<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10-QSB

(Mark One)

    X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---------  SECURITIES EXCHANGE ACT OF 1934
             

               For the quarterly period ended March 31, 199

             OR

           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---------  SECURITIES EXCHANGE ACT OF 1934
             

For the transition period from      to

                        Commission file number: 0-22349

                        PAN WESTERN ENERGY CORPORATION
              (Exact name of registrant as specified in charter)

       Oklahoma                                           73-1130486
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

    1850 South Boulder Avenue                Tulsa, Oklahoma           74119
   (Address of principal executive offices)                        (Zip Code)
                                   

                                (918) 582-4957
               Registrants telephone number, including area code


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 May 13, 1998, 3,367,405 shares of the Registrants Common Stock, $0.01 par
value, were outstanding.

                                       1
<PAGE>
 
                               TABLE OF CONTENTS


Part I.    Financial Information.
-------                          

     Item 1.
     -------

             Consolidated Balance Sheets (Unaudited) as of March 31, 1998 and as
             of December 31, 1997.

             Consolidated Statements of Operations (Unaudited) for the three
             months ended March 31, 1998 and March 31, 1997.

             Consolidated Statement of Changes in Stockholders' Equity
             (Unaudited) for the three months ended March 31, 1998.

             Consolidated Statements of Cash Flows (Unaudited) for the three
             months ended March 31, 1998 and March 31, 1997.

             Notes to Unaudited Consolidated Financial Statements for the three
             months ended March 31, 1998 and March 31, 1997.

     Item 2.
     -------

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


Part II.   Other Information.
--------                     

                                       2
<PAGE>
 
                          ITEM 1. FINANCIAL STATEMENTS

                         PAN WESTERN ENERGY CORPORATION

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                           March 31,      December 31,
                                                             1998             1997
                                                           Unaudited        Audited
                                                          ------------    ------------
ASSETS
------

<S>                                                             <C>             <C>   
Current Assets:
 Cash                                                           51,022          14,686
 Restricted cash                                               111,003         344,147
 Receivables:
  Trade, net of allowance of $11,080                           162,027         178,313
  Due from stockholder                                               0           4,252
  Due from affiliated partnerships                               1,187           1,187
  Prepaid expenses                                              25,327          20,350

                                                          ------------    ------------
Total current assets                                           350,566         562,935
                                                          ------------    ------------

Property and Equipment:
 Oil and gas properties (successful efforts method)          2,955,683       2,955,683
 Other property and equipment                                  378,419         378,419
                                                          ------------    ------------
                                                             3,334,102       3,334,102
 Less accumulated depreciation and depletion                 1,038,791         974,668
                                                          ------------    ------------
Net property and equipment                                   2,295,311       2,359,434
                                                          ------------    ------------
Other assets                                                    60,769          64,912
                                                          ------------    ------------

Total Assets                                                 2,706,646       2,987,281
                                                          ============    ============


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
 Accounts payable                                              333,699         247,815
 Undistributed oil and gas revenues                            178,125         153,990
 Due to affiliated partnerships                                  7,540           7,540
 Accrued liabilities                                            20,688          15,688
 Current portion of long term debt                             586,952         769,564

                                                          ------------    ------------
Total current liabilities                                    1,127,003       1,194,597

Long-term debt                                               1,600,249       1,669,628

                                                          ------------    ------------
Total liabilities                                            2,727,253       2,864,225
                                                          ------------    ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
 Preferred stock ($.05 par value; authorized 25,000,000
 shares; no shares issued or outstanding)                            0               0
 Common stock ($.01 par value; authorized 25,000,000
 shares; issued 4,448,655 shares)                               44,487          44,487
 Additional paid in capital                                  1,837,253       1,837,253
Accumulated deficit                                         (1,683,365)     (1,539,702)
Treasury stock (1,081,250 shares)                             (218,982)       (218,982)

                                                          ------------    ------------
Total stockholders' equity                                     (20,607)        123,056
                                                          ------------    ------------

Total Liabilities and Stockholders' Equity                   2,706,646       2,987,281
                                                          ============    ============
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
 
                         PAN WESTERN ENERGY CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                                            Three Months      Three Months
                                                Ended             Ended
                                            March 31, 1998    March 31, 1997
                                            --------------    --------------
REVENUE:
 Oil and gas sales                                 278,722           416,442
 Operating income                                   18,737            22,346
                                            --------------    --------------
                                                   297,459           438,788
                                            --------------    --------------

OPERATING EXPENSES:
 Lease operating                                   115,651           178,006
 Salaries and wages                                 90,671            93,968
 Depreciation, depletion and amortization           64,829            78,482
 General and administrative                        109,751           117,188
                                            --------------    --------------
                                                   380,902           467,644
                                            --------------    --------------

OPERATING INCOME (LOSS)                            (83,444)          (28,856)
                                            --------------    --------------

OTHER INCOME (EXPENSE):
 Loss from rental operations, net                   (3,745)           (4,361)
 (Loss) gain on sale of assets, net                    845            43,603
 Interest income                                     1,494             1,397
 Interest expense                                  (58,813)          (51,476)
                                            --------------    --------------
                                                   (60,219)          (10,837)
                                            --------------    --------------

INCOME (LOSS) BEFORE INCOME TAXES                 (143,663)          (39,693)

 Income taxes                                            0                 0
                                            --------------    --------------

NET INCOME (LOSS)                                 (143,663)          (39,693)
                                            ==============    ==============

NET INCOME (LOSS) PER SHARE                          (0.04)            (0.01)
                                            ==============    ==============

Weighted average common shares                   3,367,405         3,233,560
                                            ==============    ==============




          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
                         PAN WESTERN ENERGY CORPORATION

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                    FOR THE THREE MONTHS ENDED MARCH 31, 1998

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Additional                     Total
                                  Common      Paid-In     Accumulated     Treasury    Stockholders'
                                  Stock       Capital       Deficit         Stock        Equity
                              ---------------------------------------------------------------------
<S>                               <C>        <C>          <C>             <C>            <C>    
Balances, December 31, 1997       44,487     1,837,253    (1,539,702)     (218,982)      123,056

Net Income (loss)                                           (143,663)                   (143,663)
                              ---------------------------------------------------------------------

Balances, March 31, 1998          44,487     1,837,253    (1,683,365)     (218,982)      (20,607)
                              =====================================================================
</TABLE>




          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
                         PAN WESTERN ENERGY CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              Three Months    Three Months
                                                                 Ended           Ended
                                                                March 31,       March 31,
                                                                  1998            1997
                                                              ------------    ------------
<S>                                                           <C>             <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)                                                (143,663)        (39,693)
 Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
  Depreciation, depletion and amortization                          64,829          78,482
  (Gain) loss on sale of assets, net                                  (845)        (43,603)
  (Increase) decrease in receivables                                20,538         102,867
  (Increase) decrease in prepaid expenses                           (6,267)              0
  (Increase) decrease in other assets                                3,081             947
  Increase (decrease) in accounts payable                           85,884         (80,709)
  Increase (decrease) in accrued liabilities                         5,000          (5,471)
  Increase (decrease) in undistributed oil and gas revenues         24,137          (9,566)
                                                              ------------    ------------
Net cash provided by (used in) operating activities                 52,694           3,254
                                                              ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures                                                    0          (7,623)
 Purchase of certificate of deposit                                      0          (1,342)
 Proceeds from the disposal of oil and gas properties                1,056         120,000
                                                              ------------    ------------
Net cash used in investing activities                                1,056         111,035
                                                              ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from long-term debt                                            0             364
 Repayment of long-term debt                                      (251,991)       (185,245)
 Decrease (increase) in restricted cash                            234,577
                                                              ------------    ------------
Net cash provided by financing activities                          (17,414)       (184,881)
                                                              ------------    ------------

NET INCREASE  (DECREASE) IN CASH                                    36,336         (70,591)

CASH, BEGINNING OF PERIOD                                           14,686         232,699
                                                              ------------    ------------

CASH, END OF PERIOD                                                 51,022         162,108
                                                              ============    ============


SUPLEMENTAL CASH FLOW INFORMATION:
 Interest paid                                                      42,033          51,476
                                                              ============    ============

 Income taxes paid                                                       0               0
                                                              ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
 
                         PAN WESTERN ENERGY CORPORATION
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

(1)  Basis of Presentation. The consolidated financial statements included in
     this report have been prepared by Pan Western Energy Corporation (the
     "Company") pursuant to the rules and regulations of the Securities and
     Exchange Commission for interim reporting and include all normal and
     recurring adjustments which are, in the opinion of management, necessary
     for a fair presentation. These financial statements have not been audited
     by an independent accountant.

     Certain information and footnote disclosures normally included in financial
     statements prepared in accordance with generally accepted accounting
     principles have been condensed or omitted pursuant to such rules and
     regulations for interim reporting. The Company believes that the
     disclosures are adequate to make the information presented not misleading.
     However, these financial statements should be read in conjunction with the
     Company's audited financial statements and notes thereto for the years
     ended December 31, 1997 and 1996. The financial data for the interim
     periods presented may not necessarily reflect the results to be anticipated
     for the complete year.

(2)  Stockholders' Equity. On February 18, 1997, the Board of Directors approved
     a four-for-one stock split effected in the form of a stock dividend. The
     record date for the dividend was April 1, 1997. Common share, per share
     data, and stockholders' equity amounts in the accompanying unaudited
     consolidated financial statements and footnotes have been retroactively
     adjusted to reflect this stock split.

(3)  Sale of Common Stock. The Company completed a private placement of 15,000
     shares of its common stock at $10 per share (75,000 shares at $2 per share
     after giving effect to the stock split discussed in note 2) pursuant to
     Regulation D under the Securities Act of 1933 in April, 1997.

     Effective March 21, 1997, the Company amended and restated its Certificate
     of Incorporation which has the effect, among others, of eliminating
     shareholder preemptive rights to subscribe for additional shares of the
     Company's Common Stock. Subsequent to March 31, 1997, the Company informed
     those shareholders of the Company who, based upon their preemptive rights,
     were entitled to acquire additional shares of Company Common Stock, of
     their right to acquire such shares. Based upon the responses received, the
     Company has issued 25,845 shares of Common Stock and has received
     $11,888.91 in proceeds for these shares.

     On September 1, 1997, the Company issued 33,000 shares of its Common Stock
     to an individual as additional consideration for executing a promissory
     note with the Company in the amount of $300,000. The note bears interest at
     10 % per annum and matures on April 30, 1998. The note is secured by a
     second mortgage on the Company's oil and gas 

                                       7
<PAGE>
 
     properties located in Coal County, Oklahoma. The Company currently
     anticipates that the maturity of this note will be extended until June 30,
     1998.

(4)  Registration of Common Stock. On April 7, 1997, the Company filed a Form
     10-SB with the Securities and Exchange Commission. The purpose of this
     filing was to register all issued and outstanding shares of the Company's
     Common Stock and develop a public market for such Common Stock. The Company
     was notified by the Securities and Exchange Commission that this filing was
     declared effective on June 26, 1997.

(5)  Earnings per common share. Net earnings per common share for the periods
     presented has been computed based upon the weighted average number of
     shares outstanding of 3,367,405 and 3,233,560 for the three months ended
     March 31, 1998 and 1997 respectively.

     In February 1997, the Financial Accounting Standards Board (the "FASB")
     issued Statement of Financial Accounting Standard No. 128 ("SFAS No. 128,
     Earnings Per Share") which is effective for annual and interim periods
     ending after December 15, 1997.

     The Company has adopted SFAS No. 128 and has restated earnings per share
     for all periods presented in accordance with that statement. Outstanding
     stock options and warrants have not been included in the calculation for
     the periods ended March 31, 1998 and March 31, 1997 since their effect on
     diluted loss per share is antidilutive.

                                       8
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS.

DISPOSITION OF OIL AND GAS PROPERTIES.

     The Company closed the sale of its oil and gas properties located in the
state of Kansas effective February 1, 1997. This sale included 7 gross (5.6 net)
wells which had daily gross production of 20.5 (12.9 net) barrels of oil per
day. Total proved developed oil reserves for these properties at December 31,
1996 were 33,010 barrels of oil. The sales price received by the Company was
$120,000 which resulted in a gain on sale of approximately $44,000 in the
quarter ended March 31, 1997.

RESULTS OF OPERATIONS.

     The Company follows the "successful efforts" method of accounting for its
oil and gas properties whereby costs of productive wells and productive leases
are capitalized and depleted on a unit-of-production basis over the life of the
remaining proved reserves. Depletion of capitalized costs is provided on a well
by well basis. Exploratory drilling costs, including the cost of stratigraphic
test wells, are initially capitalized, but charged to expense if and when the
well is determined to be unsuccessful.

     The factors which most significantly affect the Company's results of
operations are (i) the sale prices of crude oil and natural gas, (ii) the level
of oil and gas sales, (iii) the level of lease operating expenses, (iv) the
level of exploratory activities, and (v) the level of interest rates on
borrowings. Total sales volumes and the level of borrowings are significantly
impacted by the degree of success the Company experiences in its efforts to
acquire oil and gas properties and its ability to maintain or increase
production from existing oil and gas properties through development and
enhancement activities. The following table reflects the average prices received
and the amounts produced by the Company for the periods presented.

<TABLE>
<CAPTION>
                                  Three Months Ended March 31
                                 -----------------------------
                                       1998           1997
                                 --------------  -------------
<S>                             <C>             <C>
Average price: 
   Oil (per Bbl)                     $   15.95      $   22.13
   Gas (per Mcf)                     $    1.89      $    2.28
                                                   
Production:                                        
   Oil (Bbl)                            10,353         12,434
   Gas (Mcf)                            60,040         61,428
</TABLE>

                                       9
<PAGE>
 
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997.

     The net loss of the Company increased by $103,970 from a loss of $39,693
experienced for the first quarter ended March 31, 1997 to a loss of $143,663 for
the first quarter ended March 31, 1998. The increased loss experienced is due
primarily to the net effect of a decline in the Company's oil and gas production
and a reduction in the average prices received for this production coupled with
a decrease of $62,355 in lease operating expenses and smaller declines in
salaries and wages, depreciation, depletion and amortization expense, and
general and administrative expenses.

     Oil and gas sales were $278,722 for the first quarter ended March 31, 1998
as compared to $416,442 for the first quarter ended March 31, 1997. This
represents a decrease of $137,720 which is due primarily to lower prices, on a
lesser amount of production, received by the Company for its oil and gas
production during the first quarter ended March 31, 1998. Oil production for the
first quarter of 1998 experienced a decline of 17% as compared to the first
quarter of 1997 and the average price received by the Company for its oil
production declined from $22.13 during the first quarter of 1997 to $15.95
received during the first quarter of 1998. The decrease in oil production was
primarily a result of the sale of the Company's Kansas properties as described
above, the inability of the Company to continue its normal operations
maintenance program due to cash flow constraints, and the natural production
decline expected by the Company on its existing properties. Gas production for
the first quarter of 1998 experienced a 2% decline when compared to the first
quarter of 1997. This decline is a result of the natural production decline
experienced on all wells. The average price received by the Company declined to
$1.89 during the first quarter of 1998 as compared to $2.28 during the first
quarter of 1997.

     Operating income declined by $3,609 during the three months ended March 31,
1998 to $18,737 as compared to $22,346 experienced during the three months ended
March 31, 1997. This decrease is primarily attributable to overhead expenses
being charged to a reduced number of wells.

     Lease operating expenses, including production taxes, for the three months
ended March 31, 1998 declined $62,355 to $115,651 from $178,006 experienced
during the period ended March 31, 1997. Production taxes declined by $11,917
from $30,324 experienced during the quarter ended March 31, 1997 to $18,407
experienced during the quarter ended March 31, 1998. This decline is
attributable to the lower taxable value of the Company's production during the
first quarter ended March 31, 1998 as compared to the quarter ended March 31,
1997. Other lease operating expense declined by $50,438 from $147,682 during the
first quarter ended March 31, 1997 to 97,244 experienced during the first
quarter ended March 31, 1998. This decline is primarily attributable to reduced
field maintenance operations being conducted because of cash flow constraints
during the first quarter ended March 31, 1998.

     Depreciation, depletion and amortization declined to $64,829 for the three
month period ended March 31, 1998 as compared to $78,482 during the three month
period ended March 31,

                                       10
<PAGE>
 
1997. This decline is due primarily to the lower production levels for oil and
gas experienced during the quarter ended March 31, 1998 as compared to the
quarter ended March 31, 1997.

     General and administrative expenses decreased by $7,437 from $117,188
during the quarter ended March 31, 1997 to $109,751 during the quarter ended
March 31, 1998. The decline in these expenses was due primarily to a reduction
in legal expense of $11,024 and a decrease in travel and entertainment expenses
of $6,870. These declines are partially offset by an increase of $12,462 in
other professional services expenses incurred during the first quarter of 1998.
The professional services were a result of  increased outside reservoir
engineering fees associated with both the year end engineering report and some
additional reports prepared on potenti al property acquisitions.

     Other income (expense) increased from an expense of $10,837 experienced
during the quarter ended March 31, 1997 to an expense of $60,219 during the
quarter ended March 31, 1998. Major changes in items included in other income
and expense were as follows. Interest expense for the quarter ended March 31,
1998 amounted to $58,813 as compared to $51,476 for the quarter ended March 31,
1997. (Loss) gain on sale of assets for the quarter ended March 31, 1998
amounted to a gain of $845 as compared to a gain on sale of assets of $43,603
experienced during the first quarter ended March 31, 1997.

CAPITAL RESOURCES AND LIQUIDITY.

     The Company's capital requirements relate to the acquisition, development
and operation of oil and gas producing properties. In general, since most of the
reserves the Company has acquired and intends to acquire are substantially
depleted by production, the success of its business strategy is dependent upon a
continuous acquisition, development and exploration program. The Company intends
to continue its practice of reserve replacement and growth through the
acquisition of producing oil and gas properties, although at this time it is
unable to predict the number and size of such acquisitions, if any, which will
be completed. The Company's ability to finance its oil and gas acquisitions is
determined by its cash flow from operations and available sources of debt and
equity financing. As of March 31, 1998, the Company had a working capital
deficit of $776,437 as compared to a working capital deficit of $631,662 as of
December 31, 1997. During the three month period ended March 31, 1998 the
Company experienced an increase in cash of $36,336 primarily as a result of an
increase in accounts payable and a decrease in accounts receivable and an
increase in undistributed oil and gas revenues.

     Effective March 21, 1997, pursuant to a Written Consent to Action by a
Majority (53.6%) of the Shareholders of the Company in lieu of a meeting and the
unanimous written Consent to Action by the Directors of the Company in lieu of a
meeting, the Company amended and restated both its Certificate of Incorporation
and its Bylaws. Prior to its amendment and restatement, the Company's
Certificate of Incorporation granted preemptive rights to shareholders with
respect to the issuance of Common Stock by the Company. Subsequent to this
action, the Company informed all shareholders of their right to exercise their
preemptive rights by informing the Company that they wished to do so by April
30, 1997. Based upon the responses received, the

                                       11
<PAGE>
 
Company has issued 25,845 shares of Common Stock and has received $11,888.91 in
proceeds for these shares.
 
     In April, 1997, the Company completed an offering of 15,000 shares of its
Common Stock at $10 per share (75,000 shares at $2 per share after giving effect
to the stock split discussed in note 2 to the unaudited consolidated financial
statements) which was issued pursuant to Regulation D under the Securities Act
of 1933. Purchases under this offering were limited to 100 shares (500 shares
after giving effect to the stock split) per individual.

     On April 7, 1997, the Company filed a Form 10-SB with the Securities and
Exchange Commission. The purpose of this filing was to register all issued and
outstanding shares of the Company's Common Stock and develop a public market for
such Common Stock. The Company was notified by the Securities and Exchange
Commission that this filing was declared effective on June 26, 1997.

     On September 1, 1997, the Company issued 33,000 shares of its Common Stock
to an individual as additional consideration for executing a promissory note
with the Company in the amount of $300,000. The note bears interest at 10% per
annum and matures on April 30, 1998. The note is secured by a second mortgage on
the Company's oil and gas properties located in Coal County, Oklahoma. The
Company currently anticipates that the maturity of this note will be extended
until June 30, 1998.

                                       12
<PAGE>
 
PART II. OTHER INFORMATION.

Item 1.  Legal Proceedings.

          Not applicable.

Item 2.  Changes in Securities.

          See Item 4 below.

Item 3.  Defaults Upon Senior Securities.

          Not applicable.

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

          Effective March 21, 1997, pursuant to a Written Consent to Action by a
Majority (53.6%) of the Shareholders of the Company in lieu of a meeting and the
unanimous written Consent to Action by the Directors of the Company in lieu of a
meeting, the Company amended and restated both its Certificate of Incorporation
and its Bylaws. Prior to its amendment and restatement, the Company's
Certificate of Incorporation granted preemptive rights to shareholders with
respect to the issuance of Common Stock by the Company.

Item 5.  Other Information.

          Not applicable.

Item 6.  Exhibits and Reports on Form 8-K.

         (a) Exhibits

              None

         (b) Reports on Form 8-K

             None

                                       13
<PAGE>
 
Signatures

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

                                    PAN WESTERN ENERGY CORPORATION
                                             (Registrant)


Date: March 13, 1998                /s/ SID L. ANDERSON
                                    ------------------------------
                                    Sid L. Anderson
                                    President and Director
                                    (Principal Executive Officer)


Date: March 13, 1998                /s/ CLAYTON E. WOODRUM
                                    ----------------------
                                    Clayton E. Woodrum
                                    Executive Vice President and Director
                                    (Principal Financial Officer)


Date: March 13, 1998                /s/ VINCENT R. KEMENDO
                                    ------------------------
                                    Vincent R. Kemendo
                                    Vice President - Finance
                                    (Principal Accounting Officer)

 

                                       14