UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 
 Washington, D.C. 20549
 
 FORM 10-Q
 
 x
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934For the quarter ended March 31, 2005 oro
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from ___________ to ____________ 
 Commission file number 0-8773
 
 **CRESTED CORP.**(Exact Name of Company as Specified in its Charter) 
 **Colorado**

**84-0608126**(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)**877 North 8****th****West, Riverton, WY**

**82501**(Address of principal executive offices)

(Zip Code)Company's telephone number, including area code:

**(307) 856-9271** 
 Not Applicable
 (Former name, address and fiscal year, if changed since last report)
 
 Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing
 requirements for the past 90 days.
 YES x   NO o
 
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
 YES o   NO x
 
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
 
 YES o   NO o
 
 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
 
 Class

Outstanding Shares at May 13, 2005Common stock, $.001 par value

17,152,298 
 
 
  
  
 
 **CRESTED CORP.**
 
 ****INDEX****
  Page No.**PART I.**
**FINANCIAL INFORMATION**ITEM 1.
Financial Statements.Condensed Balance Sheets (Unaudited)March 31, 2005 and December 31, 2004
3Condensed Statements of Operations (Unaudited)Three Months Ended March 31, 2005 and 2004
4Condensed Statements of Cash Flows (Unaudited)Three Months Ended March 31, 2005and 2004
5Notes to Condensed Financial Statements (Unaudited)
6-7ITEM 2.
Managements Discussion and Analysis ofFinancial Condition and Results of Operations
8-11ITEM 4.
Controlsand Procedures
11**PART II.**
**OTHER INFORMATION**ITEM 1.
LegalProceedings
12-13ITEM 2.
Changes in Securities and Use of Proceeds
13ITEM 3.
Defaults upon Senior Securities
13ITEM 4.
Submissionof Matters to a Vote of Security Holders
14ITEM 5.
Other Information
14ITEM 6.
Exhibits and Reports on Form 8-K
14Signatures
15Certifications
See Exhibits
 
 -2- 
  INDEX
  ****CONDENSED******BALANCE SHEETS****(Unaudited)****ASSETS**March 31,

December 31,2005

2004CURRENT ASSETS:Cash and cash equivalents

$
3,800

$
3,800INVESTMENTS IN AFFILIATES


3,538,100


2,969,800PROPERTIES AND EQUIPMENTMachinery and other equipment


10,000


10,000Developed oil properties, full cost method


886,800


886,800896,800


896,800Less accumulated depreciation, depletion and amortization


(886,800
)

(886,800
)10,000


10,000$
3,551,900

$
2,983,600 
 **LIABILITIES AND SHAREHOLDERS' DEFICIT**CURRENT LIABILITIES:Current debt to affiliate

$
10,621,000

$
9,650,900Asset retirement obligation


96,400


96,40010,717,400


9,747,300COMMITMENT TO FUND EQUITY INVESTEES


215,600


215,600ASSET RETIREMENT OBLIGATION


1,096,200


1,073,500COMMITMENTS AND CONTINGENCIESFORFEITABLE COMMON STOCK, $.001 par value15,000 shares issued, forfeitable until earned


10,100


10,100SHAREHOLDERS' DEFICITPreferred stock, $.001 par value;100,000 shares authorized none issued or outstanding


--


--Common stock, $.001 par value; unlimited sharesauthorized; 17,137,298 shares issued and outstanding


17,200


17,200Additional paid-in capital


11,809,600


11,809,600Accumulated deficit


(20,314,200
)

(19,889,700
)(8,487,400
)

(8,062,900
)$
3,551,900

$
2,983,600 
 
 The accompanying notes are an integral part of these statements.-3- 
  INDEX
  **CRESTED CORP.******Condensed******Statements of Operations****(Unaudited)**Three months ended March 31,2005

2004REVENUES:

$
--

$
--COSTS AND EXPENSES:Accretion of asset retirement obligation


22,700


17,500General and administrative


28,900


40,00051,600


57,500LOSS BEFORE EQUITY LOSS, PROVISIONFOR INCOME TAXES AND CUMULATIVEEFFECT OF ACCOUNTING CHANGE


(51,600
)

(57,500
)EQUITY IN LOSS OF AFFILIATES


(372,900
)

(469,900
)LOSS BEFORE PROVISION FOR INCOME TAXES


(424,500
)

(527,400
)PROVISION FOR INCOME TAXES


--


--NET LOSS

$
(424,500
)
$
(527,400
)PER SHARE DATANET LOSS PER SHARE, BASIC AND DILUTED

$
(0.02
)
$
(0.03
)BASIC AND DILUTED WEIGHTED AVERAGESHARES OUTSTANDING


17,137,298


17,118,098 
 
 
 The accompanying notes are an integral part of these statements.-4- 
  INDEX
  **CRESTED CORP.******CONDENSED******STATEMENTS OF CASH FLOWS****(Unaudited)**Three months ended March 31,2005

2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(424,500
)
$
(527,400
)Adjustments to reconcile net loss to net cashused by operating activities:Equity in loss of affiliates


372,900


469,900Accretion of asset retirement obligation


22,700


17,500NET CASH USED IN OPERATING ACTIVITIES


(28,900
)

(40,000
)CASH FLOWS FROM INVESTING ACTIVITIES:Investment in affiliate


(941,200
)

(911,100
)CASH FLOWS FROM FINANCING ACTIVITIES:Net activity on debt to affiliate


970,100


951,100NET INCREASE INCASH AND CASH EQUIVALENTS


--


--CASH AND CASH EQUIVALENTS ATBEGINNING OF PERIOD


3,800


3,300CASH AND CASH EQUIVALENTS ATEND OF PERIOD

$
3,800

$
3,300SUPPLEMENTAL DISCLOSURES:Interest paid

$
--

$
--Income tax paid

$
--

$
-- 
 The accompanying notes are an integral part of these statements.-5- INDEX
 
  **CRESTED CORP.**
 
 ****Notes**** **to Condensed Financial Statements (Unaudited)**
 
 1) The Condensed Balance Sheet as of March 31, 2005 and the Condensed Statements of Operations for the three months ended March 31, 2005 and 2004 and Statements of Cash Flows for the three months ended March 31, 2005 and 2004 have been prepared by the Company without audit. The Condensed Balance Sheet at December 31, 2004, has been derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the period then ended. In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to fairly present the financial position of the Company as of March 31, 2005 and the results of operations and cash flows for the three months ended March 31, 2005 and 2004.
 
 2) Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the Company's December 31, 2004 Form 10-K. The results of operations for the periods ended March 31, 2005 and 2004 are not necessarily indicative of the operating results for the full year.
 
 3) The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates for these reclamation expenses based on certain assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
 
 4) Debt at March 31, 2005 and December 31, 2004, consists of debt payable to the Company's parent U.S. Energy Corp. ("USE") of $10,621,000 and $9,650,900, respectively. This debt has been incurred as a result of USE funding the Companys portion of joint operations and investments. The Company will either have to retire this debt by the payment of cash, conveyance of property or the issuance of additional shares of common stock to USE. USE has agreed not to call the note for the next 14 months.
 
 5) During the three months ended March 31, 2005, the Company did not issue any shares of common stock.
 
 6) The Company presents basic and diluted earnings per share in accordance with the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share." Basic and diluted earnings per common share are based on the weighted average number of common shares outstanding during the period. The Company's management has adopted an Incentive Stock Option Plan (ISOP), which was approved by the Companys shareholders on September 2, 2004. 2,000,000 shares of common stock are reserved for grant under the ISOP, but the number of shares so reserved will be automatically increased to always equal not more than 20% of the Companys issued and outstanding shares of common stock. The Company had no outstanding stock options or warrants at December 31, 2004 and March 31, 2005.
 
 7) The Company has uranium properties that are in a shut down mode in central Wyoming for which it is responsible for one half of the reclamation expense.
 
 The Company records the estimated fair value of the reclamation liability on its shut down uranium properties as of the date that the liability is incurred with a corresponding increase in the properties. Actual results could differ from those estimates. The reclamation liabilities are reviewed each quarter to determine whether estimates for the total asset retirement obligation is sufficient to complete the reclamation work required.
 
 
 -6- INDEX
 **CRESTED CORP.**
 
 **Notes to Condensed Financial Statements (Unaudited)**
 (Continued)
 
 The Company deducts actual funds expended from the accrued liability during the quarter in which it is expended. As a result of the Company having no remaining net book value for the properties and has no economic benefits to be received in future periods, all changes in estimates are charged to operations in the quarter in which they are recorded.
 
 The following is a reconciliation of the total liability for asset retirement obligations (unaudited):
 
 Balance December 31, 2004

$
1,073,500Addition to Liability


--Liability Settled


--Accretion Expense - 8% discount rate


22,700Balance March 31, 2005

$
1,096,200
 
 These reclamation activities are scheduled to be completed over the next several years.
 
 8) The Company has reviewed current outstanding statements from the Financial Accounting Standards Board and does not believe that any of those statements will have a material adverse affect on the financial statements of the Company when adopted.
 
 
 -7- INDEX
  **CRESTED CORP.**
 
 
 ****ITEM 2.**** **Management's Discussion and Analysis of Financial Condition and Results of Operations** **.**
 
 The following is Management's Discussion and Analysis of significant factors, which have affected the Company's liquidity, capital resources and results of operations during the periods included in the accompanying financial statements. For a detailed explanation of the Company's Business Overview, it is suggested that Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2005 be read in conjunction with the Company's Form 10-K for the year ended December 31, 2004.
 
 **General Overview**
 
 The Company historically has been involved in the acquisition, exploration, development and production of properties prospective for coalbed methane, hard rock minerals including lead, zinc, silver, molybdenum, gold, uranium, oil and gas and commercial real estate properties. The Company participates in all these ventures with U. S. Energy Corp. (USE) through a non consolidated affiliate, USECC Joint Venture (USECC). USE owns 70.1% of the Companys common stock. The Company and USE have entered into partnerships and formed affiliated companies through which they either joint venture or lease properties with non-related parties for the development and production of certain of their jointly owned mineral properties.
 
 **Liquidity and Capital Resources**
 
 At March 31, 2005, the Company had nominal cash on hand, a shareholders deficit of approximately $8.5 million and a working capital deficit of approximately $10.7 million. The principal component of the working capital deficit was a debt payable to USE in the amount of approximately $10.6 million, which USE has agreed not to demand payment of during the next 14 months. The debt to USE increased $970,100 during the quarter ended March 31, 2005. The Company and USE are working of the sale of certain assets as well as the resolution of outstanding litigation. These items, when concluded, will provide cash to the Company which it can use to reduce its debt to USE.
 
 **Capital Resources**
 
 As of April 11, 2005, the Company, USE and their affiliate Rocky Mountain Gas, Inc. (RMG) entered into a binding agreement with Enterra Energy Trust (Enterra) for the acquisition of RMG by Enterra in consideration of $20,000,000, payable pro rata to the RMG shareholders in the amounts of $6,000,000 in cash and $14,000,000 in exchangeable shares of one of the subsidiary companies of Enterra. After the retirement of the RMG debt to the Company and USE, the Company owns 33.4% and USE owns 60.7% of the common stock of RMG. The shares will be exchangeable for units of Enterra twelve months after closing of the. The Enterra units are traded on the Toronto Stock Exchange and on NASDAQ; the exchangeable shares will not be traded. Enterra will assume approximately $3,500,000 of RMG debt to mezzanine lenders when it acquires RMG. This transaction will result in approximately $2.0 million in cash to the Company at closing, which may be applied to the debt to USE, and Enterra affiliate convertible units valued at approximately $4.7 million.
 
 
 -8- INDEX
 
 The Company and USE also continue to pursue the settlement of a long standing arbitration/litigation regarding the Sheep Mountain Partnership (SMP). The litigation involves Nukem, Inc. (Nukem) and its subsidiary Cycle Resource Investment Corp. of Danbury Connecticut. The case is currently on remand to the arbitration panel following Nukems third appeal to the Tenth Circuit Court of Appeals. Prior to the remand, there was a $20 million judgment entered by the U.S. Federal District Court of Colorado in favor of the Company and USE. The timing and cost of achieving final resolution cannot be predicted. Management of the Company believes that the ultimate outcome will be positive and in favor of the Company and USE.
 
 As of April 11, 2005, the Company and USE, through USECC Joint Venture (USECC) signed a Mining Venture Agreement with Uranium Power Corp., a British Columbia corporation, (UPC, formerly Bell Coast Capital Corp.) to establish a joint venture, with a term of 30 years, to explore, develop and mine the properties being purchased by UPC under the Purchase and Sale Agreement, and acquire, explore and develop additional uranium properties. Under the terms of this agreement the Company and USE are to receive an additional $500,000 cash on June 29, 2005 and 1,000,000 shares of UPC common stock, and additional payments of $3,200,000 and $3,000,000 shares of UPC stock through December 29, 2007.
 
 The Company, jointly with USE, has a $750,000 line of credit with a commercial bank. The line of credit is secured by certain real estate holdings and equipment jointly owned with USE. At March 31, 2005, the full line of credit was available to the Company and USE and has been renewed by the bank through June 30, 2005. This line credit is used for short term working capital needs associated with operations.
 
 The Companys capital resources at March 31, 2005, are not sufficient to satisfy all the capital requirements of the Company. To provide the capital resources needed for the next calendar year, the Company will need to (1) continue to successfully negotiate the terms of its debt with USE, (2) assist in the sale of RMG to Enterra and (3) successfully resolve the Nukem litigation.
 
 **Capital Requirements**
 
 The direct capital requirements of the Company during 2005 remain its general and administrative costs; expenses and funding of exploration drilling; the holding costs of the SMP uranium properties in Wyoming and a uranium mill and uranium properties in southern Utah, and the maintenance of jointly owned real estate.
 
 The average monthly care and maintenance costs associated with the SMP uranium mineral properties in Wyoming (of which the Company is responsible for 50%) was $23,100 during the year ended December 31, 2004. It is anticipated that this level of care and maintenance costs will continue during calendar 2005.
 
 The Company is contractually obligated to fund 50% of the cash requirements of Plateau Resources Ltd. (Plateau) and also a share in 50% of any cash receipts of Plateau. USE is responsible for the other 50%. Although the Company participates in 50% of the cash flow from Plateau; 100% of the common stock of Plateau is owned by USE. Plateau owns and maintains the Shootaring Canyon Uranium Mill (the Shootaring Mill). In March 2005, Plateau filed an application with the State of Utah to restart the Shootaring Mill.
 
 
 -9- INDEX
 
 The first $500,000 expended by UPC on approved projects, in the UPC joint venture agreement is to be funded entirely by UPC. All expenses over $500,000 for each approved project are to be shared equally by USECC and UPC. A budget of $567,842 for the seven months ending December 31, 2005 has been approved, relating to reclamation work at the Sheep Mountain properties, exploration drilling, geological and engineering work, and other costs. Please see the Form 10-K for the year ended December 31, 2004 (UPC Joint Venture - Mining Venture Agreement).
 
 **Results of Operations**
 
 **Quarter Ended March 31, 2005 compared with the Quarter Ended March 31, 2004**
 
 The Company had no revenues during the three months ended March 31, 2005 and 2004. General and Administrative expenses were reduced by $11,100 during the three months ended March 31, 2005 as compared to the general and administrative expenses recognized during the quarter ended March 31, 2004. This reduction was primarily as a result of continued expense reducing measures in overhead and mineral property maintenance expenses. The Companys equity loss from USECC during the three months ended March 31, 2005 was $372,900 as compared to $469,900 recognized during the three months ended March 31, 2004. Again these reduced equity losses are as a result of ongoing cost reduction measures.
 
 Operations for the three months ended March 31, 2005 resulted in a net loss of $424,500, $0.02 per share, as compared to a net loss of $527,400 or $0.03 per share during the three months ended March 31, 2004.
 
 **Quarter Ended March 31, 2004 compared with the Quarter Ended March 31, 2003**
 
 The Company had no revenues during the three months ended March 31, 2004 and 2003.
 
 Costs and expenses for the three months ended March 31, 2004 decreased to $57,500 compared to costs of $59,200 recognized during the three months ended March 31, 2003. The Company recorded equity losses from USECC and RMG of $469,900 and $373,500 during the three months ended March 31, 2004 and 2003, respectively. The primary reason for the increase in the equity losses from USECC and RMG are the costs associated with the purchase of Hi-Proof RMG Pinnacle Gas Resources, Inc., a minority owned affiliate. The Company recorded $293,800 as the cumulative effect of accounting changes as a result of the adoption of SFAS 143 during the three months ended March 31, 2003.
 
 The Company recorded a net loss of $527,400 during the three months ended March 31, 2004, as compared to a net loss of $726,500 for the three months ended March 31, 2003.
 
 **Forward Looking Statements**
 
 This Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ("the Exchange Act"). All statements other than statements of historical fact included in this Report, are forward-looking statements. In addition, whenever words like "expect", "anticipate" or "believe" are used, we are making forward looking statements. For all the above reasons, actual results may vary materially from the forward-looking statements and there is no assurance that the assumptions used are necessarily the most likely to occur.
 
 
 -10- INDEX
 
 **Critical Accounting Policies**
 
 **Employee Stock-Based Compensation** - On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued FASB No. 123(R), *Accounting for Stock-Based Compensation,* which replaces FASB 123, *Accounting for Stock-Based Compensation* , and supersedes APB Opinion No. 25, *Accounting for Stock Issued to Employees* , and its related implementation guidance. The Company will be required to implement FASB 123(R) on the quarterly report for the quarter ended September 30, 2005. Under the terms of FASB 123(R) the Company will be required to expense the fair value of stock options should it issue such options to employees. The fair value is determined using an option-pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock, the expected dividends on it, and the risk-free interest rate over the expected life of the option. The fair value of an option estimated at the grant date is not subsequently adjusted for changes in the price of the underlying stock or its volatility, life of the option, dividends on the stock, or the risk-free interest rate. The Company will be required to begin reporting under FASB 123(R) on the first interim report after December 31, 2005.
 
 **Asset Retirement Obligation** - The Company's policy is to accrue the liability for future reclamation costs of its mineral properties under SFAS 143 based on the estimated future reclamation costs as determined by internal and external experts. The present value of the obligation is accreted each period as the date of obligation settlement approaches. The Company deducts actual funds expended from the accrued liability during the quarter in which it is expended. As a result of the Company having no remaining net book value for the properties and has no economic benefits to be received in future periods, all changes in estimates are charged to operations in the quarter in which they are recorded.
 
 **Contractual Obligations**
 
 There have been no material changes outside the ordinary course of business in the Company's contractual obligation from those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.
 
 **Recent Accounting Pronouncements**
 
 The Company has reviewed all current outstanding statements from the Financial Accounting Standards Board and does not believe that any of those statements will have a material adverse effect on the financial statements of the Company when adopted.
  ****ITEM 4****.**** **** **Controls and Procedures**
 
 Our management, under the supervision and with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of our disclosure controls and procedures as defined in Securities and Exchange Commission (SEC) Rule 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based upon that evaluation, management has concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act is communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.
 
 During the three months covered by this report, there have been no significant changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 -11- INDEX
 **PART II. OTHER INFORMATION**
 
  ****ITEM 1.**** **Legal Proceedings**
 
 **Sheep Mountain Partners**
 
 On February 24, 2005, a three judge panel of the 10 th Circuit Court of Appeals vacated the judgment of the U.S. District Court of Colorado of $20,044,183 and remanded the case to the Arbitration Panel for clarification of its 1996 Order and Award. In remanding this case, the CCA stated: "The arbitration award in this case is silent as to the definition of 'purchase rights' and the 'profits therefrom,' including the valuation of either. Also unstated in the award is the duration of the constructive trust and whether and what costs should be deducted when computing the value of the constructive trust. Further, the arbitration panel failed to address whether prejudgment interest should be awarded on the value of the constructive trust. As a result, the district court's valuation of the constructive trust was based upon extensive guesswork. Therefore, a remand to the arbitration panel for clarification is necessary, despite the long and tortured procedural history of this case." The U.S. District Court remanded the case to the arbitration panel where it is currently pending.
 
 The timing and ultimate outcome of this litigation is not predicted. We believe that the ultimate outcome will not have an adverse affect on our financial condition or results of operations.
 
 **Phelps Dodge**
 
 Crested and USE were served with a lawsuit on June 19, 2002, filed in the U.S. District Court of Colorado (Case No. 02-B-0796(PAC)) by Phelps Dodge Corporation (PD) and its subsidiary, Mt. Emmons Mining Company (MEMCO), seeking declaratory judgment over contractual obligations in USECCs agreement with PDs predecessor companies, concerning mining properties on Mt. Emmons, near Crested Butte, Colorado.
 
 The case was tried starting on November 29, 2004. On February 4, 2005, the Court entered Findings and Fact and Conclusions of Law and ordered that the conveyance of the Mt. Emmons properties under Paragraph 8 of the 1987 AMAX Agreement includes the transfer of ownership and operational responsibility for the Water Treatment Plant, and that PD does not owe USECC any advanced royalty payments. However, the Order did not address the NPDES permit. NPDES permits are administered and regulated by the Colorado Department of Public Health and the Environment (CDPHE). The timing and scope of responsibilities for maintaining and operating the plant will be addressed by the CDPHE later in 2005.
 
 USECC has filed a motion with the Court to amend the Order to determine that the decreed water rights to PD on the MT. Emmons properties from the Colorado Supreme Court opinion (decided in 2002, finding that the predecessor owners of the Mt. Emmons property had rights to water to develop a mine), and any other appurtenant water rights, be conveyed to USECC. The motion is pending.
 
 PD and USECC have been engaged in settlement discussions in an attempt to resolve the remaining issues and avoid an appeal of the District Courts Judgment. In view of the ongoing discussions and in the interest of conserving judicial and party resources, on April 5, 2005, the parties filed a Joint Motion to Stay Ruling on Motion to Amend Judgment and to Extend Stay of Execution Pending Appeal. On April 7, 2005, the Court granted the motion and entered an order as follows: (1) the ruling on USECCs Motion to Amend Judgment is stayed until ten (10) days after filing of written notice by PD that settlement has
 
 
 
 -12- 
  INDEX
 
 not been achieved; and (2) the March 8, 2005 Order on stay of execution and enforcement of the Judgment is extended for thirty (30) days after the Court issues a ruling on USECCs Motion to Amend.
 
 **Rocky Mountain Gas, Inc. (RMG)**
 
 **Lawsuits challenging BLM's Records of Decisions**
 
 Three lawsuits are currently pending in the Montana Federal District Court challenging BLM's Records of Decisions for the Powder River Basin Oil and Gas EIS for the Wyoming portion of the Basin, and the Statewide Oil and Gas EIS and Proposed Amendment for the Powder River and Billings Resource Management Plans in Montana.
 
 In April of 2003, NRPC and the Northern Cheyenne Tribe and Native Action (the Tribe) filed a suit against BLM challenging the April 2003 decision by BLM approving the Final Statewide Oil and Gas Environmental Impact Statement (FEIS) and proposed amendments to the RMP. On February 25, 2005 Federal District Court Judge Anderson dismissed all counts with the exception of the allegation that the FEIS is inadequate because it failed to consider any alternatives to full-field development and ruled that BLMs failure to analyze a phased development alternative renders the FEIS inadequate. BLM will now be required to perform a Supplemental EIS (SEIS) examining a phased development alternative, which could take 18 months to complete.
 
 On April 5, 2005, Federal District Court Judge Anderson rejected the Tribes request for a complete moratorium on CBM drilling in Montana and instead accepted BLMs proposal that limited the number of Federal APDs issued by BLM to maximum of 500 wells per year, including federal, state and fee wells within a certain defined geographic area. The decision will prohibit BLM from issuing Federal wells in RMGs Castle Rock property until the SEIS is completed, because it is not located with the defined geographic area. However, the decision does not limit the number of fee and state wells that can be approved in the Castle Rock property by the State of Montana. RMG will request BLM to extend the expiration date of the Federal leases for the period of the delay.
 
 Neither the Company, nor RMG is a party to these lawsuits.
 
 **Dunlap Litigation**
 
 On April 13, 2005, the Dunlap Family and others filed a complaint against RMG, Civil Action No. 26375 in the Wyoming Sixth Judicial District Court claiming improper payment of royalties from coalbed methane production. RMG filed an answer on April 28, 2005, denying that RMG has failed to make proper payment. RMG estimates that the potential exposure could be approximately $40,000 to $50,000. The case is pending.
 
 No other material developments in the other pending Legal Proceedings have occurred since they were last reported by the Company in Item 1 of its Form 10-K for the year ended December 31, 2004.
  ****ITEM 2****.**** **Changes in Securities and Use of Proceeds**
 
 During the three months ended March 31, 2005, the Company did not issue any unregistered securities.
 
 ****ITEM 3****.**** **** **Defaults upon Senior Securities**
 
 Not applicable.
 
 -13- INDEX
 
 ****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.31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) / Rule 15d-15(e)31.2
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) / Rule 15(e)/15d-15(e)32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002(b)
**Reports on Form 8-K.**The Company filed three reports on Form 8-K for the quarter ended March 31, 2005. The events reported were as follows:1.
The report filed on February 16, 2005, under Item 8.01 referenced the receipt of the Order dated February 4, 2005 from the judge of the U.S. District Court of Colorado in the case between the Company, U.S. Energy Corp. and Phelps Dodge Corporation.2.
The report filed on February 28, 2005, under Item 8.01 referenced the Letter of Intent for Proposed Merger of Rocky Mountain Gas, Inc. with Enterra Energy Trust and the February 24, 2005 ruling by the Tenth Circuit Court of Appeals to remand the case between the Company, U.S. Energy Corp. and Nukem to the Arbitration Panel for clarification.3.
The report filed on March 21, 2005, under Item 8.01 referenced the Company and U.S. Energy Corp. filing a formal request with the State of Utah for an operational license to reopen and operate the Shootaring Canyon Uranium Mill in southeastern Utah.
 
 -14- INDEX
 ****SIGNATURES****
 
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 
 CRESTED CORP.(Company)Date: May 13, 2005
By:
/s/John L. LarsenJOHN L. LARSEN,CHAIRMAN and CEODate: May 13, 2005
By:
/s/Robert Scott LorimerROBERT SCOTT LORIMERPrincipal Financial Officer andChief Accounting Officer 
 
 
 
 
 -15-