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, 1997
                               --------------------------------------------

[  ]     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.)

Suite 1410,
One Palliser Square, 125 Ninth Avenue, S.E., Calgary, Alberta, Canada T2G OP6
 ................................................................................
(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
l934  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. Yes X 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 13,956,540
shares outstanding as of May 2,1997.



<PAGE>

                                                      

                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                         CANADA SOUTHERN PETROLEUM LTD.

                           CONSOLIDATED BALANCE SHEETS
                         (Expressed in Canadian dollars)
                                   (unaudited)

                                                  March 31,        December 31,
                                                    1997               1996
                                                  ---------        ------------
                                         
                    Assets               
                                         
Current assets:                          
  Cash and cash equivalents                   $   2,684,169       $   2,709,597
  U.S. Government securities                      2,629,603           3,404,213
  Accounts and interest receivable                  801,936             635,223
  Prepaid insurance and other                       235,552             227,368
                                              -------------       -------------
Total current assets                              6,351,260           6,976,401
                                              -------------       -------------
                                          
U.S. Government securities                        2,069,849           2,048,573
                                              -------------       -------------
                                          
Oil and gas properties and equipment      
  (full cost method)                             11,766,652          11,349,945
                                               ------------        ------------
                                                $20,187,761         $20,374,919
                                                ===========         ===========
                                      
     Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                              $   603,367         $   439,837
  Accrued liabilities                               219,705             182,104
                                                -----------         -----------
Total current liabilities                           823,072             621,941
                                                -----------         -----------
                                            
Future site restoration costs                       218,039             250,274
                                                 ----------          ----------
                                           
Shareholders' Equity                       
  Limited Voting Shares, par value $1 per share
  Authorized - 100,000,000 shares
  Outstanding -13,956,540 shares                 13,956,540          13,956,540
  Contributed surplus                            24,930,964          24,930,964
                                                 ----------          ----------
                                                 38,887,504          38,887,504
  Deficit                                       (19,740,854)        (19,384,800)
                                                ------------        ------------
Total shareholders' equity                       19,146,650          19,502,704
                                                 ----------          ----------
                                                $20,187,761         $20,374,919
                                                ===========         ===========
                                           

<PAGE>

                                                     
                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                         CANADA SOUTHERN PETROLEUM LTD.

                Consolidated Statements of Operations and Deficit
                         (Expressed in Canadian dollars)
                                   (unaudited)

                                                         Three months ended
                                                              March 31,

                                                       1997              1996
                                                      ------            ------

Revenues:
  Oil sales                                     $     294,397     $     168,003
  Gas sales                                           187,678           121,326
  Proceeds under carried interest agreements              686           225,227
  Interest and other income                           105,137            15,908
                                                 -------------    --------------
                                                      587,898           530,464
                                                 -------------    --------------
Costs and expenses:
  General and administrative                          290,969           228,551
  Legal                                               335,772           368,380
  Lease operating costs                               234,889           117,632
  Depletion, depreciation, and amortization           128,200           145,900
  Foreign exchange loss                               (64,553)              670
  Provision for future site restoration costs           5,000             5,000
  Rent                                                 13,675            13,356
                                                 -------------    --------------
                                                      943,952           879,489
                                                 -------------    --------------
  Loss before income taxes                           (356,054)         (349,025)
  Income taxes                                              -                 -
                                                 -------------    --------------
Net loss                                             (356,054)         (349,025)

  Deficit - beginning of period                   (19,384,800)      (17,923,517)
                                                 -------------     -------------
  Deficit - end of period                        $(19,740,854)     $(18,272,542)
                                                 =============     =============

Average number of shares outstanding               13,956,540        12,662,391
                                                   ==========        ==========

Net loss per share                                   $(.03)            $(.03)
                                                     ======            ======



<PAGE>


                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                         CANADA SOUTHERN PETROLEUM LTD.

                      Consolidated Statements of Cash Flows
                         (Expressed in Canadian dollars)
                                   (unaudited)


                                                          Three months ended
                                                               March 31,

                                                        1997             1996
                                                       ------           ------

Cash flows from operating  activities:
    Net loss                                      $   (356,054)     $  (349,025)
    Adjustments to reconcile net loss             
    to net cash used in operating activity:       
      Depreciation, depletion and amortization         128,200          145,900
      Future site restoration costs                    (32,235)           5,000
    Change in current assets and liabilities:     
      Accounts and interest receivable                (166,713)          26,238
      Prepaid insurance and other                       (8,184)         (90,292)
      Accounts payable                                 163,530          109,420
      Accrued liabilities                               37,601          (42,348)
                                                   ------------     ------------
  Net cash used in operations                         (233,855)        (195,107)
                                                   ------------     ------------
                                                  
Cash flows from investing activities:             
  Additions to oil and gas properties (Net)           (544,907)        (129,245)
  Sale (purchase) of U.S. Government securities        753,334                -
                                                   ------------     ------------
Net cash used in investing activities                  208,427         (129,245)
                                                   ------------     ------------
                                                  
Cash flows from financing activities:             
  Exercise of stock options                                  -          176,332
                                                   ------------     ------------
  Net cash from financing activities                         -          176,332
                                                   ------------     ------------
                                                  
Increase (decrease) in cash and cash equivalents       (25,428)        (148,020)
Cash and cash equivalents at the                  
  beginning of period                                2,709,597        1,181,581
                                                   ------------     ------------
Cash and cash equivalents at the                  
  end of period                                     $2,684,169       $1,033,561
                                                    ==========       ==========
                                                  
                                                  
<PAGE>                                           


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                 March 31, 1997
                         (Expressed in Canadian Dollars)

Item 1.  Financial Statements - Notes

         The  information  for the three month  periods ended March 31, 1997 and
1996 is unaudited but  includes all  adjustments  which  the  Company  considers
necessary for a fair statement of the results for those periods. All adjustments
are of a normal recurring nature.

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

Liquidity and Capital Resources

         At March 31, 1997, the Company had  approximately  $7.6 million of cash
and  securities  available.  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 three  months ended March 31,
1997  increased  to $234,000  compared to $195,000  during the  comparable  1996
period.  The $39,000  difference between the periods was caused primarily by the
following:

               Increase in loss from operations               $(62,000)
               Increase in accounts receivable                (111,000)
               Net change in current liabilities               134,000
                                                              ---------
               Difference in net cash used in operations      $(39,000)
                                                        
         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.  Properties  in the Fort Nelson,  British
Columbia  area in which the Company has carried  interests  have reached  payout
status.  Proceeds  from  these  carried  interests  plus oil and gas sales  from
working  interest  properties are the Company's  major sources of normal working
capital.


<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                 March 31, 1997
                         (Expressed in Canadian Dollars)

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

         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 1997 will be approximately $2.3 million,  of which
approximately  $545,000  has been spent  through  March 31,  1997.  In addition,
substantial  continuing  expenses are expected to be incurred in connection with
the Kotaneelee Litigation. The expense of the Kotaneelee Litigation has been the
principal cause of the Company's losses since 1991.

Results of Operations

         Three month period ended March 31, 1997 vs. March 31, 1996

         The net loss for the quarter ended March 31, 1997 was $356,054  ($(.03)
per  share)  compared  to a net loss of  $349,025  ($.03 per share) for the 1996
period. A summary of revenue and expenses during the periods is as follows:

                              1997                  1996              Net Change
                              ----                  ----              ----------
Revenues                     587,898             $ 530,464              57,434
Costs and expenses          (943,952)             (879,489)            (64,463)
                            ---------             ---------            --------
Net loss                   $(356,054)            $(349,025)            $(7,029)
                           ==========            ==========            ========
                                          
         Oil sales  increased 75% due to a 14% increase in the price of oil sold
and a 54%  increase  in the  number of units  sold.  Oil unit  sales in  barrels
("bbls")  (before  deducting  royalties)  and the average  price per barrel sold
during the periods indicated were as follows:

<TABLE>
<CAPTION>
                                                     Three month period ended March 31,
                                           1997                                            1996
                        -------------------------------------------     --------------------------------------------
                                    Average price                                    Average price
                         bbls          per bbl            Total          bbls           per bbl             Total
<S>                     <C>             <C>             <C>             <C>              <C>              <C>     
Oil sales               13,860          $24.82           $344,000       8,985            $21.72            $195,000
Royalties paid                                            (50,000)                                          (27,000)
                                                        ----------                                        ----------
Total                                                    $294,000                                          $168,000
                                                         ========                                          ========

</TABLE>

<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                 March 31, 1997
                         (Expressed in Canadian Dollars)

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

         Gas sales  increased  55%. There was a 38% decrease in units sold which
was offset by a 156%  increase in gas prices.  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>
<CAPTION>
                                                                     Three month period ended March 31,
                                            1997                                              1996
                         --------------------------------------------       -------------------------------------------
                                      Average price                                      Average price
                         mmcf            per mcf             Total          mmcf            per mcf             Total
<S>                       <C>             <C>              <C>              <C>             <C>               <C>     
Gas sales                 45              $3.99             $180,000        72              $1.56              $112,000
Royalty income                                                55,000                                             24,000
Royalties paid                                               (47,000)                                           (15,000)
                                                           ----------                                         ----------
Total                                                       $188,000                                           $121,000
                                                            ========                                           ========
</TABLE>

         Proceeds under carried interest  agreements  decreased to $1,000 during
1997  compared to  $225,000  in 1996.  The  operator  of the  Company's  carried
interest  properties has been withholding  payment of a disputed amount totaling
$319,000 at December 31, 1996. At March 31, 1997,  $34,000 is the balance of the
amount which will be withheld by the operator.  A resolution of the claim is not
expected  until  an  independent  audit  of  the  carried  interest  account  is
completed.  However,  payments  are expected  to  resume  in the  next  quarter.
Proceeds  under  carried interest agreements  are derived  from gross production
revenues after payout of these expenses.

         Interest  and other  income was 561%  higher in 1997.  Interest  income
increased  from  $11,000  in 1996 to $97,000  in the  current  period due to the
increase in funds  available  for  investment  during 1997 compared to the prior
period. In addition,  the 1997 period includes proceeds from the sale of seismic
data in the amount of $8,000 compared to $5,000 in 1996.

         Legal  expenses  decreased 9% to $336,000 in 1997 from  $368,000 in the
1996 period. These expenses are related primarily to the Kotaneelee  litigation.
The expenses  decreased as a result of the  adjournment  of the trial during the
current quarter.


<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                 March 31, 1997
                         (Expressed in Canadian Dollars)

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

         Lease  operating costs increased 100% from $118,000 in 1996 to $235,000
in the 1997  period.  The  increase  represents  the  increased  charges  by the
operators of the Company's  properties during the current period. The revenue on
these properties also increased proportionately during the period.

         Depletion,  depreciation and amortization expense decreased 12% in 1997
to $128,000 from $146,000 in 1996.  The decrease in depletion is the result of a
decrease  in the number of units  sold  during the 1997  period,  including  the
reduction in the carried interest production, compared to the 1996 period.

         A foreign  exchange gain of $65,000 was recorded in 1997, compared with
a loss of $1,000 on the Company's  U.S.  investments in 1996.  In 1997, the gain
was attributable  to  a  strengthening  of the  U.S. dollar as  compared to  the
Canadian dollar on the Company's U.S. investments.

         Income taxes. No provision for income taxes is required for the current
period.



<PAGE>


                           PART II - OTHER INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                 March 31, 1997


Item 5.  Other Information

                  On May 2,  1997,  the  Supreme  Court  of  Canada  denied  the
Company's leave to appeal regarding the conflict-of-interest  dispute with Amoco
Canada's counsel. The trial is scheduled to resume on May 12, 1997.

Item 6.  Exhibits and Reports on Form 8-K

                  None.


<PAGE>


                                   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: May 9, 1997                           By /s/ Beverley A. Scobie
                                               ---------------------------------
                                               Treasurer and Chief Financial and
                                               Accounting Officer