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 June 30, 1999
              ----------------------------------------------------

                                       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
    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  13,285,581  shares of $.02 par value common stock  outstanding as of
August 12, 1999.

<PAGE>

                            CROWN ENERGY CORPORATION

                                      INDEX

                                                                        PAGE(S)


PART I.  Financial Information


         ITEM 1.  Financial Statements

                  Condensed Consolidated Balance Sheets at June 30,
                     1999 (unaudited) and December 31, 1998                 3

                  Condensed Consolidated Statement of Operations for
                     the Three Months ended June 30, 1999 and 1998
                     (unaudited)                                            5

                  Condensed Consolidated Statement of Operations for
                     the Six Months ended June 30, 1999 and 1998
                     (unaudited)                                            6

                  Condensed Consolidated Statement of Cash Flows for
                     the Six Months ended June 30, 1999 and 1998
                     (unaudited)                                            7

                  Notes to Condensed Consolidated Financial Statements
                     (unaudited)                                            9


         ITEM 2.  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                   17


PART II. Other Information

         ITEM 1.  Legal Proceedings                                        21

         ITEM 2.  Changes in Securities                                    21

         ITEM 3.  Defaults upon Senior Securities                          21

         ITEM 4.  Submission of Matters to a Vote of Security Holders      21

         ITEM 5.  Other Information                                        21

         ITEM 6.  Exhibits and Reports on Form 8-K                         21


PART III. Signatures                                                       22


<PAGE>
<TABLE>
<CAPTION>

                          PART I-FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                            CROWN ENERGY CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                                                   June 30,
                                                                                     1999              December 31,
                                                                                  [unaudited]              1998
                                                                                  -----------          -----------
CURRENT ASSETS:
<S>                                                                               <C>                  <C>
  Cash and cash equivalents                                                       $   814,313          $ 3,735,632
  Accounts receivable, net of allowance for uncollectible
    accounts of $100,475 and $100,475 at June 30, 1999
    and December 31, 1998, respectively                                             5,959,729            2,823,778
  Inventory                                                                        10,958,847            4,445,819
  Prepaid and other current assets                                                  1,132,444               39,371
                                                                                  -----------          -----------

      Total Current Assets                                                         18,865,333           11,044,600

PROPERTY, PLANT AND EQUIPMENT, Net                                                  7,933,700            3,013,792

INVESTMENT IN AND ADVANCES
  TO AN EQUITY AFFILIATE                                                            5,105,827            4,551,441

GOODWILL, Net                                                                       3,919,854            4,040,231

OTHER INTANGIBLE ASSETS, Net                                                          218,296              225,000
OTHER ASSETS                                                                          485,720              696,200
                                                                                  -----------          -----------

TOTAL                                                                             $36,528,730          $23,571,264
                                                                                  ===========          ===========
</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



                                                                                    June 30,
                                                                                      1999             December 31,
                                                                                  [unaudited]              1998
                                                                                  -----------          -----------
CURRENT LIABILITIES
<S>                                                                               <C>                  <C>
  Accounts payable                                                                $ 6,990,692           $1,857,407
  Preferred stock dividends payable                                                   200,000              467,433
  Accrued expenses                                                                    147,113              180,116
  Long-term debt - estimated current portion                                        1,207,590            1,000,000
  Line-of-credit to related party                                                  14,935,221            8,935,221
                                                                                  -----------          -----------

    Total current liabilities                                                      23,480,616           12,440,177
                                                                                  -----------          -----------


MINORITY INTEREST IN CONSOLIDATED
  JOINT VENTURES                                                                    1,043,486            1,255,477

CAPITALIZATION:
  Long-term debt                                                                    7,357,780            4,325,723
  Redeemable preferred stock                                                        4,811,321            4,783,019
  Common stockholders' equity                                                        (164,473)             766,868
                                                                                  -----------          -----------

    Total capitalization                                                           12,004,628            9,875,610
                                                                                  -----------          -----------

TOTAL                                                                             $36,528,730          $23,571,264
                                                                                  ===========          ===========
</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
                                                                                               June 30,
                                                                                     1999                 1998
                                                                                  -----------          -----------
<S>                                                                               <C>                  <C>
SALES, Net of demerits                                                            $10,057,495          $   186,929

EXPENSES:
  Cost of goods sold                                                                7,442,952              123,140
  Operating expenses                                                                1,803,323                  816
  General and administrative                                                          648,802              111,465
  Depreciation, depletion and amortization                                            128,335                7,951
                                                                                  -----------          -----------

TOTAL                                                                              10,023,412              243,372
                                                                                  -----------          -----------

INCOME (LOSS) FROM OPERATIONS                                                          34,083              (56,443)

OTHER INCOME (EXPENSES):
  Interest income and other income                                                    113,881               30,851
  Interest and other expense                                                         (530,734)                (350)
  Equity in losses of unconsolidated equity affiliate                                (196,875)                   0
                                                                                  -----------          -----------

    Total other (expense) net                                                        (613,728)              30,501

LOSS BEFORE INCOME TAXES
   AND MINORITY INTERESTS                                                            (579,645)             (25,942)
                                                                                  -----------          -----------

DEFERRED INCOME TAX BENEFIT                                                                 0                    0

MINORITY INTEREST IN EARNINGS OF
   CONSOLIDATED JOINT VENTURE                                                          85,266                    0
                                                                                  -----------          -----------


NET LOSS                                                                          $  (494,379)         $   (25,942)
                                                                                  -----------          -----------


NET LOSS PER COMMON SHARE - Basic                                                 $     (0.04)         $     (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 Six Months Ended
                                                                                             June 30,
                                                                                     1999                 1998
                                                                                  -----------          -----------
<S>                                                                             <C>                    <C>
SALES, Net of demerits                                                          $  14,876,581          $   186,929

EXPENSES:
  Cost of goods sold                                                               10,619,620              123,140
  Operating expenses                                                                3,145,360                  816
  General and administrative                                                        1,234,060              250,361
  Depreciation, depletion and amortization                                            339,985                9,651
                                                                                  -----------          -----------

TOTAL                                                                              15,339,025              383,968
                                                                                  -----------          -----------

INCOME LOSS FROM OPERATIONS                                                          (462,444)            (197,039)

OTHER INCOME (EXPENSES):
  Interest income and other income                                                    226,136               78,078
  Interest and other expense                                                         (912,853)              (6,873)
  Equity in losses of unconsolidated equity affiliate                                (426,273)                   0
                                                                                  -----------          -----------

    Total other (expense) net                                                      (1,112,990)              71,205

LOSS BEFORE INCOME TAXES
   AND MINORITY INTERESTS                                                          (1,575,434)            (125,834)
                                                                                  -----------          -----------

DEFERRED INCOME TAX BENEFIT                                                                 0                    0

MINORITY INTEREST IN EARNINGS OF
   CONSOLIDATED JOINT VENTURE                                                         404,962                    0
                                                                                  -----------          -----------


NET LOSS                                                                          $(1,170,472)         $  (125,834)
                                                                                  -----------          -----------

NET LOSS PER COMMON SHARE - Basic                                                 $     (0.10)         $     (0.03)
                                                                                  ===========          ===========
</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 Six Months Ended
                                                                                              June 30,
                                                                                      1999                1998
                                                                                  -----------          -----------
Cash Flows From Operating Activities:
<S>                                                                               <C>                  <C>
  Net loss                                                                        $(1,170,472)         $  (125,834)
                                                                                  -----------          -----------

  Adjustments to reconcile net loss to net cash used by operating activities:
    Amortization, depreciation and depletion                                          339,983                9,651
    Equity in losses of unconsolidated affiliate                                      426,273                    0
    Minority interest                                                                (404,962)                   0
    Non-cash (income) expense                                                               0              (22,892)
    Change in assets and liabilities:
      Accounts receivable                                                          (3,135,951)            (182,146)
      Inventory                                                                    (6,513,028)            (294,764)
      Other assets                                                                   (888,635)            (479,143)
      Accounts payable                                                              5,133,285               32,770
      Accrued expenses                                                                (33,003)              (6,308)
                                                                                  -----------          -----------

        Total adjustments                                                          (5,076,038)            (942,832)
                                                                                  -----------          -----------

        Net Cash Used in Operating Activities                                      (6,246,510)          (1,068,666)
                                                                                  -----------          -----------

Cash Flows From Investing Activities:
  Investment in and advances to Crown Asphalt Ridge, LLC                           (1,010,981)            (985,083)
  Acquisition of Asphalt Terminals                                                 (3,856,390)                   0
  Purchase of property and equipment                                               (1,240,057)            (185,639)
                                                                                  -----------          -----------

    Net Cash Used by Investing Activities                                          (6,107,428)          (1,170,722)
                                                                                  -----------          -----------


Cash Flows From Financing Activities:
  Net change in line of credit from related party                                   6,000,000                    0
  Sale of equity interest in subsidiary to a minority shareholder                     192,971                    0
  Net changes in long-term debt                                                     3,239,648                    0
                                                                                  -----------          -----------

    Net Cash Provided by Used in Financing Activities                              $9,432,619                   $0
                                                                                  -----------          -----------
</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 Six Months Ended
                                                                                              June 30,
                                                                                      1999                 1998
                                                                                  -----------          -----------

<S>                                                                               <C>                  <C>
    Net Increase (Decrease) in Cash:                                              $(2,921,319)         $(2,239,389)
                                                                                  ===========          ===========

Cash at Beginning of Period                                                       $ 3,735,632          $ 3,100,765
                                                                                  ===========          ===========

Cash at End of Period                                                             $   814,313          $   861,376
                                                                                  ===========          ===========


Supplemental Disclosure of Cash Flow Information
  Cash paid during the period:
    Interest                                                                      $    69,942          $     6,873
                                                                                  ===========          ===========

    Income taxes                                                                          ---                  ---
                                                                                  ===========          ===========



Supplemental Schedule of Non-cash Investing and Financing Activities:

  For the period ended June 30, 1999:

  OnJanuary 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.


  For the period ended June 30, 1998:

    None
</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 June 30,  1999 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, 1998 Annual
                  Report on Form 10-K.  The results of operations for the period
                  ended  June 30,  1999 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.  Prior to 1998,  the Company
                  was engaged in the  production and selling of oil and gas from
                  leases it operated in the State of Utah through its previously
                  owned subsidiary, Gavilan Petroleum, Inc. (Gavilan).

                  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.  CAT LLC is
                  a joint  venture  formed on June 16,  1998  between  Capco and
                  Foreland  Asphalt  Corporation   (Foreland).   Cowboy  Asphalt
                  Terminal,  LLC (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.

                  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 June
                  30,  1999,  all net  deferred  tax  assets  were  offset  by a
                  valuation allowance.

                                       9
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  Loss Per Share -  Effective  for the year ended  December  31,
                  1997, the Company  adopted  Statement of Financial  Accounting
                  Standards (SFAS) No. 128, Earnings Per Share. Accordingly, net
                  loss per common share computed under the basic method uses 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
                  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
                  generally accepted  accounting  principles 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.

                  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 June 30, 1999 and December 31,
                  1998.

                  Goodwill - The Company has  recorded the amount paid for 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

                                       10
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  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.

                  Segment Reporting - In 1998, the Company adopted SFAS No. 131,
                  Disclosures  About  Segments  of  an  Enterprise  and  Related
                  Information,  which redefined how 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.  During 1998, the Company operated
                  primarily in the production and  distribution of asphalt.  The
                  Company's  operations and sales are dispersed throughout Utah,
                  Arizona,  California,   Nevada,  and  Colorado  and  could  be
                  adversely  affected by economic  downturns in these states and
                  by  federal  or  state  funding   policies   related  to  road
                  construction or improvements.

                  Derivative  Instruments  and Hedging - 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, 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).  The appropriate  disclosures  required by SFAS
                  No. 123 are included in Note 8.

         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
                  operates through 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  hold   sharing   ratios   of  75%  and  25%,
                  respectively,  in  profits,  losses and  obligations  of Crown
                  Ridge.  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
                  Crown  Ridge  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  Crown  Ridge  at
                  $500,000) and (iv) cash, if any, needed to bring CAC's

                                       11
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  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,  has been funding 75% of the cash  required to construct
                  the initial plant  contemplated by Crown Ridge LLC's Operating
                  Agreement. (See Note 11 - Subsequent Event)

         NOTE 3 - 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. There were no significant operations during 1998.

                  Acquisition  of Laurel and  Williston  Asphalt  Terminals - On
                  April 17, 1999,  the Company  acquired the fixed  assets,  the
                  associated  inventory,  and certain contractual  agreements of
                  Asphalt Supply & Services, Inc. and Inoco, Inc. (collectively,
                  the Seller) for  $4,000,0000,  consisting  of $750,000 in cash
                  and 2,500,000  shares of  unregistered  common stock valued at
                  $1.30 per share. In the event that the bid price of the common
                  stock is less than $1.10 for 120  consecutive  trading days at
                  any time between  April 17, 1999 and  December  31, 2000,  the
                  Seller has the right to require the Company to repurchase  all
                  shares  issued for $1.10 per share.  The Company has the right
                  to  repurchase  up to  2,000,000 of the shares of common stock
                  from the Seller,  at any time,  for $2.05.  Per the agreement,
                  the Seller may only sell up to 500,000 shares of the Company's
                  common stock per calendar  quarter.  The  acquisition has been
                  accounted for as a purchase. Certain conditions precedent were
                  required to be satisfied by the seller for final funding to be
                  completed. As of August 14, 1999 such conditions have not been
                  completed  by the  Seller  and the  Company  fully  intends to
                  enforce its rights under the agreement.

                  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.

                  The  Company   has  been   notified  by  MCNIC  that  it  will
                  participate in the Rawlins,  Williston and Laurel acquisitions
                  and will fund one-half of all costs.

         NOTE 4 - PROCESSING AGREEMENT TERMINATION

                  The Company, through its subsidiary,  Crown Distribution had a
                  Processing  Agreement with Santa Maria Refining Company (SMRC)
                  and SABA Petroleum whereby Crown  Distribution  purchased from
                  third party  producers  crude oil which was then  processed at
                  the Santa  Maria  Refinery.  The slate of  products  produced,
                  primarily asphalt,  was then sold by Crown  Distribution.  The
                  Processing  Agreement  was  acquired  through the Petro Source
                  asset  acquisition.  Revenues  resulting  from the  Processing
                  Agreement  were  approximately  $7.8  million  in  1999.  SMRC
                  extended the agreement, which expired on December 31, 1998, to
                  April 30, 1999. As anticipated,  the Processing  Agreement was
                  not extended subsequent to April 30, 1999. The Company expects
                  to offset this loss of revenue  with  revenue  from its recent
                  acquisitions  and  its  future  acquisitions.   Following  the
                  termination of the Processing Agreement,  SMRC and the Company
                  agreed

                                       12
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  upon terms under which the Company would  continue to purchase
                  asphalt from the  facility  until  October 31, 1999,  and SMRC
                  would  continue to process crude  products  delivered to it by
                  the Company.  Although a formal  settlement  agreement has not
                  been  executed as of August 14, 1999,  the Company  intends to
                  enforce the terms previously reached by the parties.

         NOTE 5 - LINE OF CREDIT

                  MCNIC  extended  a  loan  to  Crown  Distribution  to  finance
                  inventory  purchased in the acquisition of Petro Source. As of
                  June 30, 1999, this loan plus a working capital revolving line
                  of  credit  provided  by  MCNIC,  had a  combined  balance  of
                  approximately  $14,935,221 and accrues interest at 8%. Through
                  the period ended June 30, 1999,  $556,300 in interest had been
                  accrued.  This line is repaid solely out of the cash flow from
                  Crown  Distribution.  The Company is currently reviewing other
                  proposals for the working capital line, however, MCNIC has the
                  option to match the terms of such proposals.

         NOTE 6 - LONG TERM DEBT
<TABLE>
<CAPTION>
                  Long-term debt consists of the following at June 30, 1999:
<S>                                                                                         <C>
                  Debt with Hancock-Geisler R.I.C., interest at 9%, with monthly             $ 1,214,748
                  principal and interest payments of $20,627 for 82 months

                  Debt with Community First National Bank, interest at prime plus 1%,        $ 1,799,900
                  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.

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

                  Preferential debt with MCNIC, interest at 15%, with annual principal       $ 5,325,723
                  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

                  Less estimated current portion                                             $(1,207,590)
                                                                                             -----------

                  Long-term portion                                                          $ 7,357,781
                                                                                             ===========
</TABLE>

                                       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' EQUITY AND REDEEMABLE PREFERRED STOCK

                  At June 30, 1999 and December 31, 1998,  common  stockholders'
                  equity  and  redeemable   preferred   stock  consists  of  the
                  following:
<TABLE>
<CAPTION>
                                                                                     1999             1998
                                                                                  -----------     -----------
<S>                                                                               <C>             <C>
                  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 $28,302 and $56,604
                   for the periods ended June 30, 1999 and December 31, 1998,
                   respectively, toward  the  stated  value  of $5,000,000        $ 4,811,321     $ 4,783,019
                                                                                  ===========     ===========

                  Common stockholders' equity:
                   Common stock, $.02 par value; 50,000,000 shares
                    authorized; 13,285,581 and 12,968,512 shares issued and
                    outstanding at June 30, 1999 and December 31, 1998,
                    respectively                                                  $   265,711     $   259,370
                   Additional paid-in capital                                       6,020,130       5,787,340
                   Stock warrants outstanding; 683,750 at
                    June 30, 1999 and December 31, 1998, respectively                 243,574         243,574
                   Common stock subscription receivable from officers                (549,166)       (549,166)
                   Retained deficit                                                (6,144,722)     (4,974,250)
                                                                                  -----------     -----------
                       Total                                                      $  (164,473)    $   766,868
                                                                                  ===========     ===========
</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 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

                                       14
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  outstanding Series A Preferred at the rate of 8% per annum and
                  may be declared 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. 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.

                                       15
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


         NOTE 10 - LOSS PER SHARE

                 The  following  table  is a  reconciliation  of  the  net  loss
                 numerator  of basic and diluted  net loss per common  share for
                 the six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
                                                            1999                                1998
                                                ------------------------------      -----------------------------
                                                                     Loss                              Loss
                                                     Loss         Per Share             Loss         Per Share
                                                ------------------------------      -----------------------------
<S>                                             <C>               <C>               <C>              <C>
                 Net Loss                       $ (1,170,472)                       $ (125,834)

                 Redeemable preferred
                  stock dividends                   (200,000)                         (200,000)
                                                ------------                        ----------
                 Net loss attributable to
                  common stockholders           $ (1,370,472)     $ (0.10)          $ (325,834)      $ (0.03)
                                                ============      =======           ==========       =======

                 Weighted average common
                  shares outstanding -
                  basic and diluted               13,493,021                        12,090,220
                                                ============                        ==========
</TABLE>

                  The  Company  had at June 30,  1999  and  December  31,  1998,
                  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 June 30, 1999 and December
                  31, 1998 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 - SUBSEQUENT EVENT

                  Pursuant to the Crown Ridge  Operating  Agreement  with MCNIC,
                  the Company is required to contribute to the joint venture its
                  rights  under  certain  mining  equipment  leases  with a fair
                  market  value of up to $3.5  million  once the  Asphalt  Ridge
                  Project's  mining  equipment   requirements  are  conclusively
                  determined.  Due to the delays at Asphalt  Ridge,  the Company
                  and MCNIC have agreed to share the mining  equipment costs and
                  the  costs of any mine  equipment  leases in  accordance  with
                  their   respective   sharing   ratios   once  such   equipment
                  requirements  are  determined.  In order to bring the partners
                  current  capital  account  sharing  ratios  of 75%  and 25% in
                  balance,  on July 20, 1999, the Company  executed a promissory
                  note in the  amount of  $2,991,869  with  MCNIC  Pipeline  and
                  Processing  Company.  Such note is interest only for two years
                  and bears  interest at prime plus 1% and is  adjusted  monthly
                  with payments of $20,757.14 per month. Additional payments may
                  be  required  based on the  Company's  cash flow.  On July 20,
                  2001, the remaining balance will be amortized over 13 years.

                                       16
<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 June 30,  1999,  the  Company had cash and other  current  assets of
$18,865,333  as  compared to cash and other  current  assets of  $11,044,600  at
December 31, 1998. The increase of $7,820,733 was primarily due to the Company's
asphalt  inventory  winterfill  program  whereby the Company  purchases  asphalt
during the winter months, when prices are lower, for storage and subsequent sale
during the  asphalt  season,  typically  during the  months  from April  through
October.  The Company's  operations require a working capital line for inventory
purchases and other operating expenses.  MCNIC, the minority interest owner, has
established  such line,  in addition to a working  capital  loan  provided at an
interest rate of 8%. At June 30, 1999,  the line had a balance of $9,124,641 and
the working capital loan had a balance of $5,810,580.

         The Company also owed MCNIC an  additional  $5,325,723 at June 30, 1999
with  respect  to the  Preferential  Capital  Contribution  which  funded  Crown
Distribution's  acquisition of the assets of Petro Source Asphalt  Company.  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.  At June
30, 1999, the Company has estimated $1,000,000 of this balance to be current.

         The  Company  believes  its  asphalt  distribution  business,  which is
operated  through Capco,  is a growth business whose success is not dependent on
the  Company's  interest  in the  Crown  Ridge  Project.  However,  the  asphalt
distribution business is capital intensive and requires substantial  investments
to acquire  terminal  storage,  blending  and raw material  assets.  The Company
recently  acquired  several  terminals  in  transactions  requiring  substantial
capital  commitments.  On April 17,  1999,  the  Company  acquired  the  asphalt
terminal fixed assets in Laurel, Montana and Williston,  North Dakota along with
certain  contractual  agreements of Asphalt  Supply & Services,  Inc. and Inoco,
Inc.  for  $4,000,000  consisting  of $750,000 in cash and  2,500,000  shares of
unregistered common stock.  Although the Company closed the acquisition and took
title to the  terminal  assets  on April 17,  1999,  the  purchase  price is not
payable until seller meets certain conditions precedent.  As of August 14, 1999,
the seller has not yet met these  conditions.  However,  on July 28,  1999,  the
sellers  filed  an  action  in  Montana  seeking  to  have  the  asset  purchase
transaction  set  aside.  See "PART II - Item 1- Legal  Proceedings".  Given the
inherent  uncertainties  of  litigation,  there  can be no  assurance  as to the
outcome of this litigation or whether the transaction may be set aside.

         On May 12, 1999, the Company  acquired an asphalt  terminal in Rawlins,
Wyoming along with related  inventory for $2,291,571  from S&L  Industrial.  The
purchase price  consisted 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. The

                                       17
<PAGE>

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

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.

         Under the Company's  contractual  relationships  with MCNIC,  MCNIC has
certain rights to participate in additional  business  opportunities,  including
the  transactions  with Asphalt Supply and Service,  Inc.,  Inoco,  Inc. and the
Rawlins  asphalt  terminal  transaction.  MCNIC has indicated that it intends to
participate  in the  foregoing  business  opportunities.  Assuming  that MCNIC's
participation  in the  business  opportunities  is  consummated,  MCNIC would be
required to fund its proportionate share of the capital expenditures.

         The  Company  believes  it has  sufficient  capital  to meet all of its
current working capital requirements from its cash reserve, working capital line
and other  financing  sources.  However,  the Company is required to fund 25% of
Crown Ridge's  capital  costs,  start-up  costs and  operating  expenses and the
working  capital  requirements  may be  substantial.  As of June 30,  1999,  the
Company has made cash contributions of approximately $2,549,246. Crown Ridge has
experienced  mechanical  and process  difficulties  with its facility at Asphalt
Ridge. The Company believes these  difficulties can be resolved and is currently
engineering  such a solution.  The Company  believes it will require  additional
capital  contributions  to Crown  Ridge and there can be no  assurance  that the
Company can obtain such funds on acceptable terms.  However,  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 June 30, 1999,  compared to the three
months ended June 30, 1998

         Total revenue  increased from $186,929 for the three month period ended
June 30,  1998 to  $10,057,495  for the same  period  in 1999,  an  increase  of
$9,870,566. The increase was due to revenue generated from the Company's asphalt
distribution  operations  that were  acquired  in July,  1998.  Included in this
increase were  $3,547,938 in revenues  generated from the  processing  agreement
with the Santa Maria  Refinery  that  expired  April 30,  1999. . The Company is
presently engaged in litigation with the owners of the Santa Maria Refinery (See
Part II - Item 2 - Legal Proceedings),  and the Santa Maria Refinery has refused
to process the Company's  products at that facility.  The Company will be forced
to find  alternative  sources for its  products and the Company may be forced to
incur  additional  costs and  expenses  to fulfill  its sales  contracts  in the
California and Southern Nevada markets.  Therefore,  the Company's  revenues and
gross margins in such market may be adversely affected.

         Cost of sales  increased from $123,140 for the three month period ended
June  30,  1998 to  $7,442,952  for the same  period  in 1999,  an  increase  of
$7,319,812.  This increase was due to costs  incurred at the Company's  recently
acquired asphalt  distribution  terminals of $5,048,950 and costs related to the
processing agreement at the Santa Maria Refinery of $2,394,002.

         Operating expenses increased from $816 for the three month period ended
June  30,  1998 to  $1,803,324  for the same  period  in 1999,  an  increase  of
$1,802,508. This increase was due to costs incurred at Crown Distribution, which
commenced operations in July, 1999.

         General and  administrative  expenses  increased  from $111,465 for the
three month  period ended June 30, 1998 to $648,802 for the same period in 1999,
an increase  of  $537,337.  This change was due to an increase in the  Company's
overhead  (including the hiring of a significant number of employees) related to
its growth in its asphalt distribution business.

         Interest and other  income/expenses  decreased from net other income of
$30,501 for the three month period ended June 30, 1998 to net other  expenses of
$613,728 for the same period  ended June 30,  1999, a decrease of $644,229.  The
1999 total was  comprised of interest  costs  related to the  Company's  working
capital  line,  preferential  loan and other debt for its  asphalt  distribution
business of $530,734  and losses of $196,875  related to equity in the losses of
Crown Ridge. These amounts were partially offset by interest and other income of
$113,881.

                                       18
<PAGE>

         Minority  interest  of  $85,266  represents  MCNIC's   approximate  49%
interest in Crown  Distribution and Foreland's  approximate 33% interest in CAT,
LLC.

         For the six month  period  ended  June 30,  1999,  compared  to the six
months ended June 30, 1998

         Total  revenue  increased  from $186,929 for the six month period ended
June 30,  1998 to  $14,876,581  for the same  period  in 1999,  an  increase  of
$14,689,652.  The  increase  was due to  revenue  generated  from the  Company's
recently  acquired asphalt  distribution  operations.  Included in this increase
were revenues of $7,769,632  from the processing  agreement with the Santa Maria
Refinery  that  expired  April 30,  1999.  The Company is  presently  engaged in
litigation  with the owners of the Santa  Maria  Refinery  (See Part II - Item 2
Legal  Proceedings),  and the Santa  Maria  Refinery  has refused to process the
Company's  products  at  that  facility.  The  Company  will be  forced  to find
alternative  sources  for its  products  and the  Company may be forced to incur
additional  costs and expenses to fulfill its sales  contracts in the California
and Southern Nevada markets. Therefore, the Company's revenues and gross margins
in such market may be adversely affected.

         Cost of sales  increased  from  $123,140 for the six month period ended
June 30,  1998 to  $10,619,620  for the same  period  in 1999,  an  increase  of
$10,496,480.  This increase was due to costs incurred at the Company's  recently
acquired asphalt  distribution  terminals of $5,334,633 and costs related to the
processing agreement at the Santa Maria Refinery of $5,284,987.

         Operating  expenses  increased from $816 for the six month period ended
June  30,  1998 to  $3,145,360  for the same  period  in 1999,  an  increase  of
$3,144,544.  This increase was due to costs incurred at Crown Distribution which
commenced operations in July, 1999.

         General and administrative expenses increased from $250,361 for the six
month period ended June 30, 1998 to  $1,234,060  for the same period in 1999, an
increase  of  $983,699.  This  change was due to an  increase  in the  Company's
overhead  (including the hiring of a significant number of employees) related to
its growth in its asphalt distribution business.

         Interest and other  income/expenses  decreased from net other income of
$71,205 for the six month  period  ended June 30, 1998 to net other  expenses of
$1,112,990 for the same period in 1999, a decrease of $1,184,195. The 1999 total
was comprised of interest costs related to the Company's  working  capital line,
preferential  loan and  other  debt for its  asphalt  distribution  business  of
$912,853 and losses of $426,273  related to equity in the losses of Crown Ridge.
These amounts were partially offset by interest and other income of $226,136.

         Minority  interest  of  $404,962  represents  MCNIC's  approximate  49%
interest in Crown  Distribution and Foreland's  approximate 33% interest in CAT,
LLC.

         Year 2000 Assessment

         Like many other  companies,  the "Year 2000 problem"  creates risks for
the Company. The "Year 2000 problem" is the result of computer systems and other
equipment with embedded chips or processors using two digits,  rather than four,
to define a specific year and  potentially  being unable to accurately  process,
provide and/or  receive date and time data from,  into and between the twentieth
and  twenty-first  centuries,  including the years 1999 and 2000,  and leap year
calculations. The Year 2000 problem, if not identified and corrected in a timely
manner, could result in system failures or miscalculations,  causing disruptions
to various  Company  activities and operations  and could  adversely  impact its
financial condition and results of operations.

         The  Company  continues  to  address  the Year  2000  problem  in three
overlapping  phases:  (i) the  identification  and  assessment  of all  critical
equipment,  hardware and software systems requiring  modification or replacement
prior to 2000;  (ii) the remediation  and testing of  modifications  to critical
items; and (iii) the development of contingency and business  continuation plans
to mitigate the extent of any  disruption  to the Company's  operations  arising
from the Year 2000 problem.

         The  Company  began its  assessment  of Year  2000  issues in the first
quarter of 1999 and the Company  continues  to assess the Year 2000  problem and
its potential  impact on its information  technology  ("IT") and non-IT systems.
These  activities  are intended to encompass all major  categories of systems in
use by the Company, including oil sands extraction

                                       19
<PAGE>

Year 2000 Assessment (continued)

functions,  asphalt processing,  transportation and logistics systems, sales and
finance and  accounting.  The Company is also  actively  working  with  critical
suppliers of products and services to determine that the  suppliers'  operations
and the products and services they provide are Year 2000 compliant or to monitor
their progress toward year 2000 compliance. The Company expects that assessment,
remediation and contingency  planning  activities will continue  throughout 1999
with the goal of appropriately resolving all material internal systems and third
party issues.  However,  there can be no assurance that the Company will be able
to  complete  its  assessment,   remediate   problems  or  implement   effective
contingency  plans  before  the  end of  1999.  Further,  the  Company's  recent
acquisitions  of asphalt  terminals,  and the  Company's  continuing  efforts to
integrate these assets and new personnel into the Company's overall  operations,
present  additional  difficulties  in the Company's  assessment and  remediation
efforts.

         The Company and its  affiliated  joint  venture  entity,  Crown  Ridge,
employ  a  number  of  IT  systems  in  their  operations,   including,  without
limitation,  computer  networking  systems,  financial systems and other similar
systems.  In 1998, the Company and its  subsidiaries  began  conversion of their
principal computer software systems to a new integrated system to support future
growth and improve  productivity.  Although no  independent  assessment has been
conducted,  management of the Company  believes that the new computer  system is
Year  2000  compliant  based  upon  indications  from its  vendors  that the new
computer systems incorporate current technology and software which are Year 2000
compliant.

         The Facility  constructed by Crown Ridge  incorporates state of the art
technology and the Company believes that its IT and non-IT systems are Year 2000
compliant.  However, the sophisticated nature of this Facility and the fact that
it is in its initial  operational  phase  requires that the Company  continue to
assess its Year 2000 readiness.

         The Company is also  assessing its non-IT systems  containing  embedded
electronic  circuits.  The Company has identified the operations of Crown Ridge,
Crown Distribution and CAT LLC, the Company's joint venture operating companies,
as having  the most  non-IT  Year 2000  operational  risks  since the  Company's
revenues and income are or will be derived primarily from these  operations.  As
of August 12, 1999, the Company has not  identified any material  non-IT systems
that are not Year 2000 compliant,  although the Company's assessment efforts are
ongoing.

         The Company 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 of or delays in
one or more methods of  transportation  could have a material  adverse affect on
the Company and Crown Ridge and their respective operations.

         Although  the  Company  has  obtained  assurances  from some of its key
suppliers,  it has not independently  evaluated whether its key suppliers are or
will be Year 2000 compliant,  and therefore the Company's contingency plans will
assume  that at least some of these  suppliers  will have  disruptions  in their
deliveries  and  services to the Company or Crown Ridge.  Given that  assumption
(and the risk that some of the  Company's IT or non-IT  systems will  experience
unidentified  or unremediated  Year 2000 problems),  some of the worst case Year
2000 scenarios that the Company might experience include a complete shut-down of
Crown  Ridge's  facility  and one or  more of the  asphalt  terminals  of  Crown
Distribution,  or a failure or substantial  delay in the  transportation  of the
Company's asphalt  products.  The occurrence of any of these events could result
in  lost   revenues,   lost   customers,   increased   processing,   storage  or
transportation  costs,  increased financing costs related to inventory shortages
or sales order backlogs,  substantial  remediation costs and other similar costs
and expenses.

         The potential  costs, if any, to remediate direct or indirect Year 2000
problems the Company may have or identify has not been determined,  nor can such
costs, if any, be accurately predicted or determined given the ongoing nature of
the  Company's   assessment   efforts.   At  present,   the  Company  has  spent
approximately  $100,000 upgrading its IT systems and has spent roughly $8,000 to
assess or remediate non-IT issues (excluding salaries of Company personnel). The
Company currently expects that the total cost of these programs,  including both
incremental  spending  and  redeployed  resources,  will  not  be in  excess  of
$150,000.  The total cost  estimate  is based on the current  assessment  of the
projects and is subject to change as the projects progress.

         The Company has not yet  developed any  contingency  plans in the event
that it 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 the Company and its subsidiaries.

                                       20
<PAGE>

         The   foregoing   disclosure   is  based  on  the   Company's   current
expectations,  estimates and  projections,  which could  ultimately  prove to be
inaccurate.  Because  of  uncertainties,  the  actual  effects  of the Year 2000
problem on the Company may be different from the Company's  current  assessment.
Factors, many of which are outside the control of the Company, that could affect
the Company's  ability to be Year 2000  compliant by the end of 1999 include the
failure of  customers,  suppliers,  governmental  entities and others to achieve
compliance;  the  inability or failure to identify all critical Year 2000 issues
or to  develop  appropriate  contingency  plans  for all Year 2000  issues  that
ultimately may arise.


                          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  Plaintiff's
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.  The Company is aware that the new
principals of Gavilan have experienced  extensive legal difficulties and the law
firm which  previously  represented  Gavilan  has  withdrawn  as counsel in this
matter.  Gavilan has taken no action to  prosecute  this matter for some months,
and the  Company  has not been  notified  that  Gavilan  has  engaged  new legal
counsel.  Accordingly,  the Company expects, although there can be no assurance,
that Gavilan will fail or refuse to prosecute this matter  further.  The Company
is not certain as to whether or not the outstanding balance under the promissory
note is collectible by the Company.

         On  February  10,  1999,  CEntry  Constructors  and  Engineers,  L.L.C.
(CEntry)  filed  a  demand  for  arbitration   with  the  American   Arbitration
Association  for  claims  arising  out  of the  November  5,  1997  Engineering,
Construction  and  Procurement  Agreement  between  Crown  Ridge and CEntry (the
"Contract")  for the design and  construction  of Crown  Ridge's  facility  near
Vernal,  Utah.  CEntry  seeks  damages  in excess of $1.0  million  for  amounts
allegedly due to CEntry under the Contract,  including a retention or liquidated
damages amount of $803,660, as well as amounts for modifications to the Contract
allegedly  made by Crown Ridge.  Crown Ridge has denied the claims and filed its
own counterclaims against CEntry. Crown Ridge asserts,  among other things, that
Crown Ridge is entitled to the retention  amount based upon certain  breaches of
the  Contract by CEntry and that Crown Ridge is entitled to  liquidated  damages
for CEntry's failure to meet a mechanical  completion  deadline specified in the
Contract.  An arbitration  panel has been selected and  arbitration was to begin
August 2, 1999. The  arbitration  was to take place in Salt Lake City,  Utah and
the case is currently in the discovery phase. Due to the uncertainties  inherent
in any  litigation or  arbitration  proceeding,  there can be no assurance  that
Crown Ridge will or will not  prevail or that  significant  damages  will not be
awarded  against  Crown Ridge.  The  arbitration  originally  scheduled to begin
August 2, 1999, has been postponed  indefinitely so that the parties may attempt
to settle their  differences  through  mediation to be held in Salt Lake City on
September 2, 1999.

         On July 14, 1999,  Crown  Distribution and Capco filed an action in the
United States  District Court for the Central  District of California,  Southern
Division,  against Santa Maria Refining Company ("SMRC"), SABA Petroleum Company
("SABA") and Greka Energy  Corporation  ("Greka").  The claims include causes of
action for breach of  contract,  breach of the  covenant  of good faith and fair
dealing,   conversion,   fraud,  claim  and  delivery,   unjust  enrichment  and
constructive  trust,   unfair  competition,   declaratory  relief  and  specific
performance.  These claims  arise out of SMRC's  termination  of the  Processing
Agreement and subsequent refusal to deliver asphalt to Crown Distribution. Crown
Distribution and Capco also made an application to the U.S. District Court for a
writ of possession or temporary restraining order, requesting that SMRC continue
providing asphalt to Crown Distribution,  in order that Crown Distribution could
satisfy  certain  of its  contractual  commitments.  After a hearing on July 16,
1999,  Crown  Distribution's  and  Capco's  request for the entry of a temporary
restraining  order was granted.  However,  on July 30, 1999,  after a hearing on
Crown  Distribution's  and Capco's  request for a  preliminary  injunction,  the
temporary restraining order was dissolved.  As a result, SMRC refused to deliver
any more asphalt to Crown  Distribution.  While Crown Distribution is attempting
to obtain alternative sources of asphalt and thereby mitigate its damages, it is
nonetheless  anticipated  that the  damages  caused by SMRC's  actions  could be
substantial.  Although Crown  Distribution  will attempt to recoup those damages
from SMRC, SABA and Greka, due to the  uncertainties  inherent in any litigation
proceeding,  there can be no  assurance  that Crown  Distribution  or Capco will
ultimately prevail.

         On July  28,  1999,  Robert  Ryan  Zimmerman,  d/b/a  Asphalt  Supply &
Service, Inc., Robert A. Zimmerman,  d/b/a Inoco, Inc., and Connie R. Zimmerman,
d/b/a Interstate  Asphalt Company,  (collectively,  the  "Zimmermans")  filed an
application  for  preliminary  injunction,   temporary  restraining  order,  and
declaratory judgment in the First Judicial District Court, Lewis & Clark County,
State of Montana,  against the Company,  Capco and the Company's President.  The
action  relates  to  Capco's  purchase  of  the  fixed  assets,  the  associated
inventory,  and certain contractual agreements of Asphalt Supply & Service, Inc.
and Inoco,  Inc. (See Item 2  --"Management's  Discussion  and  Analysis").  The
action generally seeks a declaration  that the Zimmermans  remain the owners and
operators  of  the  purchased  asphalt  terminals,  as  well  as  a  preliminary
injunction and temporary  restraining order.  Without hearing or opportunity for
the Company or Capco to respond,  on July 28, 1999, the First Judicial  District
Court, Lewis & Clark County,  State of Montana,  issued an order temporarily and
preliminarily  enjoining  Capco  and  the  Company  from  participating  in  the
day-to-day  decisions of the purchased  asphalt  terminals,  from collecting any
receivables  for the  terminals,  and  from  selling,  transferring,  conveying,
encumbering,  or disturbing in any manner,  the  Zimmermans'  assets.  The Court
refused to grant a  declaratory  judgment that the  Zimmermans  are the rightful
owners of the purchased  asphalt  terminals,  or that they have complete control
and decision-making  authority regarding the purchased  terminals.  On August 9,
1999, the First Judicial District Court issued an order  transferring the action
to the Thirteenth Judicial District Court, Yellowstone County (Billings),  State
of Montana.  The  Company and Capco  intend to enforce  their  rights  under the
agreement  to purchase  the asphalt  terminals.  The  Company  and/or  Capco may
respond to the action with a  counterclaim  or an  independent  civil action for
breach of contract, or both.

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.

                                       21
<PAGE>


ITEM 6.  Exhibits and Reports on Form 8-K

         The  Company  filed  a  Form  8-K on  April  29,  1999  to  report  the
         acquisition of certain asphalt terminal distribution assets.



                             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: August 14, 1999                   By: /s/ JAY MEALEY
                                           ------------------------------------
                                            Jay Mealey, Chief Executive Officer


Date: August 14, 1999                   By: /s/ ALEXANDER L. SEARL
                                           ------------------------------------
                                            Alexander L. Searl, Chief Operating
                              and Financial Officer


                                       22