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, 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 Identification No.)
 incorporation or organization)

                            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 August  16,  1999 the  Registrant  had  977,954  shares of its common
stock, par value $0.0001 per share issued and outstanding.

<PAGE>
<TABLE>
<CAPTION>


                    Part I - Summarized Financial Information

Item 1 - Financial Statements

                                 Chaparral Resources, Inc.
                                Consolidated Balance Sheets
                                        (Unaudited)



                                                                 June 30,      December 31,
                                                                   1999            1998
                                                               ------------    ------------
Assets
------
Current assets:
<S>                                                            <C>             <C>
   Cash and cash equivalents                                   $    556,000    $    121,000
   Restricted cash                                                  667,000         756,000
   Accounts receivable                                               13,000          25,000
   Prepaid expenses                                                   4,000          76,000
   Current portion of note receivable                                  --           420,000
                                                               ------------    ------------
Total current assets                                              1,240,000       1,398,000

Note receivable                                                   1,060,000         589,000

Oil and gas properties and investments - full cost method
   Republic of Kazakhstan (Karakuduk Field)--
   Not subject to depletion:                                     35,516,000      32,261,000

Furniture, fixtures and equipment                                    98,000          93,000
Less accumulated depreciation                                       (28,000)        (17,000)
                                                               ------------    ------------
                                                                     70,000          76,000
                                                               ------------    ------------

Total assets                                                   $ 37,886,000    $ 34,324,000
                                                               ============    ============


See accompanying notes to financial statements


                                        2
<PAGE>

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


                                                              June 30,      December 31,
                                                                1999            1998
                                                            ------------    ------------
Liabilities and stockholders' equity
------------------------------------
Current liabilities:
   Trade accounts payable                                   $    419,000    $    223,000
   Accrued interest payable                                       91,000            --
   Accrued liabilities                                           475,000         522,000
   Short-term notes payable, net of discount                   5,783,000         940,000
                                                            ------------    ------------
Total current liabilities                                      6,768,000       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, $5,375,000 redemption value                     5,025,000       4,850,000
Stockholders' equity:
   Common stock - authorized, 100,000,000
     shares at June 30, 1999 and
     December 31, 1998, of
     $.0001 par value; issued and outstanding,
     977,954 and 972,980 shares at
     June 30, 1999 and December 31, 1998                            --              --
   Capital in excess of par value                             48,210,000      47,611,000
   Unearned portion of restricted stock awards                  (537,000)        (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                                       (21,284,000)    (19,470,000)
                                                            ------------    ------------
Total stockholders' equity                                    25,883,000      27,579,000
                                                            ------------    ------------
Total liabilities and stockholders' equity                  $ 37,886,000    $ 34,324,000
                                                            ============    ============


See accompanying notes to financial statements


                                        3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

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



                                            For the Three Months Ended     For the Six Months Ended
                                              June 30,      June 30,        June 30,       June 30,
                                                1999          1998            1999          1998
                                            -----------    -----------    -----------    -----------

Revenue:
<S>                                         <C>            <C>            <C>            <C>
   Oil and gas sales                        $      --      $      --      $      --      $      --

Costs and expenses:
   Depreciation                                   5,000          4,000         11,000          6,000
   General and administrative`                  825,000        750,000      1,258,000      1,630,000
                                            -----------    -----------    -----------    -----------
                                                830,000        754,000      1,269,000      1,636,000
                                            -----------    -----------    -----------    -----------

Loss from operations                           (830,000)      (754,000)    (1,269,000)    (1,636,000)

Other income (expense):
   Interest income                              450,000        248,000        857,000        450,000
   Interest expense                            (113,000)       (63,000)      (167,000)       (63,000)
   Heartland Settlement                            --             --           34,000           --
   Equity in loss from investment              (557,000)      (357,000)    (1,094,000)      (690,000)
                                            -----------    -----------    -----------    -----------
                                               (220,000)      (172,000)      (370,000)      (303,000)
                                            -----------    -----------    -----------    -----------

Net loss                                    $(1,050,000)   $  (926,000)   $(1,639,000)   $(1,939,000)
                                            -----------    -----------    -----------    -----------

Cumulative annual dividend accrued
   Series A Redeemable Preferred Stock          (25,000)       (25,000)       (50,000)       (50,000)
Discount accretion
   Series A Redeemable Preferred Stock          (62,000)          --         (125,000)          --
                                            -----------    -----------    -----------    -----------

Net loss available to common stockholders   $(1,137,000)   $  (951,000)   $(1,814,000)   $(1,989,000)
                                            ===========    ===========    ===========    ===========

Basic and diluted earnings per share:
Net loss per share                          $     (1.16)   $     (1.11)   $     (1.86)   $     (2.36)
Weighted average number of shares
   Outstanding                                  977,954        853,203        977,649        842,440



See accompanying notes to financial statements

                                        4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

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


                                                          For the Six Months Ended
                                                           June 30,       June 30,
                                                             1999           1998
                                                         -----------    -----------
Cash flows from operating activities
------------------------------------
<S>                                                      <C>            <C>
Net loss                                                 $(1,639,000)   $(1,939,000)
Adjustments to reconcile net loss to
   Net cash used in operating
     Activities:
       Equity loss from investment                         1,094,000        690,000
       Depreciation                                           11,000          6,000
       Bad debt expense                                       14,000           --
       Stock issued for services and bonuses                 235,000        662,000
       Amortization of note discount                          23,000         56,000
       Expired Warrants                                     (117,000)          --
       Changes in assets and liabilities:
         Accounts receivable                                  (2,000)        69,000
         Prepaid expenses                                     72,000         14,000
         Notes receivable                                    (51,000)      (300,000)
         Accounts payable and accrued liabilities            240,000        439,000
                                                         -----------    -----------
Net cash used in operating activities                       (120,000)      (303,000)

Cash flows from investing activities
------------------------------------
Additions to property and equipment                           (5,000)       (63,000)
Investment in and advances to foreign oil and gas
       Properties                                         (4,349,000)    (5,786,000)
                                                         -----------    -----------
   Net cash used in investing activities                  (4,354,000)    (5,849,000)


Cash flows from financing activities
------------------------------------
Proceeds from notes payable                                4,820,000      1,075,000
Restricted cash                                               89,000       (800,000)
Proceeds from sale of stock                                     --        2,500,000
                                                         -----------    -----------
Net cash provided by financing
   Activities                                              4,909,000      2,775,000
                                                         -----------    -----------


                                        5

</TABLE>
<PAGE>


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


Net increase (decrease) in cash and
   Cash equivalents                                     435,000      (3,377,000)
Cash and cash equivalents at beginning
   of period                                            121,000       3,423,000
                                                    -----------     -----------
Cash and cash equivalents at end of period          $   556,000     $    46,000
                                                    ===========     ===========

Supplemental cash flow disclosure
---------------------------------
  Interest paid                                     $    45,000     $     2,000




See accompanying notes to financial statements

                                        6


<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/A 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
any future interim period or 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 June 30,
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  enough  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  develop  the  Karakuduk  Field may 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.

     The Company does not presently  have the cash reserves  required to satisfy
$5,070,000 in  short-term  debt  obligations  coming due in August and September
1999 (fully  described  in Note 6), which may lead to the  Company's  default on
some, or all, of the Company's  outstanding loans. In the event of default,  the
Company may be required to transfer its  ownership in CAP-G,  and  therefore all
rights  to KKM and the  Karakuduk  Field,  to the  Company's  creditors  and the
Company's  investment  in the  Karakuduk  Field  would be lost.  The  Company is
currently seeking  additional debt financing and restructuring of existing loans
to  timely  satisfy  all  short-term  obligations  outstanding.   There  are  no
assurances,  however,  that  additional  financing or revised  terms of existing
loans will be available to the Company, or if available,  that it will be timely
or on terms favorable to the Company.

     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 such uncertainties.

                                        7
<PAGE>

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



4. Restricted Cash

     As of June 30, 1999,  the Company held $667,000 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 June 30,  1999,  the  Company had an  outstanding  note  receivable  for
$1,009,000,  plus  accrued  interest of  $51,000,  from a  third-party  drilling
contractor,  Challenger Oil Services,  PLC (Challenger).  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 Challenger for
drilling  services  provided to Karakuduk  Munay,  Inc. (KKM) in 1999. Under the
revised  terms of the note,  the Company  would  receive  principal  payments of
approximately  $42,000 per month, plus accrued interest,  through  approximately
February  2001. As of June 30, 1999,  however,  the Company had not received any
payments on the note.

     In April 1999,  the owner of the drilling rig operated by Challenger in the
Karakuduk Field, Oil & Gas Exploration Company Cracow, Ltd. (OGECC),  terminated
its contract with  Challenger.  As a result of the  termination  of the contract
between  Challenger  and OGECC,  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,  KKM  promptly   instituted
arbitration  proceedings  pursuant to the  contract.  Drilling in the  Karakuduk
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.

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
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. Interest payments are due quarterly. As of June
30, 1999, the stated prime rate on the note was 7.75%.

     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. On June 3, 1999, the Company  borrowed an additional  $1,000,000  from
Allen & Company.  The  promissory  note also bears  interest at a rate of 8% per
annum and matures on September 3, 1999.

                                        8
<PAGE>

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



6. Notes Payable (continued)

     As  collateral  for the notes,  Allen & Company  received  a  non-exclusive
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 June 30,  1999.  If the Company  issues
convertible securities, including any debt or equity instrument convertible into
the Company's  common stock on or before March 31, 2000, Allen & Company has the
right to exchange the  outstanding  balance of the note,  together  with 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.

     During March 1999,  Whittier  loaned the Company an aggregate of $1,000,000
for  ongoing  operations.  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 Allen & Company security  interest,  but is
subordinated  to the security  interest  retained by Whittier for  providing the
collateral for the $975,000 Chase loan described in Note 6 above. 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 intrinsic  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 legal settlement.  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 effected a 1 for 60 reverse stock split. 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 Company  reincorporated 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.  Since
there were no shares of the Company's  Series B Preferred Stock and the Series C
Preferred   Stock  issued  or   outstanding,   they  were   eliminated   in  the
reincorporation.

                                        9
<PAGE>

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



7. Common Stock and Related Common Stock Warrants (continued)

     On April 30,  1999,  warrants  expired  to  purchase  12,500  shares of the
Company's  common stock at an exercise  price of $16.80 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.

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.  As of June 30,  1999,  the  Company has
accrued a $125,000 annual dividend on its Series A Redeemable Preferred Stock.

9. Subsequent Events

     In early July 1999, KKM sold 20,000 tons (approximately 146,000 barrels) of
hydrocarbons  produced from the Karakuduk Field on the local  Kazakhstan  market
for $1,060,000, net of transportation costs.



                                       10
<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:
<TABLE>
<CAPTION>

                                     Karakuduk-Munay Inc
                        Statement of Expenses and Accumulated Deficit
                    For the Six Month Period Ended June 30, 1999 and 1998
                                   (Amounts in US Dollars)
                                         (Unaudited)

                                         For The Three Months Ended   For The Six Months Ended
                                            June 30,     June 30,       June 30,     June 30,
                                              1999         1998          1999         1998
                                           ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>
Management service fee                     $   87,000   $  154,000   $  280,000   $  274,000
General and administrative expenses           547,000      182,000    1,098,000      545,000
Depreciation of fixed assets                  125,000      150,000      250,000      150,000
Interest expense                              355,000      230,000      560,000      411,000
                                           ----------   ----------   ----------   ----------

Net loss                                    1,114,000      716,000    2,188,000    1,380,000

Accumulated deficit, beginning of period    8,577,000    4,680,000    7,503,000    4,016,000
                                           ----------   ----------   ----------   ----------

                                           ----------   ----------   ----------   ----------
Accumulated deficit, end of period          9,691,000   $5,396,000    9,691,000   $5,396,000
                                           ----------   ----------   ----------   ----------

</TABLE>


     As of June  30,  1999,  KKM had  received  approximately  $850,000,  net of
transportation  costs, as proceeds from the sale of  hydrocarbons  produced from
the Karakuduk Field.  Until such time as the production from the Karakuduk Field
reaches  commercially  viable  levels,  the  net  proceeds  from  the  sales  of
hydrocarbons  will be accounted for on a cost recovery  basis and will be offset
against KKM's oil and gas investment.

                                       11
<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 a net of  $4,820,000  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 proceeds 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  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 in emerging markets, such as the Republic of Kazakhstan,
are significantly  higher than for similar  investments in the United States and
Europe.  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 does not presently  have the cash reserves  required to satisfy
$5,070,000 in  short-term  debt  obligations  coming due in August and September
1999 (fully  described  in Note 6), which may lead to the  Company's  default on
some, or all, of the Company's  outstanding loans. In the event of default,  the
Company may be required to transfer its  ownership in CAP-G,  and  therefore all
rights  to KKM and the  Karakuduk  Field,  to the  Company's  creditors  and the
Company's  investment  in the  Karakuduk  Field  may be  lost.  The  Company  is
currently seeking  additional debt financing and restructuring of existing loans
to  timely  satisfy  all  short-term  obligations  outstanding.   There  are  no
assurances,  however,  that  additional  financing or revised  terms of existing
loans will be available to the Company, or if available,  that it will be timely
or on terms favorable to the Company.

     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
enough  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 KKM, held through a wholly owned subsidiary of the Company, CAP-G.
KKM is a closed joint stock  company in the Republic of  Kazakhstan  and has the
right to develop the Karakuduk Field in western Kazakhstan. As of June 30, 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.
                                       12
<PAGE>


1. Liquidity and Capital Resources (Continued)

     The terms of KKM's revised license requires an expenditure commitment of at
least $30 million and a work  commitment of drilling  eight wells as of December
31, 1999.  As of August 16,  1999,  KKM has spent  approximately  $7 million and
drilled one well  against  the revised  license  requirements  outstanding.  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. KKM may seek an extension of time to meet the expenditure and work
commitments  established by the license. There are no assurances,  however, that
KKM will be able to obtain an amendment to the license.  If the 1999 expenditure
requirement  or work  commitment is not satisfied by KKM, KKM's License with the
government  of the Republic of Kazakhstan  may be  terminated  and the Company's
interest in the Karakuduk Field may be lost.

     On April 29, 1999,  KKM completed  Well #101, the first well drilled by KKM
in the Karakuduk  Field.  Test results are currently not available on Well #101,
due to the inability to arrive at accurate test data because of current facility
constraints, including available storage and trucking capacity for KKM's current
production.  KKM  expects to obtain  accurate  test  results  once the  pipeline
facilities  and the new  pumping  unit have been  completed  at Station 6 on the
KazTransOil  pipeline.  KKM  currently  trucks all  production  to the  pipeline
terminal at Say-Utes,  over 89 km from the Field.  KKM has received  approval to
begin  trucking  production  to the  pipeline  terminal  at  Station 6, which is
located approximately 36 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  transportation  constraints  and  the  lack  of  certain  production
facilities required for processing additional oil production for delivery to the
pipeline.

     As of August 15,  1999,  KKM has sold  33,000 tons  (approximately  241,000
barrels) of crude oil production for total proceeds of approximately $1,900,000,
net of transportation costs. KKM expects to continue to sell all available crude
oil  production on the best market terms and  conditions  available.  KKM cannot
sustain  current  operations and future  development of the Karakuduk Field from
proceeds  received from present oil sales.  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 KKM.

     In April 1999,  the owner of the drilling rig operated by Challenger in the
Karakuduk Field, Oil & Gas Exploration Company Cracow, Ltd. (OGECC),  terminated
its contract with  Challenger.  As a result of the  termination  of the contract
between  Challenger  and OGECC,  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,  KKM  promptly   instituted
arbitration  proceedings  pursuant to the  contract.  Drilling in the  Karakuduk
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 June  30,  1999,  the  Company  requested  and  received  an  additional
extension to September  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 four
additional  payments of $15,625.  The Company expects to execute the contract on
or before September 30, 1999.

     The Company has no other material  commitments for cash outlays and capital
expenditures  other than for the  development of the Karakuduk  Field and normal
operating expenses.

                                       13
<PAGE>


Results of Operations
---------------------

Six Months Ended June 30, 1999 Compared with the Six Months Ended June 30, 1998
-------------------------------------------------------------------------------

     The  Company's  operations  during  the six  months  ended  June 30,  1999,
resulted in a net loss of $1,639,000  compared to a net loss of  $1,939,000  for
the six months ended June 30, 1998.

     General and  administrative  costs  decreased  by  $372,000  during the six
months ended June 30, 1999 as compared to the six months ended June 30, 1998 due
to a reduction  in stock  based  compensation  and  expiration  of common  stock
warrants.  Without  consideration  of the stock based  compensation,  a non-cash
item, general and administrative  costs increased by $290,000 due to an increase
in corporate  overhead incurred by the Company.  Also, the Company's equity loss
in KKM  increased  by  $404,000  during  the six months  ended June 30,  1999 as
compared to the six months  ended June 30, 1998,  due to  increased  operational
costs directly related to development of oil and gas properties held by KKM.

     Interest  income  increased by $407,000  from the six months ended June 30,
1998, due to increased  financing  provided by CAP-G to KKM for KKM's operations
in Kazakhstan.

     Interest expense increased by $104,000 during the six months ended June 30,
1999 as  compared  to the six months  ended June 30,  1998,  due to the  Company
acquiring  additional  interest-bearing  obligations  during 1999. The Company's
outstanding  notes payable of $5,795,000,  as of June 30, 1999, are subject to a
$12,000 discount, fully amortizable during the 1999 fiscal year.

Three Months Ended June 30, 1999  Compared  with the Three Months Ended June 30,
1998
--------------------------------------------------------------------------------

     The  Company's  operations  during the three  months  ended June 30,  1999,
resulted in a net loss of $1,050,000, compared to a net loss of $926,000 for the
three months ended June 30, 1998.

     General and  administrative  costs  increased  by $75,000  during the three
months ended June 30, 1999, as compared to the three months ended June 30, 1998,
due to increased corporate overhead incurred by the Company. Also, the Company's
equity loss in KKM  increased by 200,000  during the three months ended June 30,
1999,  as compared to the three  months  ended June 30,  1998,  due to increased
operational costs directly related to development of oil and gas properties held
by KKM.

     Interest income  increased by $202,000 from the three months ended June 30,
1998, due to increased  financing  provided by CAP-G to KKM for KKM's operations
in Kazakhstan.

     Interest  expense  increased by $50,000  during the three months ended June
30,  1999,  as compared to the three  months  ended June 30,  1998,.  due to the
Company  acquiring  additional  interest-bearing   obligations  to  finance  the
development of the Karakuduk Field and to satisfy the Company's  working capital
needs in the short-term.

Commodity Prices for Oil and Gas; Inflation.
--------------------------------------------

     The Company's revenues, profitability,  growth and value of its oil and gas
properties are highly  dependent upon prices of oil and gas.  Market  conditions
make it difficult  to estimate  prices of oil and gas or the impact of inflation
on such  prices.  Oil and gas prices have been  volatile,  and it is likely that
they will continue to fluctuate in future.  Various factors beyond the Company's
control  affect  prices  for  oil and  gas,  including  supplies  of oil and gas
available  worldwide  and in  Kazakhstan,  the  ability of the  Organization  of
Petroleum  Exporting  Countries  (OPEC)  to agree to  maintain  oil  prices  and
production  controls,  political  instability or armed conflict in Kazakhstan or
other oil producing regions, the price of foreign imports, the level of consumer
demand,  the price and  availability of alternative  fuels,  the availability of
transportation routes and pipeline capacity,  and changes in applicable laws and
regulations.

                                       14
<PAGE>


Inflation (Continued).
----------------------

     On April 5, 1999, the government of the Republic 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
exhange  rate  declined  from 87.5 tenge to the U.S.  dollar to 142 tenge to the
U.S. dollar.  As of August 15, 1999, the official exhange rate was approximately
132 tenge to the U.S.  dollar.  The devaluation  decreased 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, and the only impact to the
Company  will relate to assets and  liabilities  denominated  in tenge.  The net
impact of the currency devaluation to the Company is not material.

2. 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.  However, it
is unclear as to the extent that the  government  of the Republic of  Kazakhstan
and other organizations who provide significant  infrastructure  services within
the  Former  Soviet  Union  have  addressed  the Year  2000  issue.  There is no
guarantee that the systems of the government or other organizations on which the
Company  relies will be timely  converted and would not have a material  adverse
effect on the Company and its systems.

Item 3 - Quantitative and Qualitative Disclosures About Market Risks

     Not Applicable.


                                       15
<PAGE>


                           Part II - Other Information


Item 1 - Legal Proceedings

     In April 1999,  the owner of the drilling rig operated by Challenger in the
Karakuduk Field, Oil & Gas Exploration Company Cracow, Ltd. (OGECC),  terminated
its contract with  Challenger.  As a result of the  termination  of the contract
between  Challenger  and OGECC,  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,  KKM  promptly   instituted
arbitration  proceedings  pursuant to the  contract.  Drilling in the  Karakuduk
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

     See Item 4 below.

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

     On April 21,  1999,  the Company  held a Special  Meeting of the  Company's
shareholders.  The  Company's  shareholders  approved a 1 for 60  reverse  stock
split.  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  Company's  shareholders  approved the  Company's
reincorporation  from  Colorado to  Delaware.  Since there were no shares of the
Company's  Series B Preferred  Stock and the Series C Preferred  Stock issued or
outstanding, they were eliminated in the reincorporation.

     The  number of shares  voted with  respect  to the 1 for 60  reverse  stock
split,  before  consideration  of the  reverse  stock split  adjustment, were as
follows:

     For            Against           Abstain
     ---            -------           -------
     30,488,755     3,280,068         985,798


     The number of shares  voted  with  respect  to the  reincorporation  of the
Company from  Colorado to Delaware,  before  consideration  of the reverse stock
split adjustment, were as follows:

     For            Against           Abstain
     ---            -------           -------
     30,660,657     1,698,176         60,798



                                       16
<PAGE>


Item 6 - Exhibits and Reports on Form 8-K

(a)  Exhibits

     27   Financial Data Schedule


(b)  Reports on Form 8-K

     On April 21, the Company  filed a current  report on Form 8-K reporting the
approval of a 1 for 60 reverse stock split of the Company's  common stock by the
Company's shareholders at a Special Meeting held on April 21, 1999.

     On April 21, the Company  filed a current  report on Form 8-K reporting the
approval  of the  Company's  reincorporation  from  Colorado  to Delaware by the
Company's shareholders at a Special Meeting held on April 21, 1999.


                                       17
<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.

Dated: August 20, 1999



                                         Chaparral Resources, Inc.



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



                                       18
<PAGE>

                                  Exhibit Index

     27   Financial Data Schedule





                                       19