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                June 30, 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 14,130,540
shares outstanding as of August 5, 1997.



<PAGE>



                                                      

                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                         CANADA SOUTHERN PETROLEUM LTD.

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

                                                      June 30,      December 31,
                                                        1997            1996
                                                        ----            ----

        Assets

Current assets:
  Cash and cash equivalents                        $  3,414,619   $   2,709,597
  U.S. Government securities                          1,326,261       3,404,213
  Accounts and interest receivable                      798,057         635,223
  Prepaid insurance and other                           220,302         227,368
                                                   ------------    ------------
Total current assets                                  5,759,239       6,976,401
                                                   ------------    ------------

U.S. Government securities                            2,064,418       2,048,573
                                                   ------------    ------------

Oil and gas properties and equipment
  (full cost method)                                 12,423,727      11,349,945
                                                   ------------    ------------
                                                    $20,247,384     $20,374,919
                                                    ===========     ===========

        Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                                  $   508,359     $   439,837
  Accrued liabilities                                   236,073         182,104
                                                    -----------     -----------
Total current liabilities                               744,432         621,941
                                                    -----------     -----------

Future site restoration costs                           222,180         250,274
                                                    -----------     -----------

Shareholders' Equity
  Limited Voting Shares, par value $1 per share
  Authorized - 100,000,000 shares
  Outstanding -14,066,540 shares                     14,066,540      13,956,540
  Contributed surplus                                25,513,964      24,930,964
                                                     ----------      ----------
                                                     39,580,504      38,887,504
  Deficit                                           (20,299,732)    (19,384,800)
                                                    ------------    ------------
Total shareholders' equity                           19,280,772      19,502,704
                                                     ----------      ----------
                                                    $20,247,384     $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)

<TABLE>
<CAPTION>
                                                                 Three months ended                         Six months ended
                                                                       June 30,                                  June 30,

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

Revenues:
<S>                                                     <C>                 <C>                   <C>                  <C>         
  Oil sales                                             $    238,215        $     160,911         $    532,612         $    328,914
  Gas sales                                                   94,546               60,606              282,224              181,932
  Proceeds under carried interest agreements                 146,798              260,757              147,484              485,984
  Interest and other income                                   85,222               57,899              190,359               73,807
                                                        ------------        -------------          -----------          -----------
                                                             564,781              540,173            1,152,679            1,070,637
                                                        ------------        -------------          -----------          -----------
Costs and expenses:
  General and administrative                                 322,514              315,403              613,483              543,954
  Legal                                                      451,037              434,351              786,809              802,731
  Lease operating costs                                      197,160              124,695              432,049              242,327
  Depletion, depreciation, and amortization                  121,900              129,900              250,100              275,800
  Foreign exchange loss (gain)                                13,130                5,005              (51,423)               5,675
  Provision for future site restoration costs                  4,500                4,400                9,500                9,400
  Rent                                                        13,418               12,789               27,093               26,145
                                                        ------------        -------------          -----------          -----------
                                                           1,123,659            1,026,543            2,067,611            1,906,032
                                                        ------------        -------------          -----------          -----------
  Loss before income taxes                                  (558,878)            (486,370)            (914,932)            (835,395)
  Income taxes                                                     -                    -                    -                    -
                                                        -------------       --------------         ------------         ------------
Net loss                                                    (558,878)            (486,370)            (914,932)            (835,395)

  Deficit - beginning of period                          (19,740,854)         (18,272,542)         (19,384,800)         (17,923,517)
                                                         ------------        -------------         ------------         ------------
  Deficit - end of period                                $20,299,732         $(18,758,912)         $20,299,732         $(18,758,912)
                                                         ===========         =============         ===========         =============

Average number of shares outstanding                      13,992,790           13,000,128           13,977,254           12,853,512
                                                          ==========           ==========           ==========           ==========

Net loss per share                                         $(.04)               $(.04)               $(.07)               $(.06)
                                                           ======               ======               ======               ======
</TABLE>


<PAGE>



                                                      

                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                         CANADA SOUTHERN PETROLEUM LTD.

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

                                                          Six months ended
                                                               June 30,

                                                          1997          1996
                                                          ----          ----

Cash flows from operating  activities:
    Net loss                                          $(914,932)     $ (835,395)
    Adjustments to reconcile net loss
    to net cash used in operating activity:
      Depreciation, depletion and amortization          250,100         275,800
      Future site restoration costs                     (28,094)         (4,349)
    Change in current assets and liabilities:
      Accounts and interest receivable                 (162,834)     (2,801,428)
      Prepaid insurance and other                         7,066         118,008
      Accounts payable                                   68,522         143,386
      Accrued liabilities                                53,967         113,416
                                                      ---------      ----------
  Net cash used in operations                          (726,205)     (2,990,562)
                                                       ---------     -----------

Cash flows from investing activities:
  Additions to oil and gas properties (Net)          (1,323,882)       (232,363)
  Sale (purchase) of U.S. Government securities       2,062,109      (4,002,387)
                                                     ----------      -----------
Net cash used in investing activities                   738,227      (4,234,750)
                                                     ----------      -----------

Cash flows from financing activities:
  Sale of Limited Voting Shares less expenses                 -       9,029,680
  Exercise of stock options                             693,000         210,832
                                                     ----------      ----------
  Net cash from financing activities                    693,000       9,240,512
                                                     ----------      ----------

Increase (decrease) in cash and cash equivalents        705,022       2,015,200
Cash and cash equivalents at the
  beginning of period                                 2,709,597       1,181,581
                                                     ----------      ----------
Cash and cash equivalents at the
  end of period                                      $3,414,619      $3,196,781
                                                     ==========      ==========



<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                  June 30, 1997
                         (Expressed in Canadian Dollars)

Item 1.  Financial Statements - Notes

         The information for the three and six month periods ended June 30, 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 June 30, 1997,  the Company had  approximately  $6.8 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 June 30,
1997 decreased to $726,000  compared to $2,991,000  during the  comparable  1996
period.  The  difference  between  the  periods  was  caused  primarily  by  the
following:

         Increase in loss from operations                 $(129,000)
         Changes in accounts receivable and other         2,528,000
         Net change in current liabilities                 (134,000)
                                                        ------------
         Difference in net cash used in operations       $2,265,000
                                                         ==========
                                                  
         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.

                                  June 30, 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  $1.3 million has been spent  through June 30, 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.

         During  the  second  half  of  1996,  the  Company  participated  in  8
productive  oil and gas wells.  In addition,  during the first six months of the
current year, 13  additional  wells were drilled with 12 being  completed as oil
wells and 1 as a gas well. This successful  drilling  program is being reflected
in the  increase  in the amount of oil and gas sales.  Further oil and gas sales
should  continue  to  increase  as the  recent  discovery  wells  are  placed on
production.  The Company's share (12-15%) of revenues has been slowed because of
a lack of drilling and completion equipment.

Results of Operations

         Three month period ended June 30, 1997 vs. June 30, 1996

         The net loss for the quarter  ended June 30, 1997 was $558,878  ($(.04)
per  share)  compared  to a net loss of  $486,370  ($.04 per share) for the 1996
period. A summary of revenue and expenses during the periods is as follows:

                                1997                1996             Net Change
                                ----                ----             ----------
Revenues                    $   564,781         $   540,173           $ 24,608
Costs and expenses          (1,123,659)          (1,026,543)           (97,116)
                            -----------          -----------           --------
Net loss                    $ (558,878)         $  (486,370)          $(72,508)
                             ==========         ============          =========


<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                  June 30, 1997
                         (Expressed in Canadian Dollars)

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

         Oil sales  increased  48% due to a 103% increase in the number of units
sold which was partially  offset by a 14% decrease in the price of oil 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 June 30,

                                         1997                                            1996
                                         ----                                            ----
                                   Average price                                   Average price
                         bbls         per bbl            Total          bbls          per bbl            Total
<S>                     <C>            <C>             <C>             <C>             <C>             <C>     
Oil sales               14,102         $22.82          $322,000        6,950           $26.52          $184,000
Royalties paid                                          (84,000)                                        (23,000)
                                                      ----------                                      ----------
Total                                                  $238,000                                        $161,000
                                                       ========                                        ========
</TABLE>

         Gas sales  increased  56%.  There was a 50%  increase  in the number of
units sold and a 29% 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 June 30,

                                         1997                                           1996
                                         ----                                           ----
                                    Average price                                  Average price
                         mmcf          per mcf           Total          mmcf          per mcf           Total
<S>                       <C>           <C>             <C>              <C>           <C>             <C>    
Gas sales                 45            $1.86           $84,000          30            $1.44           $43,000
Royalty income                                           23,000                                         25,000
Royalties paid                                          (12,000)                                        (7,000)
                                                      ----------                                      ---------
Total                                                  $ 95,000                                        $61,000
                                                       ========                                        =======
</TABLE>

         Proceeds under carried interest agreements decreased to $147,000 during
1997  compared to  $261,000  in 1996.  The  operator  of the  Company's  carried
interest  properties had been withholding  payment of a disputed amount totaling
$319,000 at December 31, 1996. A resolution  of the claim is not expected  until
an  independent  audit of the carried  interest  account is completed.  Payments
resumed during the second quarter.  Proceeds under carried  interest  agreements
are derived from gross production revenues after payout of these expenses.


<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                  June 30, 1997
                         (Expressed in Canadian Dollars)

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

         Interest  and other  income  was 47%  higher in 1997.  Interest  income
increased  from  $58,000  in 1996 to $84,000  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 $2,000 compared to $48,000 in 1996.

         Lease  operating  costs increased 58% from $125,000 in 1996 to $197,000
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 6% in 1997
to $122,000  from  $130,000 in 1996.  The decrease in depletion is the result of
the 1997  reduction  in the  carried  interest  production  compared to the 1996
period.

         A foreign  exchange loss of $13,000 was recorded in 1997, compared with
a loss of $5,000 on the Company's U.S.  investments  in 1996. In 1997,  the loss
was  attributable  to a weakening 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.

         Six month period ended June 30, 1997 vs. June 30, 1996

         The net loss for the quarter ended March 31, 1997 was $914,932  ($(.07)
per  share)  compared  to a net loss of  $835,395  ($.06 per share) for the 1996
period. A summary of revenue and expenses during the periods is as follows:

                                1997                 1996           Net Change
                                ----                 ----           ----------
Revenues                    $1,152,679          $ 1,070,637         $  82,042
Costs and expenses          (2,067,611)          (1,906,032)         (161,579)
                            -----------          -----------         ---------
Net loss                    $ (914,932)         $ (835,395)         $(79,537)
                            ===========         ============        ==========



<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                  June 30, 1997
                         (Expressed in Canadian Dollars)

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

         Oil sales  increased  62% due to a 75%  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>
                                                      Six month period ended June 30,

                                           1997                                            1996
                                           ----                                            ----
                                   Average price                                   Average price
                         bbls         per bbl            Total          bbls          per bbl            Total
<S>                     <C>            <C>             <C>             <C>             <C>             <C>     
Oil sales               27,962         $23.81          $666,000        15,935          $23.81          $379,000
Royalties paid                                         (133,000)                                        (50,000)
                                                     -----------                                      ----------
Total                                                  $533,000                                        $329,000
                                                       ========                                        ========
</TABLE>

         Gas sales  increased  55%. There was a 13% decrease in units sold which
was offset by a 93%  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>
                                                       Six month period ended June 30,

                                            1997                                            1996
                                            ----                                            ----
                                     Average price                                    Average price
                         mmcf           per mcf            Total           mmcf          per mcf            Total
<S>                       <C>            <C>             <C>               <C>            <C>             <C>     
Gas sales                 89             $2.92           $260,000          102            $1.53           $156,000
Royalty income                                             79,000                                           48,000
Royalties paid                                            (57,000)                                         (22,000)
                                                        ----------                                       ----------
Total                                                    $282,000                                         $182,000
                                                         ========                                         ========
</TABLE>

         Proceeds under carried interest agreements decreased to $148,000 during
1997  compared to  $486,000  in 1996.  The  operator  of the  Company's  carried
interest  properties had been withholding  payment of a disputed amount totaling
$319,000 at December 31, 1996. A resolution  of the claim is not expected  until
an  independent  audit of the carried  interest  account is completed.  Payments
resumed during the second quarter.  Proceeds under carried  interest  agreements
are derived from gross production revenues after payout of these expenses.


<PAGE>


                         PART I - FINANCIAL INFORMATION

                         CANADA SOUTHERN PETROLEUM LTD.

                                  June 30, 1997
                         (Expressed in Canadian Dollars)

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

         Interest  and other  income was 158%  higher in 1997.  Interest  income
increased  from  $21,000  in 1996 to  $181,000  in the  current  year 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 $9,000 compared to $53,000 in 1996.

         General and  administrative  expenses increased 13% to $613,000 in 1997
from  $544,000  in 1996.  In 1996,  the Company  saved the cost of printing  and
mailing a separate  annual  report by  utilizing  the June 1996 rights  offering
prospectus in lieu of an annual  report.  In addition,  business taxes which are
based on the Company's net worth increased in 1997.

         Lease  operating  costs increased 78% from $242,000 in 1996 to $432,000
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 9% in 1997
to $250,000  from  $276,000 in 1996.  The decrease in depletion is the result of
the 1997  reduction  in the  carried  interest  production  compared to the 1996
period.

         A foreign  exchange gain of $51,000 was recorded in 1997, compared with
a loss of $6,000 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.

                                  June 30, 1997


Item 4.  Submission of Matters to a Vote of Security Holders

         (a)  On June 4, 1997,  the Company  held its  Annual General Meeting of
Shareholders.

         (b)  Mr. Eugene C. Pendery was reelected a director of the Company. The
vote was as follows:

              For                         520,345
              Withheld                     30,069

         (c)  The  firm of  Ernst & Young,  Chartered Accountants, was appointed
as the Company's independent auditors for the year ending December 31, 1997. The
vote was as follows:

              For                         526,632
              Against                         800
              Abstain                      15,781

Item 5.  Other Information

         On June 4, 1997,  Mr. M. A.  Ashton, 62, was elected  president  of the
Company  to replace  Mr. Charles J.  Horne,  71,  who retired  as president  but
continues as a director of the Company.

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:  August 8, 1997                     By  /s/ Beverley A. Scobie
                                              Treasurer and Chief Financial and
                                              Accounting Officer