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 1934

                  For the quarterly period ended June 30, 2009

       [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                         For the transition period from
                                      to
                          -----------    -----------

                           Commission File No. 0-6404
                                              -------

                           GATEWAY ENERGY CORPORATION
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


            Delaware                                           44-0651207
 ------------------------------                            --------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                           Identification Number)

                        1415 Louisiana Street, Suite 4100
                                Houston, TX 77002
                     ---------------------------------------
                    (Address of principal executive offices)

                                 (713) 336-0844
                            -------------------------
                           (Issuer's telephone number)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such  shorter  period  that the  registrant  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.  Yes  X   No
          -----   -----

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files). Yes  X   No
                                                               -----   -----

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]                        Accelerated filer [ ]

Non-accelerated filer [ ]                          Smaller reporting company [X]

Indicate by checkmark  whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.) Yes      No  X
                                    -----   -----

As of July 30,  2009,  the Issuer  had  19,397,125  shares of its  common  stock
outstanding.

<PAGE>


                   GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
                            INDEX TO QUARTERLY REPORT
                                  ON FORM 10-Q


Part  I - Financial Information
-------------------------------

Item  1.      Financial Statements                                            3
              Consolidated Balance Sheets (unaudited) as of June 30, 2009
                  and December 31, 2008                                       3
              Consolidated Statements of Operations (Unaudited) for the
                  three and six month periods ended June 30, 2009 and
                  June 30, 2008                                               4
              Consolidated Statements of Cash Flows (Unaudited) for the
                  six month periods ended June 30, 2009 and June 30, 2008     5
              Notes to Consolidated Financial Statements (Unaudited)          6
Item  2.      Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                   17
Item  4T.     Controls and Procedures                                         21

Part  II - Other Information                                                  23
----------------------------
Item  1.      Legal Procedings                                                23
Item  2.      Unregistered Sales of Equity Securities and Use of Proceeds     23
Item  3.      Defaults Upon Senior Securities                                 23
Item  4.      Submission of Matters to a Vote of Security Holders             23
Item  5.      Other Information                                               23
Item  6.      Exhibits                                                        23

Signatures                                                                    24
----------                                                                    --

Certification of Robert Panico Pursuant to Section 302
Certification of Christopher M. Rasmussen Pursuant to Section 302
Certification of Robert Panico Pursuant to Section 906
Certification of Christopher M. Rasmussen Pursuant to Section 906


                                       2

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<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


                                                                               June 30,      December 31,
                                                                                 2009            2008
                                                                             ------------    ------------
 ASSETS                                                                       (unaudited)     (revised)
<S>                                                                          <C>             <C>
Current Assets
   Cash and cash equivalents .............................................   $  1,649,519    $  1,789,029
   Restricted cash .......................................................      1,750,000            --
   Accounts receivable trade, net ........................................        953,152         969,859
   Notes receivable ......................................................        440,742            --
   Prepaid expenses and other assets .....................................        309,255         121,398
   Current assets of discontinued operations .............................           --         1,805,167
                                                                             ------------    ------------
        Total current assets .............................................      5,102,668       4,685,453
                                                                             ------------    ------------

Property and Equipment, at cost
   Gas gathering, processing and transportation ..........................      8,849,969       8,843,142
   Net profits production interest .......................................        779,424         763,909
   Office furniture and other equipment ..................................        147,129         143,654
                                                                             ------------    ------------
                                                                                9,776,522       9,750,705
   Less accumulated depreciation and amortization ........................     (2,552,144)     (2,371,704)
                                                                             ------------    ------------
                                                                                7,224,378       7,379,001
                                                                             ------------    ------------
Other Assets
   Deferred tax assets, net ..............................................      1,195,000       1,205,000
   Intangible assets, net of accumulated amortization of $300,484 and
     $222,082 as of June 30, 2009 and December 31, 2008, respectively ....        686,935         765,337
   Other .................................................................         44,472         136,657
   Non-current assets of discontinued operations .........................           --         2,519,253
                                                                             ------------    ------------
                                                                                1,926,407       4,626,247
                                                                             ------------    ------------
        Total assets .....................................................   $ 14,253,453    $ 16,690,701
                                                                             ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable ......................................................   $    404,736    $    776,519
   Accrued expenses and other liabilities ................................        314,077         323,100
   Insurance  notes payable ..............................................        206,984            --
   Current maturities of long-term debt ..................................        962,000       1,062,000
   Current maturities of capital lease ...................................         19,691          20,235
                                                                             ------------    ------------
        Total current liabilities ........................................      1,907,488       2,181,854
                                                                             ------------    ------------

Long-term capital lease, less current maturities .........................           --             9,187
Non-current liabilities of discontinued operations .......................           --         2,318,315
                                                                             ------------    ------------
        Total liabilities ................................................   $  1,907,488    $  4,509,356
                                                                             ------------    ------------

Commitments and contingencies ............................................           --              --

Stockholders' Equity
   Preferred stock - $1.00 par value; 10,000 shares authorized;
      no shares issued and outstanding ...................................           --              --
   Common stock - $0.25 par value; 35,000,000 shares authorized;
      19,397,125 and 19,207,249 shares issued and outstanding  at June 30,
      2009 and December 31, 2008, respectivley ...........................      4,849,281       4,801,812
   Additional paid-in capital ............................................     17,345,269      17,284,485
   Accumulated deficit ...................................................     (9,848,585)     (9,904,952)
                                                                             ------------    ------------
        Total stockholders' equity .......................................     12,345,965      12,181,345
                                                                             ------------    ------------
        Total liabilities and stockholders' equity .......................   $ 14,253,453    $ 16,690,701
                                                                             ============    ============


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

                                                     3
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<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


                                                            Three Months Ended June 30,          Six Months Ended June 30,
                                                         --------------------------------    --------------------------------
                                                              2009              2008              2009              2008
                                                         --------------    --------------    --------------    --------------
                                                                             (revised)                           (revised)
<S>                                                      <C>               <C>               <C>               <C>
Operating revenues
    Sales of natural gas .............................   $      932,234    $    3,679,554    $    2,086,144    $    6,452,636
    Transportation of natural gas and liquids ........          711,606           603,433         1,386,755         1,171,331
    Treating and other ...............................           96,903           102,613           237,300           209,624
                                                         --------------    --------------    --------------    --------------
                                                              1,740,743         4,385,600         3,710,199         7,833,591
                                                         --------------    --------------    --------------    --------------
Operating costs and expenses
    Cost of natural gas purchased ....................          761,678         3,321,047         1,786,696         5,890,161
    Operation and maintenance ........................          186,850           204,969           374,405           385,287
    Depreciation, depletion and amortization .........          141,600           156,626           302,652           325,799
    General and administrative .......................          743,082           635,019         1,412,212         1,312,573
                                                         --------------    --------------    --------------    --------------
                                                              1,833,210         4,317,661         3,875,965         7,913,820
                                                         --------------    --------------    --------------    --------------
Operating income (loss) ..............................          (92,467)           67,939          (165,766)          (80,229)

Other income (expense)
    Interest income ..................................            6,622             5,305            11,520            16,611
    Interest expense .................................          (43,407)          (37,194)          (83,831)          (80,882)
    Other income (expense), net ......................           32,401            (3,649)           41,744             1,302
                                                         --------------    --------------    --------------    --------------
         Other expense ...............................           (4,384)          (35,538)          (30,567)          (62,969)
                                                         --------------    --------------    --------------    --------------

Income (loss) from operations before income taxes and
    discontinued operations ..........................          (96,851)           32,401          (196,333)         (143,198)

Income tax benefit (expense) .........................            2,914              (395)           79,096            63,922
                                                         --------------    --------------    --------------    --------------

Income (loss) from continuing operations .............          (93,937)           32,006          (117,237)          (79,276)

Discontinued operations, net of taxes
    Income (loss) from discontinued operations, net of
    taxes ............................................          (39,255)          154,015          (151,393)          191,675
    Gain on disposal of assets, net of taxes .........          324,997              --             324,997              --
                                                         --------------    --------------    --------------    --------------
Income from discontinued operations ..................          285,742           154,015           173,604           191,675

Net income ...........................................          191,805           186,021            56,367           112,399
Net income attributable to noncontrolling interest ...             --             (11,896)             --             (28,824)
                                                         --------------    --------------    --------------    --------------
Net income attributable to controlling interest ......   $      191,805    $      174,125    $       56,367    $       83,575
                                                         ==============    ==============    ==============    ==============

Basic and diluted income per share:
Continuing operations ................................   $         --      $         --      $        (0.01)   $        (0.01)
Discontinued operations ..............................             0.01              0.01              0.01              0.01
                                                         --------------    --------------    --------------    --------------
Net income ...........................................   $         0.01    $         0.01    $         --      $         --
                                                         ==============    ==============    ==============    ==============

Weighted average number of common shares outstanding
    Basic ............................................       19,209,336        19,062,313        19,208,298        19,044,587
    Diluted ..........................................       19,219,611        19,240,228        19,223,033        19,184,029


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

                                                               4
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<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


                                                                             Six Months Ended June 30,
                                                                            --------------------------
                                                                                2009           2008
                                                                            -----------    -----------
                                                                                            (revised)
<S>                                                                         <C>            <C>
Cash flows from operating activities - continuing operations
   Income from continuing operations ....................................   $  (117,237)   $   (79,276)
   Adjustments to reconcile income from continuing operations to net cash
      provided by operating activities:
      Depreciation, depletion and amortization ..........................       302,652        325,799
      Deferred tax benefit ..............................................       (90,000)        14,420
      Stock based compensation expense ..................................       108,253        113,353
      Net income attributable to noncontrolling interests ...............          --           28,824
      Amortization of deferred loan costs ...............................        67,813         76,143
      Change in operating assets and liabilities:
         Accounts receivable trade ......................................        16,706       (618,381)
         Prepaid expenses and other assets ..............................       201,527        130,520
         Accounts payable ...............................................      (351,912)       223,949
         Accrued expenses and other liabilities .........................       (52,037)       (63,003)
                                                                            -----------    -----------
              Net cash provided by operating activities .................        85,765        152,348
                                                                            -----------    -----------

Cash flows from investing activities - continuing operations
      Capital expenditures ..............................................       (25,817)       (20,003)
      Restricted cash for asset acquisition .............................          --         (605,425)
      Other .............................................................          --              475
                                                                            -----------    -----------
              Net cash used in investing activities .....................       (25,817)      (624,953)
                                                                            -----------    -----------

Cash flows from financing activities - continuing operations
      Payments on borrowings ............................................      (231,684)      (943,462)
      Proceeds from borrowings ..........................................          --          600,000
      Restricted cash on credit facility ................................    (1,750,000)          --
      Deferred financing costs ..........................................       (18,139)          --
      Distributions to minority partner .................................          --          (39,821)
                                                                            -----------    -----------
              Net cash used in financing activities .....................    (1,999,823)      (383,283)

Net decrease in cash and cash equivalents from continuing operations ....    (1,939,875)      (855,888)
                                                                            -----------    -----------

Discontinued operations:
   Net cash provided by discontinued operating activities ...............     1,803,065        280,144
   Net cash used in discontinued investing activities ...................        (2,700)       (13,547)
   Net cash provided by discontinued financing activities ...............          --             --
                                                                            -----------    -----------

Net increase in cash and cash equivalents from discontinued operations ..     1,800,365        266,597
                                                                            -----------    -----------

Net decrease in cash and cash equivalents ...............................      (139,510)      (589,291)
Cash and cash equivalents at beginning of period ........................     1,789,029      1,807,224
                                                                            -----------    -----------
Cash and cash equivalents at end of period ..............................   $ 1,649,519    $ 1,217,933
                                                                            ===========    ===========

Supplemental disclosures of cash flow information:
   Income taxes paid ....................................................   $    33,000    $    46,000
   Cash paid for interest ...............................................        36,172         28,682

Supplemental schedule of noncash investing and financing activities:
    Trade note payable for insurance premiums ...........................   $   328,938    $   408,703
                                                                            ===========    ===========


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

                                                    5
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<PAGE>


(1)      Nature of Business

         Gateway Energy Corporation (the "Company," or "Gateway"), a Delaware
corporation, was incorporated in 1960 and entered its current business in 1992.
The Company's common stock is traded in the over-the-counter market on the
bulletin board section under the symbol GNRG. Gateway conducts all of its
business through its wholly owned subsidiary companies, Gateway Pipeline
Company, Gateway Offshore Pipeline Company, Gateway Energy Marketing Company and
Gateway Processing Company and CEU TX NPI, L.L.C. Gateway-Madisonville Pipeline,
L.L.C, previously known as Gateway-ADAC Pipeline, L.L.C., is 67% owned by
Gateway Pipeline Company and 33% owned by Gateway Processing Company. The
Company acquired the minority interest (33%) from the prior owner (see Note 3)
on July 3, 2008 and the Company now owns 100% of this venture. Access to the
Company's annual reports on Form 10-K and Form 10-KSB, quarterly reports on Form
10-QSB and Form 10-Q, the Company's Code of Ethics, and current reports on Form
8-K are available at the Company's website www.gatewayenergy.com.
                                           ---------------------

         In the following discussion, "Mcf" refers to thousand cubic feet of
natural gas; "Mmcf" refers to million cubic feet of natural gas; "Bbl" refers to
barrel of liquid hydrocarbons of approximately 42 U.S. gallons; "Btu" refers to
British thermal unit, a common measure of the energy content of natural gas;
"MMBtu" refers to one million British thermal units. "Mcfe" refers to thousand
cubic feet equivalent. Liquid hydrocarbons are converted to Mcf equivalents
using the ratio of 1.0 barrel of liquid hydrocarbons to 6.0 Mcf of natural gas.

(2)      Summary of Significant Accounting Policies

Revenue Recognition

         Revenues from the sales of natural gas are generated under purchase and
sales contracts that are priced at the beginning of the month based upon
established gas indices. The Company purchases and sells the gas using the same
index to minimize commodity price risk. Revenues from the sales of natural gas
are recognized at the redelivery point, which is the point at which title to the
natural gas transfers to the purchaser. Transportation revenues are generated
under contracts which have a stated fee per unit of production (Mcf, MMBtu, or
Bbl) gathered or transported. Onshore transportation revenues are recognized at
the redelivery point, which is the point at which another party takes physical
custody of the natural gas or liquid hydrocarbons. Offshore transportation
revenues are recognized at the Company's receipt point.

Principles of Consolidation

         The Company consolidates the financial statements of its majority-owned
and wholly-owned subsidiaries. The portion of Gateway-ADAC Pipeline L.L.C.
(through June 30, 2008) not owned by the Company is recorded as noncontrolling
interest. All significant intercompany transactions have been eliminated in
consolidation.

         Effective December 22, 2008, the Company purchased 100% of the
ownership interest in CEU TX NPI, L.L.C. The entity owns the net profits
interest in the Madisonville field. The entity is a wholly-owned subsidiary of
Gateway Energy Corporation and is consolidated as such.

         The accompanying consolidated financial statements have been prepared
by the Company. In the opinion of management, such financial statements reflect
all adjustments necessary for a fair presentation of the financial position and
results of operations in accordance with U.S. generally accepted accounting
principles.

Property and Equipment

         Property and equipment is stated at cost, plus capitalized interest
costs on major projects during their construction period. Additions and
improvements that add to the productive capacity or extend the useful life of an
asset are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred. For the six months ended June 30, 2009, property and
equipment included $79,222 of equipment financed under a capital lease, net of
$20,278 of accumulated amortization. Depreciation and amortization is provided
using the straight-line method over estimated useful lives ranging from 6 to 30
years for pipeline systems, gas plant and processing equipment, and from 2 to 10
years for office furniture and other equipment. Upon disposition or retirement
of pipeline components or gas plant components, any gain or loss is charged or
credited to accumulated depreciation. When entire pipeline systems, gas plants
or other property and equipment are retired or sold, any resulting gain or loss
is credited to or charged against operations.

         For the three and six months ended June 30, 2009 and 2008,
depreciation, depletion and amortization expense was $141,600 and $156,626 and
$302,652 and $325,799, respectively. Property, plant and equipment and

                                       6

<PAGE>


identifiable intangible assets are reviewed for impairment, in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected discounted cash flows is less than the carrying value of the
related asset or group of assets, a loss is recognized for the difference
between the fair value and carrying value of the asset or group of assets. There
have been no impairments of long-lived assets required during the six months
ended June 30, 2009.

Future Asset Retirement Obligation

         The Company provides for future asset retirement  obligations under the
provisions  of SFAS No.  143,  "Accounting  for Asset  Retirement  Obligations,"
related to the Shipwreck offshore production platform because,  eventually,  law
or regulation will require its  abandonment.  The present value of the estimated
future  asset  retirement  obligation,  as  of  the  date  of  acquisition,  was
capitalized  to gas  gathering,  processing and  transportation  equipment.  The
present value of the estimated  future asset  retirement  obligation,  as of the
balance sheet date, is presented as a noncurrent  liability.  Until the platform
is  ultimately  sold or retired,  the Company will  recognize  (i)  depreciation
expense on the  additional  capitalized  costs;  (ii)  accretion  expense as the
present  value of the future  asset  retirement  obligation  increases  with the
passage of time,  and; (iii) the impact,  if any, of changes in estimates of the
liability.  The following table sets forth a reconciliation of the beginning and
ending  aggregate  carrying amount of asset  retirement  obligations for the six
months ended June 30, 2009 and 2008:

                                              Six Months Ended June 30,
                                            ----------------------------
                                               2009             2008
                                            -----------      -----------

                 Beginning balance          $ 2,318,315      $   394,640
                 Accretion                       69,549           13,689
                 Sale of asset               (2,387,864)            --
                                            -----------      -----------
                 Ending balance             $      --        $   408,329
                                            -----------      -----------



Refer to Note 4 for discussion of sale, effective June 30, 2009, of the
Shipwreck platform.

Refer to Note 7 for discussion of change in estimate.

Goodwill and Other Intangibles

         SFAS No. 142, "Goodwill and Other Intangible Assets" addresses the
methods used to capitalize, amortize and to assess the impairment of intangible
assets. In evaluating the Company's intangibles, management considered all of
the criteria set forth in SFAS No. 142 for determining useful life. Management
performs our annual impairment test for intangible assets in the fourth quarter
of each fiscal year. No impairments were indicated as a result of impairment
reviews for intangible assets in 2008 nor was there any indication that
intangible assets were impaired during the six months ended June 30, 2009.

Cash Equivalents

         For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with original maturities
of three months or less to be cash equivalents.

Concentrations of Credit Risk

         The Company maintains all cash in deposit accounts, which at times may
exceed federally insured limits. The Company has not experienced losses in such
accounts.

Restricted Cash

         Restricted cash is related to the collateral for letters of credit and
credit facility with a bank.

Casualty Loss

         Gateway owns pipelines, a related 140' x 70' operating platform, and an
onshore terminal facility (the "Crystal Beach" facility) located in southeast
Texas, east of Galveston. The Crystal Beach facility is connected to the
Company's Shipwreck system, which provides separation of gas and liquid

                                       7

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<CAPTION>


hydrocarbon services, dehydrates the gas for a fee, delivers pipeline quality
gas to market and provides storage and truck loading services for the liquid
hydrocarbons.

         The Crystal Beach facility was damaged by hurricane Ike in September
2008. The Company reviewed the damage at the facility as well as other assets
the Company owns during the fourth quarter of 2008. Initially, an estimated
casualty loss of $51,344, which was 25% of the net book value of the facility,
was recorded as a receivable as the Company had property insurance on the
facility with a value of $2 million.

         During the first quarter of 2009, the Company received insurance
proceeds in the amount of $2 million less the deductible of $250,000. These
proceeds were attributable to the damage at the Crystal Beach facility. The
Company recorded a receivable at December 31, 2008 of $1.75 million for the
receivable less the already recorded amount of $51,344.

         In June 2009, the Company completed the sale of the Crystal Beach
facility and related Shipwreck system (see Note 4).

Income Taxes

         The Company computes income taxes using the asset and liability method
whereby deferred tax assets are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities from
a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is established against such assets where
management is unable to conclude more likely than not that such asset will be
realized.


Earnings Per Share

         Basic earnings per share is computed by dividing net income or loss by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed by dividing net income or loss by the
weighted average number of shares outstanding, after giving effect to
potentially dilutive common share equivalents outstanding during the period.
Potentially dilutive common share equivalents are not included in the
computation of diluted earnings per share if they are anti-dilutive.
Accordingly, 10,275 and 189,431 shares of common stock for the three months
ended June 30, 2009 and June 30, 2008, respectively, and 14,735 and 211,070
shares of common stock for the six months ended June 30, 2009 and 2008,
respectively, were excluded from the calculation of diluted earnings per share
because of their anti-dilutive effect. Earnings per common share were computed
as follows:

                                                    Three Months Ended               Six Months Ended
                                                          June 30,                       June 30,
                                               ----------------------------    ----------------------------
                                                   2009            2008            2009            2008
                                               ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>              <C>
Weighted average number of common shares
    outstanding ............................     19,209,336      19,062,313      19,208,298      19,044,587
Effect of dilutive securities ..............         10,275         177,915          14,735         139,442
                                               ------------    ------------    ------------    ------------
Weighted average dilutive common shares
    outstanding ............................     19,219,611      19,240,228      19,223,033      19,184,029
                                               ============    ============    ============    ============

Income (loss) from continuing operations ...        (93,937)         32,006        (117,237)        (79,276)
Income from discontinued operations, net of
    taxes ..................................        285,742         154,015         173,604         191,675
Net income attributable to noncontrolling
    interests ..............................           --           (11,896)           --           (28,824)
                                               ------------    ------------    ------------    ------------
Net income attributable to controlling
    interests ..............................   $    191,805    $    174,125    $     56,367    $     83,575
                                               ============    ============    ============    ============

Basic and diluted income per common share:
Continuing operations ......................   $       --      $       --      $      (0.01)   $      (0.01)

Less:  income attributable to noncontrolling
    interests ..............................           --              --              --              --
Discontinued operations ....................           0.01            0.01            0.01            0.01
                                               ------------    ------------    ------------    ------------
Net income .................................   $       0.01    $       0.01    $       --      $       --
                                               ============    ============    ============    ============

                                                      8
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Accounting Pronouncements and Recent Regulatory Developments

         The Financial Accounting Standards Board ("FASB") issued FASB Staff
Position (FSP) FAS 157-4, "Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly". This FSP:

     o    Affirms that the objective of fair value when the market for an asset
          is not active is the price that would be received to sell the asset in
          an orderly transaction.

     o    Clarifies and includes additional factors for determining whether
          there has been a significant decrease in market activity for an asset
          when the market for that asset is not active.

     o    Eliminates the proposed presumption that all transactions are
          distressed (not orderly) unless proven otherwise. The FSP instead
          requires an entity to base its conclusion about whether a transaction
          was not orderly on the weight of the evidence.

     o    Includes an example that provides additional explanation on estimating
          fair value when the market activity for an asset has declined
          significantly.

     o    Requires an entity to disclose a change in valuation technique (and
          the related inputs) resulting from the application of the FSP and to
          quantify its effects, if practicable.

     o    Applies to all fair value measurements when appropriate.

         FSP FAS 157-4 must be applied prospectively and retrospective
application is not permitted. FSP FAS 157-4 is effective for interim and annual
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. An entity early adopting FSP FAS 157-4 must also
early adopt FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments". The Company adopted SFAS No. 157 as it
applies to financial assets and liabilities as of January 1, 2008 and the
adoption did not have a material impact on its consolidated financial
statements.

         The FASB issued FSP FAS 107-1 and APB 28-1, "Interim Disclosures about
Fair Value of Financial Instruments". This FSP amends FASB Statement No. 107,
"Disclosures about Fair Value of Financial Instruments", to require an entity to
provide disclosures about fair value of financial instruments in interim
financial information. This FSP also amends APB Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized financial
information at interim reporting periods. Under this FSP, a publicly traded
company shall include disclosures about the fair value of its financial
instruments whenever it issues summarized financial information for interim
reporting periods. In addition, an entity shall disclose in the body or in the
accompanying notes of its summarized financial information for interim reporting
periods and in its financial statements for annual reporting periods the fair
value of all financial instruments for which it is practicable to estimate that
value, whether recognized or not recognized in the statement of financial
position, as required by Statement 107.

         FSP 107-1 and APB 28-1 are effective for interim periods ending after
June 15, 2009, with early adoption permitted for periods ending after March 15,
2009. However, an entity may early adopt these interim fair value disclosure
requirements only if it also elects to early adopt FSP FAS 157-4, FSP FAS 115-2
and FAS 124-2. The Company adopted SFAS No. 157 as it applies to financial
assets and liabilities as of January 1, 2008 and the adoption did not have a
material impact on its consolidated financial statements.

         The FASB has issued FASB Statement No. 165, "Subsequent Events" ("SFAS
No. 165"). SFAS No. 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. Specifically,
SFAS No. 165 provides:

     o    The period after the balance sheet date during which management of a
          reporting entity should evaluate events or transactions that may occur
          for potential recognition or disclosure in the financial statements;

                                       9

<PAGE>


     o    The circumstances under which an entity should recognize events or
          transactions occurring after the balance sheet date in its financial
          statements; and

     o    The disclosures that an entity should make about events or
          transactions that occurred after the balance sheet date.

         SFAS No. 165 is effective for interim or annual financial periods
ending after June 15, 2009, and shall be applied prospectively. The Company has
adopted and will follow the guidance in SFAS 165 for all prospective subsequent
event transactions and disclosures.

         The FASB issued FASB Statement No. 168, the "FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles"
("SFAS No. 168"). SFAS No. 168 establishes the FASB Accounting Standards
Codification (Codification) as the single source of authoritative U.S. generally
accepted accounting principles (U.S. GAAP) recognized by the FASB to be applied
by nongovernmental entities. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. SFAS No. 168 and the Codification are effective for
financial statements issued for interim and annual periods ending after
September 15, 2009.

         When effective, the Codification will supersede all existing non-SEC
accounting and reporting standards. All other nongrandfathered non-SEC
accounting literature not included in the Codification will become
nonauthoritative. Following SFAS No. 168, the FASB will not issue new standards
in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force
Abstracts. Instead, the FASB will issue Accounting Standards Updates, which will
serve only to: (a) update the Codification; (b) provide background information
about the guidance; and (c) provide the bases for conclusions on the change(s)
in the Codification.

         When effective, the Company will utilize SFAS No. 168 as authoritative
guidance over accounting transactions.

         The SEC has published a Final Rule, Modernization of Oil and Gas
Reporting. The new disclosure requirements include provisions that permit the
use of new technologies to determine proved reserves if those technologies have
been demonstrated empirically to lead to reliable conclusions about reserves
volumes. The new requirements also will allow companies to disclose their
probable and possible reserves to investors. In addition, the new disclosure
requirements require companies to: (a) report the independence and
qualifications of its reserves preparer or auditor; (b) file reports when a
third party is relied upon to prepare reserves estimates or conducts a reserves
audit; and (c) report oil and gas reserves using an average price based upon the
prior 12-month period rather than year-end prices.

         The new disclosure requirements are effective for registration
statements filed on or after January 1, 2010, and for annual reports on Forms
10-K and 20-F for fiscal years ending on or after December 31, 2009. A company
may not apply the new rules to disclosures in quarterly reports prior to the
first annual report in which the revised disclosures are required.

         The Company estimates that the adoption of this rule will have no
effect on the financial statements.

Use of Estimates

         The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the 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. Management's significant estimates include depreciation of
long-lived assets, depletion of gas reserves, amortization of deferred loan
costs, valuation of the Shipwreck asset retirement obligation, deferred tax
valuation allowance, valuation of assumed liabilties, intangible lives, pipeline
asset allocations, and valuation of stock based transactions. Actual results
could differ from those estimates.

                                       10

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<CAPTION>


(3)      Acquisitions

Acquisition of Allen Drilling Acquisition Company

         On July 3, 2008, Gateway Processing Company, a subsidiary of Gateway
Energy Corporation (the "Company") closed on a Member Interest Purchase
Agreement with Allen Drilling Acquisition Company ("ADAC"), effective as of July
1, 2008, regarding the purchase of ADAC's one-third interest in Gateway-ADAC
Pipeline, LLC ("Gateway-ADAC") for $539,167 and 100,000 shares of Company common
stock. Gateway-ADAC owns the Company's Madisonville pipeline, connecting the
Madisonville gas treatment plant to two major pipelines.

Acquisition of Madisonville Field Net Profits Interest

         Effective December 22, 2008, the Company, through its wholly-owned
subsidiary CEU TX NPI, L.L.C., purchased a 9.1% net profits interest in the
Madisonville Field. The interest was purchased for $762,450.

Pro Forma Results of Operations

         The following unaudited pro forma consolidated results of operations
for the three months and six months ended June 30, 2008 are presented as if the
above named acquisitions had been made on January 1, 2008. The operations of the
above-named acquisitions have been included in the statement of operations since
the acquisition effective dates disclosed above. The pro forma consolidated
results of operations include adjustments to give effect to the change in
depreciation rates as well as certain other adjustments.




                                              Three months ended June 30, 2008
                                      GEC             ADAC      CEU TX NPI, LLC      TOTAL
==============================================================================================
<S>                              <C>             <C>             <C>             <C>
Operating revenues ...........   $   4,665,991   $        --     $     218,133   $   4,884,124
Net income ...................         174,125           7,851         129,350         311,326
Basic and diluted earnings
    per share ................   $        0.01   $        --     $        0.01   $        0.02
                                 =============   =============   =============   =============



                                              Six months ended June 30, 2008
                                      GEC             ADAC      CEU TX NPI, LLC      TOTAL
==============================================================================================
Operating revenues ...........   $   8,367,558   $        --     $     360,516   $   8,728,074
Net income ...................          83,575          19,024         208,500         311,099
Basic and diluted earnings
    per share ................   $        --     $        --     $        0.01   $        0.02
                                 =============   =============   =============   =============


(4)      Discontinued Operations

Sale of the Crystal Beach Terminal and Shipwreck and Pirates' Beach Gathering Systems

         On June 30, 2009, the Company sold its Shipwreck gathering system
consisting of an offshore platform and related pipelines, as well as a related
onshore facility known as the Crystal Beach terminal (the "Shipwreck/Crystal
Beach Assets"). In a separate transaction, the Company also sold its Pirates'
Beach gathering system (the "Pirates' Beach Assets").

         The Shipwreck/Crystal Beach Assets were sold to Impact Exploration &
Production, LLC for consideration consisting of $200,000, payable in four
quarterly installments, and the assumption of liabilities, including abandonment
and retirement obligations with an effective date of June 30, 2009. As a result
of the sale, the Company recognized a pre tax gain of $371,743.

         The Pirates' Beach Assets were sold to Emerald Gathering and
Transportation, L.L.C. for consideration consisting of $300,000, of which
$50,000 was paid at closing, with the balance payable in five monthly
installments, and the assumption of liabilities, including abandonment and
retirement obligations with an effective date of June 1, 2009. As a result of
the sale, the Company recognized a pre tax gain of $102,660.

         Accordingly, prior period financial statement amounts have been
adjusted to give effect to these dispositions as discontinued operations.

                                       11
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<PAGE>
<TABLE>
<CAPTION>


         Following are the results of operations of the Crystal Beach Terminal
and Shipwreck and Pirates' Beach gathering systems for the periods presented:


                                 Three Months Ended June 30,          Six Months Ended June 30,
                               --------------------------------   --------------------------------
                                     2009              2008             2009              2008
                               --------------------------------   --------------------------------
<S>                            <C>               <C>              <C>               <C>
Operating revenues (1) ....    $       74,974    $      280,391   $      131,964    $      533,967
Operating costs and
  expenses (2) .............          163,727           123,351          332,855           228,950
Income (loss) from
  discontinued operations,
  net of taxes .............          (39,255)          154,015         (151,393)          191,675
Gain on disposal of
  discontinued operations,
  net of taxes .............          324,997              --            324,997              --

Basic and diluted income
  (loss) per share from
  discontinued operations ..   $         --      $         0.01   $        (0.01)   $         0.01

Basic and diluted income
  per share from gain on
  disposal of discontinued
  operations ...............   $         0.01    $         --     $         0.01    $         --
                               --------------    --------------   --------------    --------------
Total ......................   $         0.01    $         0.01   $         --      $         0.01
                               ==============    ==============   ==============    ==============

Weighted average number of
  common shares outstanding:
Basic ......................       19,209,336        19,062,313       19,208,298        19,044,587
Diluted ....................       19,219,611        19,240,228       19,223,033        19,184,029


(1)  This revenue is based on billings to producers for transportation services.

(2)  This cost is comprised of operations and maintenance expense, depreciation
     expense, and accretion expenses.


(5)      Stock-Based Compensation Plans

         The Company's 2007 Equity Incentive Plan provides for stock-based
compensation for officers, employees and non-employee directors.

         The Company accounts for stock based compensation under the provisions
of SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"). The
options generally vest ratably over three years and expire between five and ten
years.

         Under the modified prospective approach, SFAS No. 123R applies to new
awards and to awards that were outstanding on January 1, 2006 as well as those
that are subsequently modified, repurchased or cancelled. Under the modified
prospective approach, compensation cost recognized for the six months ended June
30, 2008 includes compensation cost for all share-based awards granted prior to,
but not yet vested as of January 1, 2006, based on the grant-date fair value
estimated in accordance with the original provisions of SFAS No. 123, and
compensation cost for all share-based awards granted subsequent to January 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS No. 123R.

         Compensation cost related to non-qualified stock options recognized for
the three months ended June 30, 2009 and 2008 was $25,279 and $28,016,
respectively. For the six months ended June 30, 2009 and 2008, compensation cost
was $48,251 and $44,353, respectively. The Company views all awards of

                                       12
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<TABLE>
<CAPTION>


share-based compensation as a single award with an expected life equal to the
average expected life of component awards and amortize the fair value of the
award over the requisit service period.

         The Company receives a tax deduction for certain stock option exercises
during the period the options are exercised, generally for the excess of the
value of the stock over the strike price received on the date of exercise.
During the six months ended June 30, 2009, there were no options exercised. In
addition, the Company receives an additional tax deduction when restricted stock
vests at a higher value than the value used to recognize compensation expense at
the date of grant. The Company records these deductions as a tax asset with a
corresponding amount recorded as additional paid-in capital when the Company can
receive a tax cash savings from these awards. Due to the Company having
significant unused net operating-loss carryforwards, the recording of this tax
benefit is deferred until such tax savings is realized.

         The fair value of each option award is estimated on the date of grant
using the Black-Scholes option-pricing model. Expected volatility is estimated
using the annualized historical stock prices to derive an expected term. The
risk-free rate for periods within the contractual life of the option is based on
the U.S. treasury yield curve in effect at the time of grant. The Company uses
the Black-Scholes option pricing model to compute the fair value of stock
options, which requires the Company to make the following assumptions:

     o    The risk-free interest rate is based on the five-year Treasury bond at
          date of grant.

     o    The dividend yield on the Company's common stock is assumed to be zero
          since the Company does not pay dividends and has no current plans to
          do so in the future.

     o    The market price volatility of the Company's common stock is based on
          daily, historical prices for the last three years.

     o    The term of the grants is based on the simplified method as described
          in Staff Accounting Bulletin No. 110.

         In addition, the Company estimates a forfeiture rate at the inception
of the option grant based on historical data and adjusts this prospectively as
new information regarding forfeitures becomes available.

         At June 30, 2009, there was $149,208 of total unrecognized compensation
cost related to non-vested stock option awards which is expected to be
recognized over a weighted-average period of three years.

The following table represents stock option activity for the six months ended
June 30, 2009:

                                                                                      Weighted           Intrinsic
                                                                   Weighted            Average           Value of
                                                                    Average          Contractual       Options as of
                                                                   Exercise           Terms (in          June 30,
                                                 Shares              Price             years)              2009
                                             ----------------    --------------     --------------    ----------------
<S>                                              <C>                   <C>                <C>           <C>
Options outstanding, beginning of period..       1,038,947             $0.53              3.43
Options granted...........................         417,500              0.32              4.87
Options canceled or expired...............         (82,500)             0.59               --
Options exercised.........................            --                --                 --
                                                 ---------
Options outstanding, end of period........       1,373,947             $0.46              3.50          $  39,420
                                                 =========                                              =========

Options exercisable, end of period........         665,482             $0.45              2.64          $  14,300
                                                 =========                                              =========

         The market value of the Company's common stock on June 30, 2009 was
$0.38 per share.

         The weighted-average grant-date fair value of options granted during
the six months ended June 30, 2009 was $0.15 per share.

         During the second quarter of 2009, the Company made a stock grant of
189,876 restricted shares of common stock to the Company's Board of Directors.
The value of the stock grant was $0.315 per share and was recognized as Board
compensation expense.

                                       13
</TABLE>

<PAGE>


(6)      Debt

         The Company's outstanding debt at June 30, 2009 consisted of the
following:

             Trade note payable - Insurance........     $   206,984
             Revolving credit facility.............         962,000
                                                        -----------
                                                          1,168,984
             Less current maturities...............      (1,168,984)
                                                        -----------
                                                        $      --
                                                        ===========
Trade Notes Payable

         In January 2009, the Company executed a premium finance agreement for
its insurance premiums. The total of the note was $328,938 with an interest rate
of 6.40%. The note requires monthly principal and interest payments. The amount
of the monthly payment varies depending on any changes in coverage and policy
renewal period changes.

Revolving Credit Facility

         On August 23, 2007, the Company entered into a Credit Agreement (the
"Agreement") with a bank (the "Lender"), regarding a revolving credit facility
provided by Lender to the Company. The original borrowing base under the
Agreement had been established at $2.5 million, which may be increased at the
discretion of the Lender to an amount not to exceed $20 million. The credit
facility is secured by a portion of the Company's assets and has a term of two
years maturing in August 2009. Interest on outstanding balances will accrue at
Lender's prime rate, plus one percent, with a minimum rate of 5.00%. In
connection with the acquisition of the minority interest in the Madisonville
pipeline as well as the net profits interest in the Madisonville Field assets,
the Company borrowed $1,362,000 on the credit facility. As of June 30, 2009, the
balance was $962,000 and the interest rate was 5%. Due to the maturing of the
Agreement in August 2009, the Company is currently in negotiations with the
Lender to renew the Agreement; however, there is no guarantee that the Lender
will renew the Agreement.

         The Company completed the sale of the Crystal Beach Terminal and
Shipwreck and Pirates' Beach Gathering Systems effective June 30, 2009 (see Note
4). As these sales involved collateral under the Company's credit agreement, the
credit agreement was amended to reduce the borrowing base to $1.6 million. The
Company is currently considering pledging additional available assets as
collateral to restore the borrowing base to its prior level of $2.5 million or
greater.

Letters of Credit

         At June 30, 2009, the Company had outstanding letters of credit for gas
purchases totaling $900,000.

(7)      Change in Estimate

         The Company calculates the Asset Retirement Obligation ("ARO")
liability and related expenses utilizing a methodology that is in accordance
with SFAS No. 143. The calculation provides for an ARO liability based on an
estimated fair value of the asset. SFAS No. 143 requires the Company to review
the liability periodically and adjust fair values and other assumptions based on
current market conditions.

         Prior to the sale of the Shipwreck Platform and based on the current
market value of the asset along with the recent interest and inflation rate
activity, the Company had adjusted these aforementioned assumptions.
Specifically, subsequent to hurricane Ike and in light of the recent decline in
energy prices experienced during 2008, the fair value of the cost to abandon the
facility was increased. Additionally, the life of the platform was reevaluated
to better approximate the estimated time until the potential abandonment occurs.
The production which flows through the platform was also a factor in the change
in assumptions. It is projected to increase significantly which increases the
value and life of the asset.

         The adjustment increased the book value of the asset and corresponding
liability. The increase in the liability, as discussed above, better depicts the
fair value of the abandonment of the asset. The adjustment itself is considered
a change in estimate as defined by SFAS No. 154, "Accounting Changes and Error
Corrections," which requires disclosure in the financial statements.

(8)      Commitments and Contingencies

         From time to time the Company is involved in litigation concerning its
properties and operations. There is no known or pending litigation expected to
have a material effect on the Company's consolidated financial statements.

                                       14

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<CAPTION>


(9)      Financial Instruments

         The carrying amount of cash and cash equivalents, restricted cash,
certificates of deposit, trade and insurance receivables, trade payables and
short-term borrowings approximate fair value because of the short maturity of
those instruments. The carrying amount of the term note approximates fair value
because of its variable interest rate. The fair value of the Company's financial
instruments is based upon current borrowing rates available for financings with
similar terms and maturities, and is not representative of the amount that could
be settled, nor does the fair value amount consider the tax consequences, if
any, of settlement.

(10)     Segment Disclosures

         All of the Company's operations are in the domestic U.S., including the
Gulf of Mexico in Texas and federal waters. The Company's management reviews and
evaluates the operations separately of the two main segments--Onshore Operations
and Offshore Operations. Each segment is an aggregation of operations subject to
similar economic and regulatory conditions such that they are likely to have
similar long-term prospects for financial performance. Onshore Operations
include natural gas gathering, transportation and distribution activities in
Texas. Offshore Operations include natural gas and liquid hydrocarbon gathering,
transportation, and processing activities in the Gulf of Mexico in Texas as well
as federal waters. The principal markets for the Onshore segment are affiliates
of large intrastate and interstate pipeline companies and industrial customers;
and for the Offshore segment they are affiliates of large intrastate and
interstate pipeline companies.

         The accounting policies of the reportable segments are the same as
those described in Note 2 to the Consolidated Financial Statements. The Company
evaluates the segments based on operating margin, defined as revenues less cost
of purchased gas and operating and maintenance expenses. Such amounts are before
general and administrative expense, depreciation and amortization expense,
accretion expense, interest income or expense or income taxes. Operating margin
is not a GAAP measure but the components of operating margin are computed by
using amounts that are determined in accordance with GAAP. A reconciliation of
operating margin to operating income, which is its nearest comparable GAAP
financial measure, is included in the tables below.

         Summarized financial information for the three and six months ended
June 30, 2009 and 2008 of the Company's reportable segments from continuing
operations is as follows:

                                                        Three Months Ended               Six Months Ended
                                                              June 30,                       June 30,
                                                    --------------------------     ----------------------------
                                                        2009           2008            2009            2008
                                                    -----------    -----------     -----------      -----------
                  Onshore Operations
        <S>                                         <C>            <C>             <C>              <C>
        Revenues.................................   $   993,002    $ 3,775,130     $ 2,210,042      $ 6,663,554
        Cost of natural gas purchased.............      761,678      3,321,047       1,786,696        5,890,161
        Operation and maintenance expense.........       54,006         57,705         111,221          129,052
                                                    -----------    -----------     -----------      -----------
            Operating margin......................      177,318        396,378         312,125          644,341
        General and administrative expense........         --              181            --                231
        Depreciation and amortization
           expense................................       24,197         49,115          72,000           98,102
                                                    -----------    -----------     -----------      -----------
            Operating income......................      153,121        347,082         240,125          546,008

        Interest expense..........................          891          1,593           1,968            3,346
        Capital expenditures......................          408           --             6,826             --

        Total assets..............................    4,027,882      4,818,381       4,027,882        4,818,381

                  Offshore Operations
        Revenues.................................   $   762,091    $   610,470     $ 1,500,966      $ 1,170,037
        Operation and maintenance expense.........      132,844        147,264         263,184          256,235
                                                    -----------    -----------     -----------      -----------
            Operating margin......................      629,247        463,206       1,237,782          913,802
        Depreciation and amortization
           expense................................      105,648        106,333          211,295         225,321
                                                    -----------    -----------     -----------      -----------
            Operating income......................      523,599        356,873       1,026,487          688,481

        Interest expense..........................         --             --              --               --
        Capital expenditures......................         --             --              --             19,105

        Total assets..............................    5,431,944      6,425,840       5,431,944        6,425,840

                                                       15
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<PAGE>
<TABLE>
<CAPTION>


                 Net Profits Interest
        <S>                                         <C>            <C>             <C>              <C>
        Revenues (loss)...........................  $   (14,350)   $      --       $      (809)     $      --
                                                    -----------    -----------     -----------      -----------
            Operating margin (loss)...............      (14,350)          --              (809)            --
        Depletion expense.........................       10,157           --            15,912             --
                                                    -----------    -----------     -----------      -----------
             Operating loss.......................      (24,507)          --           (16,721)            --
                                                    -----------    -----------     -----------      -----------

        Interest expense..........................         --             --              --               --
        Capital expenditures......................         --             --            15,515             --

        Total assets..............................      766,920           --           766,920             --

                 Corporate Operations
        General and administrative expenses.......  $   743,082    $   634,838     $ 1,412,212      $ 1,312,342
        Depreciation and amortization
            expense...............................        1,598          1,178           3,445            2,376
                                                    -----------    -----------     -----------      -----------
            Operating loss........................      744,680        636,016       1,415,657        1,314,718

        Interest expense..........................       42,516         35,601          81,863           77,536
        Capital expenditures......................         --              995           3,476              898

        Total assets..............................    4,026,707      5,446,480       4,026,707        5,446,480

                         Total
        Revenues..................................  $ 1,740,743    $ 4,385,600     $ 3,710,199      $ 7,833,591
        Cost of natural gas purchased.............      761,678      3,321,047       1,786,696        5,890,161
        Operation and maintenance expense.........      186,850        204,969         374,405          385,287
                                                    -----------    -----------     -----------      -----------
            Operating margin......................      792,215        859,584       1,549,098        1,558,143
        General and administrative expense........      743,082        635,019       1,412,212        1,312,573
        Depreciation and amortization
            expense...............................      141,600        156,626         302,652          325,799
                                                    -----------    -----------     -----------      -----------
            Operating income (loss)...............      (92,467)        67,939        (165,766)         (80,229)

        Interest expense..........................       43,407         37,194          83,831           80,882
        Capital expenditures......................          408            995          25,817           20,003

        Total assets..............................   14,253,453     16,690,701      14,253,453       16,690,701

             Reconciliation to net income
        Operating margin..........................  $   792,215    $   859,584     $ 1,549,098      $ 1,558,143
        Less:
          Depreciation, depletion and
            amortization..........................      141,600        156,626         302,652          325,799
          General and administrative..............      743,082        635,019       1,412,212        1,312,573
          Interest expense........................       43,407         37,194          83,831           80,882
          Noncontrolling interest.................         --           11,896            --             28,824
          Income tax expense......................         --              395            --               --
        Plus:
          Interest income.........................       6,622           5,305          11,520           16,611
          Income tax benefit......................       2,914            --            79,096           63,922
          Discontinued operations, net of taxes...     (39,255)        154,015        (151,393)         191,675
          Gain on disposal of discontinued
            operations - net of taxes.............      324,997           --           324,997             --
          Other income (loss), net................       32,401         (3,649)         41,744            1,302
                                                    -----------    -----------     -----------      -----------
        Net income attributable to controlling
        interest..................................  $   191,805    $   174,125     $    56,367      $    83,575
                                                    ===========    ===========     ===========      ===========

                                                       16
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<PAGE>



Item  2. Management's Discussion and Analysis or Plan of Operations.
         -----------------------------------------------------------

         This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 that
relate to possible future events, our future performance, and our future
operations. In some cases, you can identify these forward-looking statements by
the use of words such as "may," "will," "should," "anticipates," "believes,"
"expects," "plans," "future," "intends," "could," "estimate," "predict,"
"potential," "continue," or the negative of these terms or other similar
expressions. These statements are only our predictions. Our actual results could
and likely will differ materially from these forward-looking statements for many
reasons, including the risks described in our Annual Report on Form 10-K for the
year ended December 31, 2008, and our quarterly reports on Form 10-QSB and Form
10-Q. We cannot guarantee future results, levels of activities, performance, or
achievements. We undertake no duty to update any of the forward-looking
statements after the date of this document to conform them to actual results or
to changes in our expectations.

Critical Accounting Policies

         A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements
follows.

Revenue Recognition Policy

         Revenues from the sales of natural gas are generated under purchase and
sales contracts that are priced at the beginning of the month based upon
established gas indices. The Company purchases and sells the gas using the same
index to minimize commodity price risk. Revenues from the sales of natural gas
are recognized at the redelivery point, which is the point at which title to the
natural gas transfers to the purchaser. Transportation revenues are generated
under contracts which have a stated fee per unit of production (Mcf, MMBtu, or
Bbl) gathered or transported. Onshore transportation revenues are recognized at
the redelivery point, which is the point at which another party takes physical
custody of the natural gas or liquid hydrocarbons. Offshore transportation
revenues are recognized at the Company's receipt point.

Property and Equipment

         Property and equipment is stated at cost, plus capitalized interest
costs on major pipeline projects during their construction period. Additions and
improvements that add to the productive capacity or extend the useful life of an
asset are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is provided using the straight-line method
over estimated useful lives ranging from six to 30 years for pipeline systems,
gas plant and processing equipment, and from two to ten years for office
furniture and other equipment. Upon disposition or retirement of pipeline
components or gas plant components, any gain or loss is charged or credited to
accumulated depreciation. When entire pipeline systems, gas plants or other
property and equipment are retired or sold, any resulting gain or loss is
credited to or charged against operations.

         Impairment losses are recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows are not sufficient to recover the assets' carrying value. The amount of
impairment is measured by comparing the fair value of the asset to its carrying
amount. There was no impairment required as of June 30, 2009.

Future Asset Retirement Obligation

         The Company provides for the future asset retirement obligations
related to the Shipwreck offshore platform because, eventually, law or
regulation will require its abandonment. The present value of the estimated
future asset retirement obligation, as of the date of acquisition, was
capitalized to gas gathering, processing and transportation equipment. The
present value of the estimated future asset retirement obligation, as of the
balance sheet date, is presented as a noncurrent liability. Until the platform
is ultimately sold or retired, the Company will recognize (i) depreciation
expense on the additional capitalized costs; (ii) accretion expense as the
present value of the future asset retirement obligation increases with the
passage of time, and; (iii) the impact, if any, of changes in estimates of the
liability.

                                       17

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<CAPTION>


Use of Estimates

         The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the 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. Management's significant estimates include depreciation of
long-lived assets, amortization of deferred loan costs, valuation of the
Shipwreck asset retirement obligation, deferred tax valuation allowance,
valuation of assumed liabilties, intangible lives, pipeline asset allocations,
and valuation of stock based transactions. Actual results could differ from
those estimates.

Results of Operations

General

         The Henry Hub closing index price for natural gas during the six months
ended June 30, 2009 averaged $4.21 per MMBtu, compared to $9.44 for the same
period of the prior year. In the accompanying consolidated financial statements,
the Company's revenues from sales of natural gas, along with the cost of natural
gas purchased, decreased proportionately from prior year levels. Because the
Company buys and sells gas under purchase and sales contracts that are priced at
the beginning of the month based upon established gas indices to minimize
commodity price risk, the Company's net operating margin is relatively
insensitive to fluctuations in the market price of gas. Accordingly, the Company
evaluates each of its activities based on the operating margin it produces. The
Company defines operating margin as revenues, less the cost of purchased gas and
operating and maintenance expenses. Management reviews and evaluates the
operations of two main segments--Onshore operations and Offshore operations.

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Total Operations
                                                              Three Months Ended June 30,
                                                       ------------------------------------------
                                                             2009                    2008
                                                       -----------------       ------------------
       <S>                                                <C>                     <C>
       Revenues..................................         $1,740,743              $4,385,600
       Operating margin..........................            792,215                 859,584
       Depreciation, depletion and amortization..            141,600                 156,626

         Operating margins for the three months ended June 30, 2009 decreased
$67,000 compared to the same period of the prior year. Onshore operating margin
decreased $219,000, offshore operating margin increased by $166,000 and the net
profits interest decreased by $14,350. These segments are discussed individually
below in greater detail.


Onshore Operations
                                                              Three Months Ended June 30,
                                                       ------------------------------------------
                                                             2009                    2008
                                                       -----------------       ------------------
        Revenues.................................           $993,002              $3,775,130
        Operating margin.........................            177,318                 396,378
        Depreciation and amortization............             24,197                  49,115

         Operating margins for onshore operations decreased in the second
quarter by $219,000 compared to the same period of the prior year. The decrease
was mainly due to a decrease in sales volumes on the Company's Waxahachie
distribution system, as well as a reduction in transportation volumes on the
Madisonville pipeline. As of the end of second quarter, transportation volumes
on the Madisonville pipeline have been steadily increasing since the producer
initiated work in the Madisonville field.

Offshore Operations
                                                              Three Months Ended June 30,
                                                       -------------------------------------------
                                                             2009                     2008
                                                       -----------------       -------------------
        Revenues..................................         $762,091                $610,470
        Operating margin..........................          629,247                 463,206
        Depreciation and amortization.............          105,648                 106,333

                                             18
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<PAGE>
<TABLE>
<CAPTION>


         Operating margins for offshore operations increased in the second
quarter by $166,000 compared to the same period of the prior year. The increase
was due to increased throughput on the Company's East Cameron 359 pipeline as a
new well was brought online during the first quarter, offset by reduced
throughput volumes on the Pirates' Beach system and other systems.

Net Profits Interest
                                                              Three Months Ended June 30,
                                                       -------------------------------------------
                                                             2009                     2008
                                                       -----------------       -------------------
       <S>                                                 <C>                       <C>
        Revenues (loss)...........................         $(14,350)                 $    --
        Operating margin (loss)...................          (14,350)                      --
        Depletion.................................           10,157                       --

         The Net Profits Interest operating margin for the three months ended
June 30, 2009 was $(14,350). The negative operating margin was due to a reversal
of revenue recognized during the fourth quarter of 2008. The Company purchased
this Net Profits Interest in the Madisonville Field on December 22, 2008. As the
production in the Madisonville Field continues to increase, the Company will
recognize an increased margin from this interest.

Operations Support and Other Income (Expense)

         General and administrative expenses for the second quarter increased by
$108,000 compared to the same period in 2008. This increase relates to higher
outside legal expenses and higher insurance costs. We expect insurance costs
will significantly decrease over the next few quarters due to the sale of the
Shipwreck and Crystal Beach assets.

         Interest income fluctuates directly with the average amount of cash on deposit.

         Interest expense fluctuates directly with the amount of outstanding
long-term debt and the amount of borrowings under the Company's bank revolving
credit agreement. Interest expense for the quarter ended June 30, 2009 increased
$6,000 compared to the same period in 2008 primarily because of the outstanding
balance on the Company's revolving credit facility.

         Income tax expense for the second quarter 2009 related to the estimated
state and federal tax provisions.


Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

Total Operations
                                                               Six Months Ended June 30,
                                                       ------------------------------------------
                                                             2009                    2008
                                                       -----------------       ------------------
       Revenues..................................         $3,710,199              $7,833,591
       Operating margin..........................          1,549,098               1,558,143
       Depreciation and amortization.............            302,652                 325,799

         Operating margins for the six months ended June 30, 2009 decreased
$9,000 compared to the same period of the prior year. Onshore operating margin
decreased $332,000, offshore operating margin increased by $324,000 and the net
profits interest operating margin decreased by $809. These segments are
discussed individually below in greater detail.


Onshore Operations
                                                               Six Months Ended June 30,
                                                       ------------------------------------------
                                                             2009                    2008
                                                       -----------------       ------------------
        Revenues.................................         $2,210,042              $6,663,554
        Operating margin.........................            312,125                 644,341
        Depreciation and amortization............             72,000                  98,102

         Operating margins for onshore operations decreased for the six months
ended June 30, 2009 by $332,000 compared to the same period of the prior year.
The decrease was mainly due to a decrease in sales volumes on the Company's
Waxahachie distribution system as well as a reduction in transportation volumes

                                       19

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<PAGE>
<TABLE>
<CAPTION>


on the Madisonville pipeline. As of the beginning of third quarter,
transportation volumes on the Madisonville pipeline have been steadily
increasing since the producer initiated work in the Madisonville field.

Offshore Operations
                                                               Six Months Ended June 30,
                                                       -------------------------------------------
                                                             2009                     2008
                                                       -----------------       -------------------
        <S>                                              <C>                     <C>
        Revenues..................................       $1,500,966              $1,170,037
        Operating margin..........................        1,237,782                 913,802
        Depreciation and amortization.............          211,295                 225,321

         Operating margins for offshore operations increased by $324,000 for the
six months ended June 30, 2009 compared to the same period of the prior year.
The increase was due to increased throughput on the Company's East Cameron 359
pipeline as a new well was brought online during the first quarter of 2009,
offset by reduced throughput volumes on the Pirates' Beach system and other
systems.

Net Profits Interest
                                                               Six Months Ended June 30,
                                                       -------------------------------------------
                                                             2009                     2008
                                                       -----------------       -------------------
        Revenues (loss)...........................            $(809)             $     --
        Operating margin (loss)...................             (809)                   --
        Depletion.................................           15,912                    --

         The Net Profits Interest operating margin for the six months ended June
30, 2009 was $(809). The negative operating margin was due to a reversal of
revenue recognized during the fourth quarter of 2008. The Company purchased this
Net Profits Interest in the Madisonville Field on December 22, 2008. As the
production in the Madisonville Field continues to increase, the Company will
recognize an increased margin from this interest.

Operations Support and Other Income (Expense)

         General and administrative expenses for the six months ended June 30,
2009 increased by $100,000 compared to the same period in 2008. This increase
relates to higher legal expenses, insurance costs associated with the Shipwreck
platform, and consulting fees. We expect insurance costs will significantly
decrease over the next few quarters due to the sale of the Shipwreck and Crystal
Beach assets.

         Interest income fluctuates directly with the average amount of cash on
deposit.

         Interest expense fluctuates directly with the amount of outstanding
long-term debt and the amount of borrowings under the Company's bank revolving
credit agreement. Interest expense for the six months ended June 30, 2009
increased $3,000 compared to the same period in 2008 primarily because of the
outstanding balance on the Company's revolving credit facility.

         Income tax benefit (expense) for the six months ended June 30, 2009
related to the estimated state and federal tax provision.

Liquidity and Capital Resources

         Going forward, the Company's strategy is to maximize the potential of
currently-owned properties, to construct new pipeline systems, and to acquire
properties that meet its economic performance hurdles. The Company is actively
seeking additional outside capital to allow it to accelerate the implementation
of its growth strategy, and such new capital may take several forms. There is no
guarantee that the Company will be able to raise outside capital. Without a
significant infusion of new capital, the Company believes it can finance the
construction of new facilities and generate new cash flows to the Company, but
only at a pace that can be supported by cash flows and existing financing
agreements.

         The Company had available cash of $1,649,519 at June 30, 2009.

         Net cash provided by continuing operating activities totaled
approximately $86,000 for the six months ended June 30, 2009, compared to
$152,000 during the same period of the previous year.

                                       20

</TABLE>

<PAGE>


         Absent significant acquisitions or development projects, the Company
will continue to fund its operations through internally-generated funds and
available cash and bank borrowings as needed. The Company believes its cash
flows from such sources will be sufficient to fund its ongoing operations for
the foreseeable future.

         In January 2009, the Company executed a premium finance agreement for
its insurance premiums. The total of the note was $328,938 with an interest rate
of 6.40%. The note requires monthly principal and interest payments. The amount
of the monthly payment varies depending on any changes in coverage and policy
renewal period changes.

         On August 23, 2007, the Company entered into a Credit Agreement (the
"Agreement") with a bank (the "Lender"), regarding a revolving credit facility
provided by Lender to the Company. The original borrowing base under the
Agreement had been established at $2.5 million, which may be increased at the
discretion of the Lender to an amount not to exceed $20 million. The credit
facility is secured by a portion of the Company's assets and has a term of two
years maturing in August 2009. Interest on outstanding balances will accrue at
Lender's prime rate, plus one percent, with a minimum rate of 5.00%. In
connection with the acquisition of the minority interest in the Madisonville
pipeline as well as the net profits interest in the Madisonville Field assets,
the Company borrowed $1,362,000 on the credit facility. As of June 30, 2009, the
balance was $962,000, the interest rate was 5% and the available borrowings were
$638,000. Due to the maturing of the Agreement in August 2009, the Company is
currently in negotiations with the Lender to renew the Agreement; however, there
is no guarantee that the Lender will renew the Agreement. In the event the
Company is unable to renew the agreement, it has adequate available cash to
repay all outstanding balances.

         The Company completed the sale of the Crystal Beach Terminal and
Shipwreck and Pirates' Beach Gathering Systems effective June 30, 2009 (see Note
4). As these sales involved collateral under the Company's credit agreement, the
credit agreement was amended to reduce the borrowing base to $1.6 million. The
Company is currently considering pledging additional available assets as
collateral to restore the borrowing base to its prior level of $2.5 million or
greater.

         At June 30, 2009, the Company had outstanding letters of credit for gas
purchases totaling $900,000.

         Natural gas prices as represented by the NYMEX Henry Hub index averaged
$4.21 per MMBtu and $9.44 per MMBtu for the six months ended June 30, 2009 and
2008, respectively. The Company's operating margin is not significantly affected
by the price of natural gas since gas gathering and transportation are generally
based on fee arrangements and sales of natural gas are made under back-to-back
purchase and sales arrangements. However, natural gas prices can affect
exploration and development which can result in higher or lower volumes
available for gathering and transportation.

Off-Balance Sheet Arrangements

         The Company has no off-balance sheet arrangements at June 30, 2009;
however, see Note 8 to the consolidated financial statements regarding
Commitments and Contingencies.


Item 4T.  Controls and Procedures
          -----------------------

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act is accumulated and communicated to management, including the Company's
President and Chief Executive Officer and the Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.

         An evaluation of the Company's disclosure controls and procedures (as
defined in Section 13(a)-15(e) and 15d-15(e)) of the Securities Exchange Act of
1934 was carried out under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial Officer as of the end of
the period covered by this quarterly report. The Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures as currently in effect are effective in ensuring that
the information required to be disclosed by the Company in the reports it files

                                       21

<PAGE>


or submits under the Act is (1) accumulated and communicated to the Company's
management in a timely manner, and (2) recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.

         There were no changes in the Company's internal controls over financial
reporting that occurred during the quarter ended June 30, 2009 that have
materially affected, or are reasonably likely to materially affect, the internal
control over financial reporting.

                                       22

<PAGE>


                           Part II - OTHER INFORMATION
                           ---------------------------

Item 1.           Legal Proceedings
                  -----------------

                  None

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds
                  -----------------------------------------------------------

                  During the second quarter of 2009, the Company issued 189,876
                  shares of restricted common stock to the Company's Board of
                  Directors for their services as members of the Board.


Item 3.           Defaults Upon Senior Securities
                  -------------------------------

                  None

Item 4.           Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------

         At the Annual Meeting of Stockholders held on May 20, 2009, the seven
nominees named below received the following votes with respect to the election
of the Board of Directors.

                         Name                      Votes For      Votes Withheld
                    ------------------------------------------------------------
                    Charles O. Buckner            11,131,200           3,729,984
                    Steven W. Cattron             10,547,706           4,313,478
                    William A. Henry              11,131,211           3,729,973
                    Robert Panico                  9,758,203           5,102,981
                    John A. Raasch                14,597,372             263,812
                    J. Darby Sere                 11,020,591           3,840,593
                    Gordon L. Wright              11,108,823           3,752,361


Item 5.           Other Information
                  -----------------

                  None

Item 6.           Exhibits
                  --------

                  31.1     Section 302 Certification of Chief Executive Officer
                  31.2     Section 302 Certification of Chief Financial Officer
                  32.1     Section 906 Certification of Chief Executive Officer
                  32.2     Section 906 Certification of Chief Financial Officer

                                       23

<PAGE>


                                   SIGNATURES

In accordance with to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                            GATEWAY ENERGY CORPORATION

                                            /s/  Robert Panico
                                            -----------------------------------
                                                 Robert Panico
                                                 President and
                                                 Chief Executive Officer

                                            /s/  Christopher M. Rasmussen
                                            -----------------------------------
                                                 Christopher M. Rasmussen
                                                 Chief Financial Officer

       August 13, 2009
------------------------------
(Date)


                                       24