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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 BAYOU CITY EXPLORATION, INC.
  NEVADA
(State or Other Jurisdiction of 
Incorporation of Organization)
    
    61-1306702
(IRS Employer Identification No.)
 
 
 
  þ o
  o þ
    o þ




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PART I 
FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTS (UNAUDITED)FINANCIAL STATEMENTS OF REGISTRANTBALANCE SHEETS AS OF MARCH 31, 2008 AND DECEMBER 31, 2007
    
    
    3STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 2008 AND 2007
    
    
    4STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH
31, 2008 AND 2007
    
    
    5NOTES TO FINANCIAL STATEMENTS
    
    
    6ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF OPERATIONS
    
    
    7ITEM 3.
    
    CONTROLS AND PROCEDURES
    
    
    10PART IIOTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    11ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    11ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    11ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    11ITEM 5.
    
    OTHER INFORMATION
    
    
    11ITEM 6.
    
    EXHIBITS
    
    
    11EX-31.1
EX-31.2
EX-32.1
EX-32.2EX-31.1EX-31.2EX-32.1EX-32.2
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MARCH 31,
    
    
    DECEMBER 31,2008
    
    
    2007(UNAUDITED)ASSETSCURRENT ASSETS:Cash
    
    $
    194,302
    
    
    $
    21,714Accounts receivable:Trade and other (net of reserve  $241,363 as of
March 31, 2008 and December 31, 2007)
    
    
    11,129
    
    
    
    13,457TOTAL CURRENT ASSETS
    
    
    205,431
    
    
    
    35,171PROPERTY AND EQUIPMENT, NET
    
    
    181,882
    
    
    
    494,718OTHER NONCURRENT ASSETS
    
    
    7,024
    
    
    
    7,024TOTAL ASSETS
    
    $
    394,337
    
    
    $
    536,913LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    420,662
    
    
    $
    519,051Accounts payable-related parties
    
    
    266,357
    
    
    
    281,965AFE advances from JIB owners
    
    
    51,186
    
    
    
    51,186Current portion of long term debt  related parties
    
    
    571,732
    
    
    
    552,138TOTAL CURRENT LIABILITIES
    
    
    1,309,937
    
    
    
    1,404,340LONG TERM LIABILITY-P&A COSTS
    
    
    43,806
    
    
    
    43,806LONG TERM DEBT
    
    
    
    
    
    
    TOTAL LIABILITIES
    
    
    1,353,743
    
    
    
    1,448,146COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITY (DEFICIT):Preferred Stock, $0.001 par value; 5,000,000 shares
authorized; 0 shares issued and outstanding at
March 31, 2008 and December 31, 2007
    
    
    
    
    
    
    Common Stock, $0.005 par value; 150,000,000 shares
authorized; 26,653,633 shares issued and
outstanding at March 31, 2008 and 26,653,633 shares
issued and outstanding at December 31, 2007
    
    
    133,268
    
    
    
    133,268Additional paid-in capital
    
    
    13,276,765
    
    
    
    13,276,765Accumulated deficit
    
    
    (14,369,439
    )
    
    
    (14,321,266
    )TOTAL STOCKHOLDERS DEFICIT
    
    
    (959,406
    )
    
    
    (911,233
    )TOTAL
LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    394,337
    
    
    $
    536,913
 
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THREE MONTHS ENDEDMARCH 31,2008
    
    
    2007OPERATING REVENUES:Oil and gas sales
    
    $
    5,094
    
    
    $
    4,110TOTAL OPERATING REVENUES
    
    
    5,094
    
    
    
    4,110OPERATING COSTS AND EXPENSES:Lease operating expenses
    
    
    5,844
    
    
    
    18,549Impairment, abandonment, and dry hole costs
    
    
    
    
    
    
    11,598Exploration costs
    
    
    13,440
    
    
    
    29,366Depreciation, depletion and amortization
    
    
    16,706
    
    
    
    15,771Advertising and marketing costs
    
    
    
    
    
    
    6,988General and administrative costs
    
    
    67,164
    
    
    
    400,482TOTAL OPERATING COSTS
    
    
    103,154
    
    
    
    482,754OPERATING LOSS
    
    
    (98,060
    )
    
    
    (478,644
    )OTHER INCOME (EXPENSE):Interest Expense
    
    
    (7,863
    )
    
    
    (3,522
    )Gain on sale of asset
    
    
    57,750
    
    
    
    NET LOSS BEFORE INCOME TAX
    
    
    (48,173
    )
    
    
    (482,166
    )Income Tax Provision
    
    
    
    
    
    
    NET LOSS
    
    
    (48,173
    )
    
    
    (482,166
    )SERIES E PREFERRED STOCK CASH DIVIDENDS
    
    
    
    
    
    
    (6,990
    )NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
    
    $
    (48,173
    )
    
    $
    (489,156
    )NET LOSS PER COMMON SHARE
    
    $
    (0.00
    )
    
    $
    (0.02
    )Weighted Average Common Shares Outstanding  Basic and Diluted
    
    
    26,653,633
    
    
    
    26,281,133
 
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THREE MONTHS ENDEDMARCH 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss
    
    $
    (48,173
    )
    
    $
    (482,166
    )Adjustments to reconcile net loss to net cash flows used in operating activities:Depreciation, depletion and amortization
    
    
    16,706
    
    
    
    15,771Impairment, abandonment, and dry hole costs
    
    
    
    
    
    
    11,598Gain on Sale of Asset
    
    
    (57,750
    )Change in operating assets and liabilities:Accounts receivable-trade
    
    
    2,328
    
    
    
    380,611Accounts receivable-related party
    
    
    
    
    
    
    (5,701
    )Prepaid expense and other assets
    
    
    
    
    
    
    21,469AFE advances-JIB owners
    
    
    
    
    
    
    (308,697
    )Accounts payable-related party
    
    
    (15,608
    )
    
    
    47,092Accounts payable and accrued liabilities
    
    
    (98,389
    )
    
    
    (535,862
    )Long Term Liability  P&A Costs
    
    
    
    
    
    
    (6,630
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (200,886
    )
    
    
    (862,515
    )CASH FLOW FROM INVESTING ACTIVITIES:Purchase of furniture and computer equipment
    
    
    
    
    
    
    (11,254
    )Purchase of oil and gas properties
    
    
    (3,977
    )
    
    
    (106,577
    )Proceeds from sale of oil and gas leasehold
    
    
    357,857
    
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    353,880
    
    
    
    (117,831
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments on long term debt
    
    
    (3,701
    )
    
    
    (21,356
    )Proceeds from BR Group line of credit
    
    
    23,295
    
    
    
    Dividends paid
    
    
    
    
    
    
    (6,990
    )NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
    
    
    19,594
    
    
    
    (28,346
    )NET DECREASE IN CASH
    
    
    172,588
    
    
    
    (1,008,692
    )CASH AT BEGINNING OF PERIOD
    
    
    21,714
    
    
    
    1,178,946CASH AT END OF PERIOD
    
    $
    194,302
    
    
    $
    170,254
 
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BAYOU CITY EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
 1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 INTERIM REPORTING
   2. GOING CONCERN
   3. SALE OF PROSPECT:
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MANAGEMENTS DISCUSSION AND ANALYSIS OF OPERATIONS
 GENERAL OPERATIONS
       7




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DESCRIPTION OF PROPERTIES
    Key Developed Properties :
   8




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Key Undeveloped Properties :
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
  OPERATING REVENUES
   DIRECT OPERATING COSTS
  EXPLORATION COSTS
  OTHER OPERATING EXPENSES
  9




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INCOME TAX PROVISION
  CAPITAL RESOURCES AND FINANCIAL CONDITION
   
   
 CONTROLS AND PROCEDURES
   10




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PART II
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 
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SIGNATURES
  BAYOU CITY EXPLORATION, INC.Date: May 20, 2008
    By
    /s/ Robert D. BurrChief Executive Officer andPresident
and Acting Chief Financial Officer 12