SECURITIES AND EXCHANGE COMMISSION   
                    Washington, D.C.  20549   
   
                          FORM 10-QSB   
   
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE   
                SECURITIES EXCHANGE ACT OF 1934   
   
     For the quarterly period ended:  June 30, 1998   
   
OR   
   
[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d)   
                  OF THE EXCHANGE ACT    
   
For the transition period from __________ to __________   
   
             Commission File No. 33-32685   
   
             LEXICO ENERGY EXPLORATION, INC.    
 ___________________________________________________________   
  (Exact name of small business issuer as specified in its      
                         charter)   
   
Delaware                              				84-1080261             
________                                 ____________
(State or other jurisdiction of	         (I.R.S. Employer   
Incorporation or organization)	          Identification  No.) 				   
   
         12835 E. Arapahoe Rd, Tower 1, Ste 210
    	          Englewood, Colorado  80112		     	   
_____________________________________________________________
 (Address of principal executive offices, including zip code)   
   
   
Issuer's Telephone Number:  (303) 792-0416   
   
     
______________________________________________________
 (Former name, former address and former fiscal year,    
              if changed since last report)	   
   
   
Check whether the Issuer (1) filed all    
reports required to be filed by Section 13 or    
15(d) of the Exchange Act during the past 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 
    ____       ____  
   
   
As of June 30, 1998, 11,277,000 shares of common stock   
were outstanding.   
   
Transitional Small Business Disclosure Format:   

Yes    X   No        
     ____    ____
   
<PAGE>   
   
   
   
TABLE OF CONTENTS   
Form 10-QSB    
2nd Quarter Ended March 31, 1998    
   

Lexico Energy Exploration, Inc.    
										   
                                      						         Page   
   
PART I:  FINANCIAL INFORMATION   
   
            Item 1.    
                      
                   Balance Sheet 	                  			2   
                   Statement Of Operations	          		3   
                   Statement Of Cash Flows	 	         	4   
                   Notes To Financial Statements	  	  	5   
   
   
            Item 2.   
   
	                 Management's Discussion And   
                  Analysis Or Plan Of Operation        8   
   
PART II:  OTHER INFORMATION	             	             9   
   
   
SIGNATURES					                                       10   
   
     
<PAGE>     
			   
   
   
              PART I.   FINANCIAL INFORMATION   
   
   
<PAGE>                              1   
   
   
   
   
ITEM 1.            LEXICO ENERGY EXPLORATION, INC.     
                   (A Development Stage Company)                         
                           BALANCE SHEET   
                           JUNE 30, 1998   
                            (UNAUDITED)              

                               ASSETS   
   
                       
Cash                                 $(        46) 
                                    _____________	 
  
    Total current assets              (        46)

Property & equipment (net)                 31,650
Wells & related equipment               2,777,142
Unproved properties                       220,000
Investment in USAPL                       100,000
Option                                     10,000
                                    -------------
   
Total Assets     	                			$  3,138,746   
                                    =============             
   
   
            LIABILITIES AND STOCKHOLDERS' EQUITY   
   
Current liabilities   
						   
     Accounts payable                	$    68,031   
     Accts. pay. - related party           10,000
     Interest payable          	           41,434
     Related party notes payable          448,200   
     Deferred tax liability               382,000
                                     ____________
	Total current liabilities	               949,665   
                                     ____________
   
Total Liabilities      	           		     949,665   
                                     ____________
   

Stockholders' equity    
         
     Common stock: $.001 par   
       value, 50,000,000 shares    
       authorized, 11,277,000   
       shares issued   
       & outstanding            	    	    11,277   
    
     Preferred stock:  $.01 par   
       value, 5,000,000 shares   
       authorized, 0 shares   
       issued & outstanding             	      -   
   
     Additional paid in capital        2,994,788    
   
     Deficit accumulated during				   
        the development stage        (   816,984)   
                                    ____________

  Stockholders' Equity      			        2,189,081
                                    ____________

Total Liabilities And   
 Stockholders' Equity	     	        $  3,138,746    
	 						                            ============

                  	 See Notes to Financial Statements		                
	   	   
   
<PAGE>	                               2	          
   
   
     
                     LEXICO ENERGY EXPLORATION, INC.     
                      (A Development Stage Company)   
                         STATEMENT OF OPERATIONS   
                              (UNAUDITED)   

<TABLE>
<S>                                     <C>                     <C>                         <C>          
   
                                                                                            Dec. 31, 1987
			                                    	   Three Months Ended       Nine Months Ended        (inception)
		                                    		        June  30                 June 30             to June 30,
	 			                                      1998          1997       1998         1997           1998    
							                                    ____          ____       ____         ____       _____________

   								   
Sales                                	  $       -     $      -    $       -    $      -     $       -  
   
Operating expenses                    		   48,078        3,729      140,204       4,379       404,537 
                                        _________     ________    _________    ________     _________ 
Income (loss) from   
 operations	              	              ( 48,078)     ( 3,729)    (140,204)    ( 4,379)     (404,537)  
                                        _________     ________    _________    ________     _________
Other income (expense):   
  
	Interest income	                      	        -   	        -            -           -        10,987  
 Interest expense                        (  1,675)     ( 1,676)    (  5,026)    ( 5,027)     ( 41,434)
	                                       _________     ________    _________    ________     _________ 
	Total other income          	           (  1,675) 		  ( 1,676)    (  5,026)    ( 5,027)     ( 30,447)
                                        _________     ________    _________    ________     _________
Income (loss) before   
 income taxes            		              ( 49,753)     ( 5,405)    (145,230)    ( 9,406)     (434,984)

Provision for income tax                 (382,000)           -     (382,000)          -      (382,000)
			                                     _________     ________    _________    ________     _________
Net income (loss)            	          $(431,753)  		$( 5,405)   $(527,230)   $( 9,406)    $(816,984) 
                                        =========     ========    =========    ========     =========
 
Net income (loss) per share             $( .038 )   	 $(  *  )    $( .047 )    $(  *  )     $( .081 )  
                                        =========     ========    =========    ========     ========= 
   
Weighted average number of   
common shares outstanding              11,277,000    11,277,000  11,277,000   11,277,000   10,116,574
                                       ==========    ==========  ==========   ==========   ==========
*Less than $.01 per share   
   
</TABLE>

         	         See Notes to Financial Statements   
     
   
<PAGE>	  	                            3		   
   
   
                    LEXICO ENERGY EXPLORATION, INC.     
	                    (A Development Stage Company)   
	                       STATEMENT OF CASH FLOWS   
 		                          (UNAUDITED)   
  								   
	                                                                  Dec.31,1987
				                                         	 Nine Months Ended   (inception)
	  				                                             June 30	       to June 30,
				                                         	1998          1997      1998
							                                       ____          ____    __________

Cash Flows From Operating Activities:   
   
   Net income (loss)	          	           $(431,753)     $( 9,406)  $(816,984)
   
   Adjustments to reconcile net   
   income (loss) to net cash    
   provided by (used for)    
   operating activities:   
   
       Depreciation                              350            -          350
       Increase in accounts payable                -        4,379       68,031
       Increase in accts. pay. - rel. party   10,000            -       10,000
       Increase in deferred tax liability    382,000            -      382,000
       Increase in interest payable            5,026        5,027       41,434 
		                                         ---------     --------    ---------
	        Net cash provided   
     	   by (used for)   
	        operating activities 	             (129,854)           -     (315,169)
                                           ---------     --------    ---------
   

Cash Flows From Investing Activities:

      (Purchase) of equipment               ( 32,000)           -     ( 32,000)
      (Capitalized) expenditures            (277,142)           -     (277,142)
      (Purchase) of option                  ( 10,000)           -     ( 10,000)
      (Purchase) of oil and gas interests          -            -     (220,000)
                                           ---------     --------    ---------
         Net cash provided
         by (used for)
         investing activities               (319,142)           -     (539,142)
                                           ---------     --------    --------- 


Cash Flows From Financing Activities:   
   
       Sale of common stock                        -            -       11,277
       Increase in related party
         notes payable                       448,200            -      448,200
       Increase in paid in capital         		    750 	          -      394,788
			                                        ---------     --------    ---------  
     	   Net cash provided   
      	  by (used for)   
	        financing activities	               448,950 	          -      854,265
                                           _________	    ________    _________

Net Increase (Decrease) In Cash             (     46)           -     (     46) 

Cash At The Beginning Of The Period                -            -            -
                                           _________     ________    _________
   
Cash At The End Of The Period              $(     46)    $      -    $(     46) 
                                           =========     ========    =========
	  
                     See Notes to Financial Statements   
   
   
<PAGE>		                              4   
   
   
                    LEXICO ENERGY EXPLORATION, INC.     
                    (A Development Stage Company)   
                    Notes to Financial Statements   
                              (Unaudited)   
   
   
Note 1. Basis of Presentation   
   
The accompanying unaudited financial statements have been    
prepared in accordance with the instructions to    
Form 10-QSB and do not include all of the information and    
disclosures required by generally accepted accounting    
principles for complete financial statements. All    
adjustments which are, in the opinion of management,    
necessary for a fair presentation of the results of    
operations for the interim periods have been made and are    
of a recurring nature unless otherwise disclosed herein.    
The results of operations for such interim periods are not    
necessarily indicative of operations for a full year.   
   
<PAGE>                              		5   

                   LEXICO ENERGY EXPLORATION, INC.
                Supplemental Information (Unaudited)
                     Period Ended June 30, 1998 

Capitalized Costs Relating to Oil and Gas
Producing Activities at June 30, 1998
-----------------------------------------

Unproved oil and gas properties          $   220,000
Proved oil and gas properties              2,777,142
Support equipment and facilities                   -
                                         -----------
                                           2,997,142
Less accumulated depreciation, 
depletion, amortization, and
impairment                                         -
                                         -----------
Net capitalized costs                    $ 2,997,142
                                         ===========


Costs Incurred in Oil and Gas Producing
Activities for the Period 
Ended June 30, 1998
---------------------------------------

Property acquisition costs               
     Proved                              $ 2,500,000
     Unproved                                      -
Exploration costs                                  -
Development costs                            277,142


Results of Operations for Oil and Gas Producing
Actvities for the Period Ended June 30, 1998
-----------------------------------------------

Oil and gas sales                        $         -
Gain on sale of oil and gas properties             -
Gain on sale of oil and gas leases                 -
Production costs                                   -
Exploration expenses                               -
Depreciation, depletion,
  and amortization                                 -
                                         -----------
                                                   -
Income tax expense                                 -
                                         -----------
Results of operations for oil and gas
  producing activities (excluding 
  corporate overhead and financing
  costs)                                 $         -
                                         ===========


Reserve Information

     The following estimates of proved and proved developed reserve
quantities and related standardized measure of discounted net cash flow 
are estimates only, and do not purport to reflect realizable values or
fair market values of the Company's reserves. The Company emphasizes that
reserve estimates are inherently imprecise and that estimates of new 
discoveries are more imprecise than those of producing oil and gas 
properties. Accordingly, these estimates are expected to change as future 
information becomes available. All of the Company's reserves are located
in the United States.
     Proved reserves are estimated reserves of crude oil (including 
condensate and natural gas liquids) and natural gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable
in future years from known reservoirs under existing economic and operating
conditions. Proved developed reserves are those expected to be recovered
through existing wells, equipment, and operating methods.
     The standardized measure of discounted future net cash flows is 
computed by applying year end prices of oil and gas (with consideration of
price changes only to the extent provided by contractual arrangements)
to the estimated future production of proved oil and gas reserves, less
estimated future expenditures (based on year end costs) to be incurred in
developing and producing the proved reserves, less estimated future income
tax expenses (based on year end statutory tax rates, with consideration of
future tax rates already legislated) to be incurred on pretax net cash flows 
less tax basis of the properties and available credit, and assuming 
continuation of existing economic conditions. The estimated future net cash
flows are then discounted using a rate of 10 percent a year to reflect
the estimated timing of the future cash flows.

<PAGE>                                 6

                   LEXICO ENERGY EXPLORATION, INC.
           Supplemental Information (Unaudited) - Continued
                     Period Ended June 30, 1998

Reserve Information
-------------------
                                                Oil            Gas
                                               (Bbls)         (Bcf)
                                               ------         ------
Proved developed and undeveloped reserves
     Beginning of period                            -              -
     Revisions of previous estimates                -              -
     Improved recovery                              -              -
     Purchases of minerals in place           129,300        158.625 
     Extensions and discoveries                     -              -
     Production                                     -              -
     Sales of minerals in place                     -              -
                                              -------        -------
     End of year                              129,300        158.625
                                              =======        =======
Proved developed reserves
     Beginning of period                            -              -
     End of period                            129,300        158.625

Standardized Measure of Discounted Future
     Net Cash Flows at June 30, 1998

     Future cash inflows                                     $    xx
     Future production costs                                  (   xx)
     Future development costs                                 (   xx)
     Future income tax expenses                               (   xx)
                                                             -------
                                                                  xx
     Future net cash flows (10% annual discount for
         estimated timing of cash flows)                      (   xx)
                                                             -------
Standardized measures of discounted future net cash
     flows relating to proved oil and gas reserves           $    xx
                                                             ======= 

The following reconciles the change in the standardized measure of
discounted future net cash flow during the nine months ended June 30, 1998.

Beginning of period                                          $    xx
Sales of oil and gas produced, net of production costs        (   xx)
Net changes in prices and production costs                    (   xx)
Extensions, discoveries, and improved recovery,
   less related costs                                             xx
Development costs incurred during the year which
   were previously estimated                                      xx
Net change in estimated future development costs                  xx
Revisions of previous quantity estimates                      (   xx)
Net change from purchases and sales of minerals in place      (   xx)
Accretion of discount                                             xx
Net change in income taxes                                    (   xx)
Other                                                         (   xx)
                                                             -------
End of year                                                  $    xx


Note: Engineer will complete cash flow information subject to
      Conoco 22-1 Well coming on line in August of 1998.

<PAGE>                                  7

 
                  LEXICO ENERGY EXPLORATION, INC.     
   
ITEM 2.  Management's Discussion and Analysis or Plan of     
         Operation   
   
General

Lexico Energy Exploration, Inc. was incorporated in Delaware in 1987. The
Company is now engaged principally in the business of exploration and 
development of natural gas wells. To date, several properties have been
acquired and drilling or re-completion efforts are in process to bring those
ventures on line and producing. Additional properties and the roll up of 
several other companies are being considered for acquisition.

In addition, the Company is negotiating the engagement of an investment
banker to manage the overall financial planning, merger, and future
acquisitions of the Company. The Company anticipates having its underwriter
file a 15c2-11 Registration with the SEC the third or fourth quarter of 1998.

Strategic Developments

     New Gas Well and Sites

The Uintah Basin, a major hydrocarbon producing area in Northeast Utah,
is recognized as the second largest onshore hydrocarbon basin in the 
contiguous United States and one of the world's largest non-marine
petroleum accumulations.

The Company has acquired 75% of 211.5 BCF of proven 
reserves associated with the Conoco 22-1 well from Natural Buttes Gas Corp.
Said reserves are valued at $0.73/mcf, and have been brought forward in
this quarter's financial statements. The acquisition includes the deep
rights from the top of the Mancos formation at 9,700 feet to the Weber
formation at 20,000 feet. Significant finds of gas exist in the subject
ranges according to the drill stem tests.

The Conoco 22-1 well was originally drilled by Conoco and Prudential Life
in 1972 to a depth of 20,000 feet, and recompleted in 1980 by Gillman Hill.
The well was cased to a depth of 14,800 feet to the Frontier zone and completed
there. Engineering reports on the 22-1 project indicate reserves of 32 BCF
in the Frontier, Castlegate and Upper Mancos formations based on 160 acre
spacing. In addition, the well has 436,000 barrels of recoverable condensate.

The Company has received a commitment from Coastal/Engage to purchase up to
4,000 MMBtu/day from this well for a one year term at Inside FERC CIG Rocky
Mountains Index minus $0.20.

Recently, Lexico has acquired 18 more drilling sites in the immediate 
area  of the Conoco 22-1 well from Natural Buttes Gas Corp.
The probable reserves associated with this transaction are
approximately 394 BCF.

   
<PAGE>	                              	6   
   
     Completion of Current Development Inventory

The Company owns the rights to 50% of Conoco Federal 13-1 gas well ("13-1")
which is also located in the Uintah Basin. The Company anticipates completing
this well after the rollup of a drilling company that it is currently 
negotiating. The well can be completed in approximately four weeks working
time, with cash flow accruing to the Company approximately 60 days thereafter.

     Australian Subsidiary

The Company owns 50% of United Stratum AUS PTY ("United") which owns drilling
prospects in the South Pacific. The Company also has options to purchase
the remaining shares of United Stratum.

Interwest Vanuatu PTY LTD holds the Petroleum Prospecting License in the
Port Sandwich Basin of the Republic of Vanuatu, S.W. Pacific. United owns
a 37 1/2% interest in the "Net Area Proceeds" of the Interwest concession.

<PAGE>                                 7

Recent negotiations with the Republic of Vanuatu have assured the rights
of the concession for an additional twelve months while seismic data is
reviewed and evaluated.

The concession includes almost all of Malakula Island and Espiritu Santo
Island, Republic of Vanuatu, S.W. Pacific, as well as offshore areas. The
area is approximately 3,728,000 (131 graticular blocks). The concession is
being marketed to major principals in the industry who have expressed
interest in a position to proceed with a four year program to develop this
project.

     Expansion Opportunities

The Company is actively seeking additional opportunities to expand its
asset base and cash flow prospects. It is conducting an ongoing process of
evaluating exploration and development properties, drilling companies,
and associated funding sources for these ventures.

The Company intends on entering into a "Letter of Intent" to acquire a 
drilling company within the next 30 days. This acquisition would allow the
Company to more aggresively pursue its drilling programs.

Lexico Energy Exploration, Inc. and its affiliate Natural Buttes Gas Corp.
("NBGC") are currently engaged in negotiations with a Texas based gas and oil
company to potentially merge the producing fields plus future leases of this
company with Lexico. Lexico has offered 14 drilling sites with estimated
reserves of 32 BCF of gas per 160 acre spacing as incentive to the Texas 
based company to consummate the merger. The Texas based company is
negotiating a commitment for $35 million which would be brought forward
into the merger.

The engagement of an investment banker and the registration of the Company
with the SEC is also a step towards the future potential of the Company
to raise money and trade publicly.

Results of Operations

The Company is considered a "development stage" company, with no actual
drilling or exploration operations having been conducted until midway
through the just finished quarter. The Company had losses of $431,753 for
the quarter and $527,230 year to date, resulting primarily from general
and administrative expenses.

Liquidity and Capital Resources

Operating activities of the Company used net cash of $129,854 in the
previous three quarters primarily due to development work on the
Conoco Federal 22-1 gas well, exploration, and administrative overhead.

The Company requires capital to continue with its acquisition and 
development of oil and gas properties as well as to complete drilling on
existing properties and to earn an interest in prospects developed by
others under standard industry farmout arrangements. It is anticipated that
funding for expansion activities will be provided by an offering of the
Company's securities (as described above) and through institutional 
funding via standard industry arrangements.

<PAGE>                              8
   
PART II.  OTHER INFORMATION   
   
   
Item 1.	Legal Proceedings - None   
   
Item 2.	Changes in Securities - None   
   
Item 3.	Defaults Upon Senior Securities - None   
   
Item 4.	Submission of Matters To A Vote of Securities Holders - None
   
Item 5.	Other Information - None   
   
Item 6.	Exhibits and Reports on Form 8-K - None	   
   
<PAGE>                             		9   
   
   
                         SIGNATURES   
   
	 In accordance with the requirements of the Exchange    
Act, the Registrant has duly caused this Report to be    
signed on its behalf by the undersigned, thereunto duly    
authorized.                                                        
   
			           	LEXICO ENERGY EXPLORATION, INC.   
   
   
			           	By: /s/Lex Dolton   
			           	Lex Dolton, President   
			           	and Director   
   
   
Date:  July 31, 1998	   
   

<PAGE>