FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the quarterly period ended March 31, 1999

                                       OR

|_|      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: 0-7261


                            CHAPARRAL RESOURCES, INC.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                          84-0630863
           --------                                          ----------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)


                            2211 Norfolk, Suite 1150
                              Houston, Texas 77098
                     --------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (713) 807-7100


Indicate by check mark whether the Registrant (1) 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 and,  (2) has been subject to such filing  requirements
for the past 90 days.

                            YES |X|      NO |_|

     As of May 17, 1999  Registrant  had 977,954 shares of its $0.0001 par value
common stock issued and outstanding.



<PAGE>
                    Part I - Summarized Financial Information

Item 1 - Financial Statements

                            Chaparral Resources, Inc.
                           Consolidated Balance Sheets
                                   (Unaudited)



                                                     March 31,      December 31,
                                                      1999             1998
                                                   ------------    -------------
Assets
Current assets:
   Cash and cash equivalents                       $  1,183,000    $    121,000
   Restricted cash                                      711,000         756,000
   Accounts receivable                                   23,000          25,000
   Prepaid expenses                                      80,000          76,000
   Current portion of note receivable                   546,000         420,000
                                                   ------------    ------------
Total current assets                                  2,543,000       1,398,000

Note receivable                                         463,000         589,000

Oil and gas properties and investments
    - full cost method
     Republic of Kazakhstan (Karakuduk Field)-
       Not subject to depletion:                     34,615,000      32,261,000

Furniture, fixtures and equipment                        98,000          93,000
Less accumulated depreciation                           (23,000)        (17,000)
                                                   ------------    ------------
                                                         75,000          76,000
                                                   ------------    ------------

Total assets                                       $ 37,696,000    $ 34,324,000
                                                   ============    ============


See accompanying notes to financial statements

                                       2

<PAGE>


                            Chaparral Resources, Inc.
                     Consolidated Balance Sheets (continued)
                                   (Unaudited)


                                                      March 31,    December 31,
                                                        1999           1998
                                                    ------------   ------------
Liabilities and stockholders' equity
Current liabilities:
   Trade accounts payable                           $    358,000   $    223,000
   Accrued liabilities                                   440,000        522,000
   Short-term notes payable, net of discount           4,772,000        940,000
                                                    ------------   ------------
Total current liabilities                              5,570,000      1,685,000

Accrued compensation                                     210,000        210,000
Redeemable preferred stock
  - cumulative, convertible,
     Series A, 50,000 issued and outstanding,
     at stated value, $5.00 cumulative annual
     Dividend, $5,312,500 redemption value             4,938,000      4,850,000
Stockholders' equity:
   Common stock - authorized,  100,000,000 shares
     at March 31, 1999 and December 31, 1998, of
       $.0001 par value; issued and outstanding,
       977,954 and 972,980 shares at
     March 31, 1999 and December 31, 1998                   --             --
   Capital in excess of par value                     48,208,000     47,611,000
   Unearned portion of restricted stock awards          (577,000)       (56,000)
  Preferred stock - 1,000,000 shares authorized,
     75,000 shares designated of Series A                   --             --
    Stock subscription receivable                       (506,000)      (506,000)
   Accumulated deficit                               (20,147,000)   (19,470,000)
                                                    ------------   ------------
Total stockholders' equity                            26,978,000     27,579,000
                                                    ------------   ------------
Total liabilities and stockholders' equity          $ 37,696,000   $ 34,324,000
                                                    ============   ============

See accompanying notes to financial statements


                                       3

<PAGE>


                            Chaparral Resources, Inc.
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                      For Three Months Ended
                                                    March 31,        March 31,
                                                      1999             1998
                                                   -----------      -----------
Revenue:
  Oil and gas sales                                $      --        $      --


Costs and expenses:
  Production costs                                        --               --
  Depreciation and depletion                             5,000            2,000
  General and administrative                           433,000          880,000
                                                   -----------      -----------
                                                       438,000          882,000
                                                   -----------      -----------

Loss from operations                                  (438,000)        (882,000)

Other income (expense):
  Interest income                                      406,000          202,000
  Interest expense                                     (54,000)            --
  Equity loss from investment                         (537,000)        (332,000)
  Heartland legal settlement                            34,000             --
                                                   -----------      -----------
                                                      (151,000)        (130,000)
                                                   -----------      -----------

Net loss                                           $  (589,000)     $(1,012,000)
                                                   ===========      ===========

Cumulative annual dividend accrued
  Series A Redeemable Preferred Stock                  (63,000)            --
Discount accretion
  Series A Redeemable Preferred Stock                  (25,000)         (25,000)
                                                   -----------      -----------

Net loss available to common stockholders          $  (677,000)     $(1,037,000)
                                                   ===========      ===========

Basic and diluted earnings per share:
Net loss per share                                 $      (.69)     $     (1.25)
Weighted average number of shares
Outstanding                                            977,388          831,681



See accompanying notes to financial statements

                                       4


<PAGE>

                            Chaparral Resources, Inc.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

                                                      For the Three Months Ended
                                                     ---------------------------
                                                       March 31,      March 31,
                                                        1999           1998
                                                     -----------    -----------
Cash flows from operating activities
Net loss                                             $  (589,000)   $(1,012,000)
Adjustments to reconcile net loss to
   Net cash used in operating Activities:
       Equity loss from investment                       537,000        332,000
     Depreciation and depletion                            5,000          2,000
     Stock issued for services and bonuses               194,000        614,000
       Expired stock warrants                           (117,000)          --
     Amortization of note discount                        12,000           --
     Changes in assets and liabilities:
       (Increase) decrease in:
         Accounts receivable                               2,000         68,000
         Prepaid expenses                                 (4,000)        (1,000)
       Increase in:
         Accounts payable & accrued liabilities           53,000        167,000
                                                     -----------    -----------
Net cash used in operating activities                $    93,000    $   170,000

 Cash flows from investing activities
 Additions to property and equipment                 $    (5,000)   $   (45,000)
 Investment in and advances to foreign oil and
    gas properties                                    (2,891,000)    (2,955,000)
 Increase in other assets                                   --             --
                                                     -----------    -----------
    Net cash used in investing activities             (2,896,000)    (3,000,000)

 Cash flows from financing activities
 Net proceeds from notes payable                     $ 3,820,000    $      --
 Restricted cash                                          45,000           --
 Repayment of note payable                                  --             --
                                                     -----------    -----------
 Net cash provided by financing activities             3,865,000           --
                                                     -----------    -----------

 Net increase in cash and
    cash equivalents                                   1,062,000     (2,830,000)
 Cash and cash equivalents at beginning
    of period                                            121,000      3,423,000
                                                     ===========    ===========
 Cash and cash equivalents at end of period          $ 1,183,000    $   593,000
                                                     ===========    ===========



See accompanying notes to financial statements

                                        5



<PAGE>




                            Chaparral Resources, Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.    General

     Management  has elected to omit  substantially  all notes to the  Company's
financial  statements.  Reference  should be made to the notes to the  financial
statements in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.

2.    Unaudited Information

     The  information  furnished  herein was taken from the books and records of
the Company without audit.  However,  such information reflects all adjustments,
which are, in the opinion of  management,  necessary to a fair  statement of the
results for the interim  periods  presented.  The results of operations  for the
interim periods are not necessarily indicative of the results to be expected for
the year.

3.    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 of March 31,
1999,  substantially all of the Company's assets are invested in the development
of the  Karakuduk  Field,  an  oil  field  in  the  central  Asian  Republic  of
Kazakhstan, which will require significant additional funding.

     The Company has incurred  recurring  operating  losses and has no operating
assets presently generating cash to fund its operating and capital requirements.
The  Company's  current  cash  reserves  and cash flow from  operations  are not
sufficient  to meet the capital  spending  requirements  required to develop the
Karakuduk  Field  through  fiscal 1999.  Should the Company not meet its capital
requirements,  the Company's  rights to the Karakuduk  Field can be  terminated.
There  is no  assurance  that  additional  financing  will be  available,  or if
available,  that it will be timely or on terms  favorable  to the  Company.  The
Company's  continued  existence as a going concern is dependent upon the success
of future operations,  which are, in the near term,  dependent on the successful
financing  and  development  of  the  Karakuduk  Field,  of  which  there  is no
assurance.

     These conditions  raise  substantial  doubt about the Company's  ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments  to reflect the possible  future effects on the  recoverability  and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of this uncertainty.



                                       6



<PAGE>




                            Chaparral Resources, Inc.
             Notes to Consolidated Financial Statements (continued)
                                   (Unaudited)

4.    Restricted Cash

     As of March 31, 1999, the Company held $711,000 cash on hand, as collateral
for loans made by a financial institution to KKM for the acquisition of tangible
equipment used in the Karakuduk Field.

5.    Notes Receivable

     On March 31,  1999,  the Company had an  outstanding  note  receivable  for
$1,009,000  from  a  third-party  drilling  contractor  (Contractor)  originally
entered into on September 10, 1998. On March 17, 1999,  the Company  amended the
terms of the note to extend the  repayment  period  from  twelve to twenty  four
months,  beginning  with the first payment made to the  Contractor  for drilling
services provided to Karakuduk Munay, Inc. (KKM). Under the revised terms of the
note, the Company will receive principal  payments of approximately  $42,000 per
month, plus accrued interest,  through approximately  February 2001. As of March
31, 1999,  the Company had not  received  any payments on the note.  See Note 8,
Subsequent Events.

6.    Notes Payable

     On February  28, 1999,  the $975,000  note between the Chase Bank of Texas,
N.A. (Chase) and the Company was amended.  The revised note requires the Company
to make an initial  principal  payment of $250,000,  originally due February 28,
1999, on August 31, 1999,  with the  remaining  principal of $725,000 due on, or
before,  November 30, 1999. The note accrues  interest at a variable prime rate,
as determined  by Chase.  Quarterly  interest  payments are due on May 31, 1999,
August 31, 1999,  and November 30, 1999.  The Company made the initial  interest
payment due on February 28, 1999. As of March 31, 1999, the stated prime rate on
the note was 7.75%.

     On January 4, 1999, Howard Karren,  the Company's former Chairman and Chief
Executive  Officer,  advanced  the  Company  $50,000.  The  Company is  accruing
interest at 8% on the advance.

     During January and February 1999,  Allen & Company,  Incorporated  (Allen &
Company) loaned the Company, in a series of transactions, a total of $1,750,000,
at an interest  rate of 8% per annum.  On March 31, 1999,  the Company  issued a
promissory  note to Allen &  Company  in the  principal  amount  of  $2,769,978,
representing an additional $1,000,000 loan to the Company on March 31, 1999, and
the retirement of the January and February  loans,  plus accrued  interest.  The
promissory  note bears  interest at a rate of 8% per annum and matures on August
31, 1999.

     As collateral for the note, Allen & Company received a security interest in
100% of the  Company's  shares  in  Central  Asian  Petroleum  (Guernsey),  Ltd.
(CAP-G),  which owns 50% of KKM.  The  security  interest in the CAP-G shares is
subordinated  to a similar  security  interest  held by Whittier  Ventures,  LLC
(Whittier) in conjunction with providing  collateral for the $975,000 Chase note
outstanding  as  of  December  31,  1998.  If  the  Company  issues  convertible
securities  on or  before  March  31,  2000,  Allen &  Company  has the right to
exchange the outstanding  balance of the note, plus accrued  interest,  for such
convertible  securities.  The number of convertible securities potentially to be
issued will be determined by dividing the outstanding  principal  balance of the
loans,  together  with  accrued but unpaid  interest,  by the issue price of the
convertible securities.

                                       7

<PAGE>




                            Chaparral Resources, Inc.
             Notes to Consolidated Financial Statements (continued)
                                   (Unaudited)

6.    Notes Payable (continued)

     During March 1999,  Whittier  loaned the Company an aggregate of $1,000,000
for ongoing  operations.  The Company issued two notes for $500,000 each,  dated
March 10, 1999, and March 19, 1999, respectively.  The loans are due and payable
on August 31, 1999, and accrue  interest at 8% per annum.  As collateral for the
notes,  Whittier received a security interest in 100% of the Company's shares in
CAP-G. The security interest has identical rights to the one received by Allen &
Company above, and is subordinated to the security interest retained by Whittier
for providing the  collateral for the $975,000 Chase note. If the Company issues
convertible  securities  within  one year  from  the date of each of the  notes,
Whittier  has the  right to  exchange  the  outstanding  balance  of the  loans,
together with accrued interest, for such convertible  securities.  The amount of
convertible  securities  potentially to be issued to Whittier will be determined
by  dividing  the  outstanding  principal  balance of the loans,  together  with
accrued but unpaid interest, by the issue price of the convertible securities.

7.    Common Stock and Related Common Stock Warrants

     On January 15, 1999,  the Company  granted Dr. Jack A. Krug,  the President
and Chief  Operating  Officer of the  Company,  16,667  shares of the  Company's
common stock,  of which 13,333 shares will vest with respect to 3,333.25  shares
on January 15, 2000, 2001, 2002, and 2003. The Company recorded the common stock
at its fair value on the date of grant of $719,000,  and is amortizing the value
of the shares subject to vesting restrictions ratably over four years.

     Certain warrants to purchase the Company's common stock expired relating to
a 1998 settlement of a lawsuit by the Company.  The Company  recognized the fair
value of the warrants on the date of grant, $34,000, as other income in 1999.

     On April 21, 1999, the Company's  shareholders  approved a 1 for 60 reverse
stock  split,  effective  immediately.  The  voting and  economic  rights of the
shareholders  of Common Stock and the Series A Redeemable  Preferred  Stock were
not effected by the reverse stock split. On the same date, the shareholders also
approved  the  reincorporation  of the Company from  Colorado to  Delaware.  The
financial  statements included herein  retroactively  reflect the adjustments to
shares  outstanding as a result of the reverse stock split and  reincorporation.
The  reincorporation was effected by merging the Company with and into Chaparral
Delaware. Upon completion of the reincorporation, the Company ceased to exist in
accordance with the Colorado  Business  Corporation  Act and Chaparral  Delaware
operates the business of the Company under the existing Company name,  Chaparral
Resources, Inc. Pursuant to the Plan and Agreement of Merger between the Company
and  Chaparral  Delaware,  each  outstanding  share of Common Stock and Series A
Preferred  Stock will  automatically  be  converted  into one share of Chaparral
Delaware common stock,  par value $0.0001 per share, or preferred  stock, no par
value,  as  appropriate.  Since  there were no shares of the Series B  Preferred
Stock and the  Series C  Preferred  Stock  issued or  outstanding,  there was no
conversion thereof and the Series B Preferred Stock and Series C Preferred Stock
ceased to exist.

8.    Series A  Redeemable Preferred Stock

     During 1998, the Company accrued the $250,000 annual dividend on its Series
A Redeemable  Preferred Stock in the fourth quarter.  For 1999, the Company will
accrue the  dividend on its Series A Redeemable  Preferred  Stock on a quarterly
basis.  Management  believes this will more fairly present the fair value of its
Series A Redeemable Preferred Stock.

                                       8


<PAGE>



                            Chaparral Resources, Inc.
             Notes to Consolidated Financial Statements (continued)
                                   (Unaudited)

9.    Subsequent Events

     On April 21, 1999, at a special meeting the Company's shareholders approved
a one-for-sixty reverse stock split, effective  immediately.  All references and
calculations  involving  outstanding  common stock have been adjusted to reflect
the  reverse  split.  On the same  date,  the  shareholders  also  approved  the
reincorporation of the Company from Colorado to Delaware.

     On April 30,  1999,  warrants  expired  to  purchase  12,500  shares of the
Company's  common stock at an exercise price of $15 per share. The warrants were
originally  issued as part of the 1989 Stock  Warrant Plan to a former  Chairman
and Chief Executive Officer and a former Vice President of the Company.

     On April 5, 1999, the government of Kazakhstan  decided not to continue its
support of the  National  currency,  the tenge and  allowed  it to float  freely
against the U.S.  dollar.  Immediately  thereafter,  the official  exchange rate
declined from 87.5 tenge to the U.S. dollar to 142 tenge to the U.S. dollar. The
devaluation  decreases the tenge  realizable  value of any U.S.  dollar or other
hard currency denominated monetary assets held by the Company, and increases the
tenge obligation of any U.S. dollar or other hard currency  denominated monetary
liabilities held by the Company.  KKM's financial  statements are denominated in
U.S. dollars, the only impact will relate to assets and liabilities  denominated
in tenge.  The net  impact  is not  expected  to be  material  to the  Company's
financial statements.

     On March 30, 1999,  KKM entered into a contract  with  KazakhOil,  JSC, the
national oil company of Kazakhstan  and a shareholder of KKM, for the sale of up
to 19,000 tons (138,700  barrels) of the Company's crude oil production in 1999.
Under the terms of the contract, the Company has been granted a transit quota to
export 19,000 tons of crude oil to the far abroad and near abroad markets,  with
KazakhOil acting as broker for the sale.

     According  to the  contract,  net  revenue  to the  Company is based upon a
formula  indexed to the price of Brent crude on the date of sale,  adjusted  for
transportation costs and other minor charges. On April 21, 1999, KKM sold 13,000
tons (95,000 barrels) of crude oil on the world export market for  approximately
$850,000, net of transportation costs.

     The owner of the drilling rig currently working in the Karakuduk Field, Oil
& Gas Exploration Company Cracow, Ltd., terminated its contract with Challenger,
subsequent to the  amendment to the  Challenger  drilling  contract with KKM. On
April 14, 1999,  the KKM Board of Directors  passed a resolution  approving  the
termination of the drilling contract between KKM and Challenger.  Challenger was
informed of KKM's  decision  and,  subsequently,  received  notification  of the
beginning of arbitration  proceedings pursuant to the contract.  Drilling in the
Field has been suspended  temporarily until the arbitration is resolved or until
another  drilling rig can be  procured.  KKM is  currently  exploring  strategic
alternatives to its drilling program.

     On April 30, 1999, the Company  appeared  before the Nasdaq  Qualifications
Hearing  Panel.  We expect to be notified  of the outcome of the hearing  before
June 30, 1999,  however, no assurances can be made as to the Company's continued
listing on Nasdaq.

                                       9


<PAGE>



                            Chaparral Resources, Inc.
             Notes to Consolidated Financial Statements (continued)
                                   (Unaudited)


10.   Investments

     The results from operations of the Company's equity-based investment in KKM
are summarized below:

                               Karakuduk-Munay Inc
                  Statement of Expenses and Accumulated Deficit
            For the Three Month Period Ended March 31, 1999 and 1998
                             (Amounts in US Dollars)
                                   (Unaudited)


                                                   For The Three Months Ended
                                                --------------------------------
                                                   March 31,        March 31,
                                                     1999             1998
                                                --------------------------------
Management service fee                             $193,000          120,000
General and administrative expenses                 552,000          363,000
Depreciation of fixed assets                        125,000             -
Interest expense                                    204,000          181,000
                                                --------------------------------

Net loss                                           1,074,000         664,000

Accumulated deficit, beginning of period           7,503,000        4,016,000
                                                --------------------------------

                                                --------------------------------
Accumulated deficit, end period                   $8,577,000       $4,680,000
                                                --------------------------------






                                       10

<PAGE>





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


1.    Liquidity and Capital Resources

     Since January 1, 1999, the Company raised  $3,820,000  through various debt
obligations  and  restructured  the existing  $975,000 note payable to the Chase
Bank of Texas, N.A.,  deferring a $250,000 principal payment due on February 28,
1999 until August 31, 1999.  The loans are fully  described in Note 6 of Item 1.
The funds have been,  and will be,  utilized to finance the  development  of the
Karakuduk  Field and to  satisfy  the  Company's  working  capital  needs in the
short-term.  The Company has no assurance  that future debt or equity  financing
will be available, from existing creditors and shareholders, or any other party.

     The Company is currently  seeking  additional  capital.  To meet  long-term
capital needs,  the Company is pursuing debt financing and public and/or private
equity  placements  of the  Company's  common or  preferred  stock.  To  satisfy
short-term liquidity requirements,  the Company is seeking additional short-term
debt financing,  restructuring of existing loans, if necessary, and revenue from
the sale of oil by KKM. The present environment for financing the acquisition or
ongoing  operations  of oil and gas  properties  is  uncertain,  due in part, to
instability of oil and gas prices in recent years. The Company's small size, and
the early stage of development of the Karakuduk  Field  increases the difficulty
of raising financing that may be needed in the future.

     There can be no assurance  that the debt or equity  financing that might be
required to fund the Company's  operations and obligations in the future will be
available to the Company on economically  acceptable terms, if at all. The costs
of capital for foreign  investments,  such as the Karakuduk Field, are typically
higher than for similar  investments  in western  countries,  such as the United
States.  If the  Company  fails to obtain the  additional  capital  required  to
develop the Karakuduk Field, the Company's investment in the Field may be lost.

     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.  The Company has
recurring  operating  losses and has no operating  assets  presently  generating
sufficient  cash to fund its operating and capital  requirements.  The Company's
current cash reserves and cash flow from  operations  are not sufficient to meet
its capital requirements through fiscal 1999.

     The only oil and gas interest of the Company at this time is the  Company's
investment  in  Karakuduk-Munay,   Inc.  (KKM),  held  through  a  wholly  owned
subsidiary of the Company,  Central Asian Petroleum (Guernsey) (CAP-G). KKM is a
closed  joint  stock  company in  Kazakhstan  and has the right to  develop  the
Karakuduk Field in western Kazakhstan.  As of March 31, 1999,  substantially all
of the Company's  assets are invested in the development of the Karakuduk Field.
The Karakuduk Field does not currently  produce  revenues capable of funding the
development  of the project,  and  requires  substantial  amounts of  additional
capital.

     The terms of KKM's revised license require an expenditure commitment of $30
million for the year ending December 31, 1999. The  expenditures  required under
the license will be used to conduct drilling  operations in the Karakuduk Field,
build the  required  Field  infrastructure  necessary  to support  drilling  and
production  activities,   and  market  the  crude  oil  produced.  If  the  1999
expenditure  requirement is not satisfied,  KKM's License with the government of
Kazakhstan may be terminated and the Company's  interest in the Karakuduk  Field
may be lost.

     On February 14, 1999,  KKM spudded Well #101, the first well drilled by the
Company in the Karakuduk  Field. On April 29, 1999, KKM  successfully  completed
Well #101, which is currently undergoing extended production tests. Test results
will be  announced  as soon as they are  available.  KKM  currently  trucks  all
production to the pipeline terminal at Say-Utes,  over 89 km from the Field. KKM


                                       11

<PAGE>



1.    Liquidity and Capital Resources (continued)



has received  approval to begin trucking  production to the pipeline terminal at
Station  6,  approximately  30 km from the  Field,  and is  currently  preparing
Station 6 for use as an offloading facility. Total daily production is presently
limited,  due to the trucking  restrictions  and the lack of certain  production
facilities required for processing additional oil production for delivery to the
pipeline.

     On April 21, 1999,  KKM sold 13,000 tons  (95,000  barrels) of crude oil on
the world export market, for approximately  $850,000. KKM expects to nominate an
additional  sale in early June, on either the local or export  market.  KKM will
nominate  some  or  all of the  available  crude  oil  production  in  inventory
depending  on the  available  terms at that time.  As of May 17,  1999,  KKM had
approximately  11,500 tons (84,000  barrels) of crude oil stored as inventory in
the KazTransOil pipeline. While the current rise in oil prices has increased the
potential  return on the sale of KKM's crude oil, no assurances  can be provided
that additional sales will be completed, or, if completed, on terms favorable to
Company.

     On March 17, 1999,  KKM  retroactively  amended its drilling  contract with
Challenger Oil Services,  PLC (Challenger),  originally entered into on April 7,
1998. The Company is subject to the following terms of the amended contract:

                                                                       Amount
                                                                    ------------

       Operational rate                                             $12,500/Day
       Stand-by-rate with crews                                     11,250/Day
       Stand-by rate without crews                                   8,500/Day
       Rig move rate                                                20,000/Move
       Rig demobilization (one time charge only)                     $250,000
       Lease term                                                     2 years

     The owner of the drilling rig currently working in the Karakuduk Field, Oil
& Gas Exploration Company Cracow, Ltd., terminated its contract with Challenger,
subsequent to the  amendment to the  Challenger  drilling  contract with KKM. In
April, KKM notified  Challenger of its request to begin arbitration  proceedings
pursuant to the  drilling  contract.  Drilling  in the Field has been  suspended
temporarily  until the arbitration is resolved or until another drilling rig can
be procured.  KKM is currently exploring strategic  alternatives to continue its
drilling program.

     On March 31,  1999,  the  Company  requested  and  received  an  additional
extension to June 30, 1999, from the Overseas Private Investment Corp.  ("OPIC")
for political  risk  insurance.  OPIC  originally  granted the Company a binding
executed  letter of commitment on September 25, 1996.  The Company has a standby
facility for which it has made eight  payments of $31,250 plus three  additional
payments of $15,625.  The Company  expects to execute the  contract on or before
June 30, 1999.

     The Company has no other material  commitments for cash outlays and capital
expenditures other than for normal operations.

2.    Results of Operations

Three Months Ended March 31, 1999 Compared with the Three Months Ended March 31,
1998

     The  Company's  operations  during the three  months  ended March 31, 1999,
resulted in a net loss of $589,000  compared to a net loss of $1,012,000 for the
three months ended March 31, 1998.

                                       12

<PAGE>



2.    Results of Operations (continue)

     Interest income increased by $204,000 from the three months ended March 31,
1998, due to increased financing provided by CAP-G to KKM for the development of
the Karakuduk Field. Interest expense increased by $54,000 from the three months
ended March 31, 1998, due to $3,800,000 in various short-term borrowings made by
the Company  during the quarter  ended March 31, 1999 along with a $975,000 loan
outstanding originally borrowed by the Company in 1998.

     General and  adminstrative  costs  decreased  by $444,000  from the quarter
ended  March 31,  1998,  due to a  reduction  in stock  based  compensation  and
expiration  of common  stock  warrants.  Without  consideration  of  stock-based
compensation , a non-cash item,  general and  administrative  costs increased by
$55,000 from the quarter ended March 31, 1998. The Company's  equity loss in KKM
increased by $205,000,  related to increased  operational  costs associated with
the development of the Karakuduk Field.

Inflation.

     The  Company  cannot  control  prices in its oil and gas sales,  and to the
extent the Company is unable to pass on increases in operating  costs, it may be
affected by inflation.

3.    Year 2000 Issue

     The Company has  assessed  the Year 2000 issue and does not expect the Year
2000  problem  to have a  material  impact on the  Company's  operations.  After
consulting with major vendors,  contractors,  and technical field personnel, the
Company does not anticipate any material costs to result from Year 2000 problems
impacting the Company's operations.

Item 3 - Quantitative and Qualitative Disclosures About Market Risks

     Not Applicable.

                                       13



<PAGE>




                           Part II - Other Information


Item 1 - Legal Proceedings

     The owner of the drilling rig currently working in the Karakuduk Field, Oil
& Gas  Exploration  Company  Cracow,  Ltd.,  has  terminated  its contract  with
Challenger Oil Services,  PLC, the drilling  contractor.  On April 14, 1999, the
KKM Board of Directors  passed a resolution  approving  the  termination  of the
drilling  contract between KKM and Challenger.  Challenger was informed of KKM's
decision  and,   subsequently,   received   notification  of  the  beginning  of
arbitration proceedings pursuant to the contract. Drilling in the Field has been
suspended  temporarily  until  the  arbitration  is  resolved  or until  another
drilling rig can be procured.  KKM is currently exploring strategic alternatives
to its drilling program.


Item 2 - Changes in Securities and Use of Proceeds

     On January 15, 1998, the Company issued 16,667 shares of restricted  common
stock to Dr.  Jack  Krug,  the  President  and Chief  Operating  Officer  of the
Company,  of which 13,333 shares vest with respect to 3,333.25 shares on January
15, 2000,  2001, 2002, and 2003. The Company issued the common stock in reliance
upon the exemption from registration under Section 4(2) of the Securities Act of
1933,  as  amended.   The  guarantor  had  available  all  material  information
concerning the Company.  The stock certificate bears an appropriate  restrictive
legend under the Securities Act of 1933, as amended. No underwriter was involved
in the transaction.

         On April 21, 1999, the Company  approved a 1 for 60 reverse stock split
in a special meeting of the Company's shareholders,  effective immediately.  The
reverse stock split did not impact the rights of the Company's  shareholders  of
either the Common  Stock or Series A Preferred  Stock,  except for  reducing the
total number of shares outstanding.  Each shareholder's  proportional voting and
economic rights remained unchanged.

Item 6 - Exhibits and Reports on Form 8-K

(a)       Exhibits

         10.1 Employment agreement of Dr. Jack A. Krug dated January 15, 1999.


         27   Financial Data Schedule


(b)       Reports on Form 8-K

     On April 29, 1999, the Company filed a current report on Form 8-K reporting
under Item 5 thereof a special meeting of the Company's  shareholders to vote on
proposals for a 1 for 60 reverse stock split and  reincorporation of the Company
from the state of Colorado to the State of Delaware.

                                       14

<PAGE>





                                   Signatures

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

Dated:   May 17, 1999



                                  Chaparral Resources, Inc.,
                                  a Delaware corporation



                                  By: /s/  Dr. Jack A. Krug
                                      ------------------------------------------
                                      Dr. Jack A. Krug
                                      President and Chief Operating Officer



                                  By: /s/  Michael B. Young
                                      ------------------------------------------
                                      Michael B. Young, Treasurer and Controller
                                      And Principal Accounting Officer



                                       15


<PAGE>

                                  Exhibit Index

         10.1   Employment agreement of Dr. Jack A. Krug dated January 15, 1999.


         27     Financial Data Schedule






                                       16