U. S. 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 March 31, 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)


Indicare 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       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 May 1,  2009,  the  Issuer  had  19,207,249  shares  of its  common  stock
outstanding.

<PAGE>



                                    FORM 10-Q

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


Item  1.         Financial Statements

                                                                            Page
                                                                            ----

                 Consolidated Balance Sheet (Unaudited)
                     as of March 31, 2009                                      3

                 Consolidated Statements of Operations (Unaudited)
                     for the three month period ended March 31, 2009
                     and March 31, 2008                                        4

                 Consolidated Statements of Cash Flows (Unaudited) for the
                     three month period ended March 31, 2009
                     and March 31, 2008                                        5

                 Notes to Consolidated Financial Statements (Unaudited)        6


Item  2.         Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                      16

Item  4T.        Controls and Procedures                                      19


                           Part II - Other Information
                           ---------------------------


Item  1.          Legal Procedings                                            20

Item  2.          Unregistered Sales of Equity Securities and Use
                     of Proceeds                                              20

Item  3.          Defaults Upon Senior Securities                             20

Item  4.          Submission of Matters to a Vote of Security Holders         20

Item  5.          Other Information                                           20

Item  6.          Exhibits                                                    20

                                       2

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)


                                                                           March 31,     December 31,
                                                                             2009            2008
                                                                         ------------    ------------
ASSETS
<S>                                                                      <C>             <C>
Current Assets
   Cash and cash equivalents .........................................   $  3,203,723    $  1,789,029
   Accounts receivable trade, net ....................................      1,104,307         969,859
   Insurance receivable ..............................................           --         1,750,000
   Prepaid expenses and other assets .................................        545,273         176,565
                                                                         ------------    ------------
        Total current assets .........................................      4,853,303       4,685,453
                                                                         ------------    ------------

Property and Equipment, at cost
   Gas gathering, processing and transportation ......................     12,805,542      12,796,424
   Net profits production interest ...................................        779,424         763,909
   Office furniture and other equipment ..............................        147,129         143,654
                                                                         ------------    ------------
                                                                           13,732,095      13,703,987
   Less accumulated depreciation, depletion and amortization .........     (4,030,122)     (3,805,733)
                                                                         ------------    ------------
                                                                            9,701,973       9,898,254
                                                                         ------------    ------------

Other Assets
   Deferred tax assets, net ..........................................      1,273,384       1,205,000
   Intangible assets, net of accumulated amortization of $261,283 and
     $222,082 as of March 31, 2009 and December 31, 2008, respectively        726,136         765,337
   Other .............................................................        114,320         136,657
                                                                         ------------    ------------
                                                                            2,113,840       2,106,994
                                                                         ------------    ------------
        Total assets .................................................   $ 16,669,116    $ 16,690,701
                                                                         ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable ..................................................   $    500,212    $    776,519
   Accrued expenses and other liabilities ............................        333,748         323,100
   Insurance notes payable ...........................................        326,538            --
   Current maturities of long-term debt ..............................      1,062,000       1,062,000
   Current maturities of capital lease ...............................         21,023          20,235
                                                                         ------------    ------------
        Total current liabilities ....................................      2,243,521       2,181,854
                                                                         ------------    ------------

Future asset retirement obligations ..................................      2,353,090       2,318,315
Long-term capital lease, less current maturities .....................          3,625           9,187
                                                                         ------------    ------------
        Total liabilities ............................................      4,600,236       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;
      19,207,249 shares issued and outstanding  at March 31, 2009 and
      December 31, 2008, respectively ................................      4,801,812       4,801,812
   Additional paid-in capital ........................................     17,307,458      17,284,485
   Accumulated deficit ...............................................    (10,040,390)     (9,904,952)
                                                                         ------------    ------------
        Total stockholders' equity ...................................     12,068,880      12,181,345
                                                                         ------------    ------------
        Total liabilities and stockholders' equity ...................   $ 16,669,116    $ 16,690,701
                                                                         ============    ============


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

                                                   3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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


                                                                                   Three Months Ended March 31,
                                                                                   ----------------------------
                                                                                       2009            2008
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
Operating revenues
    Sales of natural gas .......................................................   $  1,153,910    $  2,773,081
    Transportation of natural gas and liquids ..................................        732,139         780,162
    Net profits income .........................................................         13,541            --
    Treating and other .........................................................        126,856         148,323
                                                                                   ------------    ------------
                                                                                      2,026,446       3,701,566
                                                                                   ------------    ------------
Operating costs and expenses
    Cost of natural gas purchased ..............................................      1,025,018       2,569,114
    Operation and maintenance ..................................................        219,370         261,015
    General and administrative .................................................        669,130         677,554
    Depreciation, depletion and amortization ...................................        263,590         186,497
    Accretion expense ..........................................................         34,775           7,574
                                                                                   ------------    ------------
Operating loss .................................................................       (185,437)           (188)

Other income (expense)
    Interest income ............................................................          4,898          11,305
    Interest expense ...........................................................        (40,424)        (43,687)
    Other income, net ..........................................................          9,343           4,951
                                                                                   ------------    ------------
                                                                                        (26,183)        (27,431)

Loss from operations before income taxes
                                                                                       (211,620)        (27,619)

Provision for income taxes
    Current income tax benefit (expense) .......................................          7,798         (46,000)
    Deferred income tax benefit (expense) ......................................         68,384            --
                                                                                   ------------    ------------
                                                                                         76,182         (46,000)
                                                                                   ------------    ------------

Net loss.......................................................................)       (135,438)        (73,619)
Net loss attributable to noncontrolling interest...............................)           --           (16,930)
                                                                                   ------------    ------------
Net loss attributable to controlling interest..................................)   $   (135,438)   $    (90,549)
                                                                                   ============    ============

Basic and diluted loss per share...............................................)   $      (0.01)   $       --
                                                                                   ============    ============

Weighted average number of common shares outstanding:
    Basic ......................................................................     19,207,249      19,026,665
    Diluted ....................................................................     19,207,249      19,026,665


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

                                                        4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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


                                                                           Three Months Ended March 31,
                                                                           ----------------------------
                                                                               2009           2008
                                                                           -----------    -----------
<S>                                                                        <C>            <C>
Cash flows from operating activities
   Loss from operations ................................................   $  (135,438)   $   (73,619)
   Adjustments to reconcile loss from operations to net cash provided by
      operating activities:
      Depreciation, depletion and amortization .........................       263,590        186,497
      Deferred tax benefit .............................................       (68,384)          --
      Stock based compensation expense .................................        22,973         16,337
      Accretion expense ................................................        34,775          7,574
      Amortization of deferred loan costs ..............................        32,890         34,049
      Change in operating assets and liabilities:
         Accounts receivable trade .....................................      (134,448)      (619,568)
         Insurance proceeds ............................................     1,750,000           --
         Prepaid expenses and other assets .............................       (32,184)        65,450
         Accounts payable ..............................................      (276,309)       921,434
         Accrued expenses and other liabilities ........................        10,648          9,260
                                                                           -----------    -----------
              Net cash provided by operating activities ................     1,468,115        547,414
                                                                           -----------    -----------

Cash flows from investing activities
      Capital expenditures .............................................       (28,109)        (3,353)
      Other ............................................................          --              476
                                                                           -----------    -----------
              Net cash used in investing activities ....................       (28,109)        (2,877)
                                                                           -----------    -----------

Cash flows from financing activities
      Payments on borrowings ...........................................        (7,174)       (77,410)
      Deferred finance charges .........................................       (18,139)          --
      Distributions to minority partner ................................          --          (27,674)
                                                                           -----------    -----------
              Net cash used in financing activities ....................       (25,313)      (105,084)
                                                                           -----------    -----------

Net increase in cash and cash equivalents ..............................     1,414,694        439,453

Cash and cash equivalents at beginning of period .......................     1,789,029      1,807,224
                                                                           -----------    -----------
Cash and cash equivalents at end of period .............................   $ 3,203,723    $ 2,246,677
                                                                           ===========    ===========

Supplemental disclosures of cash flow information:
      Cash paid for interest ...........................................   $    17,416    $    15,456
                                                                           ===========    ===========

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
</TABLE>

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
March 31, 2009
(Unaudited)


(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 minority
interest. All significant intercompany transactions have been eliminated in
consolidation.

         Effective May 31, 2007, the Company disposed of 100% of its ownership
interests in Fort Cobb Fuel Authority, LLC. The financial statements reflect the
historical results of its operations as discontinued operations (see Note 12).

         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 three months ended March 31, 2009, property and
equipment included $80,556 of equipment financed under a capital lease, net of

                                       6

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


$19,444 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 months ended March 31, 2009 and 2008, depreciation,
depletion and amortization expense was $263,590 and $186,497, respectively.
Property, plant and equipment and 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 three months ended March 31, 2009.

         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 three
months ended March 31, 2009 and 2008:

                                         Three Months Ended March 31,
                                        ------------------------------
                                            2009              2008
                                        ------------     -------------

                 Beginning balance      $  2,318,315     $     394,640
                 Accretion                    34,775             7,574
                                        ------------     -------------
                 Ending balance         $  2,353,090     $     402,214
                                        ------------     -------------

Refer to Note 6 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 were there any indication that
intangible assets were impaired during the three months ended March 31, 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.

                                       7

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


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
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. The Company is still in the process of
reviewing the facility for estimated costs of repairs due to the damage.

         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.

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. Earnings
per common share were computed as follows:

                                                                Three Months Ended
                                                                     March 31,
                                                          ------------------------------
                                                              2009              2008
                                                          ------------      ------------
       <S>                                                <C>                <C>
       Weighted average number of common shares
           outstanding...............................       19,207,249        19,026,665
       Effect of dilutive securities.................             --                --
                                                          ------------      ------------
       Weighted average dilutive common shares
           outstanding...............................       19,207,249        19,026,665
                                                          ============      ============

       Net loss......................................     $   (135,438)     $    (90,549)
                                                          ============      ============

       Basic and diluted loss per common share:......     $      (0.01)     $       --
                                                          ============      ============


Accounting Pronouncements and Recent Regulatory Developments

         In September 2006, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"). SFAS No. 157
defines fair value, establishes a framework for measuring fair value and

                                       8
</TABLE>

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


requires enhanced disclosures about fair value measurements. SFAS No. 157
requires companies to disclose the fair value of their financial instruments
according to a fair value hierarchy, as defined, and companies may be required
to provide additional disclosures based on that hierarchy. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. On February 12,
2008, the FASB approved the Financial Staff Position ("FSP") SFAS No. 157-2,
"Effective Date of FASB Statement No. 157" ("FAS No. 157-2"), which delays the
effective date of SFAS No. 157 to fiscal years beginning after November 15,
2008, and interim periods within those fiscal years for non-financial assets and
non-financial liabilities, except for those items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually). On October 1, 2008 the FASB issued FSP 157-3, "Determining the
Fair Value of a Financial Asset When the Market for That Asset is Not Active".
Its purpose is to illustrate key considerations in determining the fair value of
a financial asset when the market for that financial asset is not active. 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.

         In December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interest
in Consolidated Financial Statements--an amendment of ARB No. 51" ("SFAS No.
160"). SFAS No. 160 establishes accounting and reporting standards for
noncontrolling interests, formerly known as minority interests, in a subsidiary
and for the deconsolidation of a subsidiary. It requires that noncontrolling
interests be reported as equity in the consolidated balance sheet and requires
that net income attributable to controlling interest and to noncontrolling
interests be shown separately on the face of the statement of operations. SFAS
160 is effective for fiscal years beginning after December 15, 2008, and we have
adopted SFAS No. 160 as of January 1, 2009. As a result of our adoption, we
modified our consolidated statement of operations to separately present net loss
attributable to controlling interest of $(90,549) for the three months ended
March 31, 2008 and net income attributable to noncontrolling interests of
$16,930 for the three months ended March 31, 2008. For the three months ended
March 31, 2009, there were no noncontrolling interests.

         In December 2007, the FASB issued SFAS No. 141 (Revised 2007),
"Business Combinations" (SFAS No. 141R). SFAS No. 141R establishes principles
and requirements for how an acquirer in a business combination recognizes and
measures in its financial statements the identifiable assets acquired,
liabilities assumed, and any noncontrolling interests in the acquiree, as well
as the goodwill acquired. Significant changes from current practice resulting
from SFAS No. 141R include the expansion of the definitions of a "business" and
a "business combination." For all business combinations (whether partial, full
or step acquisitions), the acquirer will record 100% of all assets and
liabilities of the acquired business, including goodwill, generally at their
fair values; contingent consideration will be recognized at its fair value on
the acquisition date and, for certain arrangements, changes in fair value will
be recognized in earnings until settlement; and acquisition-related transaction
and restructuring costs will be expensed rather than treated as part of the cost
of the acquisition. SFAS No. 141R also establishes disclosure requirements to
enable users to evaluate the nature and financial effects of the business
combination. SFAS No. 141R applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The adoption of SFAS
No. 141R did not materially impact the financial statements.

         The SEC has published a final rule effective September 2, 2008,
Internal Control over Financial Reporting in Exchange Act Periodic Reports of
Non-Accelerated Filers. This rule provides a one-year extension of the
compliance date for non-accelerated filers (as defined) to meet the Section
404(b) auditor attestation requirement of the Sarbanes-Oxley Act of 2002 (SOX).
Non-accelerated filers will now be required to provide the attestation reports
in their annual reports for fiscal years ending on or after December 15, 2009.
The Company is defined as a non-accelerated filer and as such will be in
compliance with this ruling by the required date.

                                       9

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


         The FASB has 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 Impairment"s. 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 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 is 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 and 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.

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

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


(3)      Business Combinations

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 ended March 31, 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 March 31, 2008

                                                                     CEU TX
                                        GEC            ADAC          NPI,LLC          TOTAL
----------------------------------------------------------------------------------------------
<S>                                <C>             <C>             <C>             <C>
Revenues.........................  $ 3,701,566     $      --       $   142,382     $ 3,843,948
Operating costs and other
(income) expenses................    3,746,115          16,930          22,458       3,751,643
                                   -----------     -----------     -----------     -----------
Income from continuing
operations before taxes..........      (44,549)         16,930         119,924          92,305

Income tax expense...............     (46,000)          (5,756)        (40,774)        (92,530)
                                   -----------     -----------     -----------     -----------
Net loss.........................  $  (90,549)     $    11,174     $    79,150     $      (225)
                                   ===========     ===========     ===========     ===========
Basic and diluted earnings per
share............................  $     --        $      --       $      --       $      --
                                   ===========     ===========     ===========     ===========


(4)      Stock-Based Compensation Plans

         Our 2007 Equity Incentive Plan provides for stock-based compensation
for officers, employees and non-employee directors.

         Effective January 1, 2006, the Company adopted the provisions of SFAS
No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R") utilizing the
modified prospective approach. 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 three months ended
March 31, 2009 and 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.

                                       11
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


         As a result of SFAS No. 123R, compensation cost related to
non-qualified stock options recognized for the three months ended March 31, 2009
and 2008 was $22,973 and $16,337, respectively. We view all awards of
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 on a straight-line basis over the life of the award.

         We receive 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 on the date of exercise. During the three months ended March 31, 2009,
there were no options exercised. In addition, we receive 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. We record this deduction as
a tax asset with a corresponding amount recorded as additional paid-in capital
when we 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, 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 March 31, 2009, there was $114,425 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 three months ended March 31, 2009:

                                                                                      Weighted           Intrinsic
                                                                   Weighted            Average           Value of
                                                                    Average          Contractual       Options as of
                                                                   Exercise           Terms (in          March 31,
                                                 Shares              Price             years)              2008
                                             ----------------    --------------     --------------    ----------------
<S>                                              <C>                   <C>                <C>          <C>
Options outstanding, beginning of period..       1,038,947             $0.53              3.43
Options granted...........................          25,000              0.44              4.84
Options canceled..........................         (57,500)             0.70                --
Options exercised.........................              --                --                --
                                                 ---------
Options outstanding, end of period........       1,006,447             $0.51              3.23          $  18,400
                                                 =========                                              =========
Options exercisable, end of period........         521,667             $0.40              2.81          $  15,400
                                                 =========                                              =========

         The market value of the Company's common stock on March 31, 2009 was $0.39 per share.


(5)      Debt

Trade Notes Payable

         During 2008, the Company executed premium finance agreements for its
insurance premiums. The total of the notes was $408,703 with an interest rate of
7.10%. The notes required monthly principal and interest payments. The amount of
the monthly payment varies depending on any changes in coverage and policy
renewal period changes. These notes were paid in full during December 2008.

                                       12
</TABLE>

<PAGE>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


         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.

Long-term Debt

         Long-term debt at March 31, 2009 consisted of the following:

                  Trade note payable - Insurance......  $   326,538
                  Revolving credit facility...........    1,062,000
                                                        -----------
                                                          1,388,538
                  Less current maturities.............   (1,388,538)
                                                        -----------
                                                        $      --
                                                        ===========
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 has 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 March 31, 2009,
the balance was $1,062,000, the interest rate was 5% and the available
borrowings were $1,438,000. 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.

Letters of Credit

         At March 31, 2009, the Company had outstanding letters of credit for
gas purchases totaling $900,000.

(6)      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.

         Based on the current market value of the asset along with the recent
interest and inflation rate activity, the Company has 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.

(7)      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.

                                       13

<PAGE>
<TABLE>
<CAPTION>
GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


(8)      Financial Instruments

         The carrying amount of cash and cash equivalents, 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.

(9)      Segments, Major Customers and Concentrations

         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 three main segments--Onshore
Operations, Offshore Operations, and Net Profits Interest. 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 and transportation activities in the Gulf of
Mexico in Texas and Louisiana as well as federal waters. Net Profits Interest
include the 9.1% net profits interest in the Madisonville Field. 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, depletion and amortization
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 periods indicated of the
Company's reportable segments from continuing operations is as follows:

                                                                            Three Months Ended March 31,
                                                                          ---------------------------------
                                                                               2009                 2008
                                                                          -------------       -------------
                               Onshore Operations
        <S>                                                               <C>                 <C>
        Revenues......................................................    $   1,217,040       $   2,888,422
        Cost of natural gas purchased.................................        1,025,018           2,569,114
        Operation and maintenance expense.............................           57,215              71,346
                                                                          -------------       -------------
             Operating margin.........................................          134,807             247,962
        Depreciation and amortization expense.........................           47,803              48,986
                                                                          -------------       -------------
             Operating income.........................................           87,004             198,976
                                                                          -------------       -------------

        Interest expense..............................................            1,077               1,753
        Capital expenditures..........................................            6,420                --

        Total assets..................................................    $   4,181,463       $   5,160,118

                              Offshore Operations
        Revenues......................................................    $     795,865       $     813,144
        Operation and maintenance expense.............................          162,155             189,669
                                                                          -------------       -------------
            Operating margin..........................................          633,710             623,475
        Depreciation and amortization expense.........................          208,185             136,314
        Accretion expense.............................................           34,775               7,574
                                                                          -------------       -------------
             Operating income.........................................          390,750             479,587
                                                                          -------------       -------------
        Interest expense..............................................             --                  --
        Capital expenditures..........................................            2,700               2,454

        Total assets..................................................    $   7,629,356       $   6,472,120

                                                     14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


                              Net Profits Interest
        <S>                                                               <C>                 <C>
        Revenues......................................................    $      13,541       $        --
                                                                          -------------       -------------
            Operating margin..........................................           13,541                --
        Depletion expense.............................................            5,755                --
                                                                          -------------       -------------
             Operating income.........................................            7,786                --
                                                                          -------------       -------------

        Interest expense..............................................             --                  --
        Capital expenditures..........................................           15,513                --

        Total assets..................................................    $     791,427       $        --

                              Corporate Operations

        General and administrative expenses...........................    $     669,130       $     677,554
        Depreciation and amortization expense.........................            1,847               1,197
                                                                          -------------       -------------
            Operating loss............................................         (670,977)           (678,751)

        Interest expense..............................................           39,347              41,934
        Capital expenditures..........................................            3,476                 899

        Total assets..................................................    $   4,066,870       $   4,091,214

                                     Total
        Revenues......................................................    $   2,026,446       $   3,701,566
        Cost of natural gas purchased.................................        1,025,018           2,569,114
        Operation and maintenance expense.............................          219,370             261,015
                                                                          -------------       -------------
             Operating margin.........................................          782,058             871,437
        General and administrative expenses...........................          669,130             677,554
        Depreciation, depletion and amortization expense..............          263,590             186,497
        Accretion expense.............................................           34,775               7,574
                                                                          -------------       -------------
            Operating loss............................................         (185,437)               (188)

        Interest expense..............................................           40,424              43,687
        Capital expenditures..........................................           28,109               3,353

        Total assets..................................................    $  16,669,116       $  15,723,452


                           Reconciliation to Net Loss
        Operating margin..............................................    $     782,058       $     871,437
        Less:
        Depreciation, depletion and amortization......................          263,590             186,497
        Accretion and changes in estimates............................           34,775               7,574
        General and administrative....................................          669,130             677,554
        Interest expense..............................................           40,424              43,687
        Income tax expense............................................             --                46,000

                                                     15
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


GATEWAY ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
March 31, 2009
(Unaudited)


        Plus:
        <S>                                                               <C>                <C>
        Interest income...............................................            4,898              11,305
        Income tax benefit............................................           76,182                --
        Other income (expense) - net..................................            9,343               4,951
                                                                          -------------       -------------
        Net loss......................................................         (135,438)            (73,619)
        Net loss attributable to noncontrolling interest..............             --               (16,930)
                                                                          -------------       -------------
        Net loss attributable to controlling interest.................    $    (135,438)      $     (90,549)
                                                                          =============       =============

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 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 and 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 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.

         Property, plant and equipment and identifiable intangible assets are
reviewed for impairment, in accordance with Financial Accounting Standards Board
("FASB") Statement 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 recorded during the three months ended March
31, 2009.

                                       16
</TABLE>

<PAGE>


Asset Retirement Obligation

         The Company provides for the future 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.

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.


Results of Operations

General

         The Henry Hub closing index price for natural gas during the three
months ended March 31, 2009 averaged $4.91 per MMBtu, compared to $8.03 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, increased 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 three main segments--Onshore operations, Offshore operations and
Net Profits Interest.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Total Operations
                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                         2009            2008
                                                     ----------      ----------
       Revenues..................................    $2,026,446      $3,701,566
       Operating margin..........................       782,058         871,437
       Depreciation, depletion and amortization..       263,590         186,497

         Operating margins for the three months ended March 31, 2009 decreased
$89,000 compared to the same period of the prior year. Onshore operating margin
decreased $113,000, Offshore operating margin increased by $10,000 and the Net
Profits Interest operating margin increased by $14,000. These segments are
discussed individually below in greater detail.

Onshore Operations
                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2009            2008
                                                     ----------      ----------
        Revenues.................................    $1,217,040      $2,888,422
        Operating margin.........................       134,807         247,962
        Depreciation and amortization............        47,803          48,986

         Operating margins for onshore operations decreased in the first quarter
by $113,000 from the same period of the prior year. The decrease was due to a
reduction in sales volumes on the Company's Waxahachie distribution system as
well as reduced throughput on the Madisonville pipeline system. The Company
expects the sales volumes on the Waxahachie distribution system to increase in

                                       17

<PAGE>

the upcoming quarters and the throughput volumes on the Madisonville pipeline
system to increase during the second quarter as the producer has announced that
they are installing a compressor to lower the pressure in the field which will
increase the produced volume. They also have plans to workover one well and
complete another and connect it to the treaitng plant.

Offshore Operations
                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2009            2008
                                                     ----------      ----------
        Revenues..................................   $  795,865      $  813,144
        Operating margin..........................      633,710         623,475
        Depreciation and amortization.............      208,185         136,314

         Operating margins for offshore operations increased in the first
quarter by $10,000 from 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 as well as other systems due to downtime
from hurricanes Gustav and Ike. The Company believes that volumes that are down
due to the hurricanes will come back online, however, the timeframe is unknown.
Depreciation and amortization expense increased by $72,000 due to the change in
estimate on the asset retirement obligation for the Shipwreck platform.

Net Profits Interest
                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2009            2008
                                                     ----------      ----------
        Revenues..................................   $   13,541      $     --
        Operating margin..........................       13,541            --
        Depletion.................................        5,755            --

         The Net Profits Interest operating margin for the three months ended
March 31, 2009 was $13,541. 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 first quarter decreased by
$8,000 compared to the same period in 2008. This decrease relates to a reduction
in bonuses paid in 2008 as well as reduced public relations expenses offset by
higher consulting fees.

         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 March 31, 2009 decreased $3,000
compared to the same period in 2008 primarily because of the lower interest rate
on the outstanding balance on the Company's revolving credit facility.

         Income taxes for the first quarter 2009 consisted of $7,798 in current
income tax benefit and $68,384 in deferred income tax benefit. Income tax
expense for the first quarter 2008 related to the estimated alternative minimum
tax for the calendar year 2007.

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 we will be able to raise outside capital or be able to sell
assets on terms favorable to the Company. Without a significant infusion of new
capital, we believe we 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 our existing financing agreements.

         The Company had available cash of $3,203,723 at March 31, 2009.

                                       18

<PAGE>


         Net cash provided by continuing operating activities totaled
approximately $1,468,000 for the three months ended March 31, 2009, compared to
$547,000 during the same period of the previous year.

         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 has 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 March 31, 2009,
the balance was $1,062,000, the interest rate was 5% and the available
borrowings were $1,438,000. 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 we are unable to renew the agreement, we have adequate available cash to
repay all outstanding balances.

         At March 31, 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
$4.91 and $8.03 for the three months ended March 31, 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 March 31, 2009;
however, see Note 7 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
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 March 31, 2009 that have
materially affected, or are reasonably likely to materially affect, the internal
control over financial reporting.

                                       19

<PAGE>


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

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

                  None

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

                  None

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

                  None

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

                  None

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


                                       20

<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

            May 13, 2009
---------------------------------
(Date)

                                       21