----

| x      | Quarterly                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|   | For                the quarter and six months ended June 30, 2005 or                                                                  |
|   |                                                                                                                                  |
| o      | Transition                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934 |
|   | For                the transition period from ___________ to                ____________                                              |

| **CRESTED                CORP.**                                                  |
|-----------------------------------------------------------------------------------|
| (Exact                Name of Company as Specified in its                Charter) |

| **Colorado**                                                    |   | **84-0608126**                     |
|-----------------------------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction of                  |   | (I.R.S.                Employer    |
| incorporation                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**  |

| Class                                        |   | Outstanding                Shares at August 12, 2005 |
|----------------------------------------------|--------|------------------------------------------------------|
| Common                stock, $.001 par value |   | 17,164,298                                           |

----

----

**CRESTED      CORP.**

**INDEX**

|                          |                                                                       | Page                  No.     |
|-------------------------------|----------------------------------------------------------------------------|-------------------------------|
| **PART                  I.**  | **FINANCIAL                  INFORMATION**                                 |                          |
|                          |                                                                       |                          |
| ITEM                  1.      | Financial                  Statements.                                     |                          |
|                          |                                                                       |                          |
|                          | Condensed                  Balance Sheets                                  |                          |
|                          | June                  30, 2005 (Unaudited) and December 31, 2004 (Audited) | 4-5                           |
|                          |                                                                       |                          |
|                          | Condensed                  Statements of Operations (Unaudited)            |                          |
|                          | Three                  and Six Months Ended June 30, 2005 and 2004         | 6                             |
|                          |                                                                       |                          |
|                          | Condensed                  Statements of Cash Flows (Unaudited)            |                          |
|                          | Six                  Months Ended June 30, 2005 and 2004                   | 7                             |
|                          |                                                                       |                          |
|                          | Notes                  to Condensed Financial Statements (Unaudited)       | 8-13                          |
|                          |                                                                       |                          |
| ITEM                  2.      | Management’s                  Discussion and Analysis of             |                          |
|                          | Financial                  Condition and Results of Operations             | 14-21                         |
|                          |                                                                       |                          |
| ITEM                  4.      | Controls                  and Procedures                                   | 22                            |
|                          |                                                                       |                          |
| **PART                  II.** | **OTHER                  INFORMATION**                                     |                          |
|                          |                                                                       |                          |
| ITEM                  1.      | Legal                  Proceedings                                         | 23-24                         |
|                          |                                                                       |                          |
| ITEM                  2.      | Changes                  in Securities and Use of Proceeds                 | 24                            |
|                          |                                                                       |                          |
| ITEM                  3.      | Defaults                  upon Senior Securities                           | 24                            |
|                          |                                                                       |                          |
| ITEM                  4.      | Submission                  of Matters to a Vote of Security Holders       | 24                            |
|                          |                                                                       |                          |
| ITEM                  5.      | Other                  Information                                         | 24                            |
|                          |                                                                       |                          |
| ITEM                  6.      | Exhibits                  and Reports on Form 8-K                          | 25                            |
|                          |                                                                       |                          |
|                          | Signatures                                                                 | 26                            |
|                          |                                                                       |                          |
|                          | Certifications                                                             | See                  Exhibits |

----

| **CRESTED                  CORP.**                                         |   |
|----------------------------------------------------------------------------|--------|
| **CONDENSED                  BALANCE SHEETS**                              |   |
| **(Unaudited)**                                                            |   |
| **ASSETS**                                                                 |   |
|                                                                       |   |   |   |   |   |
|                                                                       |   | June                  30, |   | December                  31, |   |
|                                                                       |   | 2005 |   | 2004 |   |
|                                                                       |   | (Restated) |   | (Audited) |   |
| CURRENT                  ASSETS:                                           |   |   |   |   |   |
| Cash                  and cash equivalents                                 |   | $ | 3,800 |   | $ | 3,800 |   |
| Marketable                  securities                                     |   |   | 2,164,600 |   |   | -- |   |
|                                                                       |   |   | 2,168,400 |   |   | 3,800 |   |
|                                                                       |   |   |   |   |   |   |   |
| INVESTMENTS:                                                               |   |   |   |   |   |   |   |
| Affiliates                                                                 |   |   | 2,810,900 |   |   | 2,969,800 |   |
| Non-affiliated                  companies                                  |   |   | 6,233,500 |   |   | -- |   |
|                                                                       |   |   | 9,044,400 |   |   | 2,969,800 |   |
|                                                                       |   |   |   |   |   |   |   |
| PROPERTIES                  AND EQUIPMENT:                                 |   |   |   |   |   |   |   |
| Machinery                  and other equipment                             |   |   | 10,000 |   |   | 10,000 |   |
| Developed                  oil properties, full cost method                |   |   | 886,800 |   |   | 886,800 |   |
|                                                                       |   |   | 896,800 |   |   | 896,800 |   |
| Less                  accumulated depreciation, depletion and amortization |   |   | (886,800 | ) |   | (886,800 | ) |
|                                                                       |   |   | 10,000 |   |   | 10,000 |   |
| Total                  assets                                              |   | $ | 11,222,800 |   | $ | 2,983,600 |   |
|                                                                       |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                          |   |
|-----------------------------------------------------------------------------|--------|
| **CONDENSED                  BALANCE SHEETS**                               |   |
| **(Unaudited)**                                                             |   |
| **LIABILITIES                  AND SHAREHOLDERS' DEFICIT**                  |   |
|                                                                        |   |   |   |   |   |
|                                                                        |   | June                  30, |   | December                  31, |   |
|                                                                        |   | 2005 |   | 2004 |   |
|                                                                        |   | (Restated) |   | (Audited) |   |
| CURRENT                  LIABILITIES:                                       |   |   |   |   |   |
| Current                  debt to affiliate                                  |   | $ | 11,540,000 |   | $ | 9,650,900 |   |
| Deferred                  income                                            |   |   | -- |   |   | -- |   |
| Taxes                  payable                                              |   |   | 100,000 |   |   | -- |   |
| Asset                  retirement obligation                                |   |   | 96,400 |   |   | 96,400 |   |
|                                                                        |   |   | 11,736,400 |   |   | 9,747,300 |   |
|                                                                        |   |   |   |   |   |   |   |
| COMMITMENT                  TO FUND EQUITY INVESTEES                        |   |   | 215,600 |   |   | 215,600 |   |
|                                                                        |   |   |   |   |   |   |   |
| ASSET                  RETIREMENT OBLIGATION                                |   |   | 1,118,900 |   |   | 1,073,500 |   |
|                                                                        |   |   |   |   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                              |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
| FORFEITABLE                  COMMON STOCK, $.001 par value                  |   |   |   |   |   |   |   |
| 15,000                  shares issued, forfeitable until earned             |   |   | 10,100 |   |   | 10,100 |   |
|                                                                        |   |   |   |   |   |   |   |
| SHAREHOLDERS'                  DEFICIT:                                     |   |   |   |   |   |   |   |
| Preferred                  stock, $.001 par value;                          |   |   |   |   |   |   |   |
|  100,000                  shares authorized none issued or outstanding |   |   | -- |   |   | -- |   |
| Common                  stock, $.001 par value; unlimited shares            |   |   |   |   |   |   |   |
|  authorized;                  17,149,298 and 17,137,298 shares         |   |   |   |   |   |   |   |
|  issued                  and outstanding                               |   |   | 17,200 |   |   | 17,200 |   |
| Additional                  paid-in capital                                 |   |   | 11,814,400 |   |   | 11,809,600 |   |
| Unrealized                  gain on securities                              |   |   | 435,100 |   |   | -- |   |
| Accumulated                  deficit                                        |   |   | (14,124,900 | ) |   | (19,889,700 | ) |
|                                                                        |   |   | (2,293,300 | ) |   | (8,062,900 | ) |
| Total                  liabilities and shareholders' deficit                |   | $ | 11,222,800 |   | $ | 2,983,600 |   |
|                                                                        |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                 |   |
|--------------------------------------------------------------------|--------|
| **CONDENSED                  STATEMENTS OF OPERATIONS**            |   |
| **(Unaudited)**                                                    |   |
|                                                               |   |   |   |   |   |   |   |   |   |
|                                                               |   | Three                  months ended June 30, |   | Six                  months ended June 30, |   |
|                                                               |   | 2005 |   | 2004 |   | 2005 |   | 2004 |   |
|                                                               |   | (Restated) |   |   |   | (Restated) |   |   |   |
| REVENUES:                                                          |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COSTS                  AND EXPENSES:                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accretion                  of asset retirement obligation          |   |   | 22,700 |   |   | 27,900 |   |   | 45,400 |   |   | 45,400 |   |
| Change                  in estimate of asset retirement obligation |   |   | -- |   |   | 25,800 |   |   | -- |   |   | 25,800 |   |
| General                  and administrative                        |   |   | 81,900 |   |   | 92,900 |   |   | 110,800 |   |   | 132,900 |   |
|                                                               |   |   | 104,600 |   |   | 146,600 |   |   | 156,200 |   |   | 204,100 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING                  LOSS                                    |   |   | (104,600 | ) |   | (146,600 | ) |   | (156,200 | ) |   | (204,100 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                  INCOME & ESPENSES:                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain                  on valuation of derivative                   |   |   | 1,228,800 |   |   | -- |   |   | 1,228,800 |   |   | -- |   |
| Gain                  on sale of investment                        |   |   | 5,882,500 |   |   | -- |   |   | 5,882,500 |   |   | -- |   |
|                                                               |   |   | 7,111,300 |   |   | -- |   |   | 7,111,300 |   |   | -- |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAIN                  (LOSS) BEFORE EQUITY LOSS, AND               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION                  FOR INCOME TAXES                        |   |   | 7,006,700 |   |   | (146,600 | ) |   | 6,955,100 |   |   | (204,100 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY                  IN LOSS OF AFFILIATE                       |   |   | (717,400 | ) |   | (318,800 | ) |   | (1,090,300 | ) |   | (788,700 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAIN                  (LOSS) BEFORE PROVISION                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FOR                  INCOME TAXES                                  |   |   | 6,289,300 |   |   | (465,400 | ) |   | 5,864,800 |   |   | (992,800 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION                  FOR INCOME TAXES                        |   |   | (100,000 | ) |   | -- |   |   | (100,000 | ) |   | -- |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  GAIN (LOSS)                                   |   | $ | 6,189,300 |   | $ | (465,400 | ) | $ | 5,764,800 |   | $ | (992,800 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PER                  SHARE DATA                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  GAIN (LOSS) PER SHARE, BASIC                  |   | $ | 0.36 |   | $ | (0.03 | ) | $ | 0.34 |   | $ | (0.06 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  GAIN (LOSS) PER SHARE, DILUTED                |   | $ | 0.36 |   | $ | (0.03 | ) | $ | 0.34 |   | $ | (0.06 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC                  WEIGHTED AVERAGE                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHARES                  OUTSTANDING                                |   |   | 17,137,298 |   |   | 17,118,098 |   |   | 17,143,265 |   |   | 17,118,098 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED                  WEIGHTED AVERAGE                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHARES                  OUTSTANDING                                |   |   | 17,152,298 |   |   | 17,118,098 |   |   | 17,158,265 |   |   | 17,118,098 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                    |   |
|-----------------------------------------------------------------------|--------|
| **CONDENSED                  STATEMENTS OF CASH FLOWS**               |   |
| **(Unaudited)**                                                       |   |
|                                                                  |   |   |   |   |   |
|                                                                  |   | Six                  months ended June 30, |   |
|                                                                  |   | 2005 |   | 2004 |   |
|                                                                  |   | (Restated) |   |   |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                |   |   |   |   |   |
| Net                  gain (loss)                                      |   | $ | 5,764,800 |   | $ | (992,800 | ) |
| Adjustments                  to reconcile net gain (loss) to net cash |   |   |   |   |   |   |   |
| used                  in operating activities:                        |   |   |   |   |   |   |   |
| Equity                  in loss of affiliate                          |   |   | 1,090,300 |   |   | 788,700 |   |
| Gain                  on sale of affiliate                            |   |   | (5,882,500 | ) |   | -- |   |
| Gain                  on valuation of derivatives                     |   |   | (1,228,800 | ) |   | -- |   |
| Change                  in asset retirement obligation                |   |   | -- |   |   | 25,800 |   |
| Accretion                  of asset retirement obligation             |   |   | 45,400 |   |   | 45,400 |   |
| Non                  cash compensation                                |   |   | 4,800 |   |   | -- |   |
| Taxes                  payable                                        |   |   | 100,000 |   |   | -- |   |
| NET                  CASH USED IN OPERATING ACTIVITIES                |   |   | (106,000 | ) |   | (132,900 | ) |
|                                                                  |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                |   |   |   |   |   |   |   |
| Investment                  in affiliate                              |   |   | (1,582,700 | ) |   | (1,669,300 | ) |
|                                                                  |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                |   |   |   |   |   |   |   |
| Net                  activity on debt to affiliate                    |   |   | 1,688,700 |   |   | 1,802,200 |   |
|                                                                  |   |   |   |   |   |   |   |
| NET                  INCREASE IN CASH AND CASH EQUIVALENTS            |   |   | -- |   |   | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT                         |   |   |   |   |   |   |   |
| BEGINNING                  OF PERIOD                                  |   |   | 3,800 |   |   | 3,300 |   |
|                                                                  |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT                         |   |   |   |   |   |   |   |
| END                  OF PERIOD                                        |   | $ | 3,800 |   | $ | 3,300 |   |
|                                                                  |   |   |   |   |   |   |   |
| SUPPLEMENTAL                  DISCLOSURES:                            |   |   |   |   |   |   |   |
| Interest                  paid                                        |   | $ | -- |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| Income                  tax paid                                      |   | $ | -- |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| NONCASH                  INVESTING AND FINANCING ACTIVITIES:          |   |   |   |   |   |   |   |
| Issuance                  of stock to outside directors               |   | $ | 4,800 |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| Investment                  in Non-affiliated companies               |   | $ | 6,734,200 |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| Investment                  in affiliate                              |   | $ | 651,300 |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| Deferred                  gain on sale of Rocky Mountain Gas          |   | $ | 424,500 |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |
| Net                  activity on debt to affiliate                    |   | $ | 200,400 |   | $ | -- |   |
|                                                                  |   |   |   |   |   |   |   |

----

**CRESTED                CORP.**

**Notes                to Condensed Financial Statements                (Unaudited)**

----

**CRESTED                CORP.**

**Notes                to Condensed Financial Statements (Unaudited)**

|                                                                                                       |   | Six                  months Ended |      |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                                                       |   | June                  30,         |      |
|                                                                                                       |   | 2005                              |      | 2004 |   |
| Net                  Gain (Loss)                                                                           |   | $                                 | 5,764,800 |   | $ | (                  992,800 | ) |
| Add                  : Comprehensive income from unrealized gain on marketable                  securities |   | $                                 | 435,100   |   |   | -- |   |
| Comprehensive                  Income (loss)                                                               |   | $                                 | 6,199,900 |   | $ | (                  992,800 | ) |
|                                                                                                       |   |                              |      |   |   |   |   |

|                               |   |  Cost   |      | Market                  Value |   | Unrealized                  Gain |   |
|------------------------------------|--------|--------------|-----------|-------------------------------|--------|----------------------------------|--------|
|                               |   |    |      |                          |   |                             |   |
| Equity                  Securities |   | $            | 1,729,500 |                          | $      | 2,164,600                        |   | $ | 435,100 |   |

----

**CRESTED                CORP.**

**Notes                to Condensed Financial Statements (Unaudited)**

|                                                       |   | June                  30, 2005 |       |
|------------------------------------------------------------|--------|--------------------------------|------------|
| Deferred                  tax assets:                      |   |                      |       |
| Deferred                  compensation                     |   | $                              | 3,500      |   |
| Deferred                  gains                            |   |                           | 109,300    |   |
| Allowances                  and impairments                |   |                           | 254,600    |   |
| Net                  operating loss carry-forwards         |   |                           | 4,450,500  |   |
| Tax                  credits including AMT                 |   |                           | 115,400    |   |
| Total                  deferred tax assets                 |   |                           | 4,933,300  |   |
|                                                       |   |                           |       |   |
| Deferred                  tax liabilities:                 |   |                           |       |   |
| Basis                  difference of investments           |   |                           | (1,207,500 | ) |
| Development                  and exploration costs         |   |                           | (37,200    | ) |
| Total                  deferred tax liabilities            |   |                           | (1,244,700 | ) |
| Net                  deferred tax assets - all non-current |   |                           | 3,688,600  |   |
|                                                       |   |                           |       |   |
| Valuation                  allowance                       |   |                           | (3,688,600 | ) |
| Net                  deferred tax asset                    |   | $                              | --         |   |

|                                                                                                                                                                          |   | Six                  Month Ended |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                                                                                          |   | June                  30, 2005   |       |
| Expected                  federal income tax expense                                                                                                                          |   | $                                | 1,874,000  |   |
| Losses                  from subsidiaries not consolidated                  for tax purposes, utilization                  of net operating losses                  and other |   |                             | (74,000    | ) |
| Valuation                  allowance (decrease)                                                                                                                               |   |                             | (1,700,000 | ) |
| Income                  taxes                                                                                                                                                 |   | $                                | 100,000    |   |

----

**CRESTED                CORP.**

**Notes                to Condensed Financial Statements (Unaudited)**

|                                                                                                                                                                                                           |   | Six                  months Ended |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                                                                                                                           |   | June                  30,         |       |
|                                                                                                                                                                                                           |   | 2005                              |       | 2004 |   |
| Net                  Gain (Loss), as reported                                                                                                                                                                  |   | $                                 | 5,764,800  |   | $ | (                  922,800 | ) |
| Deduct:                  Total stock-based employee compensation expense determined under                  fair                  value based method for all award, net of related tax                  effects |   | $                                 | (1,956,400 | ) |   | -- |   |
| Pro                  forma net profit (loss)                                                                                                                                                                   |   | $                                 | 3,808,400  |   | $ | (                  922,800 | ) |
|                                                                                                                                                                                                           |   |                              |       |   |   |   |   |
| Earnings                  per share:                                                                                                                                                                           |   |                              |       |   |   |   |   |
| Basic                  - as reported                                                                                                                                                                           |   | $                                 | 0.34       |   | $ | (0.06 | ) |
| Basic                  - pro forma                                                                                                                                                                             |   | $                                 | 0.22       |   | $ | (0.06 | ) |
| Diluted                  - as reported                                                                                                                                                                         |   | $                                 | 0.34       |   | $ | (0.06 | ) |
| Diluted                  - pro forma                                                                                                                                                                           |   | $                                 | 0.22       |   | $ | (0.06 | ) |

----

**CRESTED                CORP.**

**Notes                to Condensed Financial Statements (Unaudited)**

| Balance                December 31, 2004            | $                1,073,500 |
|-----------------------------------------------------|----------------------------|
| Addition                to Liability                | --                         |
| Liability                Settled                    | --                         |
| Accretion                Expense - 8% discount rate | 45,400                     |
| Balance                June 30, 2005                | $                1,118,900 |

|                                                       |   | Previously                     |        |       |   |                           |   |
|------------------------------------------------------------|--------|--------------------------------|-------------|------------|--------|--------------------------------|--------|
|                                                       |   | Reported                       |        |       |   | Restated                       |   |
|                                                       |   | June                  30, 2005 |        | Adjustment |   | June                  30, 2005 |   |
|                                                       |   |                           |        |       |   |                           |   |
| Marketable                  Securities                     |   | $                              | 2,164,600   |       | $      | (435,100                       | )      | $ | 1,729,500 |   |
| Investment                  in non-affiliated companies    |   | $                              | 5,004,700   |       | $      | 1,228,800                      |   | $ | 6,233,500 |   |
| Total                  assets                              |   | $                              | 9,994,000   |       | $      | 793,700                        |   | $ | 10,787,700 |   |
|                                                       |   |                           |        |       |   |                           |   |   |   |   |
| Deferred                  Income                           |   | $                              | 424,500     |       | $      | (424,500                       | )      | $ | - |   |
| Accumulated                  deficit                       |   | $                              | (15,778,200 | )          | $      | 1,653,300                      |   | $ | (14,124,900 | ) |
| Total                  liabilities and shareholders equity |   | $                              | 9,994,000   |       | $      | 793,700                        |   | $ | 10,787,700 |   |
|                                                       |   |                           |        |       |   |                           |   |   |   |   |

----

**CRESTED                CORP.**

**Notes                to Condensed Financial Statements (Unaudited)**

|                                               |   | Previously                       |      |       |   |                             |   |
|----------------------------------------------------|--------|----------------------------------|-----------|------------|--------|----------------------------------|--------|
|                                               |   | Reported                         |      |       |   | Restated                         |   |
|                                               |   | June                    30, 2005 |      | Adjustment |   | June                    30, 2005 |   |
|                                               |   |                             |      |       |   |                             |   |
| Gain                    on valuation of derivative |   | $                                | -         |       | $      | 1,228,800                        |   | $ | 1,228,800 |   |
| Gain                    on sale of investment      |   | $                                | 5,458,000 |       | $      | 424,500                          |   | $ | 5,882,500 |   |
| Net                    gain (loss)                 |   | $                                | 4,111,500 |       | $      | 1,653,300                        |   | $ | 5,764,800 |   |
|                                               |   |                             |      |       |   |                             |   |   |   |   |

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**CRESTED      CORP.**

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

**General      Overview**

**Liquidity      and Capital Resources**

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**Capital      Resources**

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**Capital      Requirements**

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**Results      of Operations**

**Quarter      and Six Months Ended June 30, 2005 compared with the Quarter and Six Months      Ended June 30, 2004**

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**Six      Months Ended June 30, 2004 compared with the Six Months Ended June 30,      2003**

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**Forward      Looking Statements**

**Critical      Accounting Policies**

**Employee      Stock-Based Compensation**
*      Accounting for Stock-Based Compensation,*
*Accounting      for Stock-Based Compensation*
*Accounting      for Stock Issued to Employees*

**Asset      Retirement Obligation**

**Contractual      Obligations**

**Recent      Accounting Pronouncements**

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**Risk      Factors**

**The      following risk factors should be considered in evaluating the information in      this Form 10-Q.**

**Uncertainties      in the value of the mineral properties**

| ·   | The                profitable mining and processing of uranium and vanadium at and in                the                vicinity of Plateau’s properties in Utah will depend on many factors:                Obtaining properties in proximity to the Shootaring mill to keep                transportation costs economic; delineation through extensive drilling                and                sampling of sufficient volumes of mineralized material, with sufficient                grades, to make mining and processing economic over time; continued                sustained high prices for uranium oxide and vanadium; obtaining the                capital required to upgrade the Shootaring mill and add a vanadium                circuit; and obtaining and continued compliance with operating permits. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                profitable mining at the Sheep Mountain properties in Wyoming will                depend                on: Evaluation of existing data to delineate sufficient volumes of                mineralized material, with sufficient grades, to make mining and                processing economic over time; continued sustained high prices for                uranium                oxide; and UPC and the Company having sufficient capital to complete                the                drilling and sampling work. In addition, there is no operating mill                near                Sheep Mountain; the ultimate economics of mining the Sheep Mountain                properties will depend on access to a mill or sufficiently high uranium                oxide prices to warrant shipments to faraway mills. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                profitable mining and processing of gold by Sutter Gold Mining Inc.                (in                which the Company owns a substantial stake) will depend on many factors,                including receipt of final permits and keeping in compliance with                permit                conditions; delineation through extensive drilling and sampling of                sufficient volumes of mineralized material, with sufficient grades,                to                make mining and processing economic over time; continued sustained                high                prices for gold; and obtaining the capital required to initiate and                sustain mining operations and build and operate a gold processing                mill. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | We                have not yet obtained feasibility studies on any of our mineral                properties. These studies would establish the economic viability,                or not,                of the different properties based on extensive drilling and sampling,                the                design and costs to build and operate gold and uranium/vanadium mills,                the                cost of capital, and other factors. Feasibility studies can take                many                months to complete. These studies are conducted by professional third                party consulting and engineering firms, and will have to be completed,                at                considerable cost, to determine if the deposits contain proved reserves                (amounts of minerals in sufficient grades that can be extracted profitably                under current pricing assumptions for development and operating costs                and                commodity prices). A feasibility study usually must be completed                in order                to raise the substantial capital needed to put a property into production.                We have not established any reserves (economic deposits of mineralized                materials) on any of our uranium/vanadium or gold properties, and                future                studies may indicate that some or all of the properties will not                be                economic to put into production. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                molybdenum property (in which the Company will have a substantial                interest                at such time as Phelps-Dodge conveys the Mt. Emmons properties back                to USE                and the Company) has had extensive work conducted by prior owners,                but                this data will have to be updated to the level of a current feasibility                study to determine the viability of starting mining operations. Obtaining                mining and other permits to begin mining the molybdenum property                may be                very difficult, and, like any mining operation, capital requirements                for a                molybdenum mining operation will be                substantial. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Compliance      with environmental regulations may be costly**

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**ITEM      4. **
**Controls      and Procedures**

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**PART      II. OTHER INFORMATION**

**ITEM      1. **
**Legal      Proceedings**

**Sheep      Mountain Partners**

**Phelps      Dodge**

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**ITEM      2. **
**Changes      in Securities and Use of Proceeds**

**ITEM      3. **
**Defaults      upon Senior Securities**

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

| Name                of Director |   | Term                Expires |   | For        |   | Abstain |
|---------------------------------|--------|-----------------------------|--------|------------|--------|---------|
|                            |   |                        |   |       |   |    |
| Daniel                P. Svilar |   | 2008                        |   | 15,877,442 |   | 6,275   |
|                            |   |                        |   |       |   |    |

|                                                                                                                     |   | Votes                For |   | Votes                Against |   | Abstain |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|------------------------------|--------|---------|
|                                                                                                                     |   |                     |   |                         |   |    |
| Appointment                of Epstein, Weber & Conover, PLC as independent                auditors for calendar 2005 |   | 15,877,467               |   | 1,350                        |   | 4,900   |

**ITEM      5. **
**Other      Information**

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**ITEM      6. **
**Exhibits      and reports on Form 8-K**

|   | (a)    | Exhibits.                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                          |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                          |
|   |   | 31.1                                                                                                                                                                                                      | Certification                of President 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 President Pursuant to 18 U.S.C. Section 1350, as adopted by Section                906                of the Sarbanes-Oxley Act of 2002                                                                                                       |
|   |   | 32.2                                                                                                                                                                                                      | 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 four reports on Form 8-K for the quarter ended                June 30,                2005. The events reported were as follows: |
|   |   |                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                          |
|   |   | 1.                                                                                                                                                                                                        | The                report filed on April 13, 2005, under Item 1.01 referenced the Company                and                Rocky Mountain Gas, Inc. (“RMG”) entering into a binding agreement for the                acquisition of RMG by Enterra Energy Trust. |
|   |   |                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                          |
|   |   | 2.                                                                                                                                                                                                        | The                report filed on April 13, 2005, under Item 1.01 referenced the Company                and                U.S. Energy Corp. signing a Mining Venture Agreement with Uranium                Power                Corp.                                       |
|   |   |                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                          |
|   |   | 3.                                                                                                                                                                                                        | The                report filed on May 24, 2005, under Item 1.01 was an amendment to                the                report filed April 13, 2005 referencing the acquisition of                RMG.                                                                         |
|   |   |                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                          |
|   |   | 4.                                                                                                                                                                                                        | The                report filed on June 7, 2005, under Item 2.01 and 9.01 referenced                the                Completion of Disposition of Assets of the Company, U.S. Energy Corp.                and                RMG with Exhibits.                             |

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**SIGNATURES**

|                                  |   | CRESTED                  CORP.                   |   |
|---------------------------------------|--------|--------------------------------------------------|--------|
|                                  |   | (Company)                                        |   |
|                                  |   |                                             |   |
|                                  |   |                                             |   |
|                                  |   |                                             |   |
| Date:                  March 31, 2006 | By:    | /s/Harold                  F. Herron             |   |
|                                  |   | HAROLD                  F. HERRON,               |   |
|                                  |   | President                                        |   |
|                                  |   |                                             |   |
|                                  |   |                                             |   |
|                                  |   |                                             |   |
|                                  |   |                                             |   |
| Date:                  March 31, 2006 | By:    | /s/Robert                  Scott Lorimer         |   |
|                                  |   | ROBERT                  SCOTT LORIMER            |   |
|                                  |   | Principal                  Financial Officer and |   |
|                                  |   | Chief                  Accounting Officer        |   |