UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
[x]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 2000

                                       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 0-19365


                            CROWN ENERGY CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Utah                                           87-0368981
---------------------------------                     -------------------
(State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                     Identification No.)

            215 South State, Suite 650, Salt Lake City, Utah, 84111
--------------------------------------------------------------------------------
               (Address of principal executive offices, zip code)

                                 (801) 537-5610
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


         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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

There were 13,635,581shares of $.02 par value common stock outstanding as of
November 06, 2000.

<PAGE>

                            CROWN ENERGY CORPORATION

                                      INDEX

                                                                        PAGE(S)

PART I.           Financial Information

         ITEM 1.  Financial Statements

                  Condensed Consolidated Balance Sheets at
                    September 30, 2000 (unaudited) and December
                    31, 1999                                               3

                  Condensed Consolidated Statements of Operations
                    for the Three Months ended September 30, 2000
                    and 1999 (unaudited)                                   5

                  Condensed Consolidated Statements of Operations
                    for the Nine Months ended September 30, 2000
                    and 1999 (unaudited)                                   6

                  Condensed Consolidated Statements of Cash Flows
                    for the Nine Months ended September 30, 2000
                    and 1999 (unaudited)                                   7

                  Notes to Condensed Consolidated Financial
                    Statements (unaudited)                                 9


         ITEM 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                  18

         ITEM 3.  Quantitative and Qualitative Disclosures about
                    Market Risks                                         22

PART II.          Other Information

         ITEM 1.  Legal Proceedings                                      23

         ITEM 2.  Changes in Securities                                  24

         ITEM 3.  Defaults upon Senior Securities                        24

         ITEM 4.  Submission of Matters to a Vote of Security Holders    24

         ITEM 5.  Other Information                                      24

         ITEM 6.  Exhibits and Reports on Form 8-K                       24


PART III.                  Signatures                                    25

                                       2
<PAGE>

                          PART I-FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                            CROWN ENERGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                                                 September 30,
                                                                                     2000          December 31,
                                                                                 [unaudited]           1999
                                                                             ----------------    -----------------
CURRENT ASSETS:
<S>                                                                                <C>                  <C>
     Cash and cash equivalents                                                     $2,194,317           $4,978,977
     Accounts receivable, net of allowance for uncollectible
        accounts and demerits of $277,341 and $298,000 at September 30, 2000
        and December 31, 1999, respectively                                         6,777,371            5,186,325
     Inventory                                                                      3,752,773            2,133,866
     Prepaid and other current assets                                                  95,628               35,582
                                                                             ----------------    -----------------
          Total Current Assets                                                     12,820,089           12,334,750

PROPERTY, PLANT AND EQUIPMENT, Net                                                  9,490,197            9,237,735

INVESTMENT IN AND ADVANCES
  TO AN EQUITY AFFILIATE                                                            6,610,482            7,174,920

GOODWILL, Net                                                                       3,960,856            4,127,680

OTHER INTANGIBLE ASSETS, Net                                                          137,500              175,000
OTHER ASSETS                                                                          232,105              63,768
                                                                             ----------------    -----------------
TOTAL                                                                             $33,251,229          $33,113,853
                                                                             ================    =================
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                            CROWN ENERGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                 September 30,
                                                                                     2000          December 31,
                                                                                 [unaudited]           1999
                                                                             ----------------    -----------------
<S>                                                                                <C>                  <C>
CURRENT LIABILITIES
     Accounts payable                                                              $2,157,116           $1,132,251
     Preferred stock dividends payable                                                699,995              400,000
     Accrued expenses                                                               5,486,623            2,281,992
     Long-term debt - estimated current portion                                       160,139              166,204
     Borrowings from related party                                                 14,935,222           14,935,222
                                                                             ----------------    -----------------
     Total current liabilities                                                     23,439,095           18,915,669
                                                                             ----------------    -----------------

MINORITY INTEREST IN CONSOLIDATED
  JOINT VENTURES                                                                      424,807              301,699

CAPITALIZATION:
     Long-term debt                                                                11,226,654           11,332,681
     Redeemable preferred stock                                                     4,882,076            4,839,623
     Common stockholders' deficit                                                  (6,721,403)          (2,275,819)
                                                                             ----------------    -----------------
          Total capitalization                                                     9,387,327            13,896,485
                                                                             ----------------    -----------------
TOTAL                                                                            $33,251,229           $33,113,853
                                                                             ===============     =================
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                            CROWN ENERGY CORPORATION
                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                                                                  For the Three Months Ended
                                                                                         September 30,
                                                                                   2000                 1999
                                                                           ------------------     ----------------
<S>                                                                               <C>                  <C>
SALES, Net of demerits                                                            $11,556,473          $15,848,548

EXPENSES:
  Cost of goods sold                                                                9,974,752           12,536,520
  Operating expenses                                                                1,191,947            1,577,353
  General and administrative                                                          649,608              599,597
  Depreciation and amortization                                                       234,028              154,453
                                                                           ------------------     ----------------
TOTAL                                                                              12,050,335           14,867,923
                                                                           ------------------     ----------------
INCOME (LOSS) FROM OPERATIONS                                                        (493,862)             980,625

OTHER INCOME (EXPENSES):
   Interest and other income                                                           98,420              103,826
   Interest and other expense                                                        (635,170)            (641,994)
   Equity in losses of unconsolidated equity affiliate                                (20,566)             (70,208)
                                                                           ------------------     ----------------
        Total other (expense) net                                                    (557,316)            (608,376)

LOSS BEFORE INCOME TAXES
  AND MINORITY INTEREST                                                            (1,051,178)             372,249
                                                                           ------------------     ----------------

DEFERRED INCOME TAX BENEFIT                                                                 0                    0

MINORITY INTEREST IN LOSSES OF
  CONSOLIDATED JOINT VENTURE                                                            4,196             (361,726)
                                                                           ------------------     ----------------
NET INCOME (LOSS)                                                                 ($1,046,982)             $10,523
                                                                           ------------------     ----------------
NET INCOME (LOSS) PER COMMON SHARE-
  Basic and diluted                                                                    ($0.08)              ($0.01)
                                                                           ==================     ================
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>
                            CROWN ENERGY CORPORATION
                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                                                                  For the Nine Months Ended
                                                                                          September 30,
                                                                                   2000                  1999
                                                                           ------------------     ----------------
<S>                                                                               <C>                  <C>
SALES, Net of demerits                                                            $19,745,578          $30,725,129

EXPENSES:
  Cost of goods sold                                                               16,613,213           23,156,140
  Operating expenses                                                                2,820,730            4,722,713
  General and administrative                                                        1,743,465            1,833,657
  Depreciation and amortization                                                       667,777              494,438
                                                                           ------------------     ----------------
TOTAL                                                                              21,845,185           30,206,948
                                                                           ------------------     ----------------

INCOME LOSS FROM OPERATIONS                                                        (2,099,607)             518,181

OTHER INCOME (EXPENSES):
   Interest and other income                                                          370,767              329,962
   Interest and other expense                                                      (1,901,623)          (1,554,847)
   Equity in losses of unconsolidated equity affiliate                               (454,579)            (496,481)
                                                                           ------------------     ----------------
        Total other (expense) net                                                  (1,985,435)          (1,721,366)

LOSS BEFORE INCOME TAXES
  AND MINORITY INTEREST                                                            (4,085,042)          (1,203,185)
                                                                           ------------------     ----------------

DEFERRED INCOME TAX BENEFIT                                                                 0                    0

MINORITY INTEREST IN LOSSES OF
  CONSOLIDATED JOINT VENTURE                                                           21,410               43,236
                                                                           ------------------     ----------------

NET INCOME (LOSS)                                                                 ($4,063,632)         ($1,159,949)
                                                                           ------------------     ----------------
NET INCOME (LOSS) PER COMMON SHARE-
  Basic and diluted                                                                    ($0.33)              ($0.11)
                                                                           ==================     ================
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       6
<PAGE>
<TABLE>
<CAPTION>
                            CROWN ENERGY CORPORATION
                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                    For the Nine Months Ended
                                                                                            September 30,
                                                                                       2000              1999
                                                                                  ---------------   ---------------
<S>                                                                                   <C>               <C>
Cash Flows From Operating Activities:
       Net loss                                                                       ($4,063,632)      ($1,159,949)
       Adjustments to reconcile net loss to net cash used by operating
           activities:
                Amortization, depreciation and depletion                                  667,777           494,438
                Stock issued for legal services                                            43,750                 0
                Equity in losses of unconsolidated affiliate                              454,579           496,481
                Minority interest                                                        (21,410)          (43,236)
                Changes in assets and liabilities:
                    Accounts receivable                                                (1,591,046)       (7,145,408)
                    Inventory                                                          (1,618,907)       (1,358,456)
                    Other assets                                                         (228,387)         (630,640)
                    Accounts payable                                                    1,024,865         2,988,900
                    Accrued expenses                                                    3,204,631         1,404,448
                                                                                  ---------------   ---------------
                           Total adjustments                                            1,935,852        (3,793,473)
                                                                                  ---------------   ---------------

                           Net Cash Used in Operating Activities                       (2,127,780)       (4,953,422)
                                                                                  ---------------   ---------------

Cash Flows From Investing Activities:
       Investment in and advances to Crown Asphalt Ridge, LLC                              64,377        (3,491,057)
       Acquisition of Asphalt Terminals                                                         0        (3,856,390)
       Purchase of property and equipment                                                (670,432)       (2,220,653)
                                                                                  ---------------   ---------------

                           Net Cash Used by
                                Investing Activities                                     (606,055)       (9,568,100)
                                                                                  ---------------   ---------------
Cash Flows From Financing Activities:
       Net change in borrowings from related party                                              0         6,000,000
       Sale of equity interest in subsidiary to a minority shareholder                          0           220,199
       Long-term debt payment                                                            (112,092)                0
       Proceeds from borrowings of long-term debt                                               0         6,196,707
       Capital contribution from partners                                                  61,267                 0
                                                                                  ---------------   ---------------

                           Net Cash Provided by (Used in) Financing Activities           ($50,825)      $12,416,906
                                                                                  ---------------   ---------------
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       7
<PAGE>
<TABLE>
<CAPTION>
                            CROWN ENERGY CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   [Continued]

                                                                                    For the Nine Months Ended
                                                                                            September 30,
                                                                                       2000              1999
                                                                                  ---------------   ---------------
<S>                                                                                   <C>               <C>
         Net Decrease in Cash:                                                        ($2,784,660)      ($2,104,616)
                                                                                  ===============   ===============
Cash at Beginning of Period                                                            $4,978,977        $3,735,632
                                                                                  ===============   ===============
Cash at End of Period                                                                  $2,194,317        $1,631,016
                                                                                  ===============   ===============

Supplemental Disclosure of Cash Flow Information
       Cash paid during the period:
            Interest                                                                     $404,998          $158,671
                                                                                  ===============   ===============
            Income taxes                                                                      ---               ---
                                                                                  ===============   ===============

Supplemental Schedule of Non-cash Investing and Financing Activities:
       For the period ended September 30, 1999:
           On January 27, 1999, the Company issued 317,069 shares of common
           stock to its preferred stockholders as payment in full for preferred
           stock dividends payable totaling $467,433.
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       8
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The accompanying consolidated financial statements have been prepared
         by the Company without audit. In the opinion of management, all
         adjustments (which include only normal recurring adjustments) necessary
         to present fairly the financial position, results of operations and
         changes in stockholders' equity and cash flows at September 30, 2000
         and for all periods presented have been made.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted. It is suggested
         that these condensed financial statements be read in conjunction with
         the financial statements and notes thereto included in the Company's
         December 31, 1999 Annual Report on Form 10-K. The results of operations
         for the period ended September 30, 2000 are not necessarily indicative
         of the operating results for the full year.

         Organization - Crown Energy Corporation (CEC) and its wholly-owned
         subsidiaries, Crown Asphalt Corporation (CAC) and Crown Asphalt
         Products Company (Capco) (collectively referred to as the "Company"),
         are engaged in the mining, production and selling of asphalt products.

         Majority Owned Subsidiaries - Capco is the majority-owner of Crown
         Asphalt Distribution, LLC (Crown Distribution). Crown Distribution is a
         joint venture formed on July 2, 1998, between Capco and MCNIC Pipeline
         and Processing Company (MCNIC) for the purpose of acquiring certain
         assets of Petro Source Asphalt Company (Petro Source). Capco owns
         50.01% and MCNIC owns 49.99% of Crown Distribution. Capco is the
         general manager and operating agent of Crown Distribution. Because
         there is no agreement requiring the minority shareholder, MCNIC, to
         guarantee the subsidiary's debt or losses or a commitment to provide
         additional capital, other than working capital, all cumulative losses
         in excess of equity allocable to MCNIC totaling approximately
         $1,892,000, have been included in the Company's Financial Statements.
         Cowboy Asphalt Terminal, L.L.C. (CAT, LLC) is a joint venture formed on
         June 16, 1998 between Capco and Foreland Asphalt Corporation
         (Foreland). CAT, LLC is an asphalt terminal and storage facility. On
         December 21, 1998, Capco assigned its interest in CAT, LLC to Crown
         Distribution. Crown Distribution owns 66.67% and Foreland owns 33.33%
         of CAT, LLC.

         Principles of Consolidation - The consolidated financial statements
         include the accounts of the Company and its wholly-owned subsidiaries.
         All significant intercompany transactions have been eliminated in
         consolidation.

         Investment in and Advances to Equity Affiliate - The Company's
         investment in Crown Asphalt Ridge, LLC (Crown Ridge) is accounted for
         using the equity method. Accordingly, the Company's investment is
         recorded at cost and adjusted by the Company's share of undistributed
         earnings and losses. The excess of the Company's investment in Crown
         Ridge over its equity in the related underlying net assets
         (approximately $2,168,000) is being amortized over 40 years.

         Basis of Presentation - The accompanying consolidated financial
         statements have been prepared on a going concern basis, which
         contemplates the realization of assets and satisfaction of liabilities
         in the normal course of business. The consolidated financial statements
         do not include any adjustments relating to the recoverability and
         classifications of recorded amounts of assets or the amounts and
         classifications of liabilities that might be necessary should the
         Company be unable to continue as a going concern. The Company's
         continuation as a going concern depends upon its ability to generate

                                       9
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

         Basis of Presentation (continued) - sufficient cash flows to meet its
         obligations on a timely basis and to obtain additional financing or
         refinancing as may be required.

         At September 30, 2000, the Company's current liabilities exceeded
         current assets by $10,619,006 and the Company had a common
         stockholders' deficit of $6,721,403. For the year ended December 31,
         1999, the Company had a loss of $3,053,516 and for the nine month
         period ended September 30, 2000, the Company had a loss of $4,063,632.
         On March 27, 2000, the Company was advised by MCNIC that it was in
         default of a working capital loan. MCNIC has also demanded immediate
         payment of the working capital loan plus accrued interest. Management
         believes that the Company is not in default of the working capital
         loan, since only the initial loan had specified terms and such loan was
         extinguished by the replacement loan, which management believes is a
         line of credit as interpreted by the Operating Agreement between MCNIC
         and Capco. The Company does not believe that MCNIC will provide
         additional working capital in excess of the existing loan and
         Management has been unable to secure additional working capital through
         other sources.

         The Crown Ridge production facility, which is a joint venture between
         MCNIC and CAC, has not completed the pilot operations in the third
         quarter as indicated by Management in its December 31, 1999 annual
         report on Form 10-K. The continued delays of the pilot operations,
         indicate that the $6,610,482 investment that the Company holds on its
         balance sheet in Crown Ridge has the potential to be impaired if the
         facility does not achieve an acceptable level of profitable operations.
         Management believes that if a viable and economic solution exists at
         the facility and the facility becomes operational, then Crown Ridge
         will be able to continue as a going concern.

         These factors, as well as continued operating losses raise some concern
         regarding the Company's ability to operate as a going concern.

         Revenue Recognition - Revenues are recognized when the related product
         is shipped.

         Income Taxes - The Company utilizes an asset and liability approach for
         financial accounting and reporting for income taxes. Deferred income
         taxes are provided for temporary differences in the bases of assets and
         liabilities as reported for financial statement and income tax
         purposes. As of September 30, 2000, all net deferred tax assets were
         offset by a valuation allowance.

         Loss Per Share - Net loss per common share is computed under the basic
         method using the weighted average number of the Company's common shares
         outstanding. The effect of common shares from stock options, warrants
         and convertible securities is not considered in the diluted loss per
         share computations as such common stock equivalents are anti-dilutive.

         Cash and Cash Equivalents - For purposes of the statements of cash
         flows, the Company considers all highly liquid debt investments
         purchased with a maturity of three months or less to be cash
         equivalents.

         Use of Estimates in Preparing Financial Statements - The preparation of
         financial statements in conformity with accounting principles generally
         accepted in the United States of America, requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities, the disclosures of contingent assets and liabilities
         at the date of the financial statements and the reported amount of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimated.

                                       10
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

         Inventory - Inventories consist principally of asphalt hydrocarbons and
         chemical supplies which are valued at the lower of cost (computed on a
         first-in, first-out basis) or market.

         Long-Lived Assets - The Company evaluates the carrying value of
         long-term assets including intangibles based on current and anticipated
         undiscounted cash flows and recognizes impairment when such cash flows
         will be less than the carrying values. Measurement of the amount of
         impairments, if any, is based upon the difference between carrying
         value and fair value. There were no impairments as of September 30,
         2000 and December 31, 1999.

         Goodwill - The Company has recorded the amount paid for Petro Source
         Asphalt Corporation (Petro Source) in excess of the fair value of the
         net tangible assets acquired at the date of acquisition as goodwill.
         Such goodwill is amortized using the straight-line method over 20
         years.

         Asphalt Demerits - Crown's subsidiary, Capco, blends asphalt for sale
         to contractors and state agencies. The asphalt sold must meet certain
         specifications for a particular application. If the asphalt sold does
         not meet these specifications for whatever reason, the asphalt supplier
         may be held liable for possible damages (asphalt demerits) therefrom.
         Management believes that the Company's product liability insurance
         would cover any significant damages.

         Environmental Expenditures - Environmental related restoration and
         remediation costs are recorded as liabilities when site restoration and
         environmental remediation and clean-up obligations are either known or
         considered probable, and the related costs can be reasonably estimated.
         Other environmental expenditures, that are principally maintenance or
         preventative in nature, are recorded when expended and expensed or
         capitalized as appropriate.

         Comprehensive Income - In 1998, the Company adopted SFAS No. 130,
         "Reporting Comprehensive Income". SFAS 130 requires that an enterprise
         (a) classify items of other comprehensive income by their nature in a
         financial statement and (b) display the accumulated balance of other
         comprehensive income separately from additional paid-in capital,
         retained earnings and stockholders' equity. The Company does not
         currently have any components of comprehensive income other than net
         loss.

         Derivative Instruments and Hedging - In June 1998, the FASB issued SFAS
         No. 133, Accounting for Derivative Instruments and Hedging Activities.
         SFAS No. 133 establishes accounting and reporting standards for
         derivative instruments and hedging activities. It requires that an
         entity recognize all derivatives as either assets or liabilities in the
         balance sheet and measure those instruments at fair value. SFAS No. 133
         is effective for the Company's financial statements for the year ending
         December 31, 2001. The Company does not expect the impact of SFAS No.
         133 to be material in relation to its financial statements.

         Stock-Based Compensation - The Company has elected to continue to apply
         Accounting Principles Board (APB) Opinion 25 (as permitted by SFAS No.
         123, Accounting for Stock-Based Compensation).

                                       11
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

NOTE 2 - ACQUISITION OF ASSETS

         Acquisition of Cowboy Asphalt Terminal Property - On January 9, 1999,
         CAT LLC acquired the Cowboy Terminal Property for $1,973,511. CAT LLC
         paid deposits totaling $496,441 during 1998. In addition, CAT LLC paid
         $195,000 in cash at closing and executed and delivered a promissory
         note in the amount of $1,282,070. This promissory note is payable in 84
         equal monthly installments of $20,627 beginning on February 1, 1999 and
         ending on January 1, 2006. The note bears interest at the rate of 9%
         and is secured by a deed of trust encumbering the Cowboy Terminal
         Property. The acquisition was accounted for as a purchase. CAT, LLC was
         assigned to Crown Distribution in 1998.

         Acquisition of Rawlins Asphalt Terminal - On May 12, 1999, the Company
         acquired the Rawlins Asphalt Terminal and inventory for $2,291,571 from
         S&L Industrial (S&L). The purchase price consists of the Company
         assuming S&L's debt of approximately $1,800,000, entering into a note
         payable to S&L for $225,000 and a cash payment of $266,571. Capco
         currently processes asphalt for Crown Distribution for a fee through
         the Rawlins Asphalt Terminal by throughput agreement. The Company has
         been notified by MCNIC that it will participate in this acquisition and
         will fund one-half of all costs. To date, however, MCNIC has not taken
         the actions required in order for it to participate.

NOTE 3 - PROCESSING AGREEMENT EXPIRATION

         The Company, through its subsidiary, Crown Distribution had an
         agreement with Santa Maria Refining Company (SMRC) and SABA Petroleum
         whereby Crown Distribution purchased crude oil for processing at the
         Santa Maria Refinery, and Capco marketed the slate of products
         produced, primarily asphalt. This agreement was acquired through the
         acquisition of Petro Source in 1998. The agreement was terminated
         effective April 30, 1999. Revenues resulting from the agreement were
         approximately $4.8 million in the first nine months of 1999.

NOTE 4 - BORROWINGS FROM RELATED PARTY

         Pursuant to the Crown Distribution Operating Agreement, Management
         believes, MCNIC elected to provide a working capital revolving line of
         credit to Crown Distribution in lieu of the Company completing a line
         with an outside third party financial institution. As of September 30,
         2000, this line had a balance of approximately $14,935,222 and accrues
         interest at 8%. Management of the Company has indicated that MCNIC
         believes the borrowing is a working capital loan. Through the period
         ended September 30, 2000, $2,055,550 in interest had been accrued. This
         line is repaid solely out of the cash flow from Crown Distribution.
         Crown Distribution has received a notice of default of a working
         capital loan from MCNIC made in conjunction with the Petro Source asset
         acquisition. Further, MCNIC has filed a complaint seeking, among other
         things, repayment of the working capital loan plus all interest accrued
         thereon. The Company has answered MCNIC's suit and filed counterclaims
         and an additional action of its own relating to MCNIC's actions with
         regard to the Company and its ventures with it. (See "Part II, Item 1
         Legal Proceedings and Item 3. Defaults upon Senior Securities.")

                                       12
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

NOTE 5 - LOSSES FROM EQUITY AFFILIATE

         Crown Ridge has recorded certain expenses, the majority of which relate
         to the pilot project conducted at the Asphalt Ridge facility, that the
         Company believes were not approved by the Management Committee of Crown
         Ridge. The Company has recorded expenses totaling $454,579 through
         September 30, 2000. Should a portion of these expenses be determined
         not to be valid Crown Ridge expenditures, the Company will reverse its
         share of such expenses in the period upon such determination. MCNIC,
         the majority interest owner in Crown Ridge and its current operator,
         has been unwilling to provide the Company with Crown Ridge financial
         statements through September 30, 2000. Consequently, the Company has
         prepared estimates torecord its share of approved expenses.

NOTE 6 - LONG TERM DEBT

         Long-term debt consists of the following at September 30, 2000:

         Debt with Hancock-Geisler R.I.C., interest at 9%, with
           monthly principal and interest payments of $20,627 for
           84 months                                                 $1,045,413

         Debt with Community First National Bank, interest at
           prime plus 1%, with monthly payments of $13,600
           through May 12, 2001 with additional principal
           payments due in 2000 and 2001 of $60,000 and $66,000
           respectively, based on cash flow from Capco only.
           Balance as of May 12, 2001 to be amortized over 13
           years.                                                   $ 1,798,788

         Debt with S&L, interest at LIBOR with annual payments
           equal to the greater of 25% of the Rawlins , Wyoming
           terminal cash flow after debt service or principal and
           interest payments annualized over 10 years. Such
           amount will be reduced because certain representations
           of S&L were not satisfied.                                 $ 225,000

         Preferential Capital Contribution in Crown Distribution
           with MCNIC, interest at 15%, with annual principal and
           interest installments equal to 50% of the net cash
           flows (as defined) of Crown Distribution. This debt is
           secured by all of the assets of Crown Distribution and
           is repayable solely from Crown Distribution's cash
           flow and is non-recourse to the Company.                 $ 5,325,723

         Debt with MCNIC, interest at prime plus 1%, with monthly
           payments of $20,757 through July 20, 2001 with
           additional payments due in 2000 and 2001 based upon
           the Company's cash flow. Balance as of July 20, 2001
           to be amortized over 13 years.                           $ 2,991,869

         Less estimated current portion                               ($160,139)
                                                                    -----------
         Long-term portion                                          $11,226,654
                                                                    ===========

                                       13
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

NOTE 7 - CONCENTRATION OF CREDIT RISK

         Financial instruments which subject the Company to concentration of
         credit risk consist principally of trade receivables. The Company's
         policy is to evaluate, prior to shipment, each customer's financial
         condition and determine the amount of open line credit to be extended.
         It is also the Company's policy to obtain adequate letters of credit or
         other acceptable security as collateral for amounts in excess of the
         open line.

NOTE 8 - COMMON STOCKHOLDERS' DEFICIT AND REDEEMABLE PREFERRED STOCK

         At September 30, 2000 and December 31, 1999, common stockholders'
         equity and redeemable preferred stock consists of the following:
<TABLE>
<CAPTION>
         <S>                                                                         <C>              <C>
         September 30, December 31, 2000 1999 Redeemable preferred stock - $.005
           par value; 1,000,000 shares authorized; $10.00 stated value; 500,000
           Series A cumulative convertible shares issued and outstanding;
           original estimated fair value of $4,716,981, accretion of $42,453 and
           $56,604 for the periods ended September 30, 2000 and December 31,
           1999, respectively, toward the stated value of $5,000,000                 $ 4,882,076      $ 4,839,623
                                                                                     ===========      ===========
         Common stockholders' equity: Common stock, $.02 par value; 50,000,000
           shares authorized; 13,635,581 and 13,285,581 shares issued and
           outstanding at September 30, 2000 and December 31, 1999, respectively       $ 272,711        $ 265,711

         Additional paid-in capital                                                    5,486,128        5,791,828

         Stock warrants outstanding; 683,750 at September 30, 2000 and December
           31, 1999, respectively                                                        243,574          243,574

         Common stock subscription receivable from officers                             (549,166)        (549,166)

         Retained deficit                                                            (12,174,650)      (8,027,766)
                                                                                     -----------       ----------

         Total                                                                      $ (6,721,403)    $ (2,275,819)
                                                                                    ============     ============
</TABLE>

NOTE 9 - CAPITAL TRANSACTIONS

         Preferred Stock - The Company is authorized to issue 1,000,000
         preferred shares, par value $.005 per share. On November 4, 1997, the
         Company completed the sale of 500,000 shares of its Series A Cumulative
         Convertible Preferred Stock ("Series A Preferred") pursuant to a stock
         purchase agreement dated September 25, 1997 for an aggregate sales
         price of $5,000,000. Each share of Series A Preferred is convertible at
         the option of its holder, at any time, into 8.57 shares of common stock
         of

                                       14
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

         Preferred Stock (continued) - the Company. At the date of the issuance
         of the preferred stock, the embedded conversion price was $1.17 and the
         estimated fair value of the common stock was $1.03. Dividends accrue on
         the outstanding Series A Preferred at the rate of 8% per annum and may
         be declared, at the option of the Company, and paid through cash or
         common shares of the Company at the option of the holder. Subject to
         the holder's right to convert the Series A Preferred, the Company may
         redeem the Series A Preferred at any time from the date on which it is
         issued at a percentage of the Series A Preferred's stated value of $10
         per share; 130% of stated value if redemption occurs within thirty-six
         months of the date of issuance, 115% of stated value if redemption
         occurs between thirty-six and forty-eight months after the date of
         issuance, 110% of stated value if redemption occurs between forty-eight
         and sixty months after the date of issuance, and 100% if redemption
         occurs thereafter. The holder of the Series A Preferred may also
         require the Company to redeem the Series A Preferred after the eighth
         anniversary of the Series A Preferred's issuance. The holders of the
         Series A Preferred shall have the right, but shall not be obligated, to
         appoint 20% of the Company's Board of Directors. The Company may not
         alter the rights and preferences of the Series A Preferred, authorize
         any security having liquidation preference, redemption, voting or
         dividend rights senior to the Series A Preferred, increase the number
         of Series A Preferred, reclassify its securities or enter into
         specified extraordinary events without obtaining written consent or an
         affirmative vote of at least 75% of the holders of the outstanding
         shares of the Series A Preferred stock. All voting rights of the Series
         A Preferred expire upon the issuance by the Company of its notice to
         redeem such shares. The shares of common stock issuable upon conversion
         of the Series A Preferred are subject to adjustment upon the issuance
         of additional shares of the Company's common stock resulting from stock
         splits, share dividends, and other similar events as well as upon the
         issuance of additional shares or options which are issued in connection
         with the Company's equity investment or as compensation to any
         employee, director, consultant, or other service provider of the
         Company or any subsidiary, other than options to acquire up to 5% of
         the Company's common stock at or less than fair market value. This
         anti-dilution provision only applies upon the issuance of additional
         equity in connection with the Company's interest in Crown Asphalt
         Ridge, LLC or equity issued to any employee, director, consultant or
         other service provider outside of the Company's Long Term Incentive
         Plan.

         Common Stock Warrant - In conjunction with the issuance of the
         preferred stock described above, the Company issued a warrant to the
         holders of the preferred stock. The fair value of the warrant at the
         date of issuance was estimated to be $283,019 and was recorded to
         additional paid-in capital and as a reduction to the stated value of
         the preferred stock. The reduction in preferred stock is being accreted
         over the five-year period from the date of issuance to the earliest
         exercise date of the warrant. Upon the fifth anniversary of the
         issuance of the preferred stock, the warrant becomes exercisable, at
         $.002 per share, into the number of common shares of the Company equal
         to (a) [$5,000,000 plus the product of (i) ($5,000,000 multiplied by
         (ii) 39% (internal rate of return) multiplied by (iii) 5 years]
         (14,750,000), minus (b) the sum of (i) all dividends and other
         distributions paid by the Company on the preferred stock or on the
         common stock received upon conversion of the preferred stock plus (ii)
         the greater of the proceeds from the sale of any common stock received
         by the holder upon the conversion of the preferred stock prior to the
         fifth anniversary date or the terminal value (as defined below) of such
         common stock sold before the fifth anniversary plus (iii) the terminal
         value of the preferred stock and common stock received upon conversion
         of the preferred stock then held, divided by (c) the fair market value
         of the Company's common stock on a weighted average basis for the 90
         days immediately preceding the fifth anniversary date of the issuance
         of the preferred stock. Terminal value is defined as the sum of (i) the
         shares of common stock into which the preferred stock then held is
         convertible, plus (ii) shares of common stock received upon conversion
         of preferred stock, multiplied by the fair market value of the
         Company's common stock on a weighted average basis for the 90 days
         immediately preceding the fifth anniversary date of the issuance of the
         preferred stock.

                                       15
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

         Common Stock Warrant (continued) -The warrants will expire in 2007 and
         is subject to a cap of up to an additional 8% of the Company's fully
         diluted outstanding shares as of September 25, 1997 and other certain
         adjustments.

         Common Stock Options-During the period ended September 30, 2000, the
         Company granted to certain employees stock options to purchase 500,000
         shares of Common Stock. In addition the Company repriced stock options
         to purchase 650,000 shares. These transactions did not result in the
         Company recognizing an expense for financial reporting purposes.

NOTE 10 - LOSS PER SHARE

         The following table is a reconciliation of the net income (loss)
         numerator of basic and diluted net loss per common share for the nine
         months ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                 2000                                 1999
                                                          Loss                                  Loss
                                            Loss         Per Share              Loss         Per Share
                                            ----         ---------              ----         ---------
<S>                                    <C>              <C>                 <C>              <C>
Net Loss                               $ (4,063,632)                        $ (1,159,949)

Redeemable preferred
  stock dividends                          (300,000)                            (300,000)

Net loss attributable to
  common stockholders                  $ (4,363,632)    $ (0.33)            $ (1,459,949)     $ (0.11)

Weighted average common
  shares outstanding -
  basic and diluted                     13,289,427                           13,253,874
</TABLE>

         The Company had at September 30, 2000 and December 31, 1999,
         incremental options and warrants to purchase, computed under the
         treasury stock method, 668,256 shares of common stock that were not
         included in the computation of diluted earnings per share because their
         effect was anti-dilutive. The Company also has preferred stock
         outstanding at September 30, 2000 and December 31, 1999 which is
         convertible into approximately 4,300,000 shares of common stock that
         was not included in the computation of diluted earnings per share as
         its effect was anti-dilutive. Accordingly, diluted earnings per share
         does not differ from basic earnings.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

         On June 20, 2000, MCNIC filed a Complaint in the Third Judicial
         District Court, Salt Lake County, Utah, against Crown Distribution. The
         action seeks to foreclose on alleged mortgage and security interest in
         and to certain real and personal property of Crown Distribution, which
         property constitutes a substantial part of the operating assets of
         Crown Distribution. In summary, in its Complaint, MCNIC does not
         acknowledge its prior commitment to "roll" the working capital loan
         into the working capital line of credit and alleges that Crown
         Distribution is in default on the promissory note evidencing the loan
         to Crown Distribution in the amount of $7,141,930.00. MCNIC further
         alleges that the total amount owed by Crown Distribution to MCNIC is in
         excess of $15,000,000, as well as interest at the

                                       16
<PAGE>

                            CROWN ENERGY CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

NOTE 11 - COMMITMENTS AND CONTINGENCIES (continued)

         rate of 18% from January 1, 2000 until paid in full. The Complaint also
         seeks the appointment of a receiver to ensure and protect the interests
         of MCNIC in the property of Crown Distribution, pending a determination
         by the Court of the merits of the Complaint. Crown Distribution intends
         to vigorously defend against this litigation and believes that it has
         certain available defenses, claims and counterclaims. Crown
         Distribution's management further believe that certain of MCNIC's
         allegations are lacking in either legal or factual basis. However,
         litigation is inherently uncertain and Crown Distribution is therefore
         unable to predict the outcome of the litigation. On July 25, 2000, the
         Company brought suit against MCN, MCNIC and certain officers of MCN and
         MCNIC in the United States District Court for the District of Utah,
         Central Division. The Company alleges claims against defendants for
         breach of fiduciary duties, economic duress, breach of implied
         covenants of good faith and fair dealing, breach of contracts,
         estoppel, intentional interference, and trade libel and slander of
         title as a result of defendants' wrongful and bad faith conduct in the
         joint venture relationships. Damages of an amount exceeding $100
         million are being sought with the full amount of damages on all claims
         to be proven at trial. (See "Part II - Item 1 - Legal Proceedings")

         On August 1, 2000, Crown Distribution filed its Answer and
         Counterclaims to the MCNIC Complaint and named additional counterclaim
         defendants, MCN and certain officers of MCN and MCNIC. The Answer and
         Counterclaims substantially denied all of the allegations set forth in
         the MCNIC Complaint and alleged numerous counterclaims. (See "Part II -
         Item 1 - Legal Proceedings")

         On August 31, 2000, MCNIC filed motions to stay both the state court
         and federal court actions and have them submitted to an arbitration
         panel in accordance with the rules of the American Arbitration
         Association. The Company does not believe either lawsuit should be
         subject to arbitration and filed an answer to both motions on October
         2, 2000 to that effect. On November 8, 2000, the state court signed a
         minute entry stating that MCNIC's motion to stay proceedings pending
         arbitration would be granted. The federal court has yet to decide on
         these motions.

NOTE 12 - CUMULATIVE LOSSES OF MAJORITY OWNED SUBSIDIARY

         The Company, through its wholly owned subsidiary, Capco owns 50.01% and
         MCNIC owns 49.99% of Crown Distribution. Capco is the manager and
         operating agent of Crown Distribution. Crown Distribution has
         cumulative losses totaling approximately $5,693,000 through September
         30, 2000 since being acquired by the Company in 1998. Because there is
         no agreement requiring the minority shareholder, MCNIC, to guarantee
         the subsidiary's debt or such cumulative losses or a commitment to
         provide additional capital, other than working capital, all cumulative
         losses in excess of equity allocable to MCNIC totaling approximately
         $1,892,000 have been included as a loss in the Company's Financial
         Statements.

                                       17
<PAGE>

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

     The following discussion and analysis of the Company's financial condition,
results of operations and related matters includes a number of forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
include, by way of illustration and not limitation, statements containing the
words "anticipates", "believes", "expects", "intends", "future" and words of
similar import which express, either directly or by implication, management's
beliefs, expectations or intentions regarding the Company's future performance
or future events or trends which may affect the Company or its results of
operations.

     Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors, including but not limited to changes in
economic conditions generally or with respect to the Company's asphalt products
market in particular, new or increased governmental regulation, increased
competition, shortages in labor or materials, delays or other difficulties in
shipping or transporting the Company's products, technical or operational
difficulties at the facility of Crown Ridge, difficulties in integrating the
Company's recent joint venture and acquisition related businesses and other
similar risks inherent in the Company's operations or in business operations
generally. Any such risks or uncertainties, either alone or in combination with
other factors, may cause the actual results, performance or achievements of the
Company to differ materially from its anticipated future results, performance or
achievements (which may be expressed or implied by such forward looking
statements). Consequently, the following management's discussion and analysis,
including all forward-looking statements contained therein, is qualified and
limited by the foregoing cautionary factors. Interested persons are advised to
consider all forward-looking statements within the context of such cautionary
factors.

         Liquidity and Capital Resources

     At September 30, 2000, the Company had cash and other current assets of
$12,820,089 as compared to cash and other current assets of $12,334,750 at
December 31, 1999, an increase of $485,339. This increase was primarily due to
higher inventory and accounts receivable balances financed through corresponding
increases in accounts payable and accrued liabilities. Inventory and accounts
receivable increased approximately $3.2 million from the period ended December
31, 1999. This increase was partially offset by the Company's cash operating
loss for the nine month period ended September 30, 2000. The operating loss
resulted from insufficient funds available under its working capital line of
credit to complete its asphalt inventory winterfill purchase program. The
winterfill purchase program involves the purchase of asphalt during the winter
months to fill the available storage capacity, when prices are lower, for
subsequent sale during the asphalt season, typically during the months from
April through October. Management believes, MCNIC, the minority interest owner,
having agreed to provide such line of credit in lieu of third party bank
financing has declined to make available to the Company additional borrowings.
All inventory was therefore purchased from existing cash and operating cash
flow. The Company has accrued interest on the line at an interest rate of 8%. At
September 30, 2000, the line had an outstanding principal balance of
$14,935,222. (See "Part II - Item 1 - Legal Proceedings")

     On March 27, 2000, MCNIC delivered to the Company a notice of default with
respect to the working capital loan, and demanded payment of the outstanding
principal balance plus all interest accrued thereon. MCNIC, immediately
following its notice of default, proposed an extension on the working capital
loan, provided the Company also relinquishes operational control of Crown
Distribution to MCNIC. The Company has endeavored to resolve these issues with
MCNIC on mutually acceptable terms. However, on June 20, 2000, MCNIC filed a
Complaint in the Third Judicial District Court, Salt Lake County, Utah, against
Crown Distribution. The action seeks to foreclose on alleged mortgage and
security interest in and to certain real and personal property of Crown
Distribution, which property constitutes a substantial part of the operating
assets of Crown Distribution. In summary, in its Complaint, MCNIC does not
acknowledge its prior agreement to extinguish the working capital loan and
"roll" such loan into the working capital line of credit. The Complaint alleges
that Crown Distribution is in default on the promissory note evidencing the
working capital loan to Crown Distribution in the amount of $7,141,930.00. MCNIC
further alleges that the total amount owed by Crown Distribution to MCNIC is in
excess of $15,000,000, as well as interest at the rate of 18% from January 1,
2000 until paid in full. The Complaint also seeks the appointment of a receiver
to ensure and protect the interests of MCNIC in the property of Crown
Distribution, pending a determination by the Court of the merits of the
Complaint.

                                       18
<PAGE>

                  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULT OF OPERATIONS (continued)

         Management of the Company believes that the working capital loan was
fully satisfied and replaced by the working capital line of credit and no
default has occurred under the working capital loan or working capital line of
credit. The Company further believes that MCNIC is improperly attempting to
demand repayment of the working capital loan. Additionally, Management believes
that MCNIC is improperly attempting to gain control of Crown Distribution and
other aspects of the Company's operations. The Company and Crown Distribution
intend to vigorously defend against this litigation. An Answer and Counterclaims
to the MCNIC Complaint were filed on August 1, 2000 with the court and named
additional counterclaim defendants, MCN Energy Group, Inc. ("MCN") and certain
officers of MCN and MCNIC. The Answer and Counterclaims substantially denied all
of the allegations set forth in the MCNIC Complaint and made certain defensive
arguments, claims and counterclaims. The Answer and Counterclaims further argued
that certain of MCNIC's allegations are lacking in either legal or factual
basis.

         Interested persons should note that litigation is inherently uncertain
and the Company and Crown Distribution are therefore unable to predict the
outcome of the litigation. Should MCNIC prevail in the action against Crown
Distribution, and depending upon the extent and nature of any relief granted by
the Court, Crown Distribution may be severely and adversely impacted and may
lose possession of some or all of its primary assets and sources of revenues.
Further, since Crown Distribution provides a very significant portion of the
Company's revenues from operations, the Company is likely to be materially and
adversely impacted by any adverse outcome of MCNIC's litigation. On the other
hand, interested persons should note that, subject of course to available
equitable and other creditor remedies, neither the MCNIC working capital loan or
working capital line to Crown Distribution contain cross-default provisions
giving MCNIC any right to declare a default or to seek control or possession
over the assets or operations of Crown Ridge or the Company's interest in Crown
Ridge or any other assets of the Company.

         Management of the Company intends to take all actions necessary or
appropriate to assert the Company's rights and preserve its rights and assets in
Crown Distribution and other aspects of its operations. As a result, the Company
on July 25, 2000 filed suit in United States District Court for the District of
Utah, Central Division against MCN, MCNIC and certain officers of MCN and MCNIC
in which the Company alleges claims against defendants for breach of fiduciary
duties, economic duress, breach of implied covenants of good faith and fair
dealing, breach of contracts, estoppel, intentional interference, and trade
libel and slander of title as a result of defendants' wrongful and bad faith
conduct in the joint venture relationships. Damages of an amount exceeding $100
million are being sought with the full amount of damages on all claims to be
proven at trial. MCNIC has since filed motion to compel that all actions
relating to the dispute be submitted to arbitration in accordance with the rules
of the American Arbitration Association. The Company strongly believes that
arbitration should not be required and has filed an answer to that effect.

         While there is no way of predicting or knowing the outcome of the
litigation which is now in process, the Company is confident that it is
asserting its claims in good faith, has a reasonable basis for pursuing them and
will continue to pursue them with vigor. Given the wide range of potential
actions which MCNIC might take, and the equally wide range of defenses,
counterclaims and other actions which the Company might assert and/or take, it
is difficult to predict possible outcomes at this time. Again, interested
persons should note the significant and material risks facing the Company, as
well as the related material, negative impacts the Company would experience in
the event the Company does not prevail.

         Crown Distribution also owed MCNIC an additional $5,325,723 as of
September 30, 2000 with respect to the Preferential Capital Contribution which
funded Crown Distribution's acquisition of the assets of Petro Source. The
Preferential Capital Contribution yields a 15% rate of return and is payable
solely from 50% of the cash flow from Crown Distribution's operations.

         The Company believes its asphalt distribution business, which is
operated through Capco, is a business whose success is not dependent on the
Company's interest in the Crown Ridge facility. However, the asphalt
distribution business is capital intensive and requires substantial investments
to acquire terminal storage, blending, and raw material assets. For instance,
the Rawlins, Wyoming asphalt terminal, acquired by Capco in 1999, has not yet
generated positive cash flow and requires working capital to fund its ongoing
operations. Under the Company's contractual relationship with MCNIC, MCNIC has
certain rights to participate in additional business opportunities, if any,
which may be pursued by the Company. MCNIC has agreed to jointly own the Rawlins
asphalt terminal in a new, separate joint venture,

                                       19
<PAGE>

                  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULT OF OPERATIONS (continued)

Crown Distribution II, but has not taken the steps necessary to consummate the
transaction. Assuming that both the Company and MCNIC satisfy their respective
obligations to contribute assets to and otherwise fund Crown Distribution II, it
is anticipated that Crown Distribution II will be owned 50.01% by the Company
and 49.99% by MCNIC. The final operating agreement for Crown Distribution II was
not completed as of the date of this Report, and no assets have been contributed
to Crown Distribution II. The Company expects that MCNIC will fund its
proportionate share of all costs and losses retroactive to the acquisition date
of May 12, 1999. Additionally, the Rawlins asphalt terminal will require a
separate working capital line of credit to operate the business, which line of
credit the Company expects will be jointly funded by MCNIC and the Company.
Therefore, until such time as the Rawlins asphalt terminal generates positive
cash flow, the Company expects that the operations at the Rawlins asphalt
terminal will require working capital provided by the Company.

         The Company remains open to other asphalt related business
opportunities to complement its existing asphalt distribution capabilities.
There can be no assurance that the Company can obtain additional capital
financing required to finance such transactions on acceptable terms and
conditions.

         MCNIC has advised the Company it will no longer provide funding under
the working capital line of credit as previously agreed and provided by MCNIC.
The Company relies on the working capital line of credit to purchase inventory
and fund other working capital requirements for operations. The Company is
seeking other ways to finance its working capital requirements, but there is no
assurance that such working capital financing can be secured by the Company.

         The Company has a portion of its accounts receivable subject to the
risks and uncertainties of litigation (See "Part II, Item 1. Legal Proceedings")
and subject to related collection risks. In the event that the Company is unable
to collect these amounts, or the Company is unable to secure the necessary
working capital line from third party sources, or if the Company's operating
losses and working capital deficits continue, the Company may not have
sufficient capital to operate through 2001. Thus, the risk exists that the
Company may not be able to continue as a going concern. Furthermore, if Crown
Ridge approves an additional capital contribution for the modification to the
facility, which approval requires the unanimous consent of the Company and
MCNIC, and the Company is unable to finance its approximate 25% of such capital
contribution, its sharing ratio in Crown Ridge may be diluted.

         As of September 30, 2000, the Company has made cash contributions of
approximately $5.7 million to Crown Ridge. During the start-up of the Crown
Ridge facility, mechanical and process difficulties were experienced that
affected production economics. Crown Ridge conducted a pilot study to develop a
solution to these problems, and is currently reviewing the results of the pilot
and engineering the necessary modifications to the facility. Should such delays
continue, or should the facility be unable to operate economically, the Company
believes this would significantly impact Crown Ridge's ability to continue as a
going concern and would adversely impact the Company's operations and financial
condition.

         Results of Operations

For the three month period ended September 30, 2000, compared to the three
months ended September 30, 1999

         Total revenue decreased from $15,848,548 for the three month period
ended September 30, 1999 to $11,556,473 for the same period in 2000, a decrease
of $4,292,075 (27%). The decrease was due to the Company's inability to submit
competitive bids due to its lack of working capital available to effectively
continue its winterfill inventory program and the termination of the processing
agreement with the Santa Maria Refinery that expired April 30, 1999. The Company
sold approximately 52,000 tons of asphalt during the period as compared to
80,000 tons for the same period in 1999. The Company is presently engaged in
litigation with the owners of the Santa Maria Refinery (See "Part II - Item 1 -
Legal Proceedings).

         Cost of sales decreased from $12,536,520 for the three month period
ended September 30, 1999 to $9,974,752 for the same period in 2000, a decrease
of $2,561,768 (20%). This decrease was due to lower sales volumes during the
period.

                                       20
<PAGE>

                  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULT OF OPERATIONS (continued)

         Operating expenses decreased from $1,577,353 for the three month period
ended September 30, 1999 to $1,191,947 for the same period in 2000, a decrease
of $385,406 (24%). This decrease was due to lower through put for the period and
resulting operating cost cutbacks and the termination of the Santa Maria
Processing Agreement.

         General and administrative expenses increased from $599,597 for the
three month period ended September 30, 1999 to $649,608 for the same period in
2000, an increase of $50,011 (8%). This change was primarily due to increased
legal expenses during the period.

         Depreciation and amortization increased from $154,453 for the three
month period ended September 30, 1999 to $234,028 for the same period in 2000,
an increase of $79,575 (52%). This increase was due to approximately $2 million
in construction in progress being completed, put into operation and depreciated
during the period.

         Interest and other income/expenses decreased from net other expenses of
$608,376 for the three month period ended September 30, 1999 to net other
expenses of $557,316 for the same period ended September 30, 2000, a decrease of
$51,060 (8%). The 2000 total is comprised of interest costs related to the
Company's working capital line, preferential loan and other debt for its asphalt
distribution business of $635,170 and losses of $20,566 related to equity in the
losses of Crown Ridge. These amounts were partially offset by interest and other
income of $98,420. (See "Part I - Note 5. Equity Affiliate")

         Minority interest of $4,196 represents Foreland's approximate 33%
interest in CAT, LLC.

For the nine month period ended September 30, 2000, compared to the nine months
ended September 30, 1999

         Total revenue decreased from $30,725,129 for the nine month period
ended September 30, 1999 to $19,745,578 for the same period in 2000, a decrease
of $10,979,551 (36%). The decrease was due to the Company's inability to submit
competitive bids due to its lack of working capital available to effectively
continue its winterfill inventory purchases and the termination of the
processing agreement with the Santa Maria Refinery that expired April 30, 1999.
The Company sold approximately 94,000 tons of asphalt during the period as
compared to 162,000 tons for the same period in 1999. The Company is presently
engaged in litigation with the owners of the Santa Maria Refinery (See "Part II
- Item 1 - Legal Proceedings).

         Cost of sales decreased from $23,156,140 for the nine month period
ended September 30, 1999 to $16,613,213 for the same period in 2000, a decrease
of $6,542,927 (28%). This decrease was due to lower sales volumes during the
period.

         Operating expenses decreased from $4,722,713 for the nine month period
ended September 30, 1999 to $2,820,730 for the same period in 2000, a decrease
of $1,901,983 (40%). This decrease was due to lower through put for the period
and resulting operating cost cutbacks and the termination of the Santa Maria
Processing Agreement

         General and administrative expenses decreased from $1,833,657 for the
nine month period ended September 30, 1999 to $1,743,465 for the same period in
2000, a decrease of $90,192 (5%). This change was due to the reduction of
expenses and the collection of a receivable that was expensed as a bad debt in
the prior year.This was partially offset by an increase in legal expenses.

         Interest and other income/expenses increased from net other expenses of
$1,721,366 for the nine month period ended September 30, 1999 to net other
expenses of $1,985,435 for the same period in 2000, an increase of $264,069
(15%). The 2000 total is comprised of interest costs related to the Company's
working capital line, preferential loan and other debt for its asphalt
distribution business of $1,901,623 and losses of $454,579 related to equity in
the losses of Crown Ridge. These amounts were partially offset by interest and
other income of $370,767. (See "Part I - Note 5. Equity Affiliate")

         Minority interest of $21,410 represents Foreland's approximate 33%
interest in CAT, LLC.

                                       21
<PAGE>

       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company does not believe it is subject to the material risks of
loss related to certain market risks, such as interest rate risks, foreign
currency exchange rate risks or similar risks, and therefore the Company does
not engage in transactions, such as hedging or similar transactions in
derivative financial instruments, intended to reduce its exposure to such risks.
However, the Company is subject to general market fluctuations related to the
purchase of its basestock asphalt and may suffer reduced operating margins to
the extent its increased costs are not passed through to its customers. Such
prices generally fluctuate with the price of crude oil. The Company is prevented
in certain contracts with MCNIC from utilizing any hedging strategies to
minimize any market price changes. The Company believes the inability to protect
itself from market fluctuations may negatively impact its profit margins.

         The Company is also subject to certain price escalation and
de-escalation clauses in its asphalt distribution sales contracts. The Company
supplies asphalt to projects in certain states where regulations provide for
escalation and de-escalation of the price for such asphalt relative to the price
difference from the time the project is awarded to the successful bidding
company and the time the project is completed. The Company includes such
de-escalation risk into its bid process and does not believe it has material
exposure to risk resulting from these regulations.

                                       22
<PAGE>

                          PART II. - OTHER INFORMATION

ITEM 1.  Legal Proceedings

         On June 20, 2000, MCNIC filed a Complaint in the Third Judicial
District Court, Salt Lake County, Utah, against Crown Distribution. The action
seeks to foreclose on alleged mortgage and security interest in and to certain
real and personal property of Crown Distribution, which property constitutes a
substantial part of the operating assets of Crown Distribution. In summary, in
its Complaint, MCNIC does not acknowledge its prior commitment to "roll" the
working capital loan into the working capital line of credit and alleges that
Crown Distribution is in default on the promissory note evidencing the Loan to
Crown Distribution in the amount of $7,141,930.00. MCNIC further alleges that
the total amount owed by Crown Distribution to MCNIC is in excess of
$15,000,000, as well as interest at the rate of 18% from January 1, 2000 until
paid in full. The Complaint also seeks the appointment of a receiver to ensure
and protect the interests of MCNIC in the property of Crown Distribution,
pending a determination by the Court of the merits of the Complaint. Crown
Distribution intends to vigorously defend against this litigation and believes
that it has certain available defenses, claims and counterclaims. Crown
Distribution's managements further believe that certain of MCNIC's allegations
are lacking in either legal or factual basis. However, litigation is inherently
uncertain and Crown Distribution is therefore unable to predict the outcome of
the litigation.

         On July 25, 2000, the Company brought suit against MCN, MCNIC and
certain officers of MCN and MCNIC. The suit was brought in the United States
District Court for the District of Utah, Central Division, and is styled Crown
Energy Corporation, Crown Asphalt Corporation, and Crown Asphalt Products
Company v. MCN Energy Group, Inc., MCNIC Pipeline & Processing Company, Howard
L. ("Lee") Dow III, and William E. Kraemer, Civil No. 2:00CV-05873ST. The
Company's action arises from the joint ventures between affiliates of the
Company and MCNIC with regard to the asphalt business in the Western United
States involving the mining, processing, storage, manufacture, and marketing of
asphalt the Company alleges claims against defendants for breach of fiduciary
duties, economic duress, breach of implied covenants of good faith and fair
dealing, breach of contracts, estoppel, intentional interference, and trade
libel and slander of title as a result of defendants' wrongful and bad faith
conduct in the joint venture relationships. Damages of an amount exceeding $100
million are sought on the Company's claims for breach of fiduciary duties,
economic duress, and breach of implied covenants of good faith and fair dealing,
with the full amount of damages on all claims to be proven at trial. While there
is no way of predicting or knowing the outcome of the litigation which is now in
process, the Company is confident in its claims and will continue to pursue them
with vigor.

         On August 1, 2000, Crown Distribution filed its Answer and
Counterclaims to the MCNIC Complaint and named additional counterclaim
defendants, MCN Energy Group, Inc., Howard L. ("Lee") Dow III, and William E.
Kraemer. Crown Distribution's Answer and Counterclaims substantially denied all
of the allegations set forth in the MCNIC Complaint and alleged numerous
counterclaims, including breach of fiduciary duty, economic duress, breach of
implied covenants of good faith and fair dealing, breach of contracts, estoppel,
intentional interference, trade libel and slander of title, and abuse of
process. Crown Distribution, pursuant to its counterclaims, has requested a jury
trial and is seeking relief in the way of damages in amounts to be proven at
trial, punitive damages, attorney's fees, interest, costs and any other relief
to which they may be entitled. While there is no way of predicting or knowing
the outcome of the litigation which is now in process, Crown Distribution is
confident in its defenses and counterclaims and will continue to pursue them
with vigor.

         On August 31, 2000, MCNIC filed motions to stay both the state court
and federal court actions and have them submitted to an arbitration panel in
accordance with the rules of the American Arbitration Association. The Company
does not believe either lawsuit should be subject to arbitration and filed an
answer to both motions on October 2, 2000 to that effect. On November 8, 2000,
the state court signed a minute entry stating that MCNIC's motion to stay
proceedings pending arbitration would be granted. The federal court has yet to
decide on these motions.

         On November 1, 2000, the United States District Court for the Central
District of California, Southern Division, entered an order continuing from
November 7, 2000 to February 6, 2001 the trial of the lawsuit filed by Crown
Distribution and Capco against Santa Maria Refining company, Saba Petroleum
Company and Greka Energy Corporation (collectively referred to as the
"Defendants"). The claims asserted by Crown Distribution and Capco against
Defendants arise from Defendants' alleged termination of a processing agreement
and subsequent refusal to redeliver asphalt to Crown Distribution. The trial is
expected to take 7 trial days. Due to the uncertainties inherent in ay lawsuit,
there can be no assurance that Crown Distribution and Capco will ultimately
prevail.

ITEM 2.  Changes in Securities

         None.

ITEM 3.  Defaults upon Senior Securities

         On March 27, 2000, MCNIC delivered to the Company a notice of default
with respect to the working capital loan, and demanded payment of the
outstanding principal balance plus all interest accrued thereon. Management of
the Company believes that the working capital loan was fully satisfied and
replaced by the working capital line of credit and no default has occurred under
the working capital loan or working capital line of credit. At September 30,
2000, the line had an outstanding principal balance of $14,935,222. The Company
further believes that MCNIC is improperly attempting to demand repayment of the
working capital loan. (See "Part I - Item 2 - Management's Discussion and
Analysis of Financial Condition and Results of Operations.")

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

         None.

ITEM 5.  Other Information

         The Company postponed its 2000 Annual Meeting of Shareholders until a
future date to be determined. The Annual Meeting was tentatively scheduled for
June 21, 2000. The Company is presently evaluating its options and strategic
alternatives and believes postponing its Annual Meeting will enable it to
further explore and evaluate such matters and to present any related matters, if
required under applicable corporate laws, to shareholders at the Annual Meeting.

ITEM 6.  Exhibits and Reports on Form 8-K

         The Company filed a Form 8-K on August 4, 2000 to report that on July
25, 2000, the Company brought suit against MCN, MCNIC and certain officers of
MCN and MCNIC in the United States District Court for the District of Utah,
Central Division. The Company alleges claims against defendants for breach of
fiduciary duties, economic duress, breach of implied covenants of good faith and
fair dealing, breach of contracts, estoppel, intentional interference, and trade
libel and slander of title as a result of defendants' wrongful and bad faith
conduct in the joint venture relationships. Damages of an amount exceeding $100
million are being sought with the full amount of damages on all claims to be
proven at trial.

         On August 1, 2000, Crown Distribution filed its Answer and
Counterclaims to the MCNIC Complaint and named additional counterclaim
defendants, MCN and certain officers of MCN and MCNIC. The Answer and
Counterclaims substantially denied all of the allegations set forth in the MCNIC
Complaint and alleged numerous counterclaims. (See "Part 1 - Item 2 - Liquidity
and Capital Resources.")

         The Company filed a form 8-K on October 23, 2000 and a form 8-KA on
October 31, 2000 to report a change in the company auditor to Tanner + Co. The
Company believes this change will reduce its required auditing expense.

                                       23
<PAGE>

                             PART III. - SIGNATURES

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

                                              CROWN ENERGY CORPORATION
                                              (Registrant)

Date: November 14, 2000                        By: /s/ JAY MEALEY
                                                   ---------------
                                                   Jay Mealey, Chief Executive
                                                   Officer

Date: November 14, 2000                        By: /s/ ALAN PARKER
                                                   ----------------
                                                   Alan Parker, Controller

                                       24