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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 June 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 June 30, 
2000, and the related statements of operation, stockholders' equity and changes in cash 
flows for the six months then ended and statements of operation and changes in cash flows 
for the six months ended June 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
July 21, 2000



|Part I. Financial Information
Item 1. Financial Statements                                        
|--------------------------------------------------------------------------------------------------
|                                                                                                  
|GLADSTONE ENERGY, INC.
BALANCE SHEETS
At June 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 six months ended June 30, 2000 and 1999(Unaudited)
|-----------------------------------------------------------------------------------------------------------
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|Sales:                                                                                                     
|                                                                                                           
|                                                                                                           
|Cost of sales:                                                                                             
|                                                                                                           
|                                                                                                           
|                                                                                                           
|Gross profit on sales                                                                                      
|                                                                                                           
|Expenses:                                                                                                  
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|Other income:                                                                                              
|                                                                                                           
|Income (loss) before taxes                                                                                 
|                                                                                                           
|Income taxes                                                                                               
|NET INCOME (LOSS)                                                                                          
|                                                                                                           
|Earnings per share:                                                                                        
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|(1) The earning per share have been adjusted to the current number of shares outstanding (848,991 shares). 
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|                                                                                                           
|See accompanying notes and accountant's report.                                                            



|GLADSTONE ENERGY, INC. 
STATEMENTS OF STOCKHOLDERS' EQUITY
For the six months ended June 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                                                                                                                                
|                                                                                                                                                            
|Net loss for the period                                                                                                                                     
|                                                                                                                                                            
|Balance at June 30, 2000                                                                                                                                    
|                                                                                                                                                            
|                                                                                                                                                            
|(A)                                                                                                                                                         
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|See accompanying notes and accountant's report                                                                                                              



|GLADSTONE ENERGY, INC.                           
|-------------------------------------------------
|STATEMENTS OF CASH FLOWS                         
|For the six months ended June 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)

June 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 June 30, 2000, or December 31,
1999. There were no significant non-cash investing or financing activities during the periods ended June 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. Currently the Company has not assigned any future tax benefits to the accumulated losses.

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 $57,314 due from oil and gas sales and joint interest billings as of June 30, 2000, $9,799 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.

GLADSTONE ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

June 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.

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 June 30, 2000.

|                                | Total for United States in MCF's                                                                                                    
|------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------
|                                | June 30,
                            2000                                                                                           
|Beginning of period (January 1) | 644,895                                                                                                                             
|Purchase of reserves            | -                                                                                                                                   
|Deduction for sale of leases    | -                                                                                                                                   
|Adjustment to reserves (1)      | -                                                                                                                                   
|Production (total to date)      | (66,244)                                                                                                                            
|Balance at end of period        | 578,651                                                                                                                             
|                                |                                                                                                                                     
|(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 has not assigned any future tax benefits to the accumulated losses.

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 June 30, 2000, the Company had no material commitments.

GLADSTONE ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

June 30, 2000



NOTE 7 - COMMON STOCK

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

At June 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.

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



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 June 30, 2000 was $3,560, 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 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.

GLADSTONE ENERGY, INC

NOTES TO FINANCIAL STATEMENTS (Unaudited)

June 30, 2000

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.

The Credit Facility consists of a regular revolver which at July 1, 2000, had a borrowing base of $200,000. A portion of the borrowing base is available for the issuance of letters of credit. All borrowings under the Credit Facility are
secured by a first lien deed of trust providing a security interest in certain oil and natural gas working interests in the Right Hand Creek Properties.

The Credit Facility provides that the unpaid principal balance of the loans shall bear interest, payable as it accrues on the 1st day of each month, commencing September 1, 1999, and at maturity (stated or by acceleration), at a rate
per annum equal to the lesser of the (i) Highest Lawful Rate or (ii) 1% over the CBIR rate from time to time in effect, as therein defined. The Credit Facility also permits the Company to repay and reborrow amounts under the Credit Facility without any
penalty, thereby, allowing the Company the flexibility to utilize any available cash to reduce its outstanding indebtedness and thus, its cost of borrowed funds.

Under the terms of the Credit Facility, the Company must not permit its Current Ratio (as defined) of Current Assets (as defined) to its Current Liabilities (as defined) to be less than 1.25 to 1.0 at any time. Furthermore, the Company
must not permit its Tangible Net Worth (as defined) to be less at any time than $1.00 plus (i) 50% of positive Net Income (as defined) for all quarterly periods ending subsequent to December 31, 1998, plus (ii) 100% of any Equity Infusions (as defined) to
Debt Service (as defined) to be less than 1.25 for 1.0, determined as of the end of each fiscal quarter of the Company on or after September 30, 1999.

A new Borrowing Base shall be determined as of each April 1 and October 1 during the Revolving Credit Period (the "semi-annual determinations"), or at such other or additional times during the Revolving Credit Period as the Lender in
its reasonable discretion and at its sole cost may elect ("discretionary determinations"), and the Lender shall determine a new Borrowing Base at such additional times, but no more often than one (1) time in any 12-month period without Lender's consent,
as the Company may request ("Borrower requested determinations").

The Borrowing Base shall be automatically reduced as of the 1st day of each month commencing February 1, 2000, and continuing through the Revolving Credit Period. The initial monthly reduction shall be in the amount of $5,000 per month.
At the time of each new semi-annual determination, the Lender, in its sole discretion may increase or decrease the amount of such monthly reduction. If a Borrowing Base Deficiency (as defined) exists after giving effect to a redetermination, then the
Company must either (i) prepay the principal of the outstanding Loans or (ii) cause to be created first and prior perfected Liens (subject only to Permitted Liens, as defined) in favor of the Lender, by instruments satisfactory to the Lender, on producing
oil and gas properties, which in the opinion of the Lender would increase the Borrowing Base by an amount sufficient, in combination with clause (i) preceding, to eliminate such Borrowing Base deficiency.

The Credit Facility contains a number of covenant affecting the Company's liquidity and capital resources, including restrictions a the Company's ability (i) to incur indebtedness other than (a) under the Credit Facility or (b)
Permitted Indebtedness, as defined, or (ii) to pledge assets outside of the Credit Facility, other than Permitted Liens, and with respect to the Company's maintenance of a minimum net worth.











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 Six Month Periods Ended June 30, 2000 and 1999

Net Income (Loss)

Revenues. Revenues for the three month period ended June 30, 2000 were $138,266 compared with $14,641 for the corresponding period in 1999, a 844% increase. Revenues for the six month period ended June 30, 2000 were $220,830
compared with $22,780 for the corresponding period in 1999, a 869% 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.

Costs and Expenses. Costs and expenses for the three month period ended June 30, 2000, increased $17,515, or 28%, to $81,084 versus $63,569 for the corresponding period of 1999. Costs and expenses for the six month period ended
June 30, 2000 increased $155,373, or 157%, to $253,808 versus $98,435 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 $35,554, or 71%, from $50,284 for the six month period ended June 30, 1999 to $14,730 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 $92,848 to $41,494 at June 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 increased $16,552 to $57,373 from $40,821 during
the six months ended June 30, 2000 and accounts payable decreased $124,547 to $12,911 from $137,458 during the six months ended June 30, 2000. The increase in accounts receivable is primarily related to increased revenue from the Right Hand Creek
Properties which has been accrued but not received as well as higher oil prices for the period, 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 June 30, 2000 is $89,649 or .11 per share compared to ($40,321), or ($.05) per share for the corresponding
period of 1999. EBITDA for the six month period ended June 30, 2000 was $32,717 or $ .04 per share for the six month period in 2000 compared to ($59,058), or ($.07) 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 six months ended June 30, 2000, net cash used in operating activities was $60,396 compared to $707,343 received for use for the six months ended June 30, 1999. Significant uses of cash in operations for the six months ended June
30, 2000, in addition to our net loss, was cash used to reduce payable. Additionally, accounts receivable increased.

The Company maintains a $15 million credit facility (the "Credit Facility") with Compass Bank, which is secured by a first lien deed of trust providing a security interest in the Right Hand Creek Properties. This facility expires on
August 1, 2001. At June 30, 2000, the outstanding balance under the line of credit was $200,000 and the borrowing base was $200,000. Interest on the outstanding balance accrues on the first of each month at a rate per annum equal to the lesser of the (i)
Highest Lawful Rate or (ii) 1% over the CBIR rate from time to time in effect, as therein defined. At July 1, 2000, this rate was 10%.

The Credit Facility requires the Company to comply with certain financial covenants such as a minimal current ratio, a minimal amount of tangible net worth, a minimal quick ratio and a maximum amount of debt to cash flow. The Credit
Facility also contains a number of covenants affecting the Company's liquidity and capital resources, including restrictions on the Company's ability(i) to incur indebtedness other than (a) under the Credit Facility or (b) certain indebtedness, or (ii) to
pledge assets outside of the Credit Facility, other than certain permitted liens.

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



Item 6. Exhibits and Reports on Form 8-K

|(a) | Exhibits - Not applicable.                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                      
|(b) | Reports on Form 8-K - No Reports on Form 8-K were filed during the last quarter of the period covered by this report.







|SIGNATURES                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|                                                                                                                                                                                        
|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: August 14, 2000 | By:                           
|                      | Katherine R. Murphy, Treasurer