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|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|UNITED STATES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|SECURITIES AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Washington, D.C. 20549                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|FORM 10-Q                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|[X]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|[  ]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Commission File Number 1-1525                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|GLADSTONE ENERGY, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(Exact name of Registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Delaware
(State of Incorporation)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3500 Oak Lawn Avenue, Suite 590, LB 49, Dallas, TX
(Address of principal executive offices)                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(214) 528-9710                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(Registrant's telephone number,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|including area code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Securities registered pursuant to Section 12(b) of the Act:                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Securities registered pursuant to Section 12(g) of the Act:                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Common Stock Par Value $.001 Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(Title of Class)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|______________________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (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 ninety (90) days.
YES [X]     NO [   ]
Indicate the number of shares outstanding of each of the issuer's classesof common stock at September 30, 2000.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Class:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



|GLADSTONE ENERGY, INC.
|----------------------
|                      
|INDEX                 
|                      
|                      
|Part 1.               
|                      
|Item 1.               
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|Item 2.               
|                      
|Part II.              
|                      
|Item 4.               
|                      
|Item 5.               
|                      
|Item 6.               
|                      
|Signatures            
|                      
|                      
|                      
|                      
|                      
|                      
|                      

|HAROLDL. RATCLIFF                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|CERTIFIEDPUBLICACCOUNTANT                                                                                                                                               
|4514 COLE AVENUE - LB26                                                                                                                                                 
|SUITE 1010                                                                                                                                                              
|DALLAS, TEXAS 75205                                                                                                                                                     
|MEMBER                                                                                                                                                                  
|(214) 526-5555                                   
                                          
                                          
              AMERICAN INSTITUTE
|(214) 521-9055 - FAX                                  
                                          
                                  CERTIFIED PUBLIC ACCOUNTANTS        



ACCOUNTANT'S REVIEW REPORT



Board of Directors

Gladstone Energy, Inc.

Dallas, Texas

I have reviewed the accompanying balance sheet of Gladstone Energy, Inc., as of September 
30, 2000, and the related statements of operation, stockholders' equity and changes in 
cash flows for the nine months then ended and statements of operation and changes in cash 
flows for the nine months ended September 30, 1999. In accordance with the Statements on
Standards for Accounting and Review Services by the American Institute of Certified Public 
Accountants. All information included in these statements is the representation of the 
management of Gladstone Energy, Inc.

A   review  consists   principally  of   inquiries of   Company  personnel and analytical 
procedures  applied to  financial data.   It  is substantially less in scope  than  an  audit  in 
accordance  with   generally    accepted  auditing standards,  the objective of which is the 
expression of an opinion regarding the financial statements as a whole.   Accordingly, I do not 
express such an opinion.

Based  on  my  review,  I  am  not aware of  any material modifications that should  be made to 
the accompanying financial statements in order for them to be in conformity with generally 
accepted accounting principles.

The  financial  statements  for  the  year  ended  December  31,  1999, were audited by me and 
I expressed an unqualified opinion on them in my report dated  February 4, 2000, but I have 
not performed any auditing procedures since that date.

/s/ Harold L. Ratcliff

Certified Public Accountant

Dallas, Texas

November 10, 2000



|Part I. Financial Information
Item 1. Financial Statements                                             
|-------------------------------------------------------------------------------------------------------
|                                                                                                       
|GLADSTONE ENERGY, INC.
BALANCE SHEETS
At September 30, 2000 (Unaudited) and December 31, 1999 (Audited)
|                                                                                                       
|ASSETS                                                                                                 
|                                                                                                       
|Current assets:                                                                                        
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Property and equipment:                                                                                
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Other assets:                                                                                          
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                   
|                                                                                                       
|Current liabilities:                                                                                   
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Long-term portion of note payable                                                                      
|                                                                                                       
|                                                                                                       
|Deferred income taxes                                                                                  
|                                                                                                       
|Stockholders' equity:                                                                                  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|See accompanying notes and accountant's report.                                                        



|GLADSTONE ENERGY, INC. 
STATEMENTS OF OPERATIONS
For the three months and nine months ended September 30, 2000 and 1999(Unaudited)
|----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|Sales:                                                                                                                            
|                                                                                                                                  
|                                                                                                                                  
|Cost of sales:                                                                                                                    
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|Gross profit on sales                                                                                                             
|                                                                                                                                  
|Expenses:                                                                                                                         
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|Other income:                                                                                                                     
|                                                                                                                                  
|                                                                                                                                  
|Income (loss) before taxes                                                                                                        
|                                                                                                                                  
|Income taxes (benefits)                                                                                                           
|NET INCOME (LOSS)                                                                                                                 
|                                                                                                                                  
|Earnings per share:                                                                                                               
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|(1) The earning per share have been adjusted to the current number of shares outstanding (848,782 shares).                        
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|                                                                                                                                  
|See accompanying notes and accountant's report.                                                                                   



|GLADSTONE ENERGY, INC. 
STATEMENTS OF STOCKHOLDERS' EQUITY
For the nine months ended September 30, 2000 (Unaudited)
And the year ended December 31, 1999 (Audited)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Balance at December 31, 1998                                                                                                                                      
|                                                                                                                                                                  
|Net loss for the year 1999                                                                                                                                        
|                                                                                                                                                                  
|Net change for the period (A)                                                                                                                                     
|                                                                                                                                                                  
|Balance at December 31, 1999                                                                                                                                      
|                                                                                                                                                                  
|Payment for fractional shares                                                                                                                                     
|                                                                                                                                                                  
|Net income for the period                                                                                                                                         
|                                                                                                                                                                  
|Balance at September 30, 2000                                                                                                                                     
|                                                                                                                                                                  
|                                                                                                                                                                  
|(A)                                                                                                                                                               
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|See accompanying notes and accountant's report                                                                                                                    



|GLADSTONE ENERGY, INC.                               
|-----------------------------------------------------
|STATEMENTS OF CASH FLOWS                             
|For the nine months ended September 30, 2000 and 1999
|(Unaudited)                                          
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows (to) operating activities:                
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows from (to) investing activities:           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows (to) financing activities:                
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Net increase (decrease) in cash                      
|                                                     
|Cash beginning of period                             
|                                                     
|Cash at end of period                                
|                                                     
|                                                     
|Supplemental disclosure of cash flow information:    
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|See accompanying notes and accountant's report       



GLADSTONE ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2000

NOTE 1 - ORGANIZATION

Gladstone Energy, Inc. (f/k/a Gladstone Resources, Inc.) (the "Company") was incorporated in the State of Washington on July 19, 1916. The Company sells oil and gas in Louisiana, Texas and New Mexico.
The sales to the customers are on open accounts receivable, which are unsecured. As of

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

On an accrual basis, the Company uses the successful efforts method of accounting. This method follows the premise that an enterprise is to capitalize only those costs it incurs that directly result in an asset that has future benefits
measured in terms of future cash flows.

For purposes of the statements of cash flows, the Company considers all short-term debt securities purchased with a maturity of six months or less to be cash equivalents. There were no cash equivalents at September 30, 2000, or December
31, 1999. There were no significant non-cash investing or financing activities during the periods ended September 30, 2000 and December 31, 1999.

Depreciation, depletion and amortization are calculated using the straight-line and unit of production method over the estimated useful lives of the assets or production of the estimated recoverable oil and gas reserves.

For income tax reporting, the Company uses accounting methods that recognize depreciation sooner than for financial statement reporting As a result, the basis of property and equipment for financial reporting exceeds its tax basis by
the cumulative amount that accelerated depreciation exceeds straight-line depreciation. Also, for tax purposes the Company deducts intangible drilling costs and capitalizes them on the successful efforts accounting method. Deferred income taxes had been
recorded in prior years for the excess deductions, which will be taxable in future periods through reduced depreciation and cost depletion deductions for tax purposes. The Company had not assigned any future tax benefits to the accumulated losses in prior
periods due to the projected losses in future years. The increase in oil and gas prices during the current period and the sale of the properties has resulted in a positive tax benefit being recorded in the current period.

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.

NOTE 3 - ACCOUNTS RECEIVABLE

Of the net revenue interest amount of $20,908 due from oil and gas sales and joint interest billings as of September 30, 2000, $19,097 has been received from the operators and participants as of the date of this report. The sales to the
customers are on open accounts receivable, which are unsecured, and generally are received within 60 days.

NOTE 4 - PROPERTY AND EQUIPMENT

Gas and oil properties

Currently, the Company has producing wells in Pecos County in Texas, San Juan County in New Mexico, and in Beauregard and Allen Parishes of Louisiana.

The Company owns a 28.125% net revenue interest in 5 producing gas wells in San Juan County, New Mexico. These wells were sold in October, 2000, effective for production purposes as of August 1, 2000.

GLADSTONE ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2000

The Company closed, on July 15, 1999, an acquisition of 12.25% working interest in the Righthand Creek Field located in Beauregard and Allen Parishes of Louisiana. The effective date of the acquisition was May 1, 1999. The interest
consists of 6 producing wells (.735 net productive wells) with current net production of approximately 47.5 barrels of oil per day, 1 injection well, and 2 gross (.245 net) non-producing wells. The Company sold 30% of its interest in these properties in
September, 2000, effective for production purposes as of August 1, 2000. The balance of the Company's interest is being sold, subject to stockholder approval, in December, 2000, effective for production purposes as of September 1, 2000.

A summary of changes in the Company's gas reserves (in MCF's) is as follows (oil reserves have been included as MCF's by multiplying barrels by 6). ALL RESERVE AMOUNTS, INCLUDING THE REVISIONS, HAVE BEEN FURNISHED BY THE COMPANY
MANAGEMENT AND HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT PETROLEUM ENGINEERS. The Company believes there are no "proved undeveloped reserves" at September 30, 2000.

|                                | Total for United States in MCF's                                                                                                    
|------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------
|                                | September 30,2000                                                                                                                   
|Beginning of period (January 1) | 644,895                                                                                                                             
|Purchase of reserves            | -                                                                                                                                   
|Deduction for sale of leases    | (109,859)                                                                                                                           
|Adjustment to reserves (1)      | -                                                                                                                                   
|Production (total to date)      | (79,446)                                                                                                                            
|Balance at end of period        | 455,590                                                                                                                             
|                                |                                                                                                                                     
|(1)                             | Based on reevaluation of estimated reserves by the Company. The estimates were based on current production levels of all properties.

NOTE 5 - FEDERAL AND STATE INCOME TAXES

As noted in Note 2, due to the amount of losses that are currently being carried forward, along with the carryover percentage depletion, the Company had adjusted the future tax benefit to zero. During the current period the allowance
adjusting deferred tax benefits has been adjusted, due to changing oil prices and the estimated future income, to $148,487.

Net operating loss deductions and credits carryforward consists of the following:

|From year | Year     |                       
|--------- | -------- | ----------------------
|Ended     | Expires  | Losses                
|12-31-94  | 12-31-09 | $              100,759
|12-31-97  | 12-31-12 | 57,877                
|12-31-98  | 12-31-13 | 129,028               
|12-31-99  | 12-31-14 | 118,486               
|          |          | $              406,150

There are limitations on the use of the losses due to change of control which occurred in 1999.

At December 31 1999, there was $298,732 of statutory depletion carryover to 2000.

At December 31 1999, there was 	$10,000 of Section 179 depreciation carryover to 2000.

At December 31, 1999, there was $109,071 in capital loss carryover to 2000.

NOTE 6 - COMMITMENT AND CONTINGENCY

At September 30, 2000, the Company had commitments, subject to stockholder approval, to sell of its New Mexico gas wells and the balance of the Louisiana oil wells.

GLADSTONE ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2000

NOTE 7 - COMMON STOCK

Currently the Company's common stock is not traded on any exchange or automated quotation system.

At September 30, 2000, there were no outstanding stock options issued by the Company.

The following shares of common stock were outstanding for the periods under report.

|                              | September 30,2000 | December 31,1999
|----------------------------- | ----------------- | ----------------
|Common stock, $.001 par value | 848,782           | 848,991         
|                              |                   |                 

At the Annual Shareholders' Meeting, held on July 15, 1999, a one for five reverse split was approved, which was effected August 10, 1999. All share and per share numbers have been adjusted retroactively to record the effects of the
reverse split.

With the reincorporation to Delaware, 10,000,000 shares of common stock, par value $.001 per share were authorized and 5,000,000 shares of preferred stock, par value $.001, were authorized.

NOTE 8 - SIGNIFICANT ESTIMATES AND CONCENTRATIONS

Generally accepted accounting principles require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters included the following:

1. Major Customers

In 1999, the Company had two customers which represented 72% and 19% of their total revenue.

2. Oil and Gas Reserves

Oil reserves are provided by management based on engineering reports prepared in prior periods.

NOTE 9 - RENT EXPENSE

The Company currently pays rent of $500.00 per month to Humphrey Oil Corporation, inclusive of phone service. Rent expense through September 30, 2000 was $5,060, which includes an expense adjustment. The Company does not have a
commitment on a lease contract. Rent expense for 1999 was $6,088.

NOTE 10 - ACQUISITION AND DIVESTITURE OF PROPERTIES

The Company closed, on July 15, 1999, with an effective date of May 1, 1999, an acquisition of 12.25% working interest in the Right Hand Creek Field located in Beauregard and Allen Parishes of Louisiana (collectively, the "Right Hand
Creek Properties") from Humphrey Oil Interests, L.P., a Texas limited partnership ("Humphrey") (Charles B. Humphrey, a Director of the Company, is the limited partner in Humphrey and President of Humphrey Oil Corporation, its general partner) being 50% of
the interest acquired by Humphrey from EXCO Resources, Inc. effective May 1, 1999. The Right Hand Creek Properties include 6 gross productive wells (.735 net productive wells) with current net production of approximately 55 barrels of oil and 2 gross
(.245 net) non-producing wells that will require recompletions and/or workovers. The Right Hand Creek Properties include 725.3 gross (88.85 net) developed acres and 234.22 gross (28.69 net) undeveloped acres. Based on independent engineering estimates as
of June 1, 1999, the Right Hand Creek Properties are estimated to contain 956,097 gross (85,396 net) barrels of oil and no gross or net million cubic feet of natural gas or proved reserves. The aggregate purchase price paid for the Right Hand Creek
Properties was $349,125. The Company borrowed $230,000 of the purchase price under a new credit facility and the balance of the purchase price was paid out of working capital. The note was paid in full from the sale of the 30% of the Righthand Creek
property for $201,000. The Company has contracted to sell the remaining interest in the Righthand Creek property, subject to stockholder approval, for $434,000 to EXCO Resources, Inc. The Company also sold the San Juan County New Mexico properties to EXCO
Resources, Inc. for $267,000.





GLADSTONE ENERGY, INC

NOTE 11 - CREDIT AGREEMENT

On July 15, 1999, the Company entered into a credit facility (the "Credit Facility") with Compass Bank (the "Lender"). The Credit Facility provides for borrowings up to $15 million, subject to borrowing base limitations. This agreement
has been terminated and the note associated therewith paid in full.





Item 2.

Gladstone Energy, Inc.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

This quarterly report on form 10-Q of the Company contains "forwarding-looking statements" within the meaning of, Section 27a of the Securities Act of 1933, as amended (the "Securities Act"), and section 21e
of the Securities Exchange Act of 1934, as amended (the "exchange act"). Specifically, all statements other than statements of historical facts included in this report regarding the Company's financial position, business strategy and plans and objectives
of management of the Company for future operations are forward- looking statements. These forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's
management. When used in this report, the words "anticipate," "believe," "estimate," "expect" and "intend" and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements.
Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions related to certain factors including, without limitation, price levels for oil and natural gas,
concentration of oil and natural gas reserves and production, drilling risks, uncertainty of oil and gas reserves, risks associated with the development of additional revenues and with the acquisition of oil and gas properties and other energy assets,
operating hazards and uninsured risks, general economic conditions, governmental regulation, changes in industry practices, marketing risks, one time events and other factors described herein ("cautionary statements"). Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Based upon changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward- looking
statements. All subsequent written and oral forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements. Reference is made to "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information - Cautionary Statements" included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999, which is incorporated herein by
reference.

Results of Operations - Comparison of Three Month and Nine Month Periods Ended September 30, 2000 and 1999

Net Income (Loss)

Revenues. Revenues for the three month period ended September 30, 2000 were $74,813 compared with $133,036 for the corresponding period in 1999, a 44% decrease. This decrease was due to the sale on August 31, but effective August
1, 2000, of 30% of the Company's interest in the Righthand Creek Properties, the sale on October 10, 2000, but effective August 1, 2000, of the Company's properties in San Juan County, New Mexico, and the pending sale, subject to stockholder approval, of
the Company's remaining interest in the Righthand Creek Properties that would be effective as of September 1, 2000 (collectively the "Property Sales"). Revenues for the nine month period ended September 30, 2000 were $295,643 compared with $155,816 for
the corresponding period in 1999, a 90% increase. These increases in revenues were primarily a result of the acquisition of the Right Hand Creek Properties, which was effective as of May 1, 1999. This increase was partially offset by the Property Sales.

Costs and Expenses. Costs and expenses for the three month period ended September 30, 2000, decreased $101,584, or 64%, to $57,025 versus $158,609 for the corresponding period of 1999. This decrease was primarily due to reduced
dry hole and abandonment loss (decreased $22,264 or 90% to $2,500), depletion (decreased $20,415 or 68% to $9,413), and prospect expenses (decreased $21,115 or 100% to none), as a result of the Property Sales, and reduced legal, auditing and accounting
expenses (decreased $17,345 or 78% to $4,728) because improved reporting procedures have been implemented. Costs and expenses for the nine month period ended September 30, 2000 increased $53,789, or 20%, to $310,833 versus $257,044 for the corresponding
period of 1999. General and administrative expenses increased due to the abandonment of dry holes and the associated acreage, and an officers and directors insurance policy that had not previously been carried. Legal, auditing, and accounting fees
decreased $52,899, or 73%, from $72,397 for the nine month period ended September 30, 1999 to $19,458 for the same period in 2000 because improved reporting procedures have been implemented and the Company completed its reorganization.



Liquidity and Capital Resources

Cash decreased $22,549 to $111,793 at September 30, 2000, from $134,342 at December 31, 1999, as a result of the cost of dry holes drilled and payments on bank loans. Accounts receivable decreased $19,913 to $20,908 from $40,821
during the nine months ended September 30, 2000 and accounts payable decreased $124,282 to $13,176 from $137,458 during the nine months ended September 30, 2000. The decrease in accounts receivable is primarily related to the Property Sales, while the
decrease in accounts payable is primarily due to paying invoices due on the drilling of a dry hole and an unsuccessful recompletion of a shut-in well related to the Right Hand Creek Properties, as well as to final payments on the drilling of the Cache
Creek #1 dry hole in 1999.

Earnings (loss) before interest, taxes, depreciation, depletion and amortization ("EBITDA") for the three-month period ended September 30, 2000 is $35,601 or .04 per share compared to $10,077, or $.01 per share for the corresponding
period of 1999.   EBITDA for the nine month period ended September 30, 2000 was $68,318 or $.08 per share for the nine month period in 2000 compared to ($48,981), or ($.06) per share for the same period in 1999.  (Per share figures have
been adjusted retroactively to record the effects of the reverse split.)   Management is of the opinion that any significant acquisitions, projects or drilling and/or recompletion work will require debt and/or equity financing. There is no
assurance that the Company will be able to borrow additional amounts under the Credit Facility or obtain other debt and/or equity financing for any significant activities.

For the nine months ended September 30, 2000, net cash provided from operating activities was $131,089 compared to $98,969 used for the nine months ended September 30, 1999. Cash was provided from operations. Additionally, accounts
receivable decreased due to the Property Sales.

The Company paid off and closed out their credit facility (the "Credit Facility") with Compass Bank.

Inflation and Changing Prices

The impact of inflation, as always, is difficult to assess.  During 1997 and 1998, the oil and gas industry remained depressed; however as of December 31, 1999, oil prices had made a rebound and were consistently improving.
This improvement has continued and actually increased in the first three quarters of 2000. The general softening of the market prior to and into 1999 had reduced the cost of labor, materials, contract services, and other operating costs; therefore, the
increase in oil prices could cause an increase in operating costs. The Company cannot anticipate where cost and revenue trends will head; however, a sudden increase in inflation and/or an increase in operating costs coupled with a cessation of the current
improved trend of oil prices could have an adverse effect on the operations of the Company.





Part II. Other Information



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

During the third quarter of the fiscal year, no matter was submitted by the Company to a vote of its shareholders through the solicitation of proxies or otherwise.

Item 5. Other Information

During the third quarter of the fiscal year, there is no Other Information to disclose.

Item 6. Exhibits and Reports on Form 8-K

|(a) | Exhibits - The exhibits listed in the accompanying Exhibit Index immediately following the signature page are filed as part of or incorporated by reference into this Quarterly Report on Form 10-Q.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                     
|(b) | Reports on Form 8-K - 	Two Reports on Form 8-K were filed during the last quarter of the period covered by this report.                                                                             
|    |                                                                                                                                                                                                     
|    | On August 31, 2000, the Company filed a Report on Form 8K relating to the sale of 30% of its interest in the Righthand Creek Properties.                                                            
|    |                                                                                                                                                                                                     
|    | On October 30, 2000, the Company filed a Report on Form 8K relating to the sale of its properties in San Juan County, New Mexico.                                                                   







|SIGNATURES                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                        
|                                                                                                                                                                                        
|Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        | GLADSTONE ENERGY, INC.        
|----------------------- | ------------------------------
|                        |                               
|Date: November 14, 2000 | By:/s/ Katherine R. Murphy    
|                        | Katherine R. Murphy, Treasurer





|INDEX TO EXHIBITS
|-----------------
|EXHIBIT NO.      
|10.1             
|                 
|10.2             
|                 
|10.3             
|                 
|10.4             
|                 
|10.5             
|                 
|10.6             
|                 
|27.1