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, 1998
                              ------------------------------------------------

                                       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 of              (I.R.S.Employer Identification No.)
incorporation or organization)

             215 South State, Suite 550, 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         No   X    
   -------    -------

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

There were  12,668,512  shares of $.02 par value common stock  outstanding as of
November 13, 1998.

<PAGE>

                            CROWN ENERGY CORPORATION

                                      INDEX
                                      -----
<TABLE>
<CAPTION>
                                                                                    PAGE(S)
                                                                                    -------


PART I.       Financial Information


     ITEM 1.  Financial Statements

<S>                                                                                       <C>
              Condensed Consolidated Balance Sheets at September 30,
               1998 (unaudited) and December 31, 1997                                     3

              Condensed Consolidated Statement of Operations for the Three
               Months ended September 30, 1998 and 1997 (unaudited)                       5

              Condensed Consolidated Statement of Operations for the Nine
               Months ended September 30, 1998 and 1997 (unaudited)                       6

              Condensed Consolidated Statement of Cash Flows for the
               Nine Months ended September 30, 1998 and 1997 (unaudited)                  7

              Notes to Condensed Consolidated Financial Statements
               (unaudited)                                                                9


     ITEM 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations                                       14


PART II.      Other Information

     ITEM 1.  Legal Proceedings                                                          17

     ITEM 2.  Changes in Securities                                                      17

     ITEM 3.  Defaults upon Senior Securities                                            17

     ITEM 4.  Submission of Matters to a Vote of Security Holders                        17

     ITEM 5.  Other Information                                                          17

     ITEM 6.  Exhibits and Reports on Form 8-K                                           17


PART III.     Signatures                                                                 19
</TABLE>


<PAGE>

                          PART I-FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                            CROWN ENERGY CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS


<TABLE>
<CAPTION>
                                                        September 30,
                                                            1998              December 31,
                                                         [unaudited]              1997
                                                        ------------         ------------
<S>                                                       <C>                  <C>       
CURRENT ASSETS:
     Cash                                                 $2,694,034           $3,100,765
     Trade receivables, net                                8,019,578               10,808
     Inventory                                             6,374,275                    0
     Other current assets                                    883,429              177,416
                                                        ------------         ------------
          Total Current Assets                            17,971,316            3,288,989

PROPERTY AND EQUIPMENT, net                                4,248,075                7,383

EQUITY INVESTMENT IN A LIMITED LIABILITY
     COMPANY                                               4,738,410            3,412,355

GOODWILL                                                   5,018,410              354,930

OTHER ASSETS, net                                             94,554                     


TOTAL ASSETS                                             $32,070,765           $7,063,657
                                                        ============         ============
</TABLE>


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

                                       3
<PAGE>

                            CROWN ENERGY CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                                                     September 30,
                                                                          1998          December 31,
                                                                      [Unaudited]           1997
                                                                     ------------      ------------

<S>                                                                  <C>               <C>         
CURRENT LIABILITIES
     Accounts payable                                                $  4,229,843      $      9,535
     Line of credit with a related party                               10,266,571                 0
     Current portion-long term debt                                        61,493                 0
     Dividends payable                                                    377,110            65,414
     Other current liabilities                                            889,662            59,567
                                                                     ------------      ------------

     Total Current Liabilities                                         15,824,679           134,516
                                                                     ------------      ------------

LONG-TERM DEBT                                                            958,435                 0

PREFERENTIAL DEBT WITH A RELATED PARTY                                  6,000,000                 0

MINORITY INTEREST                                                       2,197,936                 0

STOCKHOLDERS' EQUITY:
      Preferred stock, $.005 par value, 1,000,000 shares
         authorized, 500,000 $10 Series A Cumulative Convertible
         Shares issued and outstanding                                      2,500             2,500
     Common stock, $.02 par value, 50,000,000 shares
         authorized, 12,668,512 and 11,722,216 issued and
         outstanding at 1998 and 1997, respectively                       253,370           234,444
     Capital in excess of par value                                    10,719,376        10,165,245
     Common stock subscription receivable from related parties           (572,058)                0
     Retained deficit                                                  (3,313,473)       (3,473,048)
                                                                     ------------      ------------

          Total Stockholders' Equity                                    7,089,715         6,929,141
                                                                     ------------      ------------


          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 32,070,765      $  7,063,657
                                                                     ============      ============
</TABLE>

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

                                       4
<PAGE>

                            CROWN ENERGY CORPORATION

                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                         For the Three Months Ended
                                                                September 30,
                                                      ------------------------------
                                                         1998               1997
                                                      ------------      ------------

<S>                                                   <C>               <C>         
REVENUE:
         Asphalt revenue                              $ 15,734,718      $          0
                                                      ------------      ------------

Total Revenue                                           15,734,718                 0
                                                      ------------      ------------

COSTS AND OPERATING EXPENSES:
         Cost of goods sold                             11,299,005                 0
         Operating expenses                              2,178,830                 0
                                                      ------------      ------------

Total Costs and Operating Expenses                      13,477,835                 0
                                                      ------------      ------------

GROSS PROFIT                                             2,256,883                 0

         General and administrative expenses               438,184           145,011
         Depletion, depreciation and amortization          133,332                 0
                                                      ------------      ------------

INCOME (LOSS) FROM OPERATIONS                            1,685,367          (145,011)
                                                      ------------      ------------

OTHER INCOME (EXPENSES):
         Interest and other income                          97,254             8,786
         Interest and other expense                       (475,031)           (9,768)
                                                      ------------      ------------

Total Other Expenses, net                                 (377,777)             (982)
                                                      ------------      ------------

MINORITY INTEREST                                          690,884                 0

INCOME BEFORE TAX PROVISION                                616,706          (145,993)
                                                      ------------      ------------

PROVISION FOR TAXES:
         Deferred tax expense (benefit)                          0           (49,638)
                                                      ------------      ------------

NET INCOME (LOSS)                                     $    616,706      ($    96,355)
                                                      ============      ============

BASIC EARNINGS PER SHARE                              $       0.05      ($      0.01)
                                                      ============      ============

DILUTED EARNINGS PER SHARE                            $       0.03      ($      0.01)
                                                      ============      ============
</TABLE>

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

                                       5
<PAGE>

                            CROWN ENERGY CORPORATION

                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                          For the Nine Months Ended
                                                                September 30,
                                                      ------------------------------
                                                          1998               1997
                                                      ------------      ------------
<S>                                                   <C>               <C>         
REVENUE:
         Asphalt revenue                              $ 15,921,645      $          0
         Oil and gas production                                  0            77,496
                                                      ------------      ------------

Total Revenue                                           15,921,645            77,496
                                                      ------------      ------------

COSTS AND OPERATING EXPENSES:
         Production costs and related taxes                      0            54,653
         Cost of goods sold                             11,424,955                 0
         Operating expenses                              2,179,646                 0
                                                      ------------      ------------

Total Costs and Operating Expenses                      13,604,601            54,653
                                                      ------------      ------------

GROSS PROFIT                                             2,317,044            22,843

         General and administrative expenses               756,410           299,009
         Depletion, depreciation and amortization          133,332            23,817
                                                      ------------      ------------

INCOME (LOSS) FROM OPERATIONS                            1,427,302          (299,983)
                                                      ------------      ------------

OTHER INCOME (EXPENSES):
         Interest and other income                         217,440             4,928
         Interest and other expense                       (475,535)          (17,010)
         Loss on sale of subsidiary                              0          (751,461)
                                                      ------------      ------------

Total Other Expenses, net                                 (258,095)         (763,543)
                                                      ------------      ------------

MINORITY INTEREST                                         (697,935)                0

INCOME BEFORE TAX PROVISION                                471,272        (1,063,526)
                                                      ------------      ------------

PROVISION FOR TAXES:
         Deferred tax expense (benefit)                          0          (361,599)
                                                      ------------      ------------

NET INCOME (LOSS)                                     $    471,272         ($701,927)
                                                      ============      ============

BASIC EARNINGS PER SHARE                              $       0.04            ($0.06)
                                                      ============      ============

DILUTED EARNINGS PER SHARE                            $       0.03            ($0.06)
                                                      ============      ============
</TABLE>

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

                                       6
<PAGE>

                            CROWN ENERGY CORPORATION

                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                        For the Nine Months Ended
                                                                                               September 30,
                                                                                     ------------------------------
                                                                                         1998               1997
                                                                                     ------------      ------------
<S>                                                                                  <C>               <C>          
Cash Flows From Operating Activities:
       Net income (loss)                                                             $    471,271      ($   701,927)
                                                                                     ------------      ------------

       Adjustments  to  reconcile  net  loss  to  net  cash  used  by  operating
           activities:
                Amortization, depreciation and depletion                                  133,332            23,817
                Minority interest                                                         697,936                 0
                Net effect of sale of subsidiary                                                0           844,926
                Change in assets and liabilities:
                    Trade receivable                                                   (6,484,287)           17,357
                    Inventory                                                           2,045,972                 0
                    Other assets                                                         (392,023)          (60,187)
                    Accounts payable                                                    1,963,728            (2,550)
                    Other current liabilities                                             789,494           (90,929)
                    Line of credit with related party                                   3,124,647                 0
                    Deferred tax liability                                                      0          (361,599)
                                                                                     ------------      ------------

                           Total adjustments                                            1,878,799           370,835
                                                                                     ------------      ------------

                           Net Cash Provided by (Used in) Operating Activities          2,350,070          (331,092)
                                                                                     ------------      ------------

Cash Flows From Investing Activities:
       Additions to oil sand properties                                                         0           (16,152)
       Additions to property and equipment                                             (1,031,361)                0
       Equity investment in limited liability company                                  (1,326,055)                0
       Payment received on note receivable                                                      0            75,000
       Purchase of net asphalt distribution assets                                    (16,061,243)                0
                                                                                     ------------      ------------

                           Net Cash Used by
                                Investing Activities                                  (18,418,659)           58,848
                                                                                     ------------      ------------

Cash Flows From Financing Activities:
       Proceeds from line of credit from related party                                  7,141,930                 0
       Proceeds from preferential loan from related party                               6,000,000                 0
       Proceeds from minority interest                                                  1,500,000                 0
       Net changes in long-term debt                                                    1,019,928            (9,442)
       Net proceeds from issuance of convertible debenture                                      0           150,000
       Net proceeds from sale of common stock                                                   0           300,000
                                                                                     ------------      ------------

                           Net Cash Provided by Used in Financing Activities         $ 15,661,858      $    440,558
                                                                                     ------------      ------------
</TABLE>
              The accompanying notes are an integral part of these
                        consolidated financial statements

                                       7

<PAGE>

                            CROWN ENERGY CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   [Continued]


<TABLE>
<CAPTION>
                                                      For the Nine Months Ended
                                                             September 30,
                                                     ----------------------------
                                                         1998             1997
                                                     -----------      -----------

<S>                                                  <C>              <C>        
         Net Increase (Decrease) in Cash:            ($  406,731)     $   168,314
                                                     ===========      ===========

Cash at Beginning of Period                          $ 3,100,765      $   142,772
                                                     ===========      ===========

Cash at End of Period                                $ 2,694,034      $   311,086
                                                     ===========      ===========


Supplemental Disclosure of Cash Flow Information
       Cash paid during the period:
           Interest                                  $    52,670      $     4,844
                                                     ===========      ===========

           Income taxes                                     --               --
                                                     ===========      ===========
</TABLE>



Supplemental Schedule of Non-cash Investing and Financing Activities:

       For the period ended September 30, 1998:

                None

       For the period ended September 30, 1997:

                The company  issued  45,000 shares of common stock in payment of
accounts payable and oil sand project costs.

                The Company  issued  56,877 shares of common stock in payment of
$25,985 in long-term debt.

                The Company  issued  64,693  shares of common stock in a partial
debenture conversion.



              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, 1998 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, 1997 Annual
                  Report on Form 10-K.  The results of operations for the period
                  ended September 30, 1998 are not necessarily indicative of the
                  operating results for the full year.

                  ORGANIZATION

                  Crown Energy Corporation ["Crown" or the "Registrant"], a Utah
                  corporation,  was organized on March 17, 1981. Crown's primary
                  activities  have been the  acquisition  and development of oil
                  and gas leases.

                  BuenaVentura    Resources   Corporation   ["BVRC"],   a   Utah
                  corporation,  was organized  October 24, 1985.  Crown acquired
                  100% of BVRC on  September  30, 1992.  On August 6, 1997,  the
                  name of BVRC was changed to Crown Asphalt Corporation ["CAC"].
                  On September  1, 1997,  the  corporation  entered into a joint
                  venture  with  MCNIC  Pipeline  and   Processing   Company  to
                  construct  and  operate  an  asphalt  production  facility  at
                  Asphalt Ridge (See Note 2 - Formation of Joint  Venture).  The
                  Company's  asphalt   production   business  is  CAC's  primary
                  business activity.

                  Crown Asphalt Products Company ("CAPCO") was formerly known as
                  Energy Technologies Corporation. CAPCO was formed in 1991, but
                  until recently has been a dormant entity. The Company recently
                  activated  CAPCO for the  purpose  of  developing  an  asphalt
                  marketing and  distribution  business.  On July 2, 1998, CAPCO
                  formed Crown  Asphalt  Distribution,  LLC ("CAD"),  with MCNIC
                  Pipeline and Processing  Company ("MCNIC") a subsidiary of MCN
                  Energy Group, Inc. ("MCN"), a large diversified energy holding
                  company with approximately $4 billion in assets to acquire the
                  asphalt  distribution  assets of Petro Source Asphalt Company.
                  CAD is operated by CAPCO.

                  PRINCIPLES OF CONSOLIDATION

                  The consolidated  financial statements include the accounts of
                  the  Company   and  its   majority-owned   subsidiaries.   All
                  significant inter-company transactions have been eliminated in
                  consolidation.


                                       9
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


         NOTE 2 - FORMATION OF JOINT VENTURE

                  On  August  1,  1997,  Crown's  wholly-owned  subsidiary,  CAC
                  entered  into a joint  venture with MCNIC,  The joint  venture
                  will operate  through  Crown  Asphalt  Ridge,  L.L.C.,  a Utah
                  limited liability company, ("Crown Ridge") and will be devoted
                  to extracting  commercially marketable products from CAC's oil
                  sand  reserves  (the  "Reserves")  located at Asphalt Ridge in
                  eastern Utah.

                  MCNIC and CAC will  initially  hold sharing  ratios of 75% and
                  25%, respectively,  in profits,  losses and obligations of the
                  L.L.C.  The  forgoing  ratios will be adjusted to provide each
                  party with a 50% sharing ratio upon the achievement of certain
                  payouts to MCNIC.  CAC's required capital  contribution to the
                  L.L.C.  consists of (i) CAC's rights under  certain  equipment
                  leases  with a fair market  value of up to $3.5  million to be
                  obtained by CAC; (ii) the  Sublicense  of Crown's  proprietary
                  oil sands refining  technology  from Park Guymon  Enterprises,
                  Inc.;  (iii) the  capital  reserves  (which were valued at the
                  time of the  formation of the L.L.C.  at $500,000) and (iv) an
                  amount  of  cash,  if  any,  needed  to  bring  CAC's  capital
                  contributions  up to 25% of the capital  required to construct
                  the initial oil sands refining  plant.  After giving effect to
                  the value of the items described  above,  MCNIC, in turn, will
                  be required to fund 75% of the cash  required to construct the
                  initial   plant   contemplated   by  the  L.L.C.'s   Operating
                  Agreement.

         NOTE 3 - ACQUISITION OF ASSETS

                  On July 2, 1998, Crown Asphalt Distribution, L.L.C. ("CAD"), a
                  newly formed limited  liability  company,  the sole members of
                  which are MCNIC and CAPCO, a wholly owned subsidiary of Crown,
                  completed the acquisition of the inventory and assets of Petro
                  Source  Asphalt  Company  ("Seller"),   a  Texas  corporation,
                  including  asphalt supply and marketing  contracts,  owned and
                  leased  equipment,   personal  property,  fixtures,  equipment
                  leases, real estate leases, technology licenses, other related
                  agreements, certain intellectual property, products inventory,
                  and ownership, leasehold or other contractual interests in and
                  to asphalt distribution  facilities in Utah, Colorado,  Nevada
                  and  Arizona and a refinery in Santa  Maria,  California  (the
                  "Acquired Assets").

                           CAD is owned by CAPCO  (50.01%)  and MCNIC  (49.99%).
                  The business of CAD is operated by CAPCO. No officer, director
                  or affiliate  of the  Registrant  has a material  relationship
                  with the  Seller.  The  Acquired  Assets  (excluding  products
                  inventory)  were  purchased  for  $7.5  million,   the  amount
                  determined  by the parties to be the fair market value of such
                  assets, with capital contributed to CAD by MCNIC. The products
                  inventory  had an agreed upon fair market value of  $6,797,932
                  and was purchased with the proceeds of a working  capital loan
                  to CAD from MCNIC.  To finance the  acquisition,  MCNIC funded
                  the  $14,641,930   acquisition  through  a  combination  of  a
                  $6,000,000 Preferential contribution,  which yields 15% and is
                  payable  solely out of 50% of the net cash flow from CAD and a
                  working capital line,  which accrues  interest at 8% (see Note
                  5).


                                       10
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS



         NOTE 4 - PROCESSING AGREEMENT EXPIRATION

                  The Company, through its subsidiary, CAD has an agreement with
                  Santa  Maria  Refining  Company  ("SMRC")  and SABA  Petroleum
                  whereby  it  purchases  crude oil,  processes  it at the Santa
                  Maria  Refinery  and markets  the slate of products  produced,
                  primarily  asphalt.  This  agreement was acquired  through the
                  Petro  Source asset  acquisition.  The profits of the refinery
                  are  split  approximately  50% to Crown  and 50% to SMRC.  The
                  primary  term of the  agreement  expires on December 31, 1998.
                  Pursuant  to  agreement,   Crown  has  given  written   notice
                  requesting an extension.  SMRC has until  December 31, 1998 to
                  either accept or reject this request.

         NOTE 5 - WORKING CAPITAL LINE

                  CAPCO's partner in the acquisition of the acquired assets (see
                  Note 3),  MCNIC,  extended  a working  capital  line to CAD to
                  finance  the   Company's   asphalt   purchases   and  accounts
                  receivable.   As  of  September  30,  1998,   this  line  plus
                  additional  funds  advanced,  had a balance  of  approximately
                  $10,266,571  and accrues  interest  at 8%.  Through the period
                  ended  September  30,  1998,  $184,230  in  interest  had been
                  accrued.  This line is repaid solely out of the cash flow from
                  CAD. The Company is currently  reviewing  other  proposals for
                  the  working  capital  line,  however  MCNIC has the option to
                  match the terms of such line.

         NOTE 6- 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.  Crown  is  currently
                  reviewing  two jobs sold in which the  purchaser  is  claiming
                  damages   due  to  asphalt   that  they  claim  did  not  meet
                  specifications. Crown carries product liability insurance that
                  it believes will cover any such damages.

         NOTE 7 - LONG TERM DEBT

                  As part of the contemplated  acquisition of the Cowboy asphalt
                  terminal in North Salt Lake City,  Utah,  the Company  assumed
                  debt of approximately $1,067,111.  The terms of such debt have
                  not been  finalized,  however as presently  contemplated,  the
                  Company believes such debt shall accrue interest at 10% and be
                  repaid in monthly  installments of  approximately  $16,000 per
                  month with a balloon payment of $650,000 due in the year 2008.


                                       11
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


         NOTE 8 - CONCENTRATION OF CREDIT RISK

                  The  realization  of the  Company's  investment  in  oil  sand
                  properties  is dependent  on the success of the joint  venture
                  with  MCNIC  to  successfully  complete  construction  of  its
                  asphalt  production  facility and profitably  sell the related
                  asphalt products.  The Company currently has not generated any
                  significant revenues through the sale of asphalt products from
                  its project at Asphalt Ridge in eastern Utah.

         NOTE 9 - EXERCISE OF STOCK OPTIONS

                  On January 2, 1998, certain officers,  directors and employees
                  of the Company  exercised  946,296  options to purchase common
                  stock  for  $549,166  in  notes  receivable.  The  notes  bear
                  interest  at the  prime  rate,  adjusted  the  1st day of each
                  calendar  quarter,  and are  payable  on or before  January 2,
                  2003.

         NOTE 10 - ACCOUNTING STANDARDS

                  Reporting  Comprehensive  Income - In June 1997, the Financial
                  Accounting  Standards  Board  issued  Statement  of  Financial
                  Accounting Standards No. 130, "Reporting Comprehensive Income"
                  ("SFAS No.  130").  SFAS No.  130  establishes  standards  for
                  reporting  and  display  of   comprehensive   income  and  its
                  components  (revenues,  expenses,  gains and losses) in a full
                  set  of  general-purpose  financial  statements.  SFAS  No.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  retained  earnings  and  additional
                  paid-in-capital  in  the  equity  section  of a  statement  of
                  financial  position.  Effective  January 1, 1998,  the Company
                  adopted  the  provisions  of SFAS No.  130.  Accordingly,  the
                  Company  determined that no transactions were considered to be
                  an additional  component of comprehensive  income.  Therefore,
                  comprehensive  income (loss) equaled net income (loss) for the
                  three and  nine-month  periods  ended  September  30, 1998 and
                  1997.

                  In June 1997, the FASB issued SFAS No. 131, "Disclosures About
                  Segments  of an  Enterprise  and Related  Information",  which
                  redefines how public business  enterprises  report information
                  about operating segments in annual financial  statements.  The
                  statement also establishes  standards for related  disclosures
                  about  products and services,  geographical  areas,  and major
                  customers.  SFAS No. 131 is effective for financial statements
                  for periods  beginning after December 15, 1997. In the initial
                  year of application, comparative information for earlier years
                  is to be  restated.  The Company does not expect the impact of
                  SFAS No.  131 to be  material  in  relation  to its  financial
                  statements

                  In February  1998,  the FASB  issued SFAS No. 132,  Employer's
                  Disclosures about Pensions and Other Postretirement  Benefits.
                  SFAS No. 132 does not change the measurement or recognition of
                  pension   and   other   postretirement   benefit   plans.   It
                  standardizes  the  disclosure  requirements  for those  plans,
                  requires  additional  information  on changes  in the  benefit
                  obligations   and  fair   values  of  plan  assets  that  will
                  facilitate   financial   analysis,   and  eliminates   certain
                  disclosures.  SFAS  No.  132 is  effective  for  fiscal  years
                  beginning after December 15, 1997. The Company does not expect
                  the impact of SFAS No. 132 to be  material  in relation to its
                  financial statements.


                                       12
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS



         NOTE 10 - ACCOUNTING STANDARDS (CONTINUED)

                  In June 1998,  the FASB issued SFAS No.  133,  Accounting  for
                  Derivative   Instruments   and   Hedging   Activities,   which
                  supersedes SFAS No. 80, Accounting for Futures Contracts, SFAS
                  No. 105, Disclosure of Information About Financial Instruments
                  with  Off-Balance-sheet  Risk and Financial  Instruments  with
                  Concentration  of Credit  Risk,  and SFAS No. 119,  Disclosure
                  about  Derivative  Financial  Instruments  and  Fair  Value of
                  Financial  Instruments,  and also  amends  certain  aspects of
                  other  SFAS's  previously  issued.  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, 2000. The Company does not expect
                  the impact of SFAS No. 133 to be  material  in relation to its
                  financial statements.



                                       13


<PAGE>

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


RESULTS OF OPERATIONS 
--------------------- 

For the three month  period  ended  September  30,  1998,  compared to the three
--------------------------------------------------------------------------------
months ended September 30, 1997.
--------------------------------

         Asphalt revenue  increased from $0 for the three months ended September
30, 1997 to  $15,734,718  for the three months ended  September  30, 1998.  This
increase was due to revenue  from  CAPCO's  operation  and the  Company's  newly
formed asphalt distribution subsidiary, Crown Asphalt Distribution, LLC ("CAD").
CAD sold approximately 114,000 tons of asphalt during the period.

         Cost  of  goods  sold  increased  from $0 for the  three  months  ended
September 30, 1997 to $11,299,005 for the three months ended September 30, 1998.
This  increase was due to the cost of products  sold by CAD.  Cost of goods sold
primarily  represents  the cost of asphalt  purchased  from  suppliers,  such as
Exxon, and the related transportation and blending costs.

         Operating  expenses  increased  form  $0 for  the  three  months  ended
September 30, 1997 to $2,178,830 for the three months ended  September 30, 1998.
This increase was due to the cost of operating the asphalt  distribution  assets
acquired through CAD. Operating  expenses  primarily  represent asphalt terminal
labor expenses, utility expenses and lease expenses.

         Gross profit of $2,256,883  represents a margin of approximately 14% on
sales  after cost of goods sold and  operating  expenses.  The  Company's  gross
margin  is  dependent  on  the  Company's  ability  to  operate  its  facilities
efficiently,  purchase  its  asphalt at  favorable  market  prices and blend its
products to meet required industry specifications.

         General and  administrative  expenses  increased  from $145,011 for the
three  months  ended  September  30, 1997 to $438,184 for the three months ended
September  30, 1998,  an increase of $293,173.  This change was due to increased
costs  related to the  Company's  investment  in the Crown  Asphalt  Ridge joint
venture with MCNIC and administrative costs related to CAD.

         Depletion,  depreciation  and  amortization  increased  from $0 for the
three  months  ended  September  30, 1997 to $133,332 for the three months ended
September 30, 1998.  This increase was due to depreciation on the asphalt assets
acquired and amortization of goodwill recorded on the acquisition.

         Other Income  (Expense)  fluctuated from total expenses of $982 for the
three  months  ended  September  30, 1997 to $475,031 for the three months ended
Sept 30, 1998.  This  fluctuation  was primarily due to interest  expense on the
debt  recorded  in the asphalt  asset  acquisition  and  interest on the line of
credit used to finance the operation of the business.

For the nine month period ended September 30, 1998,  compared to the nine months
--------------------------------------------------------------------------------
ended September 30, 1997.
-------------------------

         Asphalt  revenue  increased from $0 for the nine months ended September
30, 1997 to  $15,921,645  for the nine months ended  September  30,  1998.  This
increase was due to revenue  from CAPCO's  operations  and the  Company's  newly
formed asphalt distribution subsidiary, Crown Asphalt Distribution, LLC ("CAD").
CAD sold approximately 114,000 tons of asphalt during the period.


                                       14
<PAGE>

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


RESULTS OF OPERATIONS (CONTINUED)
---------------------------------

         Cost  of  goods  sold  increased  from  $0 for the  nine  months  ended
September 30, 1997 to $11,424,955  for the nine months ended September 30, 1998.
This  increase was due to the cost of products  sold by CAD.  Cost of goods sold
primarily  represents  the cost of asphalt  purchased  from  suppliers,  such as
Exxon, and the related transportation and blending costs.

          Operating  expenses  increased  from  $0 for  the  nine  months  ended
September 30, 1997 to $2,179,  646 for the nine months ended September 30, 1998.
This increase was due to the cost of operating the asphalt  distribution  assets
acquired through CAD. Operating  expenses  primarily  represent asphalt terminal
labor expenses, utility expenses and lease expenses.

          Gross profit of $2,317,044 represents a margin of approximately 15% on
sales  after cost of goods sold and  operating  expenses.  The  Company's  gross
margin  is  dependent  on  the  Company's  ability  to  operate  its  facilities
efficiently,  purchase  its  asphalt at  favorable  market  prices and blend its
products to meet required industry specifications.

         General and  administrative  expenses  increased  from $299,009 for the
nine months  ended  September  30, 1997 to  $756,410  for the nine months  ended
September  30, 1998,  an increase of $457,401.  This change was due to increased
costs  related to the  Company's  investment  in the Crown  Asphalt  Ridge joint
venture with MCNIC and administrative costs related to CAD.

         Depletion, depreciation and amortization increased from $23,817 for the
nine months  ended  September  30, 1997 to  $133,332  for the nine months  ended
September 30, 1998.  This increase was due to depreciation on the asphalt assets
acquired and amortization of goodwill recorded on the acquisition.

         Other Income  (Expense)  fluctuated from total expenses of $763,543 for
the nine months ended  September  30, 1997 to $258,095 for the nine months ended
September 30, 1998. This  fluctuation was due to a loss of $751,461  recorded on
the sale of a subsidiary in 1997.  This change was partially  offset by interest
and other income of $217,440  recorded in 1998 and interest  expense incurred on
the debt recorded in the asphalt asset  acquisition  and interest on the line of
credit used to finance the operation of the business.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         At September 30, 1998, the Company had cash and other current assets of
$17,971,316 and current liabilities of $15,824,679 as compared to cash and other
current assets of $3,288,989 and current liabilities of $124,981 at December 31,
1997. These fluctuations were due to the business  operations of the CAD asphalt
asset acquisition,  income from operations and equity contributions to the Crown
Asphalt Ridge, L.L.C. ("Crown Ridge"). As of September 30, 1998, the Company had
long-term debt obligations of approximately  $1,000,000 and a preferential  debt
obligation  of  $6,000,000  related  to the asset  acquisition.  The  Company is
obligated to make monthly  payments of  approximately  $16,000 on the $1,000,000
debt and is obligated to distribute 50% of the net cash flow from CAD, after the
debt payment above, as payment on the $6,000,000  preferential debt. The Company
is also  obligated to distribute  50% of the remaining cash flow of CAD to MCNIC
Pipeline and Processing  Company,  the minority interest holder. The Company has
available   for  CAD's   operations  a  working   capital  line  from  MCNIC  of
approximately  $10,000,000.  The Company  believes it has sufficient  capital to
meet all of its  current  working  capital  requirements  and its share of Crown
Ridge's budgeted capital requirements.  However,  there can be no assurance that
such obligations can be met.

                                       15
<PAGE>

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



LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
-------------------------------------------

         In  addition,  the  Company  will  incur  its  proportionate  share  of
operating  expenses of Crown Ridge until such time that Crown Ridge's operations
become profitable.  Furthermore,  should Crown Ridge incur unforeseen additional
capital costs, the Company is obligated to pay its  proportionate  share of such
costs. The Company believes it has sufficient capital to cover such obligations.
However, there can be no assurance that such additional obligations can be met.

YEAR 2000 ISSUES
----------------

         Crown and its subsidiaries have not yet completed an assessment of Year
2000 ("Y2K")  issues that could  impact its  information  technology  ("IT") and
non-IT  systems.  Crown and its  subsidiaries  employ a number of IT  systems in
their operations,  including,  without limitation,  computer networking systems,
financial systems and other similar systems. In 1998, Crown and its subsidiaries
began  conversion  of  their  principal  computer  software  systems  to  a  new
integrated  system to support  future  growth and  improve  productivity.  Crown
believes that its new computer system will be Y2K compliant,  but has not tested
the system.

         With respect to non-IT systems containing embedded electronic circuits,
Crown  has  not   conducted  an  assessment  of  such  systems  for  it  or  its
subsidiaries.  Crown's  greatest  non-IT Y2K concerns  are with Crown  Ridge,  a
limited  liability company  partially owned by Crown's  wholly-owned  subsidiary
CAC,  and  CAD,  a  limited   liability   company  partially  owned  by  Crown's
wholly-owned  subsidiary  CAPCO.  Crown  Ridge  owns  and  operates  an  asphalt
processing  facility near Vernal,  Utah and Crown Distribution owns and operates
asphalt  distribution  facilities  in Utah,  Colorado,  Nevada and  Arizona  and
California.   The  vast  majority  of  Crown's  income  is  derived  from  these
operations.

         Crown is not aware of the potential  cost, if any, to remediate  direct
or indirect Y2K problems for Crown and its subsidiaries.  At present,  Crown has
spent  approximately  $20,000 upgrading its IT systems.  Crown has not spent any
money to assess or remediate non-IT issues. Crown expects to begin an assessment
of Y2K issues in the first quarter of 1999. However,  there is no assurance that
Crown will be able to complete its assessment or remediate  problems  before the
end of 1999.

         Crown believes that it is most reasonably likely that its own computers
will perform  according to expectations  on and after January 1, 2000.  However,
Crown is highly dependant upon electric power,  natural gas, asphalt,  petroleum
based  products and chemicals as well as the delivery of such items by all forms
of transportation,  including, pipeline, shipping, rail and truck. A shortage of
any of the foregoing products or a failure one or more methods of transportation
would  have a  material  adverse  affect on Crown,  its  subsidiaries  and their
operations.  Because  Crown has not  evaluated  whether its key suppliers are or
will be Y2K compliant, it must assume that these suppliers will have disruptions
in their deliveries and services to Crown and its  subsidiaries.  The worst case
Y2K  scenarios  for Crown would  include a complete  shut-down of Crown  Ridge's
Facility and one or more of the distribution centers of Crown Distribution since
most of Crown's income is expected to be derived from these operations.

         Crown has not yet developed any contingency plans in the event that its
or its  subsidiaries'  IT or non-IT  systems fail or in the event that  material
suppliers  of  goods  or  services  fail  or  have  significant  disruptions  in
deliveries to Crown and its subsidiaries.

                                       16

<PAGE>

                          PART II. - OTHER INFORMATION


ITEM 1.  Legal Proceedings

         On May 21,  1998,  Road Runner Oil,  Inc.  ("Road  Runner") and Gavilan
Petroleum,  Inc.  ("Gavilan")  filed an action in the  Third  Judicial  District
Court, Salt Lake County,  State of Utah, as Civil Number 98-0905064  against the
Company and its President.  The action relates to the purchase by Road Runner of
100% of the  stock  of  Gavilan  in 1997,  and  generally  seeks  to (i)  obtain
corporate records of Gavilan in the Company's  possession relating to the amount
of oil  and gas  royalties  potentially  owed  to  third  parties  prior  to the
aforementioned  stock sale, and (ii) to determine the amount of royalties  owed.
The action further alleges, on behalf of Gavilan,  claims of breach of fiduciary
duty,  professional negligence and mismanagement against the Company's President
for alleged  mismanagement of Gavilan's affairs.  The Plaintiffs seek injunctive
relief requiring the tendering by the Company of the referenced records and such
damages as may be proven at trial.  The  Company  believes  that the  Plaintiffs
claims are  groundless  and that it is entitled to payment of the $75,000  still
owed by Road Runner as part of the  purchase  price for  Gavilan.  In  addition,
since the action was filed, the Company has tendered  substantial  quantities of
corporate records to the Plaintiffs for their review. On June 17, 1998, an order
was entered  granting an open extension to the Company of its obligation to file
an answer to the  above-described  Complaint so that the parties may  informally
pursue a settlement, if any, of the matter.

ITEM 2.  Changes in Securities

         None.

ITEM 3.  Defaults upon Senior Securities

         None.

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

         None.

ITEM 5.  Other Information

         None.

ITEM 6.  Exhibits and Reports on Form 8-K

         Exhibit           Name
         -------           ----

          10.1             Purchase  and  Sale  Agreement  dated  July  2,  1998
                           between Petro Source and Crown Asphalt Distribution*

          10.2             Saba Petroleum  Processing  Agreement for Santa Maria
                           Refinery  in  California  dated May 1,  1997  between
                           Petro  Source  Refining  Corporation  and Santa Maria
                           Refining  Company and Saba Petroleum  Company,  which
                           was  assigned  to the  Company  on or  about  July 2,
                           1998**


                                       17
<PAGE>

                    PART II. - OTHER INFORMATION (CONTINUED)


ITEM 6.  Exhibits and Reports on Form 8-K  (CONTINUED)

          10.3             MetLife  Equipment  Lease  dated May 1, 1997  between
                           Petro Source Refining Corporation and MetLife Capital
                           Corporation,  which was assigned to the Company on or
                           about July 2, 1998**

          10.4             PacifiCorp Property Lease dated April 1, 1996 between
                           Petro Source  Refining  Corporation  and  PacifiCorp,
                           which was  assigned  to the  company on or about July
                           2, 1998**

          10.5             GATX Rail Car Lease dated  December  10, 1987 between
                           Petro  Source   Corporation   and  General   American
                           Transportation Corporation, which was assigned to the
                           Company on or about July 2, 1998**

          10.6             Office Space Lease**

          27               Financial Data Schedule

         ----

         *Incorporated  by reference  from the Company's Form 8-K filed with the
         Commission on or about July 17, 1998,  bearing  commission  file number
         0-19365.

         **To be filed pursuant to Rule 201 Temporary Hardship Exemption.

         ----

         The  Company  filed a Form 8-K on June 8,  1998,  to report a change in
         auditors. The Company also filed a Form 8-K on July 17, 1998, to report
         the  acquisition  of the inventory  and assets of Petro Source  Asphalt
         Company.

                                       18

<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, 1998             By: /s/ JAY MEALEY
    ------------------------           -----------------------------------------
                                    Jay Mealey, President

Date: November14, 1998              By: /s/ RICHARD S. RAWDIN
    ------------------------           -----------------------------------------
                                    Richard S. Rawdin, Vice President of Finance


                                       19