<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                               ------------------

                                   FORM 10-QSB

(Mark One)
|X|      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

|_|      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
         FOR THE TRANSITION PERIOD FROM              TO



                             BLUE RIDGE ENERGY, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)



           NEVADA                                          61-1306702
(State or Other Jurisdiction of                           (IRS Employer
Incorporation or Organization)                         Identification No.)


              632 ADAMS STREET, SUITE 710, BOWLING GREEN, KY 42101
                    (Address of Principal Executive Offices)

                                 (270) 842-2421
                (Issuer's Telephone Number, Including Area Code)

                                       N/A
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                                                     Yes |X| No |_|


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 7,516,094 shares as of May
10, 2003.


================================================================================


<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS (UNAUDITED)

                  FINANCIAL STATEMENTS OF REGISTRANT

                   INDEX                                                 NUMBER
                   -----                                                 ------

                  Balance Sheets as of March 31, 2003 and December 31,
                    2002.................................................   3
                  Statements of Operations for the three months ended
                    March 31, 2003 and 2002..............................   4
                  Statements of Cash Flows for the three months ended
                    March 31, 2003 and 2002..............................   5
                  Notes to Financial Statements..........................  6-12

         The financial statements of the Registrant included herein have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Although certain information normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States has been omitted, the Registrant believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Form 10-KSB of the
Registrant for its fiscal year ended December 31, 2002.

         The financial statements included herein reflect all adjustments
(consisting only of normal recurring accruals) which, in the opinion of
management, are necessary to present a fair statement of the results for the
interim periods.

         The results for interim periods are not necessarily indicative of
trends or of results to be expected for a full year.

ITEM 2.           Management's Discussion and Analysis of Operations.... 13-17
ITEM 4.           Controls and Procedures...............................    17
                                     PART II

                                OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.....................................    18
ITEM 2.           CHANGES IN SECURITIES.................................    18
ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.......................    18
ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..    18
ITEM 5.           OTHER INFORMATION.....................................    18
ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K......................    18
SIGNATURES..............................................................    18
Certifications.......................................................... 19-20


                                       2

<PAGE>


                             BLUE RIDGE ENERGY, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                 MARCH 31,       DECEMBER 31,
                                                                                   2003              2002
                                                                                   ----              ----
                                                                                (UNAUDITED)
<S>                                                                              <C>            <C>
                                     ASSETS

CURRENT ASSETS:
   Cash ......................................................................   $    61,461    $   335,907
   Accounts Receivable:
      Managed Limited Partnerships ...........................................        15,120          7,865
      Trade and Other ........................................................        37,017         37,017
   Advances to Related Parties ...............................................         8,798           --
   Prepaid Expenses and Other Current Assets .................................        33,350         87,473
                                                                                 -----------    -----------
        TOTAL CURRENT ASSETS .................................................       155,746        468,262

ASSETS ASSOCIATED WITH DISCONTINUED OPERATIONS, NET ..........................        36,000        200,000
PROPERTY AND EQUIPMENT, NET ..................................................     1,445,646      1,319,123
DEFERRED SEISMIC COSTS, NET ..................................................     1,718,710      1,860,865
OTHER NONCURRENT ASSETS ......................................................         7,514            490
                                                                                 -----------    -----------

        TOTAL ASSETS .........................................................   $ 3,363,616    $ 3,848,740
                                                                                 ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts Payable and Accrued Liabilities ..................................   $   268,288    $   299,870
   Advances from Related Parties .............................................          --           71,137
   Seismic Data Costs Payable ................................................       500,115        753,093
   Current Portion Long Term Debt ............................................        22,000         24,000
                                                                                 -----------    -----------
      TOTAL CURRENT LIABILITIES ..............................................       790,403      1,148,100

LONG TERM DEBT ...............................................................          --            4,000
                                                                                 -----------    -----------
      TOTAL LIABILITIES ......................................................       790,403      1,152,100

COMMITMENTS AND CONTINGENCIES ................................................          --             --

STOCKHOLDERS' EQUITY:
   Preferred Stock, $0.001 par value; 5,000,000 shares authorized; 273,300
      shares issued and outstanding at March 31, 2003 and December 31,
      2002, respectively (liquidation preference of $2,230,000 at March 31,
      2003 and $1,980,000 at December 31, 2002) ..............................           273            273
   Common Stock, $0.005 par value; 20,000,000 shares authorized; 7,516,094
      shares issued and outstanding at March 31, 2003 and December 31, 2002,
      respectively ...........................................................        37,581         37,581
   Additional Paid-In Capital ................................................     8,270,656      8,285,056
   Preferred Stock Subscription Receivable ...................................      (500,000)      (760,000)
   Accumulated Deficit .......................................................    (5,235,297)    (4,866,270)
                                                                                 -----------    -----------
      TOTAL STOCKHOLDERS' EQUITY .............................................     2,573,213      2,696,640
                                                                                 -----------    -----------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............................   $ 3,363,616    $ 3,848,740
                                                                                 ===========    ===========
</TABLE>


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

                                       3
<PAGE>

                             BLUE RIDGE ENERGY, INC.
                            STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              --------------------------
                                                                  2003          2002
                                                              -----------    -----------
<S>                                                           <C>            <C>
OPERATING REVENUES:

Turnkey Contract Sales ....................................   $        --    $   835,000
Oil and Gas Property Sales to Related Parties..............       255,000             --
Oil and Gas Sales .........................................        73,590         45,825
                                                              -----------    -----------
        Total Operating Revenues ..........................       328,590        880,825

OPERATING COSTS AND OTHER EXPENSES:
   Turnkey Contract Costs .................................         9,457        543,005
   Cost of Oil and Gas Property Sales to Related Parties...        95,000             --
   Lease Operating Costs ..................................        12,304          7,852
   Depreciation, Depletion and Amortization ...............       178,188         30,000
   Dry Hole and Abandonment Costs .........................        85,173           --
   Marketing Costs ........................................        24,804        196,195
   General and Administrative Costs .......................       232,130        310,414
                                                              -----------    -----------
        Total Operating Costs .............................       637,056      1,087,466
                                                              -----------    -----------

OPERATING LOSS ............................................      (308,466)      (206,641)

OTHER INCOME (EXPENSE):
   Interest Income (Expense) ..............................           461         (9,140)
                                                              -----------    -----------
        Total Other Income (Expense) ......................           461         (9,140)
                                                              -----------    -----------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES .......      (308,005)      (215,781)
   Income Tax Provision ...................................          --           73,547
                                                              -----------    -----------
LOSS FROM CONTINUING OPERATIONS ...........................      (308,005)      (142,234)

DISCONTINUED OPERATIONS:
   Income from Operations of Discontinued Drilling Services          --           14,403
   Income Tax Provision ...................................          --           (4,897)
                                                              -----------    -----------
INCOME FROM DISCONTINUED OPERATIONS .......................          --            9,506
                                                              -----------    -----------

NET LOSS ..................................................   $  (308,005)   $  (132,728)
                                                              ===========    ===========

LOSS FROM CONTINUING OPERATIONS PER COMMON SHARE:
   Basic ..................................................   $     (0.05)   $     (0.02)
                                                              ===========    ===========
   Diluted ................................................   $     (0.05)   $     (0.02)
                                                              ===========    ===========

INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE:
   Basic ..................................................   $     (0.00)   $     (0.00)
                                                              ===========    ===========
   Diluted ................................................   $     (0.00)   $     (0.00)
                                                              ===========    ===========

NET LOSS PER COMMON SHARE:
   Basic ..................................................   $     (0.05)   $     (0.02)
                                                              ===========    ===========
   Diluted ................................................   $     (0.05)   $     (0.02)
                                                              ===========    ===========

Weighted Average Common Shares Outstanding ................     7,516,094      7,485,719
                                                              ===========    ===========
</TABLE>


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

                                       4

<PAGE>

                             BLUE RIDGE ENERGY, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              --------------------------
                                                                  2003          2002
                                                              -----------    -----------
<S>                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Loss ...............................................   $  (308,005)   $  (132,728)
   Adjustments to Reconcile Net Loss to Net Cash Flows from
      Operating Activities:
      Depreciation, Depletion and Amortization ............       178,188         54,000
      Deferred Taxes ......................................          --          (68,650)
      Change in Assets from Discontinued Operations........       164,000           --
      Change in Operating Assets and Liabilities:
        Accounts Receivable ...............................        (7,255)       399,285
        Drilling Advances .................................          --         (814,809)
        Prepaid Expenses ..................................        47,099         95,000
        Seismic Data Costs Payable ........................      (252,978)          --
        Accounts Payable and Accrued Liabilities ..........       (31,582)        69,388
                                                              -----------    -----------
NET CASH USED IN OPERATING ACTIVITIES .....................      (210,533)      (398,514)

CASH FLOWS FROM INVESTING ACTIVITIES:
   (Decrease) Increase in Advances from Affiliate .........       (79,935)       277,777
   Purchase of Oil and Gas Properties .....................      (162,556)      (668,012)
                                                              -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES .....................      (242,491)      (390,235)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments of Long Term Debt .............................        (6,000)       (51,632)
   Preferred Stock Subscription Receivable ................       260,000           --
   Costs of Preferred Stock Sale ..........................       (14,400)          --
   Dividends Paid .........................................       (61,022)        (8,065)
                                                              -----------    -----------
NET CASH FROM (USED IN) FINANCING ACTIVITIES ..............       178,578        (59,697)
                                                              -----------    -----------
NET DECREASE IN CASH ......................................      (274,446)      (848,446)
CASH AT BEGINNING OF PERIOD ...............................       335,907      1,081,096
                                                              -----------    -----------
CASH AT END OF PERIOD .....................................   $    61,461    $   232,650
                                                              ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash Paid for Interest .................................   $      --      $     9,140
                                                              ===========    ===========
   Cash Paid for Income Taxes .............................   $      --      $      --
                                                              ===========    ===========

</TABLE>
                   The accompanying notes are an integral part
                         of these financial statements.

                                       5


<PAGE>
                            BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002


1.    OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

         Blue Ridge Energy, Inc. (BR Energy), a Nevada corporation, was
organized in November, 1994, as Gem Source, Incorporated (Gem Source), and
subsequently changed the name of BR Energy to Blue Ridge Energy, Inc. in May,
1996. BR Energy has offices at 10777 Westheimer Rd., Suite 170, Houston, TX
77042 and 632 Adams Street, Suite 710, Bowling Green, Kentucky, 42101. BR Energy
is engaged in the oil and gas business, primarily in Texas, Kentucky, New Mexico
and West Virginia. BR Energy sponsors oil and gas drilling partnerships through
which it raises money for the drilling of oil and gas wells and participates for
a 1% partnership interest as the managing general partner of the oil and gas
exploration partnerships. BR Energy also owned two drilling rigs. These rigs
were used to drill oil and gas wells for the sponsored oil and gas drilling
partnerships and also other non-affiliated oil and gas companies. These
operations were discontinued and the rigs were sold during 2002. BR Energy also
acquires direct working interest participation in oil and gas properties. The
participation includes both operated and non-operated working interest in
exploratory and development wells. These acquisitions are funded by a
combination of the profits earned from sponsoring oil and gas drilling programs,
the profit earned from contract drilling and from the proceeds of private
offerings of preferred stock. BR Energy intends to maintain an active role in
the oil and gas industry as an operator of oil and gas wells, a sponsor of oil
and gas drilling programs, a participant in oil and gas programs, and as an
independent producer of oil and gas.

         During March of 2002, BR Energy acquired a 35% interest in Channel LLC
resulting in a 17.5% working interest in a large ongoing Texas onshore
exploration program that could have a significant impact on BR Energy. The
centerpiece of this program will utilize a large onshore Texas seismic database
comprising approximately 48,000 miles and covering 100+ counties of the Texas
Gulf Coast, East Texas, and South Texas. The great majority of this data has
never been put into the "public domain" and was acquired by a major oil company
thought to be primarily exploring for large deep targets. We expect that this
will be the foundation for our drilling activity for the next several years. BR
Energy has recorded an asset of $2.3 million, which is being amortized on a
straight-line basis over four years and which has a remaining balance of $1.7
million at March 31, 2003.

         BR Energy suffered a net loss of approximately $308,000 during the
first quarter of 2003 and had a working capital deficit of approximately
$634,000 at March 31, 2003. The accompanying financial statements have been
prepared assuming that BR Energy will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the ordinary course of business. It is management's opinion that the going
concern basis of reporting its financial position and results of operations is
appropriate at this time.

         Management has taken significant steps to address the financial
condition of BR Energy, to increase cash flows and to achieve better operating
results; principally by implementing its new business plan and discontinuing its
contract drilling service segment. BR Energy has also entered certain
agreements, including a sales and service agreement with BR Group to provide the
necessary financial support for BR Energy through the first quarter of 2004.

DISCONTINUED OPERATIONS

         As BR Energy began implementation of its new business plan, the
decision was made in July 2002 to discontinue the contract drilling service
segment of BR Energy's operations and sell its remaining drilling rigs and
ancillary drilling equipment. The drilling rigs and equipment were sold in the
latter half of 2002 and all related income, expense, property and liability
accounts related to these operations have been netted and classified as
discontinued operations in the financial statements for all periods presented.

                                       6
<PAGE>


                             BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002

PRINCIPLES OF CONSOLIDATION

         The accompanying financial statements include the accounts of Blue
Ridge Energy, Inc. and its investment in limited partnerships for which it acts
as managing general partner. As such, BR Energy has the sole and exclusive right
and power to manage and control the partnership. BR Energy accounts for its
investment in limited partnerships under the proportionate consolidation method.
Under this method, BR Energy's financial statements include its pro-rata share
of assets and liabilities and revenues and expenses, respectively, of the
limited partnership in which it participates. All material inter-company
accounts and transactions have been eliminated in consolidation.

         For the interim periods presented, management believes the unaudited
consolidated financial statements reflect all adjustments of a normal recurring
nature and disclosures which are necessary for a fair presentation of the
results for the interim periods presented. The results of operations for the
interim periods are not necessarily indicative of the results that may be
expected for the full year or any other interim period.

         Although the consolidated balance sheet at December 31, 2002 has been
derived from the audited consolidated financial statements at that date, the
accompanying interim consolidated financial statements do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States. These interim financial statements should be
read in conjunction with the BR Energy's 2002 Annual Report on Form 10-K.

USE OF ESTIMATES

         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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting for Asset Retirement Obligations

         In June 2001, the Financial Accounting Standards Board issued SFAS No.
143, ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS, which is effective for fiscal
years beginning after June 15, 2002. The Statement requires legal obligations
associated with the retirement of long-lived assets to be recognized at their
fair value at the time that the obligations are incurred. Upon initial
recognition of a liability, that cost should be capitalized as part of the
related long-lived asset and allocated to expense over the useful life of the
asset. BR Energy adopted SFAS 143 on January 1, 2003 and determined that it
had no impact on BR Energy.

REVENUE RECOGNITION

         Oil and gas revenue, from working interests BR Energy owns, are
recognized at the point of sale.

MANAGED LIMITED PARTNERSHIPS

         BR Energy sponsors limited partnerships for which it serves as the
Managing General Partner. The purpose of these partnerships is to acquire and
develop oil and gas leases. The partnerships enter into turnkey drilling
contracts with BR Energy to drill, complete and equip, if warranted, the oil and
gas wells of the partnerships. BR Energy receives direct compensation,
reimbursement of costs and expenses, and revenues related to turnkey drilling
contracts. BR Energy normally participates for 1% of the Limited Partnerships as
the Managing General Partner. BR Energy follows the industry practice of pro
rata consolidation of its investments in these partnerships. Accordingly, BR
Energy records on its financial statements its pro rata share of the assets,
liabilities, revenues and expenses of each partnership.

PROPERTY AND EQUIPMENT

         Property and equipment (other than oil and gas) are stated at cost.
Depreciation is recognized on the straight line method, after considering
salvage value, over the estimated useful lives of the assets as follows:

         LIVES (YEARS)
      Machinery and Equipment.............          10
      Autos and Trucks....................           5
      Furniture and Fixtures..............          10

                                       7
<PAGE>

                             BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002

         BR Energy follows the successful efforts method of accounting for oil
and gas producing activities. Under the successful efforts method of accounting,
costs, which relate directly to the discovery of oil and gas reserves are
capitalized. These capitalized costs include;

         (1) the costs of acquiring mineral interest in properties,
         (2) costs to drill and equip exploratory wells that find proved
             reserves,
         (3) costs to drill and equip development wells, and
         (4) costs for support equipment and facilities used in oil and gas
         producing activities.

         These costs are depreciated, depleted or amortized on the unit of
productions method, based on estimates of recoverable proved developed oil and
gas reserves. Costs to drill exploratory wells that do not find proved reserves,
geological and geophysical costs, and costs of carrying and retaining unproved
properties are expensed.

         The costs of acquiring unproved properties are capitalized as incurred
and carried until the property is reclassified as a producing oil and gas
property, or considered impaired. BR Energy quarterly assesses its unimproved
properties to determine whether they have been impaired. If the results of this
assessment indicate impairment, a loss is recognized by providing a valuation
allowance. When an unproved property is surrendered, the costs related thereto
are charged to the applicable valuation allowance, if adequate, or charged as a
loss to current operations.

         The costs of drilling exploration wells are capitalized as wells in
progress pending determination of whether the well has found proved reserves.
Once a determination is made, the capitalized costs are either charged to
expense or reclassified as part of the costs of BR Energy's wells and related
equipment. In the absence of a determination as to whether the reserves that
have been found can be classified as proved, the costs of drilling such an
exploratory well are not carried as an asset for more than one year following
completion of drilling. If after a year has passed, BR Energy is unable to
determine that proved reserves have been found, the well is assumed to be
impaired, and its costs are charged to expense.

SURRENDER OR ABANDONMENT OF DEVELOPED PROPERTIES

         Normally, no gain or loss is recognized if only an individual well or
individual item of equipment is abandoned or retired or if only a single lease
or other part of a group of proved properties constituting the amortization base
is abandoned or retired as long as the remainder of the property or group of
properties continues to produce oil or gas. The asset being abandoned or retired
is deemed to be fully amortized, and its cost is charged to accumulated
depreciation, depletion, or amortization. When the last well on an individual
property or group of properties with common geological structures ceases to
produce and the entire property or property group is abandoned, gain or loss, if
any, is recognized.

OTHER DISPOSITIONS

         Upon disposition or retirement of property and equipment other than oil
and gas properties, the cost and related accumulated depreciation are removed
from the accounts and the gain or loss thereon, if any, is credited or charged
to income. BR Energy recognizes the gain or loss on the sale of either a part of
a proved oil and gas property or of an entire proved oil and gas property
constituting a part of a field upon the sale or other disposition of such. The
unamortized cost of the property or group of properties, a part of which was
sold or otherwise disposed of, is apportioned to the interest sold and interest
retained on the basis of the fair value of those interests.

IMPAIRMENT OF LONG-LIVED ASSETS

         BR Energy follows the provisions of Statement of Accounting Standards
(SFAS) No. 144, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." Consequently, BR Energy reviews its
long-lived assets to be held and used, including oil and gas properties
accounted for under the successful

                                       8

<PAGE>

                             BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002

efforts method of accounting. Whenever events or circumstances indicate the
carrying value of those assets may not be recoverable, an impairment loss for
proved properties and capitalized exploration and development costs is
recognized. BR Energy assesses impairment of capitalized costs of proved oil and
gas properties by comparing net capitalized costs to undiscounted future net
cash flows on a field-by-field basis using expected prices. If an impairment is
indicated based on undiscounted expected future cash flows, then an impairment
is recognizable to the extent that net capitalized costs exceed the estimated
fair value of the property.

EARNINGS PER COMMON SHARE

         The Company's basic earnings per common share ("Basic EPS") is based on
the weighted average number of common shares outstanding during the respective
periods. The income available to common shareholders is computed after deducting
dividends on the preferred stock. The convertible preferred stock and
outstanding stock warrants are considered anti-dilutive and therefore, excluded
from the earnings per share calculations. The following is a reconciliation of
the numerators and denominators used in the calculation of Basic EPS for the
three months ended March 31, 2003 and 2002:

<TABLE>
<CAPTION>
BASIC EPS COMPUTATION                                                                  MARCH 31
                                                                                         2003
                                                                                      ---------
<S>                                                                                <C>
Loss from Continuing Operations ..................................................    $(308,005)
Less: Preferred Stock Dividends ..................................................      (61,022)
                                                                                      ---------
Loss from Continuing Operations Available to Common Stockholders .................     (369,027)
Loss from Discontinued Operations ................................................           --
                                                                                      ---------
Loss  Available to Common Stockholders ...........................................    $(369,027)
                                                                                      =========

    DATES                                                        SHARES        FRACTION          WEIGHTED
    OUTSTANDING                                                OUTSTANDING     OF PERIOD      AVERAGE SHARES
    -----------                                                -----------     ---------      --------------
January 1-March 31 ..............................................7,516,094       100.0%          7,516,094
Weighted Average Shares .........................................7,516,094                       7,516,094
                                                                                                ==========

Basic EPS (Loss) from Continuing Operations .................................................   $    (0.05)
Basic EPS (Loss) from Discontinued Operations ...............................................         0.00
                                                                                                ----------
Basic EPS (Loss) ............................................................................  $     (0.05)
                                                                                                ==========



BASIC EPS COMPUTATION                                                                             MARCH 31
                                                                                                    2002
                                                                                                 ---------
Loss from Continuing Operations.............................................................   $  (142,234)
Less: Preferred Stock Dividends .............................................................       (8,065)
                                                                                                ----------
Loss from Continuing Operations Available to Common Stockholders............................   $  (150,299)
Income from Discontinued Operations.........................................................   $     9,506
                                                                                                ----------
Loss Available to Common Stockholders.......................................................   $  (140,793)
                                                                                                ==========

    DATES                                                           SHARES        FRACTION          WEIGHTED
    OUTSTANDING                                                   OUTSTANDING     OF PERIOD      AVERAGE SHARES
    -----------                                                   -----------     ---------      --------------
    January 1-March 31...................................         7,455,344         100.0%          7,455,344
    Conversion of Preferred Stock........................            60,750          50.0%             30,375
                                                                   --------                        ----------
    Weighted Average Shares..............................         7,516,094                         7,485,719
                                                                                                   ==========

    Basic EPS (Loss) from Continuing Operations..........                                          $    (0.02)
    Basic EPS (Loss) from Discontinued Operations........                                                0.00
                                                                                                   ----------
    Basic EPS (Loss).....................................                                          $    (0.02)
                                                                                                   ==========

</TABLE>
         As BR Energy recorded a loss in 2003 and 2002, Common share equivalents
outstanding would be anti-dilutive, and as such, no proforma earnings per share,
assuming the preferred stock was converted to Common Stock, information is
required for 2003 or 2002.

                                       9

<PAGE>

                             BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002

INCOME TAXES

         Income taxes in the three months ended March 31, 2003 and 2002 have
been provided for at an estimated effective tax rate of 0% and 34%,
respectively.

         Income taxes are provided for under the liability method in accordance
with SFAS No. 109, "Accounting for Income Taxes" which takes into account the
differences between financial statement treatment and tax treatment of certain
transactions. It is uncertain as to whether BR Energy will generate sufficient
future taxable income to utilize the net deferred tax assets, therefore for
financial reporting purposes, a valuation allowance of $857,000 and $774,000 as
of March 31, 2003 and December 31, 2002, respectively, has been recognized to
offset the net deferred tax assets.

CASH AND CASH EQUIVALENTS

         For purposes of reporting cash flows, cash and cash equivalents
includes cash on hand and cash on deposit. The Company defines cash equivalents
as short-term and highly liquid investments that are both readily convertible to
known amounts of cash and have an original maturity of less than 90 days.

RECLASSIFICATIONS

         Certain 2002 amounts have been reclassified in the financial statements
to conform with the 2003 presentation.

2.       AFFILIATED OIL AND GAS PARTNERSHIPS

         The Company provides turnkey drilling services for the various oil and
gas partnerships which it sponsors. Fees earned for these drilling services,
including the sale of leases to the partnerships, amounted to $0 and $835,000
during the three months ended March 31, 2003 and 2002, respectively.

         Included in the Company's financial statements are contributions made
to the various Company sponsored oil and gas partnerships, less the applicable
loss generated by these partnerships relative to the Company's percentage
ownership. The Company has allocated, on a pro-rata basis the amounts associated
with these investments to the appropriate asset, liability, income and expense
accounts.

3.       RELATED PARTY TRANSACTIONS

STOCK TRANSACTIONS

         As of March 31, 2003, there are 7,516,094 shares of common stock issued
and outstanding. A total of 4,141,233 shares are held by Blue Ridge Group, Inc
(BR Group) and the remainder of 3,374,861 shares are held by approximately 600
shareholders.

ADVANCES TO/FROM RELATED PARTIES

BR Group provides various management, administrative, accounting and geological
services for BR Energy at a rate of $20,750 per month which has been determined
on a proportional basis because specific identification of expenses is not
practical. BR Energy believes that this cost allocation method of expenses is
reasonable and that this management fee represents the fair market value of the
services rendered. BR Energy also reimburses BR Group for direct costs paid on
its behalf and the costs of various drilling services. As of March 31, 2003 and
December 31, 2002, advances to/from BR Group was approximately $(8,798) and
$71,137.


                                       10

<PAGE>

                             BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002


          Additionally, in March, 2002, BR Group committed to extending BR
Energy a $1,500,000 line of credit to facilitate the purchase of an interest in
48,000 miles of seismic data in the Texas Gulf Coast area. This line of credit
had a term of one year, bore interest at 9% per annum on all unpaid balances and
was secured by all of BR Energy's interests in the seismic data and any oil and
gas properties acquired through the implementation of this data. This $1,500,000
balance was paid in full on September 30, 2002 via the sale of 150,000 shares of
BR Energy's Series E Preferred Stock to BR Group for $1,500,000 and BR Group
committed to the purchase of an additional 100,000 shares for $1,000,000 to be
paid in four quarterly installments. As of March 31, 2003, $500,000 was still
due to BR Energy under this arrangement.

         During the first quarter of 2003, BR Energy entered into a sales and
service agreement with BR Group whereby BR Energy will assemble oil and gas
prospects, if requested by BR Group, and conduct the drilling, completion and
production operations of the oil and gas wells on said prospects. For these
services BR Energy will receive a lease bonus on the acreage acquired, a 10%
Carried Working Interest in the acreage acquired, a 7.5% management fee on all
monies expended in drilling and completing the wells and various overhead fees.
The first prospect under this arrangement was sold to BR Group in March, 2003
for $255,000 less expenses of $95,000 for a net lease bonus of $160,000 which
was included in advances to/from BR Group at March 31, 2003.

         BR Energy's President, Patrick A. Kelleher will receive a 2% Carried
Working Interest on all new oil and gas prospects developed by him for BR Energy
and he will receive a 0.5% Carried Working Interest on all oil and gas prospects
developed from the seismic acquisition previously mentioned.

4.       PROPERTY AND EQUIPMENT

         Property and equipment, stated at cost, consisted of the following at
March 31, 2003 and December 31, 2002:

<TABLE>
<CAPTION>

                                  MARCH 31,    DECEMBER 31,
                                    2003           2002
                                -----------    -----------
                                (unaudited)
<S>                             <C>            <C>
Oil and Gas Properties ......   $ 2,006,865    $ 1,855,992
Seismic License & Data ......     2,287,429      2,287,429
Furniture and Fixtures ......        36,465         24,782
                                -----------    -----------
                                  4,330,759      4,168,203
Less Accumulated Depreciation    (1,166,403)      (988,215)
                                -----------    -----------
                                $ 3,164,356    $ 3,179,988
                                ===========    ===========
</TABLE>

         Depletion, Depreciation and Amortization expense was $178,188 and
$54,000 for the three months ended March 31, 2003 and 2002, respectively.

5.       COMMITMENTS AND CONTINGENCIES

COMMITMENTS

                  During March, 2002 in conjunction with BR Energy's purchase of
an interest in 48,000 miles of seismic data in the Texas Gulf Coast area, BR
Energy committed to participating in the reprocessing of this data. It is
estimated that the reprocessing will be completed in 2003 at a cost to BR Energy
of approximately $2.3 million. BR Energy has paid $1.8 million of these costs to
date and recorded the remaining $500 thousand as Seismic Data Costs Payable
which will be funded by the $500 thousand preferred stock subscription
receivable from BR Group which will be paid in quarterly installments.

         Neither BR Energy nor any of its properties is subject to any material
pending legal proceedings. From time to time, BR Energy may be a party to
litigation in the ordinary course of business, none of which is expected to have
a material adverse effect on the financial condition of BR Energy.

CONTINGENCIES

         BR Energy's drilling and oil and gas exploration and production
operations are subject to inherent risks, including blowouts, fire and
explosions which could result in personal injury or death, suspended drilling
operations,

                                       11
<PAGE>

                             BLUE RIDGE ENERGY, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002

damage to or destruction of equipment, damage to producing formations and
pollution or other environmental hazards. As a protection against these hazards,
the Company maintains general liability insurance coverage of approximately $10
million per occurrence and in the aggregate. The Company believes it is
adequately insured for public liability and property damage to others with
respect to its operations. However, such insurance may not be sufficient to
protect the Company against liability for all consequences of well disasters,
extensive fire damage, or damage to the environment. The Company has never been
fined or incurred liability for pollution or other environmental damage in
connection with its operations.

6.       STOCKHOLDERS' EQUITY

         The Company is authorized to issue two classes of stock that are
designated, respectively, common and preferred stock. As of March 31, 2003, the
Company was authorized to issue 25,000,000 shares of stock, 20,000,000 being
designated as common stock and 5,000,000 shares designated as preferred stock.

SERIES E PREFERRED STOCK

         In June, 2002, BR Energy authorized the issuance and sale of 750,000
shares of Series E Preferred Stock ("Series E Stock") which has a par value of
$0.001 per share at $10.00 per share. The Series E Stock bears a 12% per annum
dividend payable quarterly and a participating dividend equal to 3% of the net
profits from the oil and gas properties acquired with the proceeds of the
offering, also payable quarterly. Each share of the Series E Stock shall be
converted automatically into five (5) shares of Common Stock five years after
the closing of the offering or at such time as BR Energy's registered common
stock has traded at $12.50 per share average for a 30 day period, but in any
event no earlier than three years after the final closing of the offering which
was December 31, 2002.

         In the event of any liquidation, dissolution or winding up of BR
Energy, either voluntary or involuntary, the existing holders of Series E Stock
shall be entitled to receive, prior and in preference to any distribution of any
assets or surplus funds of BR Energy to the holders of Common Stock the amount
of $10.00 per share plus all unpaid dividends on of each share of Series E Stock
then held by the shareholder.

         As of March 31, 2003, 273,300 shares of Series E Stock had been
subscribed to or issued.

COMMON STOCK WARRANTS

         As of March 31, 2003, BR Energy had warrants and options outstanding to
purchase 3,445,419 shares of Common Stock at prices ranging from $0.40 to $6.00
per share. There was 0 warrant activity during the first quarter of 2003. See
the Company's Form 10-KSB for December 31, 2002 for additional details.


                                       12

<PAGE>


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

FINANCIAL OVERVIEW:

         Blue Ridge Energy, Inc. ("BR Energy"), a Nevada corporation, was
organized in November, 1994, as Gem Source, Incorporated ("Gem Source"), and
subsequently changed the name to Blue Ridge Energy, Inc. in May 1996. BR Energy
has offices at 10777 Westheimer Rd., Suite 170, Houston, TX 77042 and 632 Adams
Street, Suite 710, Bowling Green, KY 42101.

         BR Energy is engaged in the oil and gas business primarily in Texas,
Kentucky, New Mexico and West Virginia. BR Energy sponsors oil and gas drilling
partnerships through which it raises funds for the drilling of oil and gas wells
and usually participates for a 1% partnership interest as the managing general
partner of the partnerships.

         With a new technical management team, additional directors, and
establishing an office in Houston, we have begun a new business plan that
focuses on shifting our oil and gas exploration and development activities from
the Appalachian Basin to well-established producing geologic structures in the
onshore Gulf Coast areas of Texas and Louisiana, and East Texas. Our objectives
are to increase our proved reserves, cash flow and shareholder equity through
oil and natural gas drilling projects which are based on our 17.5% ownership of
a 49-year license to approximately 48,000 miles of 2 dimensional seismic data in
the Texas Gulf Coast and East Texas areas which was previously conducted by a
major oil and gas company.

         BR Energy also acquires direct working interest participation in oil
and gas properties. The working interest participation includes exploratory and
development wells and both operated and non-operated working interest
participation. BR Energy intends to maintain an active role in the oil and gas
industry as an operator of oil and gas wells, a sponsor of oil and gas drilling
programs, a participant in oil and gas programs and as an independent producer
of oil and gas.

         At March 31, 2003, BR Energy had total assets of $3.4 million, total
liabilities of $790 thousand and shareholders' equity of $2.6 million. BR
Energy's net loss increased to $308,000 during the first three months of 2003 as
compared to $133,000 for the same period in 2002. The loss per common share,
which takes into account cash dividends paid on preferred stock increased to
$(0.05) per share during the first three months of 2003 as compared to $(0.02)
during the same period in 2002. All per share data in this report has been
adjusted to give effect to applicable stock issues and conversions.

         As of March 31, 2003, BR Energy has participated, either directly or
indirectly through its sponsored limited partnerships, in 96 wells, of which
seventy-five (75) are presently productive and located in Kentucky, Texas, West
Virginia and New Mexico.

         The following tables summarize by geographic area BR Energy's developed
and undeveloped acreage, oil and gas reserves and gross and net interests in
producing oil and gas wells as of March 31, 2003. Productive wells are producing
wells and wells capable of production, including gas wells awaiting pipeline
connections and oil wells awaiting connection to production facilities. Wells
that are completed in more than one producing horizon are counted as one well.

DEVELOPED AND UNDEVELOPED ACREAGE

<TABLE>
<CAPTION>
GEOGRAPHIC AREA                                   DEVELOPED ACREAGE                       UNDEVELOPED ACREAGE
                                           ------------------------------          -------------------------------
                                           GROSS ACRES          NET ACRES          GROSS ACRES           NET ACRES
                                           -----------          ---------          -----------           ---------
<S>                                            <C>                 <C>                  <C>                  <C>
New Mexico...................                  80.00               53.60                0.00                 0.00
Texas........................               1,503.78              139.03              592.00               156.00
Kentucky.....................                 780.00               99.40                0.00                 0.00
West Virginia................                 135.00                8.24                0.00                 0.00
                                            --------              ------              ------               ------
         Totals..............               2,498.78             3000.27              592.00               156.00
                                           =========             =======             =======              =======
</TABLE>

                                       13
<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

PRODUCTIVE WELLS

<TABLE>
<CAPTION>
                                             GROSS WELLS                   NET WELLS                    RESERVES
                                         ------------------           ------------------          -------------------
GEOGRAPHIC AREA                           OIL           GAS            OIL           GAS           OIL           GAS
---------------                          ----         -----           ----          ----          -----        -------
                                        (BBLS)         (MCF)         (BBLS)         (MCF)         (BBLS)         (MCF)

<S>                                      <C>           <C>            <C>           <C>           <C>            <C>
New Mexico...................            1.00          0.00           0.67          0.00          4,960          7,000
Texas........................            3.00          4.00           1.04          0.87         44,556        102,000
Kentucky.....................            0.00         55.00           0.00          7.53              0         82,967
West Virginia................            0.00         12.00           0.00          1.99              0         47,032
                                         ----         -----           ----          ----          -----        -------
         Totals..............            4.00         68.00           1.71          9.87         49,516        238,999
                                         ====         =====           ====          ====        =======       ========
</TABLE>

KEY PROPERTIES

         The working interest owned by BR Energy, either directly or indirectly
through the oil and gas partnerships, is owned jointly with other working
interest partners. Management does not believe any of these burdens materially
detract from the value of the properties or materially interfere with their use.

         The following are the primary properties held by BR Energy as of March
31, 2003:

DEVELOPED PROPERTIES

         Boon's Camp Prospect: As of March 31, 2003, fourteen (14) gas wells are
producing a total of approximately 550 - 650 MCF per day in eastern Kentucky one
(1) well has been determined to be a dry hole. In June 2002, BR Energy sold the
remaining undeveloped acreage in this prospect to a former executive of BR
Energy for a gain of approximately $25,000.

         Homestake #1: The Homestake #1 oil well is a development well located
in Lea County, New Mexico. BR Energy owns 66.9% of the Working Interest in the
Homestake #1 which is a 50.2% Net Revenue Interest.

         Big Sandy Prospect: As of March 31, 2003 ten (10) gas wells in the Big
Sandy Prospect located in eastern Kentucky are currently in production and
selling approximately 200 MCFPD of gas. BR Energy owns varying interests in
these wells ranging from 25% to 30.25% of the working interest with net revenue
interests ranging from 18.75% to 22.69% in each well.

         Contrary Creek Prospect: Drilling in this prospect located in Lawrence
County, Kentucky began during the fourth quarter of 2000 with all 11 gas wells
having been drilled producing approximately 350 MCFPD of gas as of March 31,
2003. In June 2002, BR Energy sold the remaining undeveloped acreage in this
prospect to a former executive of BR Energy for a gain of approximately $25,000.

         McDonald Prospect: Drilling in this prospect located in Logan County,
West Virginia began during the fourth quarter of 2000 with 5 gas wells having
been drilled and producing approximately 300 MCFPD of gas as of March 31, 2003.

         Keegan Gibson #1: BR Energy owns 74% of the working interest, with a
63% net revenue interest in this well located in Smith County, Texas which is
producing approximately 10 BOPD.

         Shelby County, Texas: BR Energy owns a 0.5% Net Revenue Interest in the
Hailey Bridges #1 well in Shelby County, Texas, which began producing gas in
September, 2000 and continues to produce approximately 2.5 MMCF per day.

         Mingo And Wyoming Counties, West Virginia: BR Energy owns an 8.0%
working interest in five (5) gas development wells in Mingo and Wyoming
Counties, West Virginia. These wells are presently producing a total of 200-250
MCF per day.


                                       14



<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

UNDEVELOPED PROPERTIES

         West Pebble Island Prospect: During the third quarter of 2002, BR
Energy committed to the acquisition and development of a 10% Working Interest in
undeveloped and non-producing oil and gas leases with 2 wells to be drilled in
the West Pebble Island Prospect in Tyler County, Texas. Drilling in this
prospect began during the first quarter of 2002 and the first well has been
completed as an oil producer. Drilling of the second well began during the first
quarter of 2003.

         Texas Onshore Seismic Acquisition: During March of 2002, BR Energy
acquired at 35% interest in Channel LLC resulting in a 17.5% working interest in
a large ongoing Texas onshore exploration program that could have a significant
impact on BR Energy. The centerpiece of this program will utilize a large
onshore Texas seismic database comprising approximately 48,000 miles and
covering 100+ counties of the Texas Gulf Coast, East Texas, and South Texas. The
great majority of this data has never been put into the "public domain" and was
acquired by a major oil company thought to be primarily exploring for large deep
targets. We expect that this will be the foundation for our drilling activity
for the next several years.

          In this regard, we have paid approximately $2.1 million as of March
31, 2003 and are committed to pay approximately $500,000 more for our portion of
the costs to reprocess this seismic data to look for shallow "bright spot"
prospects, primarily in the Miocene, Frio, Yegua and Wilcox formations. The
validity of using advanced technology to reprocess data and find additional
drilling prospects analogous to nearby known producing fields in the same
producing trend is well accepted by the oil and gas industry. It is management's
understanding that the major oil and gas company that generated this seismic
data did not perform this type of reprocessing. Instead, its objective in the
area was to explore for deeper and bigger reserves, and it processed the seismic
in a way that masked potential shallower natural gas prospects.

         Once a prospect has been identified and additional geologic and
geophysical work performed, we and our working interest parties have independent
elections to participate as to our respective interests in the wells.
Approximately seventy percent of the seismic mileage has been reprocessed as of
March 31, 2003 and over 100 prospects have been identified. These prospects
range from 3,000 feet to 13,000 feet in depth and will be the prospects on which
we intend to drill both exploratory and development wells. We estimate the cost
to drill and complete a well for 100% of the working interest in these prospects
will range from $150,000 for the shallower wells to $2,100,000 for the deeper
wells. As of March 31, 2003, 6 wells had been drilled under this arrangement
resulting in three dry holes, one natural gas producer and two wells in the
completion process.

         We also intend to continue reviewing other undrilled acreage in these
areas which are currently controlled by the major oil and gas companies for
potential drilling prospects. We believe this acreage has not yet been drilled
because of a shift of funding by the larger companies towards larger
international projects. The major oil and gas companies are actively encouraging
joint ventures (farm-outs of their leases and/or direct leasing of their mineral
ownership) in these areas with other oil and gas companies, including smaller
companies such as us. With respect to these prospects, the major oil and gas
companies generally allow us to use their proprietary geologic and seismic
databases at no cost to us to evaluate the prospect before our risk capital is
committed to drilling the well.

INCOME STATEMENT REVIEW:

THREE MONTHS ENDED MARCH 31, 2003 AND 2002:

         BR Energy's net loss increased to $308,000 during the first quarter of
2003 as compared to $133,000 for the same period in 2002, The loss per common
share, which takes into account cash dividends paid on preferred stock increased
to $(0.05) per share during the first quarter of 2003 as compared to $(0.02) in
the same period of 2002.


                                       15
<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

OPERATING REVENUES:

         Operating revenues totaled $329,000 during the three months ended March
31, 2003 as compared to the $881,000 recorded during the three months ended
March 31, 2002, This decrease was primarily related to a decreased activity
level in BR Energy's sponsorship of Limited Partnerships for the drilling and
development of oil and gas properties during 2003.

DIRECT OPERATING COSTS:

         Direct operating costs totaled $202,000 during the three months ended
March 31, 2003, as compared to the $551,000 experienced during the same period
in 2002. The changes in direct operating costs are directly and proportionally
related to the changes in operating revenues previously discussed.

OTHER OPERATING EXPENSES:

         Marketing expenses decreased 87% to $25,000 during the first quarter of
2003 from the $196,000 experienced during this period in 2002 due to decreased
levels in sponsoring Limited Partnerships as previously discussed. General and
Administrative expenses decreased 25% to $232,000 during the first quarter of
2003 as compared to $310,000 during the same period in 2002, primarily as a
result of decreased costs associated with changes in management personnel.

OTHER EXPENSE:

         Other Expense decreased 105% to income of $461 during the first quarter
of 2003 as compared to expense of $9,000 during the first quarter of 2002 due to
the Company not having any interest expense associated with debt that was paid
off in 2002.

BALANCE SHEET REVIEW:

ASSETS:

         BR Energy's current assets decrease of 67% to $155,000 at March 31,
2003 as compared to $469,000 at December 31, 2002 was primarily due to the use
of cash and advances for operations and the development of oil and gas
properties. The decrease in Deferred Seismic Costs resulted from the
amortization of these costs.

LIABILITIES:

         BR Energy's current liabilities decreased 31% to $790,000 at March 31,
2003 from $1,148,000 at December 31, 2002 primarily due to the payment of
Seismic Data Costs Payable.

STOCKHOLDERS' EQUITY:

         Total capital invested in BR Energy for Common and Preferred Stock
remained essentially the same at March 31, 2003 as at December 31, 2002. The
loss for the quarter and the payment of dividends on Preferred Stock were offset
by the collection of $260,000 in Preferred Stock Subscriptions Receivable.

CAPITAL RESOURCES AND LIQUIDITY:

         BR Energy's current ratio (current assets / current liabilities) was
0.20 to 1 at March 31, 2003 and 0.41 to 1 at March 31, 2002. Such calculations
include the accounts receivable from managed oil and gas drilling partnerships
and advances to (from) related parties. The change in the current ratio for 2003
from 2002 was due primarily to the use of funds in the acquisition of seismic
data, development of oil and gas properties and continuing operations.

                                       16



<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

          BR Energy's primary source of cash in 2002 was derived from the sale
of oil and gas limited partnerships, the sale of drilling equipment and the sale
of preferred stock. Without these sources of cash, BR Energy would not have
adequate sources of cash for its operations. While BR Energy expects that its
revenue sources will not significantly change in 2003, BR Energy will be
increasing its emphasis on drilling and developing oil and gas properties in
order to increase its revenue from oil and gas production.

          During the periods ended March 31, 2003 and December 31, 2002, BR
Energy has relied upon net inflows of cash generated by its operating activities
and equity offerings to fund the purchase of assets and its expansion. Generally
speaking, management intends to fund further growth with equity transactions and
improved cash flows from operations.

                  BR Energy suffered a net loss of approximately $308,000 during
the first quarter of 2003 and had a working capital deficit of approximately
$634,000 at March 31, 2003. The accompanying financial statements have been
prepared assuming that BR Energy will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the ordinary course of business. It is management's opinion that the going
concern basis of reporting its financial position and results of operations is
appropriate at this time.

                  Management has taken significant steps to address the
financial condition of BR Energy, to increase cash flows and to achieve better
operating results; principally by implementing its new business plan and
discontinuing its contract drilling service segment. BR Energy has also entered
certain agreements, including a sales and service agreement with BR Group to
provide the necessary financial support for BR Energy through the first quarter
of 2004.

          As of March 31, 2003, BR Energy had sufficient cash to satisfy its
operating needs for a period of 90 days or longer. BR Energy plans to continue
funding its operating needs by sponsoring 1 to 2 limited partnership oil and gas
drilling programs a year.

ITEM 4. CONTROLS AND PROCEDURES

          BR Energy's Chief Executive Officer and Chief Financial Officer have
evaluated BR Energy's disclosure controls and procedures within 90 days of the
filing of this report. Based on that evaluation, BR Energy's management,
including the Chief Executive Officer and Chief Financial Officer concluded
that BR Energy's disclosure controls and procedures were functioning
effectively to provide reasonable assurance that BR Energy can meet its
disclosure obligations. There have been no significant changes in BR Energy's
internal controls or in other factors that could significantly affect internal
controls subsequent to this review.





                                       17
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

         There are no legal proceedings pending against BR Energy, Inc.

ITEM 2.           CHANGES IN SECURITIES

         None

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

ITEM 5.           OTHER INFORMATION

         None

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         No reports on Form 8-K were filed during the quarter ended March 31,
2003.

         Exhibit 99.1      Chief Executive Officer's Certification Pursuant to
                           18 U.S C Section 1350
         Exhibit 99.2      Chief Financial Officer's Certification Pursuant to
                           18 U.S C Section 1350


                                   SIGNATURES

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

                                         BLUE RIDGE ENERGY, INC.



Date May 14, 2003                        By     /s/ Forrest E. Ebbs
                                            ------------------------------------
                                               Forrest E. Ebbs
                                               Sr. Vice President-Finance & CFO


                                       18

<PAGE>
                                 CERTIFICATIONS

I, Patrick A. Kelleher, certify that:

1.    I have reviewed this quarterly report on Form 10-QSB of Blue Ridge
      Energy, Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors:

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weakness in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation including
      any corrective actions with regard to significant deficiencies and
      material weakness.


Date: May 14, 2003                              /s/  Patrick A. Kelleher
                                                Chief Executive Officer


<PAGE>

I, Forrest E. Ebbs, certify that:

1.    I have reviewed this quarterly report on Form 10-QSB of Blue Ridge
      Energy, Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about he
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors:

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weakness in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation including
      any corrective actions with regard to significant deficiencies and
      material weakness.


Date: May 14, 2003                              /s/  Forrest E. Ebbs
                                                Chief Financial Officer