommendations  of the  Canadian  Institute  of
Chartered Accountants, the Company retroactively adopted the liability method of
accounting for income taxes.

         Under this method the Company  records  income  taxes to give effect to
temporary  differences  between  the  carrying  amount  and the tax basis of the
Company's  assets  and  liabilities.   Temporary   differences  arise  when  the
realization  of an asset or the  settlement  of a  liability  would give rise to
either an increase or decrease in the  Company's  income  taxes  payable for the
year or later period. Future income taxes are recorded at the enacted income tax
rates that are expected to apply when the future tax liability is settled or the
future tax asset is  realized.  Income tax  expense is the tax  payable  for the
period and the change during the period in future income tax and liabilities.

         Adoption  of the  liability  method  of  accounting  for  income  taxes
resulted in changes to previously  reported net income, net income per share and
the balance sheet accounts, as follows:
<TABLE>
                                                                                       September 30, 1999
                                                                                --------------------------------------
                                                                                    Three months      Nine months
                                                                                --------------------------------------
<S>                                                                                 <C>               <C>
Net loss previously reported                                                         $(387,997)        $(2,244,791)
Adjustment for the effect of the change in accounting method                            35,377             108,573
                                                                                     ----------        ------------
           Net loss as restated                                                      $(352,620)        $(2,136,218)
                                                                                     ==========        ============

Net loss per share previously reported                                                   $(.03)              $(.16)
Adjustment for the effect of the change in accounting method                               .01                 .01
                                                                                        ------              ------
           Net loss per share as restated                                               $(.02)              $(.15)
                                                                                        ======              ======
</TABLE>

         If the tax  allocation  method of accounting  for income taxes had been
retained, the Company would have reported a net loss of $(335,939) or $(.02) per
share  for  the  three  months  ended  September  30,  2000  and a net  loss  of
$(2,368,607) or $(.17) per share for the nine months ended September 30, 2000.


<PAGE>


Item 1.  Financial Statements - Notes (Cont'd)

Note 4.  Oil and Gas Properties

         During 1999, the Company's  primary Alberta asset and revenue producing
property was its heavy crude oil production and related  facilities at Kitscoty.
The  Company  sold  its 10 %  working  interest  to the  operator  for  $336,000
effective  October 1, 1999. The transaction  was completed  during February 2000
and the  proceeds  of sale were  credited to oil and gas  properties  during the
quarter ended March 31, 2000.

Note 5.    General and Administrative Expenses - Compensation

     Effective  January 3, 2000,  Mr. Ben A.  Anderson was employed as Executive
Vice  President  for a two year  period at an annual  salary of $  120,000.  Mr.
Anderson also received  options to purchase  75,000 Limited Voting Shares of the
Company with 1/3 of the total  vesting  immediately,  1/3 vesting after one year
and 1/3  vesting  after two  years.  Mr.  Anderson  will also  receive an annual
vehicle  allowance  payment of $12,000.  Mr.  Anderson  succeeded  Mr. Ashton as
President  and CEO of the  Company  on  April 1,  2000.  Mr.  Anderson  was also
appointed a director of the Company on the same date.

Note 6.    Leases

         At September 30, 2000, the future minimum rental payments and estimated
operating costs  applicable to the Company's  noncancelable  five year operating
(office)  lease  which was  effective  June 1, 2000  total $ 191,478  and are as
follows:  $ 9,883 in 2000,  $39,534 in 2001,  $40,943 in 2002,  $41,949 in 2003,
$41,949 in 2004 and $17,478 in 2005.

Note 7.  Contingent Liabilities

         The  operator  of the  Company's  Buick  Creek  properties  in  British
Columbia has notified the Company that it has  miscalculated the Company's share
of net revenues  during the last six years and has  overpaid  the  Company.  The
Company currently understands the operator's claim to be approximately $900,000.
Based upon the operative  agreement and other information,  the Company does not
believe the claim has merit and has so advised the  operator.  The  operator has
indicated an intent to withhold  approximately  one-half of any future  payments
due the Company from these properties.


<PAGE>


Item 1.  Financial Statements - Notes (Cont'd)

Note 8.  Limited Voting Shares and Stock Options

         On September 25, 2000,  the Company  filed a  preliminary  registration
statement  with both the U.S.  Securities  and Exchange  Commission  and various
Canadian securities commissions for a rights offering to its shareholders of its
limited voting  shares.  The number of shares to be sold, the purchase price and
the terms  have not yet been  determined.  The costs  incurred  relating  to the
offering totaled  approximately  $202,000 at September 30, 2000 and are included
in other assets.


         Following is a summary of option transactions since December 31, 1999:

<TABLE>

Options Outstanding                     Expiration Dates            Number of Shares            Option Prices ($)
-------------------                     ----------------            ----------------            -----------------
<S>                                  <C>                                  <C>             <C>
 December 31, 1999                   Nov. 2000 - Jan. 2004                523,500         $6.92 weighted average
   Granted                                 Jan. 2000                       75,000                     8.36
                                                                           ------
 September 30, 2000                  Nov. 2000 - Jan. 2004                598,500         $7.10 weighted average
                                                                          =======
</TABLE>




Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations

         Statements   included  in  Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby  identified as, "forward looking  statements"
for  purposes  of the  "Safe  Harbor"  Statement  under the  Private  Securities
Litigation Reform Act of 1995. The Company cautions readers that forward looking
statements  are  subject to certain  risks and  uncertainties  that could  cause
actual results to differ  materially from those indicated in the forward looking
statements.

         Among these risks and uncertainties are:

o        uncertainties as to the costs, length and outcome of the Kotaneelee
         litigation;

o        uncertainty as to when or if the Company will receive its share of
         revenue from the Kotaneelee gas field.



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations (Cont'd)

Liquidity and Capital Resources

         At September 30, 2000,  the Company had  approximately  $1.7 million of
cash and marketable securities available. Of this amount, approximately $444,000
are  held  in  U.S.   marketable   securities  which  are  subject  to  exchange
fluctuations.  These  funds  are  expected  to be  used  for  general  corporate
purposes, including exploration and to continue the Kotaneelee field litigation.

         Cash flow used in operations during the nine months ended September 30,
2000 decreased to $1,701,000  compared to $2,247,000  during the comparable 1999
period.  The  difference  between  the  periods  was  caused  primarily  by  the
following:

                  Decrease in loss from operations            $ 407,000
                  Changes in accounts receivable and other        1,000
                  Net change in current liabilities             138,000
                                                             ----------
                  Difference in net cash used in operations   $ 546,000
                                                              =========

          In  December  1999,  the  Company  filed a motion to have the Court of
Queen's Bench direct the working interest parties in the Kotaneelee gas field to
make timely payments of all current and future amounts due from its share of the
Kotaneelee gas field revenues.  During April 2000, the trial court dismissed the
Company's  motion  pending  the  Court's  ultimate  determination  of the issues
surrounding the Kotaneelee field carried-interest  account. The Alberta Court of
Appeal in Canada  recently  stayed  the  Company's  appeal.  See Item 5. - Other
Information.

          In view of the Court's  decisions,  the Company's motion,  the Company
will not accrue any revenues from the Kotaneelee  gas field until  collection of
the amounts due is reasonably assured.

         Since  March  2000,  the  Operator  of the  Kotaneelee  field  has been
reporting the amount of the Company's  share of net revenues being  deposited in
escrow.  The October 2000 report provided  information for production during the
month of July 2000.  Based on the reported data, the Company  believes the total
amount due the Company is $6,101,777,  of which $2,023,121 has been deposited in
escrow.

         The  Company's  Annual  Report on Form 10-K for the year ended
December 31, 1999 should be read for a detailed  discussion of the Kotaneelee
litigation.

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations (Cont'd)

         A  significant  proportion  of the  Company's  property  interests  are
covered by carried interest agreements,  which provide that expenditures made by
the operator are recouped solely out of revenues from production.  Major capital
expenditures  made by the operators  have an impact on the  Company's  cash flow
from  operations as no revenues are reported or received until the capital costs
have been  recovered  by the  operator.  The  Kotaneelee  gas field and  certain
properties  in the Fort Nelson,  British  Columbia area in which the Company has
carried  interests  have  reached pay out status.  Proceeds  from these  carried
interests  (except from the  Kotaneelee  gas  field)plus  oil and gas sales from
working interest properties are the Company's major sources of working capital.

         The Company is currently evaluating and expects to continue to evaluate
oil and gas properties and may make  investments  in such  properties  utilizing
cash on hand. The Company  anticipates  that its capital  expenditures  for land
acquisitions  and drilling  for 2000 will be  approximately  $500,000  ($348,000
spent to date). In addition,  substantial continuing expenses are expected to be
incurred in connection with the Kotaneelee Litigation. During the year 1999, the
Company  expended  approximately  $2.1 million in connection with the Kotaneelee
Litigation  which has been the  principal  cause of the  Company's  losses since
1991.

Results of Operations

         Three month period ended September 30, 2000 vs. September 30, 1999

         A summary of revenues and expenses during the periods is as follows:
<TABLE>
                                                            2000                         1999                      Net Change
                                                            ----                         ----                      ----------
<S>                                                   <C>                          <C>                             <C>
Revenues                                              $    478,231                 $    274,036                    $ 204,195
Costs and expenses                                        (814,170)                    (662,033)                    (152,137)
Income tax (provision) recovery                           (177,000)                      35,377                     (212,377)
                                                        -----------                 ------------                  ------------
Net loss                                                $ (512,939)                 $  (352,620)                $   (160,319)
                                                        ===========                 ============                =============
EPS (basic and diluted)                                    $ (.04)                    $ (.02)                         $ (.02)
                                                           =======                     =======                        =======
</TABLE>

         Oil sales  decreased  by 84% in 2000.  The Company sold the majority of
its crude oil producing properties in 1998 and also sold its remaining heavy oil
production  in February  2000.  Since the  Company  has  disposed of most of its
producing  properties,  future  oil  sales are  expected  to be  minimal  unless
additional producing  properties are drilled or purchased.  Crude oil unit sales
in barrels ("bbls") (before deducting royalties)

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations (Cont'd)

and the average price per barrel sold during the periods indicated were as
follows:
<TABLE>
                                                    Three month period ended September 30,
                                        2000                                            1999
                                     Average price                                  Average price
                          bbls          per bbl             Total         bbls         per bbl             Total
                          ----          -------             -----         ----         -------             -----
<S>                        <C>          <C>                   <C>        <C>            <C>                 <C>
Oil sales                  74           $42.35                $3,000     1,514          $29.96              $45,000
Royalty income                                                 3,000                                          1,000
Royalties paid                                                     -                                         (6,000)
                                                             -------                                        -------
Total                                                        $ 6,000                                        $40,000
                                                             =======                                        =======
</TABLE>

         Gas sales  increased  5750% in 2000.  There was a 64%  increase  in the
number of units sold and a 262% increase in the average price for gas. Gas sales
include  royalty  income which also  increased 67%. The volumes in million cubic
feet ("mmcf") and the average price of gas per thousand  cubic feet ("mcf") sold
during the periods indicated were as follows:
<TABLE>
                                                     Three month period ended September 30,
                                          2000                                             1999
                                      Average price                                    Average price
                          mmcf           per mcf             Total          Mmcf          per mcf             Total
                          ----           -------             -----          ----          -------             -----
<S>                        <C>            <C>              <C>               <C>           <C>               <C>
Gas sales                  18             $5.87             $106,000          11           $1.62               $18,000
Royalty income                                                 35,000                                           14,000
Royalties paid                                                (25,000)                                         (30,000)
                                                             --------                                           ------
Total                                                        $116,000                                           $2,000
                                                             ========                                           ======
</TABLE>

         Proceeds from carried interests  increased 110% to $310,000 during 2000
compared  to  $178,000  in 1999  primarily  because  the  number  of units  sold
increased 34% and gas prices  increased 37%. The disputed  deduction  represents
the  operator's  intent to recover a disputed  amount  from  current  and future
revenues.  The volumes in million  cubic feet  ("mmcf") and the average price of
gas per thousand  cubic feet ("mcf") sold during the periods  indicated  were as
follows:
<TABLE>
                                                          Three months ended September 30,
                                               2000                                         1999
                                           Average price                                 Average price
                                 mmcf         per mcf            Total         mmcf         per mcf           Total
                                 ----         -------            -----         ----         -------           -----

<S>                               <C>          <C>              <C>             <C>          <C>               <C>
Gas sales                         174          $3.55            $ 617,000       130          $2.59             $337,000
Oil sales                                                           3,000                                         2,000
Royalty paid                                                     (161,000)                                      (65,000)
Operating costs                                                   (82,000)                                      (76,000)
Capital costs                                                      (2,000)                                      (20,000)
Disputed deduction                                                (65,000)                                            -
                                                                 --------                                       --------
Total                                                           $ 310,000                                       $178,000
                                                                 ========                                       ========
</TABLE>


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations (Cont'd))

         Interest  and  other  income  was 15%  lower in 2000.  Interest  income
decreased  38% from  $52,000 in 1999 to $30,000 in the 2000 period  because less
funds were  available  for  investment.  In addition,  the 2000 period  includes
$16,000 from the sale of seismic data compared to $2,000 in 1999.

         General and administrative costs increased 35% in 2000 to $293,000 from
$217,000 in 1999.  The Company hired a new executive  vice  president  effective
January  1, 2000  which  increased  salary  expense  approximately  $33,000.  In
addition,  the 2000 period  includes an  increase  of  approximately  $27,000 in
consulting  fees.  The 1999  period  also  included a $16,000  nonrecurring  tax
refund.

         Legal  expenses  increased  28% during 2000 to $453,000  from  $354,000
during 1999. These expenses are related  primarily to the cost of the Kotaneelee
litigation.  During the 2000 period,  the Company prepared and filed its written
closing arguments.

         Lease  operating costs decreased 60% from $50,000 in 1999 to $20,000 in
the 2000 period. The Company sold its remaining heavy oil production  properties
during February 2000.

         Depletion,  depreciation and amortization expense decreased 36% in 2000
to $59,000 from $92,000 in 1999 because the Company sold its remaining heavy oil
production properties during February 2000.

     A foreign exchange gain of $10,000 was recorded in 2000, compared to a gain
of $51,000 in 1999 on the Company's U.S. investments.  The value of the Canadian
dollar was U.S. $.6655 at September 30, 2000 compared to U.S. $.6759 at June 30,
2000.

         Income tax  expense  changed  from a  recovery  of $35,000 in 1999 to a
provision of $177,000 in 2000, as a result of an adjustment in the quarter which
reduced  the  amount of  deductions  to be taken as a  recovery.  The  remaining
deductions  not taken as a recovery  are  subject to a valuation  reserve  since
there is considerable risk that these deductions will not be realized


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations (Cont'd)


Nine month period ended September 30, 2000 vs. September 30, 1999

         A summary of revenues and expenses during the periods is as follows:
<TABLE>

                                                  2000                         1999                       Net Change
                                                  ----                         ----                       ----------
<S>                                          <C>                            <C>                             <C>
Revenues                                      $   1,161,693                 $    638,862                    $ 522,831
Costs and expenses                               (3,530,300)                  (2,883,653)                    (646,647)
Income tax recovery                                  65,525                      108,573                      (43,048)
                                               -------------              --------------                    ----------
Net loss                                      $  (2,303,082)                $ (2,136,218)                   $(166,864)
                                               =============              ==============                    ==========
EPS (basic and diluted)                             $ .16                         $ .15                         $ .01
                                                    =====                         =====                         =====
</TABLE>

         Oil sales  decreased by 86%. The Company sold the majority of its crude
oil  producing  properties  in 1998  and  also  sold  its  remaining  heavy  oil
production  in February  2000.  Since the  Company  has  disposed of most of its
producing  properties,  future  oil  sales are  expected  to be  minimal  unless
additional producing  properties are drilled or purchased.  Crude oil unit sales
in barrels  ("bbls")  (before  deducting  royalties)  and the average  price per
barrel sold during the periods indicated were as follows:
<TABLE>

                                                    Nine month period ended September 30,
                                         2000                                            1999
                                     Average price                                  Average price
                          bbls          per bbl             Total         Bbls         per bbl             Total
                          ----          -------             -----         ----         -------             -----
<S>                        <C>          <C>                   <C>        <C>            <C>                <C>
Oil sales                  252          $36.05               $ 9,000     6,607          $17.23             $114,000
Royalty income                                                 5,000                                          1,000
Royalties paid                                                      -                                       (12,000)
                                                          ----------                                      ---------
Total                                                        $14,000                                       $103,000
                                                            ========                                       ========
</TABLE>



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations (Cont'd)

         Gas  sales  increased  428% in 2000.  There was a 44%  increase  in the
number of units sold and a 186% increase in the average price for gas. Gas sales
include royalty income which increased 71% in 2000. The volumes in million cubic
feet ("mmcf") and the average price of gas per thousand  cubic feet ("mcf") sold
during the periods indicated were as follows:

<TABLE>
                                                      Nine month period ended September 30,
                                          2000                                             1999
                                      Average price                                    Average price
                          mmcf           per mcf             Total          mmcf          per mcf             Total
                          ----           -------             -----          ----          -------             -----
<S>                        <C>            <C>               <C>              <C>           <C>                <C>
Gas sales                  23             $5.09             $ 117,000        16            $1.78              $ 27,000
Royalty income                                                 70,000                                           41,000
Royalties paid                                                (27,000)                                         (38,000)
                                                            ---------                                         --------
Total                                                        $160,000                                          $30,000
                                                             ========                                          =======
</TABLE>

         Proceeds from carried interests  increased 180% to $860,000 during 2000
compared to $306,000 in 1999 because gas prices  increased 38% and the number of
units sold increased 13%. Capital expenditures  decreased 93% in 2000 to $17,000
from $242,000  during 1999.  The disputed  deduction  represents  the operator's
intent to recover a disputed  amount  from  current  and  future  revenues.  The
volumes in million cubic feet ("mmcf") and the average price of gas per thousand
cubic feet ("mcf") sold during the periods indicated were as follows:

<TABLE>
                                                         Nine month period ended September 30,
                                                 2000                                          1999
                                             Average price                                Average price
                                  mmcf          per mcf           Total         Mmcf         per mcf          Total
                                  ----          -------           -----         ----         -------          -----

<S>                               <C>            <C>             <C>             <C>          <C>            <C>
Gas sales                         455            $3.51           $1,596,000      408          $2.55          $1,044,000
Oil Sales                         208            40.49                8,000     1,344         16.57              22,000
Royalty paid                                                       (380,000)                                   (220,000)
Operating costs                                                    (282,000)                                   (298,000)
Capital costs                                                       (17,000)                                   (242,000)
Disputed deduction                                                  (65,000)                                          -
                                                                   --------                                    --------
Total                                                             $ 860,000                                    $306,000
                                                                  =========                                    ========
</TABLE>



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations (Cont'd))

         Interest  and  other  income  was 36%  lower in 2000.  Interest  income
decreased 37% from $193,000 in 1999 to $106,000 in the 2000 period  because less
funds were  available  for  investment.  In addition,  the 2000 period  includes
proceeds  from the sale of seismic  data in the amount of  $22,000  compared  to
$6,000 in 1999.

         General and  administrative  costs  increased 20% in 2000 to $1,165,000
from  $971,000  in  1999.  The  Company  hired a new  executive  vice  president
effective January 1, 2000 which increased salary expense approximately  $66,000.
In addition the 2000 period includes a $38,000  severance  payment to the former
Secretary-Treasurer.  The costs of printing and mailing in  connection  with the
annual  meeting also increased  $45,000  during the 2000 period.  Accounting and
auditing costs also increased $33,000 in the 2000 period.

         Legal expenses  increased 6% during 2000 to $1,562,000  from $1,473,000
during 1999. These expenses are related  primarily to the cost of the Kotaneelee
litigation.  During the 2000 period, the Company presented its rebuttal evidence
and completed and filed its written closing argument.

         Lease operating costs decreased 65% from $118,000 in 1999 to $41,000 in
the 2000 period. The Company sold its remaining heavy oil production  properties
during February 2000.

         Depletion,  depreciation and amortization expense decreased 37% in 2000
to $178,000 from  $280,000 in 1999 because the Company sold its remaining  heavy
oil production properties during February 2000.

         A foreign  exchange  gain of $50,000  was  recorded  in 2000,  compared
to a loss of $42,000  in 1999 on the  Company's  U.S. investments.  The value of
the Canadian dollar was U.S. $.6924 at December 31, 1999 compared to U.S. $.6655
at September 30, 2000.

         Abandonments  and write downs  increased  to  $635,000  during the 2000
period.  The  Company's  investment  in the Texas  project was written down to a
nominal  value  during the second  quarter  because the project was deemed to be
uneconomic.

         Income tax  recovery  decreased  by 40% to $66,000 in 2000  compared to
$109,000 in 1999 as a result of reduced capital spending and the sale of certain
oil and gas  properties in the 2000 period.  Most of the  deductions in the 2000
period  have not been aken as a recovery  since they are  subject to a valuation
reserve  because there is  considerable  risk that these  deductions will not be
realized


Item 3.  Quantitative and Qualitative Disclosure About Market Risk

         The Company  does not have any  significant  exposure to market risk as
the only market risk  sensitive  instruments  are its  investments in marketable
securities.  At September  30,  2000,  the  carrying  value of such  investments
(including those classified as cash and cash equivalents) was approximately $1.7
million  which  was  approximately  equal to fair  value  and face  value of the
investments.  Since the Company expects to hold the investments to maturity, the
maturity  value should be realized.  In addition,  the Company's  investments in
marketable  securities included  investments held in the United States which are
subject to foreign exchange fluctuations. At September 30, 2000, the investments
held in the United States totaled $444,000.



<PAGE>



                         CANADA SOUTHERN PETROLEUM LTD.

                                    FORM 10-Q

                           PART II - OTHER INFORMATION

                               September 30, 2000

Item 5.  Other Information

         On September 25, 2000,  the Company  filed a  preliminary  registration
statement  with both the U.S.  Securities  and Exchange  Commission  and various
Canadian securities commissions for a rights offering to its shareholders of its
limited voting  shares.  The number of shares to be sold, the purchase price and
the terms have not yet been determined.

          In the Kotaneelee  litigation,  the Alberta Court of Appeal has stayed
the Company's appeal of the trial court's refusal to direct the working interest
parties to make timely  payments of all current and future amounts which are due
as the Company's share of the field's net revenues.  The stay was granted on the
basis that the appeal is  premature  until a judgment  is rendered on the entire
trial.  The  appeal  may be  reactivated  in the  event  that  the  trial  court
ultimately  decides  the issue in favor of the  defendants.  The Court of Appeal
also indicated that it might consider the issue  separately from, and in advance
of, any other appeal which might be brought from the trial court's decision.


Item 6.  Exhibits and Reports on Form 8-K

          (a)     Exhibits

                  None.

          (b)     Reports on Form 8-K

          On July 19, 2000,  the Company  filed a current  report on Form 8-K to
report the resignation of Mr. Kelly B. Johnson as Secretary, Treasurer and Chief
Financial  and  Accounting  Officer  effective  July 31, 2000.  The Company also
reported  that Mr. David Blain was  appointed to replace Mr.  Johnson  effective
August 1, 2000.



<PAGE>



                         CANADA SOUTHERN PETROLEUM LTD.

                                    FORM 10-Q

                               September 30, 2000



                                   SIGNATURES




         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                                  CANADA SOUTHERN PETROLEUM LTD.
                                                            Registrant




Date:  November 13, 2000                   By /s/  David Blain
                                              ----------------------------------
                                                   David Blain
                                                   Treasurer and Chief Financial
                                                   and Accounting Officer