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|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                            
|UNITED STATES                                                                                                                                                                                                                                                                                               
|SECURITIES AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                          
|Washington, D.C. 20549                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                            
|FORM 10-QSB                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                            
|[X]                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                            
|[  ]                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                            
|COMMISSION FILE NUMBER: 0-5525                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                            
|CASTLEGUARD ENERGY, INC.                                                                                                                                                                                                                                                                                    
|(Exact name of Registrant as specified in its charter)                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                            
|Florida
(State or other jurisdiction of 
of incorporation or organization)                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                            
|4625 Greenville Avenue, Suite 203, Dallas, TX
(Address of principal executive offices)                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                            
|(214) 361-1755                                                                                                                                                                                                                                                                                              
|(Registrant's telephone number, including area code)                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                            
|Securities registered pursuant to Section 12(b) of the Act: NONE                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                            
|Securities registered pursuant to Section 12(g) of the Act:                                                                                                                                                                                                                                                 
|Common Stock Without Par Value                                                                                                                                                                                                                                                                              
|(Title of Class)                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                            
|Check whether the issuer (1) has 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.
|                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                            
|At June 30, 2002, there were 17,248,626 Common shares outstanding.                                                                                                                                                                                                                                          
|______________________________                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                            
|Transitional Small Business Disclosure Format (check one): Yes [   ] No [X]                                                                                                                                                                                                                                 





|CASTLEGUARD ENERGY, INC.
|------------------------
|                        
|INDEX                   
|                        
|                        
|Part 1.                 
|                        
|Item 1.                 
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|Item 2.                 
|                        
|Part II.                
|                        
|Item 1.                 
|                        
|Item 2.                 
|                        
|Item 3.                 
|                        
|Item 4.                 
|                        
|Item 5.                 
|                        
|Item 6.                 
|                        
|                        
|                        









|Item 1. FINANCIAL STATEMENTS
|----------------------------
|                            
|                            
|                            





|REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Board of Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Castleguard Energy, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|We have reviewed the accompanying balance sheet of Castleguard Energy, Inc. as of June 30, 2002, and the related statements of income for the three and six months periods and stockholders' equity and cash flows for the six month period then ended. These financial statements are the responsibility of the Company's management.                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of analytical procedures applied to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Whitley Penn                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Dallas, Texas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|August 13, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      





|CASTLEGUARD ENERGY INC.
|-----------------------
|                       
|                       
|BALANCE SHEETS         
|                       

|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|---------------------------------------- | ------------------------------------------------------------------------ | -------------------------- | -------- | --------- | --------- | ------------- | --------- |  | -----------------
|                                         |                                                                          |                            |          |           |           | June 30,
2002 |           |  | December 31,
2001
|                                         |                                                                          |                            |          |           |           | (Unaudited)   |           |  | (Audited)        
|ASSETS                                  
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|Current assets:                          |                                                                          |                            |          |           |           |               |          
|                                         | Cash                                                                     | $                          | 49,658   |           | $         | 99,979       
|                                         | Accounts receivable                                                      |                            |          | 131,367   |           |               | 146,877  
|                                         |                                                                          | Total current assets       |          | 181,025   |           |               | 246,856  
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|Petroleum and natural gas interests, net |                                                                          | 1,439,188                  |          |           | 1,459,384
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|Deferred debt issue cost, net            |                                                                          | 24,162                     |          |           | -        
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|TOTAL ASSETS                             |                                                                          |                            | $        | 1,644,375 |           | $             | 1,706,240
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|LIABILITIES & STOCKHOLDERS' EQUITY      
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|Current liabilities:                     |                                                                          |                            |          |           |           |               |          
|                                         | Accounts payable and accrued liabilities                                 | $                          | 38,965   |           | $         | 83,880       
|                                         | Current portion of long-term debt                                        |                            | 260,004  |           |           | 238,337      
|                                         |                                                                          | Total current liabilities  |          | 298,969   |           |               | 322,217  
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|Long-term debt, less current portion     |                                                                          | 265,667                    |          |           | 367,078  
|Accrued stock to be issued               |                                                                          | -                          |          |           | 7,315    
|Deferred income taxes                    |                                                                          | 80,000                     |          |           | 61,000   
|                                         |                                                                          |                            |          |           |           |               |          
|TOTAL LIABILITIES                        |                                                                          | 644,636                    |          |           | 757,610  
|                                         |                                                                          |                            |          |           |           |              
|Stockholders' equity:                    |                                                                          |                            |          |           |          
|                                         | Common stock, $0.001 par value,                                          |                            |          |           |           |              
|                                         | 50,000,000 shares authorized; 19,146,626 
  and 19,013,626 shares issued |                            | 19,147   |           |           | 19,014       
|                                         | Paid-in capital                                                          |                            | 965,824  |           |           | 958,643      
|                                         | Retained earnings                                                        |                            | 70,768   |           |           | 26,973       
|                                         | Less: Treasury stock, 1,862,000 shares at cost                           |                            | (56,000) |           |           | (56,000)     
|                                         |                                                                          | Total stockholders' equity |          | 999,739   |           |               | 948,630  
|                                         |                                                                          |                            |          |           |           |               |           |  |                  
|TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $                                                                        | 1,644,375                  |          | $         | 1,706,240
|                                         |                                                                          |                            |          |           |           |               |           |  |                  





|CASTLEGUARD ENERGY INC.                                                  
|-------------------------------------------------------------------------
|                                                                         
|STATEMENTS OF INCOME                                                     
|(Unaudited)                                                              
|                                                                         
|                                                                         
|                                                                         
|Oil and gas Revenues                                                     
|                                                                         
|Expenses:                                                                
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Income from operations                                                   
|                                                                         
|Interest and financing costs                                             
|                                                                         
|Income before income taxes                                               
|Provision for income taxes                                               
|                                                                         
|Net income                                                               
|                                                                         
|Basic earnings per common share                                          
|                                                                         
|Weighted average number of common
             shares outstanding (000's)
|                                                                         





|CASTLEGUARD ENERGY INC.                             
|----------------------------------------------------
|                                                    
|                                                    
|STATEMENTS OF CASH FLOWS                            
|(Unaudited)                                         
|                                                    
|                                                    
|                                                    
|                                                    
|Cash Flows from Operating Activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Net cash provided by operating activities           
|                                                    
|Cash Flows from Investing Activities:               
|                                                    
|                                                    
|Net cash used in investing activities               
|                                                    
|Cash Flows from Financing Activities:               
|                                                    
|                                                    
|Net cash used by financing activities               
|                                                    
|Net increase (decrease) in cash and cash equivalents
|Cash and cash equivalents, beginning of period      
|Cash and cash equivalents, end of period            
|                                                    
|                                                    
|                                                    





|STATEMENTS OF STOCKHOLDERS' EQUITY        
|------------------------------------------
|(Unaudited for year 2002 first six months)
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Balance, December 31, 2000                
|                                          
|Issuance of stock accrued                 
|                                          
|Issuance of stock for services            
|                                          
|Net income                                
|                                          
|Balance, December 31, 2001                
|                                          
|Issuance of stock                         
|to settle litigation                      
|                                          
|Net income                                
|                                          
|Balance, June 30, 2002                    





|CASTLEGUARD ENERGY, INC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|NOTES TO FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Note 1 - Future Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company is in the process of growing through the acquisition of oil and gas interests. The Company intends to finance this growth through future cash flow, the issuance of common stock and debt. Future growth may be limited by the extent of internally generated cash flow, the Company's ability to obtain financing from share issuances and debt to finance future expansion of working interests.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Note 2 - Summary of Significant Accounting Policies and Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



|CASTLEGUARD ENERGY, INC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|NOTES TO FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 3 - Long-Term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Long-term debt is a secured note payable to a commercial bank, payable at $21,667 per month plus interest at the Wall Street Journal's prime rate plus 3/4 of one percent. The note is collateralized by the company's interest in oil and gas properties and is also guaranteed by two directors of the Company. Maturities of the debt are as follows:                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Debt covenants restrict other debt, pledge of assets, payments of dividends, mergers and changes in ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 4 - Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|In January, 2001, the Company's directors entered into an agreement with H & S Production, Inc. (a company wholly owned by the Company's Chairman, Scott Heape) to participate in a farmout agreement covering leasehold interests in the Mings Chapel Field in East Texas whereby the Company has the opportunity to participate in up to three development wells. The first and second wells were drilled, completed, and put on line in 2001. A third well is planned to be drilled in the summer of 2002; additionally, four proven but undeveloped locations have been identified as a result of the first two wells drilled on this prospect.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   





|Item 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|CASTLEGUARD ENERGY, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|CONDITION AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|This Quarterly Report on Form 10-QSB includes "forward-looking" statements within the meaning of Section 27a of the Securities Act of 1933, as amended (the "Securities Act"), and section 21e of the Securities Exchange Act of 1934, as amended (the "exchange act"). Specifically, all statements other than statements of historical facts included in this report regarding the Company's financial position, business strategy and plans and objectives of management of the Company for future operations are forward- looking statements. These forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. When used in this report, the words "anticipate," "believe," "estimate," "expect" and "intend" and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions related to certain factors including, without limitation, price levels for oil and natural gas, concentration of oil and natural gas reserves and production, drilling risks, uncertainty of oil and gas reserves, risks associated with the development of additional revenues and with the acquisition of oil and gas properties and other energy assets, operating hazards and uninsured risks, general economic conditions, governmental regulation, changes in industry practices, marketing risks, one time events and other factors described herein ("cautionary statements"). Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward- looking statements. All subsequent written and oral forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements. Reference is made to disclosure regarding "Forward-Looking Statements and Cautionary Statements" included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001, which is incorporated herein by reference.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|The Company is an independent oil and gas exploration company whose strategic focus is the application of advanced seismic imaging and computer-aided exploration technologies in the systematic search for commercial hydrocarbon reserves, primarily in the states of Texas and Louisiana. The Company attempts to leverage its technical experience and expertise with seismic to identify exploration and exploitation projects with significant potential economic return. The company intends to participate in selected exploration projects as a non-operating, working interest owner, sharing both risk and rewards with its partners. The Company has and will continue to pursue exploration opportunities in regions where the Company believes significant opportunity for discovery of oil and gas exists. By reducing drilling risk through seismic technology, the Company seeks to improve the expected return on investment in its oil and gas exploration projects. The Company attempts to limit capital requirements by forming industry alliances and exchanges a portion of its interest for cash and/or a carried interest in its exploration projects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





|RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Three and Six Month Periods Ended June 30, 2002 vs. 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Commodity price declines this year compared to last year have adversely affected the second quarter of 2002 and the first six months when compared with the same periods last year. The adverse effect was partially offset by increased volumes of natural gas sales in the second quarter of 2002 versus 2001 and by cost containment activities that reduced general and administrative costs nearly 50% in the second quarter and the six months compared with last year.                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Volumes of gas sales increased in the second quarter compared to last year, from 48,123 MCF to 63,118 MCF, and for the six months, from 118,459 MCF to 129,786 MCF, as the result of higher deliveries from the Company's Minden Louisiana properties. Oil sales volumes declined in the second quarter and the six months, from 798 barrels to 564 barrels and from 1,581 barrels to 1,192 barrels, respectively.                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Prices for natural gas were $2.73 per MCF in the second quarter this year versus $4.77 per MCF last year, and $2.54 per MCF for the six months this year versus $6.27 last year.                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|The combination of volume increases and price declines resulted in a decline in second quarter revenues of 26% and 55% for the six months.                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|For the second quarter and the six months, increases in lease operating expenses and depletion, depreciation and amortization (DD&A) were offset by a decline in general and administrative expense. Income from operations still declined in both periods compared to last year principally as a result of the aforementioned commodity price declines for natural gas. Interest and financing cost was lower for the three and six months as the result of lower debt levels and lower interest rates.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|LIQUIDITY AND CAPITAL RESOURCES                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Cash flow for the six months ended June 30, 2002 was adequate to meet operating requirements and debt service with an amount for new investment. New investment opportunities exceed the Company's estimate of cash available in the future, however, so that additional financing will be required to fully exploit all opportunities. No efforts have yet been made to arrange such financing. The lack of additional funding may limit the Company's deal flow in the future.                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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|Part II. Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 1. Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 2. Changes in Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 3. Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 4. Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 5. Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



|Item 6. Exhibits and Reports on Form 8-K
|----------------------------------------



|(a) | Exhibits -                                                                                                                                                    
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                               
|(b) | Reports on Form 8-K - 	One Report on Form 8-K were filed during the last quarter of the period covered by this report.                                        
|    |                                                                                                                                                               
|    | On June 5, 2002, the Company filed a Report on Form 8K relating to the change of the Company's certifying accountant from Jackson Rhodes P.C. to Whitley Penn.
|    |                                                                                                                                                               









|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.

|                | CASTLEGUARD ENERGY, INC.            
|--------------- | ------------------------------------
|                |                                     
|                |                                     
|August 14, 2002 | /s/ Bob G. Honea                    
|                | BY: Bob G. Honea, Director/President