FORM 10-Q

                                  UNITED STATES

                       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, 2005

                                       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 1-12108

                            CRIMSON EXPLORATION INC.
                            ------------------------
             (Exact name of Registrant as specified in its charter)

              Texas                                         87-0444770
    (State or other jurisdiction                          (IRS Employer
        of incorporation)                               Identification No.)

 480 North Sam Houston Parkway East
             Suite 300
           Houston, Texas                                     77060
(Address of principal executive offices)                    (zip code)

                                 (281) 820-1919
              (Registrant's telephone number, including area code)

                              GulfWest Energy Inc.
                                  (Former name)

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 (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  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).
                                            YES      NO   X
                                               -----    -----

The  number of shares  outstanding  of each of the  issuer's  classes  of common
stock, as of the latest practicable date, August 15, 2005, was 28,838,144 shares
of Common Stock, $.001 par value.


<PAGE>


                            CRIMSON EXPLORATION INC.

                         FORM 10-Q FOR THE QUARTER ENDED
                                  JUNE 30, 2005

<TABLE>
<CAPTION>

                                                                                         Page of
                                                                                        Form 10-Q
                                                                                        ---------
<S>                                                                                        <C>
Part I:  Financial Statements

Item 1.           Financial Statements
                    Consolidated Balance Sheets, June 30, 2005
                       and December 31, 2004                                                3
                    Consolidated Statements of Operations-for the three
                       months and six months ended June 30, 2005 and 2004                   5
                    Consolidated Statements of Cash Flows-for the six
                       months ended June 30, 2005 and 2004                                  6
                  Notes to Consolidated Financial Statements                                7

Item 2.           Management's Discussion and Analysis
                    of Financial Condition and Results
                    of Operations                                                          15

Item 3.           Quantitative and Qualitative Disclosures about Market Risk               18

Item 4.           Controls and Procedures                                                  19

Part II:          Other Information

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds              20

Item 4.           Submission of Matters to a Vote of Security Holders                      20

Item 6.           Exhibits                                                                 22

Signatures                                                                                 24

</TABLE>


                                       2


<PAGE>


                          PART I. FINANCIAL INFORMATION
                          -----------------------------

ITEM 1.  FINANCIAL STATEMENTS.
-------  ---------------------

                            CRIMSON EXPLORATION INC.
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>

                                                                       June 30,          December 31,
                                                                         2005                2004
                                                                     (Unaudited)           (Audited)
                                                                 -------------------  --------------------
<S>                                                              <C>                  <C>
CURRENT ASSETS
     Cash and cash equivalents                                   $        1,083,304   $           411,377
     Accounts receivable - net of allowance
          for doubtful accounts of $-0- in 2005 and 2004                  2,696,344             1,674,448
     Prepaid expenses                                                       220,929               128,717
                                                                 -------------------  --------------------
               Total current assets                                       4,000,577             2,214,542
                                                                 -------------------  --------------------

PROPERTY AND EQUIPMENT
     Oil and gas properties, using the successful efforts
           method of accounting                                          64,848,517            58,557,072
     Other property and equipment                                         1,394,485             1,437,206
      Less: accumulated depreciation, depletion and
          amortization                                                  (11,296,458)           (9,870,962)
                                                                 -------------------  --------------------

     Net property and equipment                                          54,946,544            50,123,316
                                                                 -------------------  --------------------

OTHER ASSETS
     Deposits                                                                 9,804                 9,804
     Investments                                                            261,209               274,362
     Debt issue cost, net                                                     2,640             1,756,316
     Deferred tax asset, net                                              4,172,353             3,322,551
     Derivative instruments                                                       -               175,273
                                                                 -------------------  --------------------
               Total other assets                                         4,446,006             5,538,306
                                                                 -------------------  --------------------

TOTAL ASSETS                                                     $       63,393,127    $       57,876,164
                                                                 ===================  ====================

</TABLE>


               The Notes to Consolidated Financial Statements are
                      an integral part of these statements.


                                       3

<PAGE>


                            CRIMSON EXPLORATION INC.
                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                    June 30,          December 31,
                                                                     2005                2004
                                                                  (Unaudited)         (Audited)
                                                                ----------------   ----------------
<S>                                                             <C>                <C>
CURRENT LIABILITIES
     Notes payable                                              $        40,300    $     4,916,568
     Notes payable - related parties                                  1,000,000          2,140,000
     Current portion of long-term debt                                   87,886         22,686,254
     Current portion of long-term debt - related parties                      -            112,192
     Accounts payable - trade                                         3,355,741          4,654,561
     Accrued expenses                                                   279,880            940,587
     Income taxes payable                                               118,255            118,255
     Derivative insruments                                            2,156,988          1,680,800
                                                                ----------------   ----------------
               Total current liabilities                              7,039,050         37,249,217
                                                                ----------------   ----------------

NONCURRENT LIABILITIES
     Long-term debt, net of current portion                              84,134            805,450
     Asset retirement obligations                                     1,183,176          1,144,854
                                                                ----------------   ----------------
               Total noncurrent liabilities                           1,267,310          1,950,304
                                                                ----------------   ----------------

OTHER LIABILITIES
     Derivative instruments                                             743,245                  -
                                                                ----------------   ----------------

               Total Liabilities                                      9,049,605         39,199,521
                                                                ----------------   ----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred stock                                                      1,033                253
     Common stock                                                        28,783             19,394
     Additional paid-in capital                                      72,679,741         34,062,502
     Retained deficit                                               (18,366,035)       (15,405,506)
                                                                ----------------   ----------------
               Total stockholders' equity                            54,343,522         18,676,643
                                                                ----------------   ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $    63,393,127    $    57,876,164
                                                                ================   ================

</TABLE>

               The Notes to Consolidated Financial Statements are
                      an integral part of these statements.


                                       4

<PAGE>


                            CRIMSON EXPLORATION INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                              Three Months                   Six Months
                                                             Ended June 30,                Ended June 30,
                                                           2005          2004          2005          2004
                                                      -------------  -------------  ------------  ------------
<S>                                                   <C>            <C>            <C>           <C>
OPERATING REVENUES
  Oil and gas sales                                   $  4,367,751   $  2,494,347   $ 8,001,911   $ 4,994,987
  Operating overhead and other income                       25,289         40,919        55,462        79,008
                                                      -------------  -------------  ------------  ------------
         Total operating revenues                        4,393,040      2,535,266     8,057,373     5,073,995
                                                      -------------  -------------  ------------  ------------

OPERATING EXPENSES
  Lease operating expenses                               1,364,998      1,284,972     2,765,862     2,599,256
  Depreciation, depletion and amortization                 835,231        437,043     1,491,009       876,245
  Dry holes, abandoned property and impaired assets        389,183        326,512       391,339       326,512
  Accretion expense                                         19,161         20,358        38,322        40,716
  General and administrative                               934,902        472,441     1,553,129       873,633
                                                      -------------  -------------  ------------  ------------
          Total operating expenses                       3,543,475      2,541,326     6,239,661     4,716,362
                                                      -------------  -------------  ------------  ------------

INCOME (LOSS) FROM OPERATIONS                              849,565         (6,060)    1,817,712       357,633
                                                      -------------  -------------  ------------  ------------

OTHER INCOME AND EXPENSE
  Interest expense                                         (18,099)    (1,014,609)   (1,216,600)   (1,934,777)
  Other financing costs                                     (5,000)      (369,270)   (1,910,159)     (369,270)
  Loss from equity in investments                          (36,159)             -       (36,159)            -
  Loss on sale of assets                                   (25,894)      (226,809)      (38,916)     (226,809)
  Unrealized gain (loss) on derivative instruments         618,775     (1,438,249)   (1,394,706)   (1,150,402)
  Forgiveness of debt                                            -     12,475,612             -    12,475,612
                                                      -------------  -------------  ------------  ------------
       Total other income and expense                      533,623      9,426,675    (4,596,540)    8,794,354
                                                      -------------  -------------  ------------  ------------

INCOME (LOSS) BEFORE INCOME TAXES                        1,383,188      9,420,615    (2,778,828)    9,151,987

INCOME TAXES                                              (537,889)             -       849,802             -
                                                      -------------  -------------  ------------  ------------

NET INCOME (LOSS)                                          845,299      9,420,615    (1,929,026)    9,151,987

DIVIDENDS ON PREFERRED STOCK                              (924,661)       (97,334)   (1,697,781)     (131,709)
                                                      -------------  -------------  ------------  ------------
NET INCOME (LOSS) AVAILABLE TO
  COMMON SHAREHOLDERS                                 $    (79,362)  $  9,323,281   $(3,626,807)  $ 9,020,278
                                                      =============  =============  ============  ============

NET INCOME (LOSS) PER COMMON SHARE,
 BASIC                                                $       (.00)  $        .50   $      (.15)  $       .49
                                                      =============  =============  ============  ============
       DILUTED                                        $       (.00)  $        .29   $      (.15)  $       .34
                                                      =============  =============  ============  ============

</TABLE>

               The Notes to Consolidated Financial Statements are
                      an integral part of these statements


                                       5

<PAGE>


                            CRIMSON EXPLORATION INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                             Six Months Ended June 30,
                                                                      -------------------------------------
                                                                             2005                2004
                                                                      -----------------   -----------------
<S>                                                                   <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                $     (1,929,026)   $      9,151,987
     Adjustments to reconcile net income (loss) to net cash
          Provided by operating activities:
               Depreciation, depletion and amortization                      1,491,009             876,245
               Accretion expense                                                38,322              40,716
               Stock option expense                                             19,670                   -
               Stock compensation expense                                       29,999                   -
               Debt issue cost expense                                       1,779,596                   -
               Discount on note payable                                        502,120             107,177
               Loss from equity  in investments                                 36,159                   -
               Deferred tax benefit                                           (849,802)                  -
               Forgiveness of debt                                                   -         (12,475,612)
               Note payable issued and charged to interest                           -              61,046
               Loss on sale of property and equipment                           38,915             226,809
               Dry holes, abandoned property and impaired assets                     -             326,512
               Unrealized loss on derivative instruments                     1,394,706           1,150,402
                Increase  in accounts receivable - trade, net               (1,010,646)           (449,463)
                (Increase ) decrease in prepaid expenses                       (92,212)             58,446
                Decrease in accounts payable and accrued expenses           (1,979,197)         (1,098,150)
                                                                      -----------------   -----------------
                         Net cash used in operating activities                (530,387)         (2,023,885)
                                                                      -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sale of property and equipment                             101,491                   -
      Capital expenditures                                                  (6,431,925)           (975,513)
                                                                      -----------------   -----------------
                         Net cash used in investing activities              (6,330,434)           (975,513)
                                                                      -----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of preferred stock, net                             38,212,517           3,393,601
     Proceeds from common stock warrants exercised                                 200                   -
     Payments on debt                                                      (31,815,988)        (17,176,706)
     Proceeds from debt issuance                                             1,820,000          18,830,258
     Debt issue cost                                                            (2,640)         (1,748,910)
     Dividends paid                                                           (681,341)                  -
                                                                      -----------------   -----------------
                         Net cash provided by financing activities           7,532,748           3,298,243
                                                                      -----------------   -----------------

INCREASE  IN CASH AND CASH EQUIVALENTS                                         671,927             298,845

CASH AND CASH EQUIVALENTS,
     Beginning of period                                                       411,377             483,618
                                                                      -----------------   -----------------

CASH AND CASH EQUIVALENTS,
     End of period                                                    $      1,083,304    $        782,463
                                                                      =================   =================

CASH PAID FOR INTEREST                                                $        718,768    $      1,506,352
                                                                      =================   =================


</TABLE>

               The Notes to Consolidated Financial Statements are
                     an integral part of these statements.


                                       6

<PAGE>


                    CRIMSON EXPLORATION INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (UNAUDITED)
1.   BASIS OF PRESENTATION

     During interim periods,  we follow the accounting policies set forth in our
     Annual  Report  on  Form  10-K  filed  with  the  Securities  and  Exchange
     Commission. Users of financial information produced for interim periods are
     encouraged  to refer to the  footnotes  contained in the Annual Report when
     reviewing interim financial results.

     On  June  29,  2005,  our  predecessor,   GulfWest  Energy  Inc.,  a  Texas
     corporation ("GulfWest"),  merged with and into Crimson Exploration Inc., a
     Delaware corporation ("Crimson"),  for the purpose of changing our state of
     incorporation   from  Texas  to  Delaware  (the   "Reincorporation").   The
     Reincorporation  was  accomplished  pursuant  to an  Agreement  and Plan of
     Merger, dated June 28, 2005, which was approved by GulfWest's  shareholders
     at the 2005 Annual Shareholders' Meeting held June 1, 2005.

     The  accompanying   financial   statements  include  the  Company  and  its
     wholly-owned  subsidiaries:  RigWest Well Service, Inc. formed September 5,
     1996;  GulfWest  Texas Company  formed  September  23, 1996;  DutchWest Oil
     Company formed July 28, 1997;  Southeast Texas Oil and Gas Company,  L.L.C.
     acquired  September 1, 1998;  SETEX Oil and Gas Company  formed  August 11,
     1998;  GulfWest Oil & Gas Company formed February 8, 1999; LTW Pipeline Co.
     formed April 19, 1999;  GulfWest  Development  Company  formed  November 9,
     2000; GulfWest Oil & Gas Company (Louisiana) LLC formed July 31, 2001; and,
     S.G.C.   Transmission,   LLC  formed   December  30,  1993.   All  material
     intercompany transactions and balances are eliminated upon consolidation.

     As a result of our April 27, 2004  refinancing  we recorded  $11,884,145 in
     forgiveness of debt and a hedging liability of $591,467 was eliminated.  At
     December  31, 2004 we  reclassified  the  eliminated  hedging  liability to
     forgiveness  of debt.  This  reclassification  is reflected in the June 30,
     2004  periods.   Certain   other  prior  period   amounts  have  also  been
     reclassified to conform with current year presentations.

     In management's  opinion,  the accompanying  interim  financial  statements
     contain  all  material  adjustments,  consisting  only of normal  recurring
     adjustments  necessary  to present  fairly  the  financial  condition,  the
     results of operations,  and the cash flows of Crimson  Exploration Inc. for
     the interim periods.

2.   NON-CASH INVESTING AND FINANCING ACTIVITIES

     During the six month  period  ended June 30,  2005 we settled  $350,163  in
     dividends by issuing  377,917  shares of common stock and we issued  29,100
     shares of  common  stock to  satisfy  and  record a $23,280  fee for a loan
     extension prior to the sale of the Series G Preferred Stock. In addition we
     recorded  $29,999 in director fee expense  associated  with the issuance of
     34,090  shares  of  common  stock  to  directors  under  the  new  Director
     Compensation  Plan. Also, on March 30, 2005 one of our employees  exercised
     25,000  common  stock  options for $11,250  which is recorded as an account
     receivable.  Under our  cashless  exercise  procedures,  the stock has been
     posted for sale by a broker  and the  receivable  will be settled  when the
     stock is sold.  During the period,  we  invested  $23,006 in an oil and gas
     partnership by contributing our cost basis in undrilled oil and gas leases.
     In addition, we financed new field trucks for the $45,724 cost.

     During the six month period  ended June 30, 2004,  we issued a note payable
     for $600,000 in exchange for an account payable for $538,954 and $61,046 in
     related  interest  expense was  recorded.  Also,  in  conjunction  with the
     refinancing of debt in April 2004; we issued common stock  warrants  valued


                                       7

<PAGE>


     at $916,029 which were recorded as a note discount,  we issued  $500,000 of
     preferred stock of a wholly owned subsidiary as a commission to a financial
     advisor,  we recorded a $360,000  payable for a loan termination fee and we
     obtained and recorded $12,475,612 in debt forgiveness.

3.   DERIVATIVE INSTRUMENTS

     In the past we have entered into, and may in the future enter into, certain
     derivative arrangements with respect to portions of our oil and natural gas
     production to reduce our sensitivity to volatile  commodity prices.  During
     2005 and  2004,  we  entered  into  price  swaps  and put  agreements  with
     financial  institutions.  We believe  that these  derivative  arrangements,
     although not free of risk, allow us to achieve a more predictable cash flow
     and  to  reduce  exposure  to  price  fluctuations.   However,   derivative
     arrangements  limit the benefit to us of  increases  in the prices of crude
     oil and natural gas sales. Moreover, our derivative arrangements apply only
     to a portion of our  production  and provide only partial price  protection
     against  declines  in price.  Such  arrangements  may  expose us to risk of
     financial loss in certain circumstances.  We expect that the monthly volume
     of derivative  arrangements  will vary from time to time.  We  continuously
     reevaluate  our price hedging  program in light of increases in production,
     market  conditions,  commodity price  forecasts,  capital spending and debt
     service  requirements.  The following derivatives were in place at June 30,
     2005 or were  added  subsequent  to that  date  and are  effective  for the
     production periods shown.

<TABLE>
<CAPTION>
                                                                                                       Fair Value
                                                                                                         Asset
               Crude Oil                              Volume/ Month        Average Price/ Unit        (Liability)
               ---------                              -------------        -------------------        -----------
<S>                                         <C>        <C>                        <C>                     <C>
May 2004 thru October 2005                 Swap        10,000 Bbls                $32.00             $  ( 1,277,168)
April  2005 thru June 2005                 Swap          2,000 Bbls               $56.50             $          161
July 2005 thru October 2005                Swap          1,000 Bbls               $56.50             $       (6,131)
November 2005 thru December 2005           Swap        11,000 Bbls                $56.50             $      (59,078)
January 2006 thru March 2006              Collar       10,000 Bbls     Floor $50.00-$59.00 Ceiling   $     (114,183)
April 2006 thru December 2006             Collar         9,000 Bbls    Floor $50.00-$59.00 Ceiling   $     (290,889)
January 2007 thru  December 2007          Collar         3,000 Bbls    Floor $45.00-$59.45 Ceiling   $     (156,046)

</TABLE>

<TABLE>
<CAPTION>

                                                                                                       Fair Value
                                                                                                         Asset
               Natural Gas                            Volume/ Month        Average Price/ Unit        (Liability)
               -----------                            -------------        -------------------        -----------
<S>                                         <C>        <C>                        <C>                     <C>
June 2004 thru October 2005                Swap       60,000 MMBTU                $5.15              $    ( 431,230)
April  2005 thru June 2005                 Swap       20,000 MMBTU                $7.45              $            -
July 2005 thru October 2005                Swap       10,000 MMBTU                $7.45              $       19,639
November 2005 thru December 2005           Swap       70,000 MMBTU                $7.45              $      (19,668)
January 2006 thru December 2006           Collar      70,000 MMBTU      Floor $6.00-$8.25 Ceiling    $     (367,919)
January 2007 thru December 2007           Collar      20,000 MMBTU      Floor $6.00-$6.95 Ceiling    $     (202,123)

</TABLE>

     These volumes represent  approximately 75% of the estimated production (for
     both oil and natural gas) on current  proved  producing  properties for the
     remainder  of  2005  and  for  2006  and  approximately  30%  of  estimated
     production for 2007.

     We also had the  following  put options in place at June 30, 2005,  for the
     months reflected.

<TABLE>
<CAPTION>

                                                                                   Fair Value
                                                                                      Asset
         Crude Oil                      Monthly Volume        Price per Bbl       (Liability)
         ---------                      --------------        -------------       -----------
<S>                                       <C>                   <C>               <C>
November 2005 thru April 2006             7,000 Bbls            $25.75 put        $        212
May 2006 thru October 2006                6,000 Bbls            $25.75 put        $      1,288
November 2006 thru April 2007             5,000 Bbls            $25.75 put        $      2,902

</TABLE>


                                       8

<PAGE>


     The following puts on natural gas were terminated effective April 1, 2005.


                  Natural Gas          Monthly Volume         Price per MMBTU
                  -----------          --------------         ---------------
November 2005 thru April 2006           50,000 MMBTU             $4.50 put
May 2006 thru October 2006              40,000 MMBTU             $4.50 put
November 2006 thru April 2007           30,000 MMBTU             $4.50 put

     At the end of each  reporting  period we are required by SFAS 133 to record
     on our  balance  sheet the  marked to market  valuation  of our  derivative
     instruments. These valuations are based on the NYMEX strip prices for those
     future  periods,  as of the  balance  sheet  date.  As a  result  of  these
     agreements,  we  recorded  a non-cash  charge to  earnings,  for  unsettled
     contracts, of $1,394,706 for the six month period ended June 30, 2005 and a
     charge of  $1,150,402  for the six month period  ended June 30,  2004.  For
     settled  contracts,  during the six month periods we realized a cash charge
     to earnings of $1,469,718  for the six month period ended June 30, 2005 and
     $702,649 for the six month  period ended June 30, 2005,  which are included
     in oil and gas sales.

     The estimated  change in fair value of the derivatives is reported in Other
     Income and Expense as unrealized (gain) loss on derivative instruments.

4.   STOCK BASED COMPENSATION

     In October 1995, SFAS No. 123, "Stock Based  Compensation,"  (SFAS 123) was
     issued.  This  statement  requires  that we choose  between  two  different
     methods of accounting for stock options and warrants. The statement defines
     a fair-value-based  method of accounting for stock options and warrants but
     allows an entity to continue to measure compensation cost for stock options
     and warrants  using the  accounting  prescribed  by APB Opinion No. 25 (APB
     25),  "Accounting  for  Stock  Issued  to  Employees."  Use of  the  APB 25
     accounting  method  results in no  compensation  cost being  recognized  if
     options are granted at an exercise price at the current market value of the
     stock on the date of grant or higher. We will continue to use the intrinsic
     value  method  under APB 25 but are  required by SFAS 123 to make pro forma
     disclosures  of net income  (loss) and earnings  (loss) per share as if the
     fair  value  method  had  been  applied  in our  2005  and  2004  financial
     statements.

     We use the Black Sholes option  pricing model to estimate the fair value of
     the options. If we had used the fair value method required by SFAS 123, our
     net loss and per share information would approximate the following amounts:

<TABLE>
<CAPTION>

     Three Months                          2005                             2004
     -----------------------  ------------------------------  ------------------------------
                                As Reported          Proforma    As Reported       Proforma
<S>                            <C>                 <C>           <C>              <C>
     SFAS 123
         compensation cost     $                   $  624,204    $                $     5,250
     APB 25
         compensation cost     $  (50,580)         $   50,580    $                $
     Net income (loss)         $  (79,362)         $ (754,146)   $ 9,323,281      $ 9,318,031
     Income (loss) per
         common share,
         Basic                 $     (.00)         $     (.03)   $       .50      $       .50
         Diluted               $     (.00)         $     (.03)   $       .29      $       .29
     ----------------------------------------------------------------------------------------

</TABLE>


                                       9

<PAGE>


<TABLE>
<CAPTION>

     Six Months                             2005                            2004
     -----------------------  ------------------------------  ------------------------------
                                As Reported          Proforma    As Reported       Proforma
<S>                            <C>                 <C>           <C>              <C>
     SFAS 123
         compensation cost     $                   $   765,729   $                $    5,250
     APB 25
         compensation cost     $    19,670         $   (19,670)  $                $
     Net income (loss)         $(3,626,807)        $(4,372,866)  $ 9,020,278      $9,015,028
     Income (loss) per
         common share,
         Basic                 $      (.15)        $      (.18)  $       .49      $      .49
         Diluted               $      (.15)        $      (.18)  $       .34      $      .34
     ---------------------------------------------------------------------------------------

</TABLE>

     On December 16,  2004,  the  Financial  Accounting  Standards  Board (FASB)
     issued FASB Statement No. 123 (revised 2004), Share-Based Payments which is
     a  revision  of FASB No.  123,  Accounting  for  Stock-Based  Compensation.
     Statement  123 (R)  supercedes  APB  opinion No. 25,  Accounting  for Stock
     Issued to Employees,  and amends FASB  Statement No. 95,  Statement of Cash
     Flows.  Generally,  the  approach  in  Statement  123 (R) is similar to the
     approach  described in Statement 123.  However,  Statement 123 (R) requires
     all share-based  payments to employees,  including grants of employee stock
     options,  to be  recognized  in the  income  statement  based on their fair
     values.  Pro  forma  disclosure  will  no  longer  be an  alternative.  The
     effective date of this statement will be our first quarter of 2006.

5.   FINANCING ACTIVITY

     On April 27, 2004, we completed an $18,000,000  financing  package with new
     energy lenders.  We used  $15,700,000 in net proceeds from the financing to
     retire  existing debt of  $27,584,145,  resulting in forgiveness of debt of
     $12,475,612,  the elimination of a hedging  liability and the return to the
     Company  of  Series  F  Preferred  Stock  with  an  aggregate   liquidation
     preference  of  $1,000,000  (this  preferred  stock,  at the request of the
     Company,  was transferred by the previous lender to a financial  advisor to
     the Company and to two  affiliated  companies).  The taxable gain resulting
     from  these  transactions  will  be  completely  offset  by  available  net
     operating loss carryforwards for income tax purposes.  The term of the note
     was  eighteen  months and it bore  interest at the prime rate plus 11%. The
     rate  increased  by .75% per month  beginning in month ten. We paid the new
     lenders  $1,180,000  in cash fees and also issued them warrants to purchase
     2,035,621  shares  of our  common  stock at an  exercise  price of $.01 per
     share, expiring in five years (exercised in April, 2005). The warrants were
     subject to anti-dilution  provisions.  In connection with the February 2005
     transactions  described  below, the  anti-dilution  provisions were amended
     such that  additional  issuances  of stock  (other  than  issuances  to all
     holders)  would not trigger an adjustment to the number of shares  issuable
     upon exercise of the warrants.

     On January 7, 2005,  we amended our April 2004 credit  agreement  to extend
     the target date for  repayment  to February 28,  2005.  We  exercised  this
     option on January 26, 2005 and issued  29,100 shares of our common stock in
     connection with this amendment.

     On February 28, 2005, we sold in a private placement,  81,000 shares of our
     Series G Preferred Stock to OCM GW Holdings, LLC ("OCMGW") for an aggregate
     offering price of $40.5 million.  GulfWest Oil and Gas Company,  ("GWOG") a
     subsidiary of the Company, issued, in a private placement,  2,000 shares of
     our Series A  Preferred  Stock,  having a  liquidation  preference  of $1.0
     million,  to OCMGW for $1.5  million.  Net  proceeds  of the  offerings  of
     approximately  $38.2 million after  expenses were used for the repayment of
     substantially  all of our  outstanding  debt and other past due liabilities
     and for general corporate purposes.


                                       10

<PAGE>


     The  Series  G  Preferred  Stock  bears a  coupon  of 8% per  year,  has an
     aggregate  liquidation  preference of $40.5 million (excluding  accumulated
     undeclared dividends),  is convertible into common stock at $0.90 per share
     and is senior to all of our capital  stock.  For the first four years after
     issuance,  we may defer the payment of  dividends on the Series G Preferred
     Stock and these deferred dividends will also be convertible into our common
     stock at $0.90 per share.  In  addition,  the Series G  Preferred  Stock is
     entitled  to  nominate  and elect a majority of the members of our Board of
     Directors.

     In connection with these  recapitalization  transactions,  the terms of the
     Series A Preferred Stock were amended such that by March 15, 2005, all such
     stock would either convert into a newly created Series H Preferred Stock on
     a one for one basis or into common stock at a conversion price of $0.35 per
     share. The Series H Preferred Stock is required to be paid a dividend of 40
     shares of common stock per share of Series H Preferred  Stock per year.  At
     March  15,  2005,  holders  of 6,700  shares of  Series A  Preferred  Stock
     converted to Series H Preferred Stock and holders of 3,250 shares of Series
     A Preferred  Stock  converted  to an aggregate  4,642,859  shares of common
     stock. One Series H Preferred Stock holder converted its shares of Series H
     Preferred  Stock into 285,715  shares of common stock.  In April,  2005, an
     additional  1,250 shares  converted  into  1,785,714 of common  stock.  The
     outstanding   Series  H  Preferred  Stock  has  an  aggregate   liquidation
     preference of $2.625 million. The Series H Preferred Stock is senior to all
     of our capital stock other than Series G Preferred Stock.

     In addition, we amended the terms of our 9,000 shares of Series E Preferred
     Stock such that the coupon of 6% per year may be deferred for the next four
     years and these deferred dividends will be convertible into common stock at
     conversion price of $0.90 per share. The original liquidation preference of
     the Series E Preferred  Stock of $500 per share  remains  convertible  into
     common  stock at $2.00  per  share.  The  Series E  Preferred  Stock has an
     aggregate  liquidation  preference of $4.5 million  (excluding  accumulated
     undeclared  dividends),  and is senior to all of our common stock, of equal
     preference  with our Series D Preferred  Stock as to liquidation and junior
     to our Series G and Series H Preferred Stock.

     On May 17, 2005,  we executed a  promissory  note for the benefit of OCM GW
     Holdings, in the principal amount of $1 million,  payable on the earlier of
     July 17,  2005 or the day on which we are able to make draws under a credit
     facility  under which greater than $1 million may be borrowed.  Interest on
     the unpaid principal accrued at 4.59% per annum. We repaid the note in full
     on July 19, 2005 from borrowings  under our new $100 million senior secured
     revolving credit facility.

     On July 15, 2005, we entered into a $100 million senior  secured  revolving
     credit  facility with Wells Fargo Bank,  National  Association.  Borrowings
     under  the  new  credit  facility  will  be  subject  to a  borrowing  base
     limitation  based on our current  proved oil and gas reserves.  The initial
     borrowing  base is set at $20  million  and will be subject to  semi-annual
     redeterminations,  with the first  redetermination  to be December 1, 2005.
     The facility will be secured by a lien on all our assets, and the assets of
     our  subsidiaries,  as well as a security  interest in the stock of all our
     subsidiaries.  The  credit  facility  has a term of  three  years,  and all
     principal amounts,  together with all accrued and unpaid interest,  will be
     due and  payable in full on June 30,  2008.  Proceeds  from  extensions  of
     credit  under  the  facility  will  be  for  acquisitions  of oil  and  gas
     properties and for general corporate  purposes.  The facility also provides
     for the  issuance of  letters-of-credit  up to a $3 million  sub-limit.  On
     August 15,  2005,  the  outstanding  balance  under our  facility  was $1.5
     million.

     Advances  under the facility  will be in the form of either base rate loans
     or Eurodollar  loans.  The interest rate on the base rate loans  fluctuates
     based upon the higher of (1) the lender's  "prime rate" and (2) the Federal
     Funds rate, plus a margin of 0.50%,  plus a margin of between 0.0% and 0.5%
     depending on the percent of the borrowing  base utilized at the time of the
     credit  extension.  The interest rate on the  Eurodollar  loans  fluctuates
     based upon the rate at which  Eurodollar  deposits in the London  Interbank
     market  ("Libor")  are quoted for the maturity  selected,  plus a margin of
     1.25% to 2.00%  depending on the percent of the borrowing  base utilized at


                                       11

<PAGE>


     the time of the credit  extension.  Eurodollar  loans of one, three and six
     months  may be  selected  by us. A  commitment  fee of 0.375% on the unused
     portion of the  borrowing  base will  accrue,  and be payable  quarterly in
     arrears.

     The credit agreement includes usual and customary affirmative covenants for
     credit  facilities  of this type and size,  as well as  customary  negative
     covenants,  including, among others, limitation on liens, hedging, mergers,
     asset  sales  or  dispositions,   payments  of  dividends,   incurrence  of
     additional  indebtedness,  certain  leases and  investments  outside of the
     ordinary  course of  business.  The credit  agreement  also  requires us to
     maintain a ratio of current assets to current liabilities,  except that any
     availability  under the borrowing base will be considered as an addition to
     current  assets,  and any  current  assets or  liabilities  resulting  from
     hedging  agreements  will be excluded,  of at least 1.0 to 1.0, an interest
     coverage ratio of EBITDAX  (earnings before interest,  taxes,  depreciation
     and amortization  and exploration  expense) to cash interest expense of 3.0
     to 1.0 and a  tangible  net  worth  of at least  $45  million,  subject  to
     adjustment  based on future  results of operations  and any sales of equity
     securities.   EBITDAX  and  tangible  net  worth  are  calculated   without
     consideration of unrealized  gains and losses related to stock  derivatives
     accounted for under variable accounting rules for commodity hedges. At June
     30, 2005 we were in compliance with the aforementioned financial covenants.

6.   NOTES PAYABLE

     Notes payable and related party notes payable are as follows:

<TABLE>
<CAPTION>


                                                                                   June 30,        December 31,
                                                                                     2005              2004
                                                                                ---------------  ---------------
     <S>                                                                         <C>              <C>
     Non-interest bearing note payable to an unrelated party;
          payable out of 50% of the net transportation revenues
          from a certain natural gas pipeline that is not yet in
          service; no due date.                                                  $      40,300    $      40,300

     Promissory note payable to a former director at 8%; due
          May, 2001; unsecured. Retired March, 2005.                                                     40,000

     Promissory note payable to an unrelated party at 10%; payable on demand;
      unsecured. Retired March, 2005.                                                                     5,000

     Promissory note payable to an unrelated party; payable on demand; interest
      at 8%; interest increased to 12% on January 1, 2003; secured by certain
      oil and gas properties. Retired March, 2005.                                                      180,000

     Note payable to a bank; due July, 2004; secured by guaranty
         of a director; interest at prime rate (prime rate 5.25% at
     December 31, 2004 with a floor of 4.75% and a
     ceiling of 8.0%. Retired February, 2005.                                                           948,291

     Promissory note payable to unrelated party; interest at 6%; due June, 2003.
      Retired January, 2005.                                                                             55,300

     Promissory note payable to one of our directors; interest at
          8%; due on demand; unsecured. Retired March, 2005.                                             50,000

     Promissory note payable to one of our directors; interest at
          prime rate (prime rate 5.25% at December 31, 2004); due
          May, 2003; secured by Common Stock of DutchWest Oil
          Company, our wholly owned subsidiary.  Retired March,
          2005.                                                                                       1,450,000

</TABLE>


                                       12

<PAGE>


<TABLE>
<CAPTION>

<S>                                                                                    <C>              <C>
     Promissory note payable to an unrelated party at 8%; due
          June 2003; secured by 4% in the last draft of the
          Common Stock of DutchWest Oil Company, our wholly
          owned subsidiary. Retired March, 2005.                                                        100,000

     Promissory note payable to an unrelated party at 8%; due
          May 2003; secured by 8% of the Common Stock of
          DutchWest Oil Company, our wholly owned subsidiary.
          Retired March, 2005.                                                                          140,000

     Note payable to an entity owned by two directors of the
          company, due September 2004; interest at prime plus
          2% (prime rate 5.25% at December 31, 2004).  Secured
          by oil and gas leases. Retired March, 2005.                                                   600,000


     Line of credit (up to $3,500,000) to a bank; due June 2004;
          secured by the guaranty of a director; interest at prime
          rate (prime rate 5.25% at December 31, 2004) with a
          floor of 4.75% and a ceiling of 8.0%.  Retired February,
          2005.                                                                                       3,447,677
     Note payable to a related party, due July 2005, interest at 4.59%.
          Retired July, 2005.                                                        1,000,000
                                                                                ---------------  ---------------
                                                                                 $   1,040,300    $   7,056,568
                                                                                ===============  ===============

</TABLE>



     Long-term debt is as follows:

<TABLE>
<CAPTION>


                                                                                 June 30, 2005     December 31
                                                                                                      2004
                                                                                ---------------  ---------------
<S>                                                                         <C>              <C>
Line of credit (up to $3,000,000) to a bank; due July, 2005; secured
     by the guaranty of a director; interest greater  prime rates less
     .25% or 5.25% (prime note 5.25% at December 31, 2004); retired
     February 2005.                                                              $                $   2,995,488

Subordinated promissory notes to various individuals at 9.5%
     interest per annum; amounts include $50,000 due to related
     parties.  Retired $100,000 March, 2005.                                            50,000          150,000

Notes payable to finance vehicles, payable in aggregate monthly
     installments of approximately $4,000, including interest of  9% to
     13% per annum; secured by the related equipment; due various
     dates through 2010.                                                               122,020           99,900

Promissory note to a director; interest at 8.5%; due December 31,
     2003.  Retired March, 2005.                                                                         62,192

Note payable to lender; interest at prime plus 11% (prime rate 5.25%
     at December 31, 2004) interest only; due October,2006; secured
     by related oil and gas properties. Retired February, 2005.                                      19,021,880

</TABLE>


                                       13

<PAGE>


<TABLE>
<CAPTION>

<S>                                                                         <C>              <C>
Note payable to a bank with monthly principal payments of $36,000;
     interest at prime plus 1% (prime rate 5.25% at December 31, 2004
     with a minimum prime rate of  5.5%; final payment due November,
     2003; secured by related oil and gas properties; extended to July,
     2007. Retired February, 2005.                                                                    1,224,000

Note payable to unrelated party to finance saltwater disposal well
     with monthly installments of $4,540, including interest at 10%
     per annum; final payment due January, 2005; secured by related
     well.  Retired March, 2005.                                                                         50,436

                                                                                ---------------  ---------------
                                                                                       172,020       23,603,896
Less current portion                                                                    87,886      (22,798,446)
                                                                                ---------------  ---------------
Total long-term debt                                                             $      84,134    $     805,450
                                                                                ===============  ===============

</TABLE>

7.   TAXES

     For the six month  period ended June 30, 2005 we incurred a taxable loss of
     approximately $2.8 million and tax differences of approximately $.9 million
     resulting  in an  approximately  $.8 million  increase in our  deferred tax
     asset.  We expect to fully  utilize this increase in deferred tax assets in
     the future.  Deferred tax assets are shown net of a $2.5 million  valuation
     allowance.  The valuation  allowance was recorded because we expect we will
     not be able to use net operating loss  carryforwards of approximately  $6.6
     million due to the limitations of Internal Revenue Code Section 382.

8.   STOCKHOLDERS EQUITY

     The  following  table sets forth the  changes in the  stockholder's  equity
     during the period ended June 30, 2005.

<TABLE>
<CAPTION>

                                                 NUMBER OF SHARES
                                          ------------------------------
                                             PREFERRED       COMMON       COMMON      PREFERRED     ADDITIONAL      RETAINED
                                               STOCK          STOCK        STOCK        STOCK     PAID-IN CAPITAL    DEFICIT
                                          --------------------------------------------------------------------------------------
<S>                                               <C>        <C>             <C>             <C>     <C>           <C>
BALANCE DECEMBER 31, 2004                         25,290     19,393,969      $19,394         $253    $34,062,502   $(15,405,506)
Common stock issued for services and fees                        63,190           63                      53,216
Preferred stock issued
  Series A                                         2,000                                       20      1,499,980
  Series G                                        81,000                                      810     36,711,706
Preferred stock conversions
  Series A to common stock                        (3,250)     4,642,859        4,643          (33)        (4,610)
  Series F to common stock                          (340)       170,000          170           (3)          (167)
  Series H to common stock                        (1,450)     2,071,429        2,072          (14)        (2,057)
Common stock dividends paid
  Series A Preferred                                            356,250          356                     330,956
  Series H Preferred                                             21,667           22                      18,828
Options and warrants exercised                                2,063,224        2,063                       9,387
Current year loss                                                                                                    (1,929,026)
Dividends paid on preferred stock                                                                                    (1,031,503)
                                          --------------------------------------------------------------------------------------
BALANCE JUNE 30, 2005                            103,250     28,782,588      $28,783       $1,033    $72,679,741   $(18,366,035)
                                          ======================================================================================

</TABLE>


     Also during the period the  holders of the  remaining  6,700  shares of the
     Series A Preferred Stock, of our wholly owned  subsidiary  GulfWest Oil and
     Gas Company, converted to our Series H Preferred Stock.


                                       14

<PAGE>

     Dividends  on all  classes  of our  preferred  stock are  cumulative  until
     declared as payable by our Board of Directors. Our Series E Preferred Stock
     accumulates  at 6% per annum  payable  in cash,  Series G  Preferred  Stock
     accumulates  at 8% per annum  payable in cash and Series H Preferred  Stock
     accumulates  at 40 shares  of our  common  stock per share of the  Series H
     Preferred Stock per annum.

     The  following  table  sets  forth  the  accumulated  value  of  undeclared
     dividends of our preferred stock at June 30, 2005.

Series E Preferred Stock          $         90,986
Series G Preferred Stock                 1,091,836
Series H Preferred Stock                    56,499
                                -------------------
                                  $      1,239,321
                                ===================

     The Series E and Series G dividends are  convertible to our common stock at
     $.90 per common  share.  The  Series H  Preferred  Stock has no  conversion
     feature for unpaid dividends. These dividends call for payment of 10 common
     shares per quarter for each preferred share. Payments are current.

     ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS
     -------    ------------------------------------
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                ------------------------------------------------

     Overview.
     ---------
     We are primarily engaged in the acquisition,  development, exploitation and
     production of crude oil and natural gas, primarily in the onshore producing
     regions of the United States.  Our focus is on increasing  production  from
     our existing  properties  through  further  exploitation,  development  and
     exploration, and on acquiring additional interests in undeveloped crude oil
     and  natural  gas  properties.  Our gross  revenues  are  derived  from the
     following sources:

     1.   Oil and gas  sales  that are  proceeds  from the sale of crude oil and
          natural gas production to midstream  purchasers.  This represents over
          98% of our gross revenues.

     2.   Operating  overhead and other income that  consists of  administrative
          fees received for operating  crude oil and natural gas  properties for
          other working  interest  owners,  and for  marketing and  transporting
          natural gas for those owners.  This also includes  earnings from other
          miscellaneous activities.

     The following is a discussion of our  consolidated  results of  operations,
     financial condition and capital resources.  You should read this discussion
     in conjunction  with our  Consolidated  Financial  Statements and the Notes
     thereto contained elsewhere herein.

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

     The factors which most  significantly  affect our results of operations are
     (1) the sales  price of crude oil and natural  gas,  (2) the level of total
     sales volumes of crude oil and natural gas, (3) the cost and  efficiency of
     operating our own properties, (4) depletion and depreciation of oil and gas
     property costs and related  equipment,  (5) the level of and interest rates
     on  borrowings,  and (6) the level and success of  acquiring or finding new
     reserves,  and the acquisition,  finding and development  costs incurred in
     adding these reserves.

     We  consider  depletion  and  depreciation  of oil and gas  properties  and
     related support equipment to be critical accounting  estimates,  based upon
     estimates of total recoverable oil and gas reserves.

     The  estimates  of oil and gas  reserves  utilized  in the  calculation  of
     depletion and  depreciation  are estimated in  accordance  with  guidelines
     established  by the  Securities  and Exchange  Commission and the Financial
     Accounting  Standards  Board,  which  require  that  reserve  estimates  be


                                       15

<PAGE>


     prepared under existing economic and operating conditions with no provision
     for price and cost  escalations  over  prices and costs  existing at period
     end, except by contractual arrangements.

     We emphasize that reserve estimates are inherently imprecise.  Accordingly,
     the  estimates are expected to change as more current  information  becomes
     available.  Our policy is to amortize  capitalized oil and gas costs on the
     unit of  production  method,  based upon  these  reserve  estimates.  It is
     reasonably possible that the estimates of future cash inflows, future gross
     revenues, the amount of oil and gas reserves, the remaining estimated lives
     of the oil and gas properties,  or any combination of the above will change
     in the future.

     Comparative  results of operations for the periods  indicated are discussed
     below.

     Three-Month Period Ended June 30, 2005 compared to Three Month Period Ended
     June 30, 2004.

     Revenues

     Oil and Gas Sales.  During the second  quarter,  revenues  from the sale of
     crude  oil and  natural  gas,  net of  realized  losses  from  our  hedging
     instruments,  increased 75% from  $2,494,300 in 2004 to $4,367,800 in 2005.
     Losses realized on our hedges during the 2005 quarter were $609,600 for oil
     and $203,600 for gas,  compared to $197,300 for oil and $129,100 for gas in
     the 2004 quarter.  The  significant  increase in revenues was due to higher
     oil and gas sales  volumes and higher crude oil and natural gas prices,  as
     further described below.

     In the second  quarter of 2005,  our sales  volumes were 47,771  barrels of
     crude  oil  and  420,657  Mcf  of  natural  gas,  or  707,283  natural  gas
     equivalents  (mcfe) compared to 41,613 barrels of crude oil and 230,247 Mcf
     of natural gas, or 479,925 Mcfe in the second  quarter of 2004.  On a daily
     basis we  produced  an average of 7,772 Mcfe in the second  quarter of 2005
     compared  to a daily  average  of 5,274  Mcfe in the 2004  quarter.  Higher
     natural  gas and  crude  oil  sales  volumes  were a direct  result  of the
     development  program  we began in late  2004,  and  expanded  in 2005.  The
     development program included our drilling and completing 2 new gas wells in
     east Texas in early 2005, the completion of workover and facility  projects
     at our Grand Lake and  Lacassine  fields in  southwest  Louisiana,  and the
     workover of gas wells in south Texas. These successful new oil and gas well
     completions  not only offset the loss of production  from property sales in
     2004,  but also allowed us to achieve the 47% increase in  production  rate
     from second quarter 2004 to second quarter 2005.

     Oil and gas prices are reported  net of the realized  effect of our hedging
     agreements.  Prices  realized  were $37.26 per Bbl and $6.15 per Mcf in the
     second  quarter of 2005 compared to $30.41 per Bbl and $5.34 per Mcf in the
     second quarter of 2004. Prices before the effects of the hedging agreements
     were  $50.02  per  Bbl and  $6.64  per Mcf in the  second  quarter  of 2005
     compared to $35.15 per Bbl and $5.90 per Mcf in the second quarter of 2004.

     Operating  Overhead  and  Other  Income.  Revenues  from  these  activities
     decreased  from $40,900 in 2004 to $25,300 in 2005,  due primarily to lower
     overhead recoveries on company-operated properties.

     Costs and Expenses

     Lease Operating  Expenses.  Overall,  lease operating expenses increased 6%
     from  $1,285,000 in 2004 to $1,365,000 in 2005.  Considering the properties
     sold in the third quarter of 2004,  operating  expenses  increased 35% from
     2004  to  2005.  Approximately  two-thirds  of  this  increase  was  due to
     increased production taxes, compression costs and salt water disposal costs
     related to higher sales  volumes.  The  remainder  was due to higher vendor
     prices.


                                       16

<PAGE>


     On a per unit basis,  expenses  decreased  from $2.68 per Mcfe in 2004,  to
     $1.93 per Mcfe in 2005. This decrease in lifting cost was due to the higher
     sales  volumes  and the sale of the two higher  lifting  cost fields in the
     third quarter of 2004.

     Depreciation,  Depletion and Amortization  (DD&A).  DD&A increased 91% from
     $437,000 in 2004 to $835,200 in 2005 due to higher production volumes,  and
     from an  increase  in the DD&A rate per unit from  $.91per  Mcfe in 2004 to
     $1.18 per Mcfe in 2005.

     General and Administrative  (G&A) Expenses.  Our G&A expenses increased 98%
     from  $472,400 in 2004 to $934,900 in 2005 due to the recent  additions  to
     our  management  team to carry out our growth  plan.  On a per unit  basis,
     expenses increased from $.98 per Mcfe in 2004 to $1.32 per Mcfe in 2005.

     Interest Expense. Interest expense decreased 98% from $1,014,600 in 2004 to
     $18,100 in 2005,  primarily due to retirement of debt  associated  with our
     February, 2005 recapitalization.

     Six-Month  Period  Ended June 30, 2005  compared to Six- Month Period Ended
     June 30, 2004.

     Revenues

     Oil and Gas Sales.  During the six month period  ended June 2005,  revenues
     from the sale of crude oil and natural gas, net of realized losses from our
     hedging instruments, increased 60% from $4,995,000 in 2004 to $8,001,900 in
     2005. Losses realized on our hedges during 2005 were $1,144,900 for oil and
     $324,800 for gas,  compared to $406,400 for oil and $296,200 for gas in the
     2004.  The  significant  increase in revenues was due to higher oil and gas
     sales  volumes and higher  crude oil and  natural  gas  prices,  as further
     described below.

     For the period in 2005,  our sales volumes were 92,479 barrels of crude oil
     and 764,672 Mcf of natural gas, or 1,319,546 natural gas equivalents (mcfe)
     compared to 86,797  barrels of crude oil and 484,003 Mcf of natural gas, or
     1,004,785 Mcfe in the 2004 period.  On a daily basis we produced an average
     of 7,290 Mcfe in the six month period of 2005  compared to a daily  average
     of 5,551 Mcfe in the 2004  period.  Higher  natural gas and crude oil sales
     volumes were a direct  result of the  development  program we began in late
     2004, and expanded in 2005. The development  program  included our drilling
     and  completing 2 new gas wells in east Texas in early 2005, the completion
     of workover and facility projects at our Grand Lake and Lacassine fields in
     southwest  Louisiana,  and the workover of gas wells in south Texas.  These
     successful  new oil and gas well  completions  not only  offset the loss of
     production  from property sales in 2004, but also allowed us to achieve the
     31%  increase in  production  rate from the period in 2004 to the period in
     2005.

     Oil and gas prices are reported  net of the realized  effect of our hedging
     agreements.  Prices  realized were $36.57 per Bbl and $6.04 per Mcf for the
     six month  period of 2005  compared  to $29.14 per Bbl and $5.09 per Mcf in
     the 2004 period.  Prices before the effects of the hedging  agreements were
     $48.95 per Bbl and $6.47 per Mcf for the six month period of 2005  compared
     to $33.82 per Bbl and $5.71 per Mcf in the 2004 period.

     Operating  Overhead  and  Other  Income.  Revenues  from  these  activities
     decreased  from $79,000 in 2004 to $55,000 in 2005,  due primarily to lower
     overhead recoveries on company-operated properties.

     Costs and Expenses

     Lease Operating  Expenses.  Overall,  operating  expenses increased 6% from
     $2,599,300 in 2004 to $2,765,900 in 2005.  Excluding  property sales in the
     third quarter  2004,  operating  expenses  increased 30% from 2004 to 2005.
     Approximately  two-thirds of this increase was due to increased  production


                                       17

<PAGE>


     taxes,  compression  costs and salt water  disposal costs related to higher
     sales volumes. The remainder was due to higher vendor prices.

     On a per unit basis,  expenses  decreased  from $2.59 per Mcfe in 2004,  to
     $2.10 per Mcfe in 2005. This decrease in lifting cost was due to the higher
     sales  volumes  and the sale of two  higher  lifting  cost  fields in third
     quarter of 2004.

     Depreciation,  Depletion and Amortization  (DD&A).  DD&A increased 70% from
     $876,200 in 2004 to  $1,491,000 in 2005 due to higher  production  volumes,
     and from an  increase  in the DD&A rate per unit from $.87 per Mcfe in 2004
     to $1.13 per Mcfe in 2005.

     General and Administrative  (G&A) Expenses.  Our G&A expenses increased 78%
     from $873,600 in 2004 to $1,553,100 in 2005 due to the recent  additions to
     our  management  team to carry out our growth  plan.  On a per unit  basis,
     expenses increased from $.87 per Mcfe in 2004 to $1.18 per Mcfe in 2005.

     Interest Expense. Interest expense decreased 37% from $1,934,800 in 2004 to
     $1,216,600 in 2005, primarily due to retirement of debt associated with our
     February, 2005 recapitalization.

     Financial Condition and Capital Resources
     -----------------------------------------

     At June 30, 2005,  our current  liabilities  exceeded our current assets by
     $3,038,473, while at December 31, 2004 our current liabilities exceeded our
     current assets by $35,034,675.The improvement was attributable to repayment
     of debt with  proceeds from the sale of the Series G Preferred  Stock.  For
     the  second  quarter  of 2005 we had a loss of  $79,362  compared  to a net
     income of $9,323,281 for the same period in 2004. The net income  generated
     in 2004 was primarily  attributed to $12.5 million in  forgiveness  of debt
     income associated with our April, 2004 refinancing.

     On July 15, 2005, we entered into a $100 million senior  secured  revolving
     credit  facility with Wells Fargo Bank,  National  Association.  Borrowings
     under  the  new  credit  facility  will  be  subject  to a  borrowing  base
     limitation  based on our current  proved oil and gas reserves.  The initial
     borrowing  base is set at $20  million  and will be subject to  semi-annual
     redeterminations,  with the first  redetermination  to be December 1, 2005.
     The facility will be secured by a lien on all our assets, and the assets of
     our  subsidiaries,  as well as a security  interest in the stock of all our
     subsidiaries.  The  credit  facility  has a term of  three  years,  and all
     principal amounts,  together with all accrued and unpaid interest,  will be
     due and  payable in full on June 30,  2008.  Proceeds  from  extensions  of
     credit  under  the  facility  will  be  for  acquisitions  of oil  and  gas
     properties and for general corporate  purposes.  The facility also provides
     for the  issuance of  letters-of-credit  up to a $3 million  sub-limit.  On
     August 15,  2005,  the  outstanding  balance  under our  facility  was $1.5
     million.  (See Note 5  "Financing  Activity"  in Notes to the  Consolidated
     Financial Statements on page 10.)

     ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     -------    ----------------------------------------------------------

     The following  market rate  disclosures  should be read in conjunction with
     the quantitative disclosures about market risk contained in our 2004 Annual
     Report on Form 10-K, as well as with the consolidated  financial statements
     and notes thereto included in this quarterly report on Form 10-Q.

     All of our financial  instruments  are for purposes other than trading.  We
     only enter into derivative  financial  instruments in conjunction  with our
     oil and gas hedging activities.

     Hypothetical  changes in interest rates and prices chosen for the following
     stimulated  sensitivity  effects are  considered to be reasonably  possible
     near-term changes generally based on consideration of past fluctuations for
     each risk category. It is not possible to accurately predict future changes


                                       18

<PAGE>


     in  interest  rates and product  prices.  Accordingly,  these  hypothetical
     changes may not be an indicator of probable future fluctuations.

     Interest Rate Risk

     At June 30, 2005, we had no variable rate debt.

     Commodity Price Risk

     We hedge a portion of price risk  associated  with our oil and  natural gas
     sales through  contractual  arrangements which are classified as derivative
     instruments.  As of June 30,  2005,  these  derivative  instruments  had an
     estimated fair value liability of $2,900,233.  A hypothetical change in oil
     and gas prices  could have an effect on oil and gas futures  prices,  which
     are used to estimate the fair value of our derivative instruments. However,
     it is not practicable to estimate the resultant change, if any, in the fair
     value of our derivative instruments.

     ITEM 4.    CONTROLS AND PROCEDURES
     -------    -----------------------

     As of June 30, 2005, our President,  Chief Executive Officer and our Senior
     Vice President,  Chief Financial Officer evaluated the effectiveness of the
     design and operation of our disclosure  controls and procedures pursuant to
     Rule 13a-15(b) under the Securities  Exchange Act of 1934, as amended ("the
     Exchange Act"). Based upon this evaluation, they concluded that, subject to
     the limitations  described  below,  the Company's  disclosure  controls and
     procedures offer reasonable  assurance that the information  required to be
     disclosed  by the Company in the reports it files under the Exchange Act is
     recorded,  processed,  summarized  and  reported  within  the time  periods
     specified  in the rules and forms  adopted by the  Securities  and Exchange
     Commission.

     During the period  covered by this report,  there has been no change in the
     Company's  internal  controls  over  financial  reporting  that  materially
     affected, or is reasonably likely to materially affect, these controls.

     Limitations on the Effectiveness of Controls. Our management, including the
     Chief Executive  Officer and the Chief Financial  Officer,  does not expect
     that the  Company's  disclosure  controls and  procedures  will prevent all
     error and all fraud. A well conceived and operated  control system is based
     in part upon certain  assumptions about the likelihood of future events and
     can provide only reasonable, not absolute, assurance that the objectives of
     the control systems are met.  Further,  the design of a control system must
     reflect the fact that there are resource  constraints,  and the benefits of
     controls  must be  considered  relative to their costs.  There have been no
     significant changes in our internal controls or in other factors that could
     significantly affect internal controls subsequent to June 30, 2005.


                                       19

<PAGE>


                           PART II. OTHER INFORMATION
                           --------------------------

     ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     -------    -----------------------------------------------------------

     On April 1 and April 4,  2005,  warrants  issued to our  former  lenders in
     connection  with  the  completion  of our  April  2004  financing  package,
     exercisable for an aggregate of 2,035,621 shares of common stock at a price
     of $0.01 per share,  were exercised for an aggregate of 2,018,224 shares of
     common stock by cashless exercise. Due to the nature of the transaction and
     the  relationship  of the former  lenders with us, we believe the exercises
     were exempt under Section 4(2) of the Securities Act.

     On April 22, 2005, two holders of the Series H Convertible  Preferred Stock
     elected to convert 1,250 shares into  approximately  1.8 million  shares of
     common stock.  Due to the nature of the transaction and the relationship of
     such holders with us, we believe the conversions  were exempt under Section
     3(a)(9) or Section 4(2) of the Securities Act.

     ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     -------    ---------------------------------------------------

     The Company held its Annual  Meeting of  Shareholders  on June 1, 2005 (the
     "Annual Meeting"). The close of business on April 15, 2005 was fixed as the
     record date for determining shareholders entitled to notice of, and to vote
     at, the meeting or any adjournments or postponement  thereof. On that date,
     26,941,117  shares of our Class A Common  Stock,  par value $.001 per share
     ("Common  Stock"),  were  outstanding  and entitled to vote.  Shares of our
     Series G Convertible Preferred Stock, par value $.01 per share (the "Series
     G "), and shares of our Series H  Convertible  Preferred  Stock,  par value
     $.01 per share (the "Series H"),  were  entitled to vote on an as converted
     basis with the Common  Stock with  respect to matters on which  approval of
     our  shareholders  was required.  However,  with respect to the election of
     directors, holders of the Series G were entitled to elect a majority of our
     directors, but not the remaining directors, which the holders of the Common
     Stock and Series H were entitled to elect. Allan D. Keel, B. James Ford and
     Skardon  F.  Baker  were  re-elected  by the  holders  of the  Series G and
     continued  their term of office  after the  meeting.  On the  record  date,
     81,000  shares of Series G,  representing  the voting  power of  45,315,631
     shares of Common  Stock,  and 6,500  shares of Series H,  representing  the
     voting power of 9,285,716 shares of Common Stock, were outstanding. Each of
     the following matters was approved by shareholders by the following votes:

     Proposal 1 - To elect two  directors  to hold office  until the next annual
     meeting of  shareholders  and until their  successors  are duly elected and
     qualified. Each of the two director nominees were elected by a plurality of
     votes  cast by holders of the  Common  Stock and Series H  Preferred  Stock
     entitled to vote at the Annual Meeting.

                                      For              Withheld
                                      ---              --------

         Lee B. Backsen            30,049,734           1,000
         Lon McCain                30,049,734           1,000


                                       20

<PAGE>


     Proposal 2 - To approve  the merger of GulfWest  Energy Inc.  into a wholly
     owned  Delaware  subsidiary,  Crimson  Exploration  Inc., to effectuate the
     change of our state of incorporation from Texas to Delaware and to increase
     the  number of  authorized  shares of common  stock  from 80 million to 200
     million.  Approval required the affirmative vote of (i) a majority of votes
     entitled to be cast in respect of the shares of Common Stock,  and Series G
     and Series H (on an as converted  basis) voting  together as a single class
     and (ii) a  majority  of each of the Common  Stock,  Series G and Series H,
     each voting by itself separately as a class, with the Series G and Series H
     voting preferred shares.

<TABLE>
<CAPTION>

           Collectively                   For           Against       Abstain     Broker Non-Votes
           ------------                   ---           -------       -------     ----------------
<S>                                     <C>                <C>            <C>           <C>
           Common Stock,              70,301,561        13,317         5,000        4,804,480
           Series G and
           Series H

           Separately, as Class           For           Against       Abstain     Broker Non-Votes
           --------------------           ---           -------       -------     ----------------
           Common Stock               16,035,984         13,317        5,000        4,804,480
           Series G                     80,400             0              0            N/A
           Series H                      6,500             0              0            N/A

</TABLE>

     Proposal 3 - To approve the 2004 Stock Option and  Compensation  Plan.  The
     affirmative  vote of a  majority  of the  votes  cast on the  matter by the
     holders of the Common  Stock,  Series G and Series H at the Annual  Meeting
     was required for approval  (although  neither the Plan nor grants under the
     Plan were contingent on shareholder approval).

<TABLE>
<CAPTION>

           Collectively                   For           Against       Abstain     Broker Non-Votes
           ------------                   ---           -------       -------     ----------------
<S>                                     <C>                <C>            <C>           <C>
           Common Stock,              69,872,069        455,909       10,700        4,815,680
           Series G and
           Series H

</TABLE>

     Proposal 4 - To approve the 2005 Stock Incentive Plan. The affirmative vote
     of a majority  of the votes cast on the matter by the holders of the Common
     Stock,  Series G and  Series  H at the  Annual  Meeting  was  required  for
     approval.

<TABLE>
<CAPTION>

           Collectively                   For           Against       Abstain     Broker Non-Votes
           ------------                   ---           -------       -------     ----------------
<S>                                     <C>                <C>            <C>           <C>
           Common Stock,              69,869,285        460,693        5,100         4,819,280
           Series G and
           Series H

</TABLE>


                                       21

<PAGE>


    ITEM 6.   EXHIBITS.
    -------   ---------

         Number   Description
         ------   -----------

         3.1      Certificate of  Incorporation  of the Registrant.  (Previously
                  filed on our current report on Form 8-K filed July 5, 2005.)
         3.2      Certificate of Designation, Preferences and Rights of Series D
                  Preferred  Stock.  (Previously  filed on our current report on
                  Form 8-K filed July 5, 2005.)
         3.3      Certificate  of   Designation,   Preferences   and  Rights  of
                  Cumulative  Convertible Preferred Stock, Series E. (Previously
                  filed on our current report on Form 8-K filed July 5, 2005.)
         3.4      Certificate of Designation, Preferences and Rights of Series G
                  Convertible Preferred Stock.  (Previously filed on our current
                  report on Form 8-K filed July 5, 2005.)
         3.5      Certificate of Designation, Preferences and Rights of Series H
                  Convertible Preferred Stock.  (Previously filed on our current
                  report on Form 8-K filed July 5, 2005.)
         3.6      Bylaws of the  Registrant.  (Previously  filed on our  current
                  report on Form 8-K filed July 5, 2005.)
         3.7      Agreement  and Plan of Merger,  dated June 28,  2005,  between
                  GulfWest Energy Inc. and Crimson Exploration Inc.  (Previously
                  filed on our current report on Form 8-K filed July 5, 2005.)
         10.1     Form of Indemnification  Agreement for directors and officers.
                  (Previously filed with our Form 8-K, Reg. No. 001-12108, filed
                  with the Commission on July 21, 2005.)
         10.2     Employment  Agreement  between Tracy Price and GulfWest Energy
                  Inc.,  dated  April 1, 2005.  (Previously  filed with our Post
                  Effective  Amendment  No. 1 to our  Registration  Statement on
                  Form S-1, Reg. No.  333-116048,  filed with the  Commission on
                  April 6, 2005.)
         10.3     Employment  Agreement between Tommy Atkins and GulfWest Energy
                  Inc.,  dated  April 1, 2005.  (Previously  filed with our Post
                  Effective  Amendment  No. 1 to our  Registration  Statement on
                  Form S-1, Reg. No.  333-116048,  filed with the  Commission on
                  April 6, 2005.)
         10.4     Employment Agreement between Jay S. Mengle and GulfWest Energy
                  Inc.,  dated  April 1, 2005.  (Previously  filed with our Post
                  Effective  Amendment  No. 1 to our  Registration  Statement on
                  Form S-1, Reg. No.  333-116048,  filed with the  Commission on
                  April 6, 2005.)
         10.5     Employment  Agreement  between  Thomas R. Kaetzer and GulfWest
                  Energy Inc., dated April 1, 2005.  (Previously  filed with our
                  Post Effective  Amendment No. 1 to our Registration  Statement
                  on Form S-1, Reg. No. 333-116048, filed with the Commission on
                  April 6, 2005.)
         10.6     Summary terms of June 2005 Director Compensation Plan.
         10.7     Credit   Agreement,   dated  July  15,  2005,   among  Crimson
                  Exploration  Inc.,  Wells Fargo,  N.A., as agent and a lender,
                  and each lender from time to time a party thereto. (Previously
                  filed with our Form 8-K,  Reg. No.  001-12108,  filed with the
                  Commission on July 21, 2005.)


                                       22

<PAGE>


         10.8     Form of director  restricted  stock grant.  (Previously  filed
                  with  our  Form  8-K,  Reg.  No.  001-12108,  filed  with  the
                  Commission on July 21, 2005.)
         10.9     Limited Waiver of Shareholders  Rights  Agreement,  dated July
                  14, 2005, by OCM GW Holdings,  LLC. (Previously filed with our
                  Post Effective  Amendment No. 2 to our Registration  Statement
                  on Form S-1, Reg. No. 333-116048, filed with the Commission on
                  July 26, 2005.)
         22.1     Subsidiaries  of the  Registrant  (included  on page 7 of this
                  Quarterly Report).
         31.1     Certification of Chief Executive  Officer pursuant to Exchange
                  Rule  13a-14 (a) as  adopted  pursuant  to Section  302 of the
                  Sarbanes-Oxley Act of 2002.
         31.2     Certification of Chief Financial  Officer pursuant to Exchange
                  Rule  13a-14 (a) as  adopted  pursuant  to Section  302 of the
                  Sarbanes-Oxley Act of 2002.
         32       Certification  pursuant to 18 U.S.C.  Section 1350 pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.


                                       23

<PAGE>


                                   SIGNATURES

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


                            CRIMSON EXPLORATION INC.
                                  (Registrant)


Date:  August 15, 2005         By: /s/ Allan D. Keel
                                   ------------------------------------
                               Allan D. Keel
                               President and Chief Executive Officer

Date:  August 15, 2005         By: /s/ E. Joseph Grady
                                   ----------------------------------
                               E. Joseph Grady
                               Senior Vice President and Chief Financial Officer


                                       24