SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C.  20549

                                Form 10-QSB

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                OF THE SECURITIES AND EXCHANGE ACT OF 1934


    For Quarter Ended                  Commission File Number
     October 31, 1996                            1-7965


                             CASPEN OIL, INC.
          (Exact name of registrant as specified in its charter)


         Nevada                              75-1325831
(State or other jurisdiction of           (I.R.S. Employer
incorporation or organization)           Identification No.)


                        777 S. Wadsworth Boulevard
                           Irongate 3, Suite 201
                            Lakewood, CO  80226
                 (Address or principal executive offices)

                              (303) 987-0925

           (Registrant's telephone number, including area code)


(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 and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.

       Yes    X                                             No 

As of October 31, 1996, the Registrant had 18,092,200 shares of
Common Stock outstanding.

Transitional Small Business Disclosure Format:  Yes    ;  No   X 
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

FORM 10-QSB

October 31, 1996

                                                                 
 

PART I - FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets. . . . . . . . . . .  1-2

Condensed Consolidated Statements of Operations. . . . . . .  3

Condensed Consolidated Statement of Shareholders' Equity . .  4

Condensed Consolidated Statements of Cash Flows. . . . . . .  5

Notes to Condensed Consolidated Financial Statements . . .  6-7

Item 2.  Management's Discussion and Analysis or Plan of
Operation. . . . . . . . . . . . . . . . . . . . . . . . .  8-9

PART II - OTHER INFORMATION

Item 4.Submission of Matters to a Vote of Security Holders . 10

Item 6.Exhibits and Reports on Form 8- K . . . . . . . . . . 10

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 11

<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(Unaudited)

                                          October 31,   July 31,
ASSETS                                       1996         1996  

CURRENT ASSETS 
  Cash and cash equivalents              $    66,727 $    94,131 
  Accounts rec., prepaid exp. 
   net of allowance for doubtful accounts    133,324     130,985 
   Other                                       1,603       1,603 
                                         ----------- -----------
                                             201,654     226,719 
                                         ----------- -----------
PROPERTY AND EQUIPMENT, AT COST 
  Oil and gas properties, full cost
   method of accounting                   19,869,745  19,873,617 
  Other                                      302,061     302,061 
                                         ----------- -----------
                                          20,171,806  20,175,678 
  Less accum. depl., deprec., and amort.  17,058,667  17,006,425 
                                        ------------ -----------
                                           3,113,139   3,169,253 
                                        ------------ -----------

OTHER 
  Investments                                833,520     833,520 
  Notes receivable, related party             66,622      66,622 
  Other                                        8,382       8,832 
                                        ------------ -----------
                                             908,524     908,974 
                                        ------------ -----------
       TOTAL ASSETS                     $  4,223,317 $ 4,304,946 
                                        ============ ===========














                              1<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES                
  Notes payable                         $  1,547,500 $ 1,547,500 
  Accounts payable                           710,485     747,918 
  Accrued expenses                           609,768     616,167 
  Note payable, related party                 26,521      50,000
  Note payable, other                         10,000      10,000 
                                        ------------ -----------
         TOTAL CURRENT LIABILITIES         2,904,274   2,971,585 

LONG-TERM LIABILITIES
  Note payable                                10,000      10,000 
  Other                                       59,400      59,400 
                                        ------------ -----------
         TOTAL LIABILITIES                 2,973,674   3,040,985 
                                        ------------ -----------

SHAREHOLDERS' EQUITY 
  Convertible preferred stock:
   Series A                                  600,000     600,000 
   Series C                                  300,000     300,000 
   Series E                                  125,000     125,000 
  Common stock                               180,922     180,922 
  Additional paid-in capital              21,091,871  21,091,871 
  Accumulated deficit                    (21,038,440)(21,024,122)
                                         ----------- -----------
                                           1,259,353   1,273,671 
  Less treasury stock                          9,710       9,710 
                                          ---------- -----------
      TOTAL SHAREHOLDERS' EQUITY           1,249,643   1,263,961 
                                          ---------- -----------
      TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY             $  4,223,317 $ 4,304,946 
                                        ============ ===========

See accompanying notes to condensed consolidated financial
statements.













                              2
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Condensed Consolidated Statements of Operations
(Unaudited)
                                                                  

                                            Three months ended
                                                October 31, 
                                            ------------------ 
                                             1996         1995 

REVENUE 
   Oil and gas sales                      $ 226,517    $ 194,464 
   Overhead income                           13,356       11,541 
   Interest income                              637        3,986 
   Other                                        123       38,785
                                          ---------    ---------
                                            240,633      248,776 
                                          ---------    ---------
COSTS AND EXPENSES 
   Production and operating                  55,925      117,080 
   Depl., deprec., and amort.                52,242       48,681 
   General and administrative               145,731       74,584 
   Interest expense                           1,053         -   
                                          ---------    --------- 
                                            254,951      240,345
                                          ---------    --------- 
NET INCOME (LOSS)                           (14,318)       8,431 

DIVIDEND REQUIREMENTS ON PREFERRED STOCK    269,775      269,775 
                                          ---------    ---------  
LOSS APPLICABLE TO COMMON STOCK           $(284,093)   $(261,344)
                                          =========    =========
LOSS PER COMMON SHARE                     $    (.02)   $    (.01) 
                                          =========    =========













See accompanying notes to condensed consolidated financial
statements.

                              3
<PAGE>
<TABLE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)

                                                                  
                                                      

                              Preferred Stock              Common Stock        Additional      Accumu-                    Total
                                                                                 paid-in        lated        Treasury  shareholders'
                         Series  Shares     Amount      Shares       Amount      capital       deficit        stock       equity
                         ------  -------   --------   ----------  ----------   -----------  -------------  ----------- ------------
<S>                         <C>  <C>       <C>        <C>         <C>         <C>           <C>            <C>           <C>
Balance at July 31, 1996    A    600,000   $600,000   18,092,222  $  180,922   $21,091,871  $(21,024,122)  $(    9,710)  $1,263,961

                            C    300,000    300,000
                            E    125,000    125,000



Net loss for the three months ended
  October 31, 1996                                                                               (14,318)                   (14,318)


Balance at October 31, 1996
  Series A                       600,000   $600,000   18,092,222  $  180,922   $21,091,871  $(21,038,440)  $(    9,710)  $1,249,643
  Series C                       300,000   $300,000               ----------   -----------  -------------  ------------  ---------- 
  Series E                       125,000   $125,000
                                           --------

</TABLE>


                                     4         
                                    <PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Unaudited)
                                                                  
                                                                  
                                                               
                                               Three months ended
                                                   October 31,
                                               ------------------
                                                 1996       1995

CASH FLOWS FROM OPERATING ACTIVITIES 
Net income (loss)                             $(14,318) $  8,431
Adjustments to reconcile net income
to net cash used in operating activities:
Depletion, depreciation, and amortization       52,242    48,681

Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
and prepaid expenses                            (2,339)  137,807 
(Increase) decrease in other assets                450   (24,399)
Decrease in notes/accts. pay./accrued exp.    ( 67,311) (350,242)
                                             ---------- ---------
NET CASH USED IN
OPERATING ACTIVITIES                          ( 31,276) (179,722)
                                             ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES 
Proceeds from disposition of property and  
equipment                                        8,356       914 
Purchase of property and equipment, net of 
property sales and well credits               (  4,484) (142,919)
                                             ---------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING 
ACTIVITIES                                       3,872  (142,005)
                                             --------- ----------

DECREASE IN CASH
AND CASH EQUIVALENTS                          ( 27,404) (321,727)

CASH AND CASH EQUIVALENTS, BEG.                 94,131   464,876 
                                             --------- --------- 
CASH AND CASH EQUIVALENTS, END               $  66,727 $ 143,149 
                                             ========= =========

See accompanying notes to condensed consolidated financial
statements.


                              5
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Three Months Ended October 31, 1996

                                                                  
(1)     Basis of Presentation

   The condensed interim consolidated financial statements
included herein are unaudited but in the opinion of management
reflect all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the financial position of
the Company at October 31, 1996, and the results of operations
for the three month periods ended October 31, 1996, and 1995.    
Interim results are not necessarily indicative of expected annual
results because of the impact of prices obtained for oil and gas
and other factors. These condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements of the Company, and related notes thereto,
included in its annual report on Form 10-KSB.

(2)     Daiwa Bank, Ltd. Loan

   On December 14, 1990, the Company entered into an amended and
restated loan agreement with its principal lender, Daiwa Bank,
Ltd. ("Daiwa"), formerly Lloyd's Bank plc, and satisfied all
technical deficiencies as they existed prior to the
renegotiation.  At the request of Daiwa, the Company sold
property, which was mortgaged to Daiwa, for approximately
$5,200,000. From the proceeds of the sale, Daiwa received the
total $5,200,000. Daiwa applied $4,700,000 to the reduction of
principal.  Simultaneously, the Company executed a 30-month
extension note in the amount of $2,000,000, with the guarantee by
Daiwa that, upon payment of $500,000 in June 1993, the note would
be renewed or restructured.  Daiwa recognized that the Company
would be unable to make the $500,000 principal payment in June
1993 and therefore returned $500,000 from the December 1990 sale
of property to the Company.

In June 1993, after the Company paid interest for thirty months
of approximately $425,000, Daiwa refused to accept the $500,000
principal reduction payment offered by the Company and refused to
renew or restructure the note claiming no legal obligation to do
so and citing its decision to divest itself of oil and gas loans. 





                              6
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Three Months Ended October 31, 1996

                                                                  
(2)     Daiwa Bank, Ltd. Loan (Continued)

On July 9, 1993, the Company received a demand notice from Daiwa
for $1,997,500 in payment of the loan balance remaining on the
$15,000,000 Credit Revolver established by Daiwa in late 1988. 
The interest rate on the revolving line of credit was prime plus
one percent.  On February 17, 1994, the Company sold certain oil
and gas properties for $300,000 the proceeds of which were used
to reduce the bank debt principal to $1,697,500.

For years ended July 31, 1996 and 1995, the Company made payments
of $50,000 and $100,000 to reduce the bank debt principal to
$1,547,500 at July 31, 1996.  

The Company has attempted to resolve the loan dispute.  The
Company expects one of two developments between the Company and
Daiwa in fiscal year 1997; (a) the Company and Daiwa reach an
agreement to reduce to $50,000 the outstanding loan balance
inclusive of interest, which, based on Generally Accepted
Accounting Principles, would result in the Company recording the
forgiveness of the debt.  (However, there can be no assurance
that Daiwa will agree to do so, nor can there be any assurance
that Daiwa will not proceed to foreclose on the oil and gas
properties which collateralize the debt); or (b) litigation
results in which the Company will seek damages in excess of
$10,000,000, and Daiwa asserts claims for default interest and 
attorneys' fees.  Under the second alternative, the Company
estimates legal fees in the range of $150,000 in fiscal year
1997.

Generally accepted accounting principles require the Company to
carry on its financial statements outstanding debt to Daiwa of
$1,547,500 as of October 31, 1996, plus interest accrued to July
31, 1996, using prime plus one percent (9.25% at July 31, 1996),
of $454,103, which is included in accrued expenses.  However, the
Company believes that Daiwa will reduce the $2,001,603 balance to
$50,000, requiring the Company to record the forgiveness of the
debt.  This action on Daiwa's part will partially compensate the
Company for damages created by Daiwa's breach of contract.


                              7<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

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

The following discussion of the Company's financial condition and
results of operations should be read in conjunction with the
condensed consolidated financial statements included in this
report and the consolidated financial statements and notes
contained in the Company's annual report on Form 10-KSB for the
fiscal year ended July 31, 1996.

Liquidity and Capital Resources

During the three months ended October 31, 1996, the working
capital deficit decreased from July 31, 1996, by approximately
$(42,000).  This decrease is due largely to the pay down of
certain outstanding trade payables from July 31, 1996.

The Company's current liabilities exceed current assets by
$2,702,620 at October 31, 1996.  The working capital deficit at
October 31, 1996, is due primarily to the $1,547,500 of the
Company's debt due to Daiwa Bank which matured in June 1993 (See
Note 2) and to outstanding trade and note payables of an
approximate $750,000, as well as accrued expenses approximating
$150,000, including $75,000 in accrued salary, approximately
$48,000 in accrued service and operations fees and other accrued
expenses.

The Company anticipates that given its current cash position and
assuming a satisfactory resolution of the Daiwa matter, and
further, and assuming no unexpected interruption of current cash
flows or unanticipated expenditures, it will have sufficient
working capital to meet its obligations throughout the remaining
fiscal year.

Results of Operations

Oil and gas revenues were higher in the three months ended
October 31, 1996, as compared to the three months ended October
31, 1995.  This was primarily attributable to higher oil and gas
prices in 1996.   

The Company experienced higher gas prices in the three months
ended October 31, 1996, compared with those received in the same
period last year, and slightly higher oil prices were experienced
in the first three months of fiscal year 1996 when compared with
the same period last year.  Average oil and gas prices received
in the three months ended October 31, 1996, were approximately
$19.85  per barrel of oil and $1.85 per MCF gas as compared to
approximately $16.00 per barrel of oil and $1.35 per MCF gas for
the three months ended October 31, 1995.
                              8<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Item 2.  Management's Discussion and Analysis or Plan of
Operation, Continued


Results of Operations (Continued)

                                                                 
The Company reported a net loss of $(14,318) for the three months
ended October 31, 1996, compared to a net income of $8,431 for
the three months ended October 31, 1995.  This is primarily due
to lower oil and gas revenues and comparatively higher production
and operating expenses for the three months ended October 31,
1995, as compared with the three months ended October 31, 1996,
combined with a beginning of fiscal year 1996 reversing entry of
trade accounts payable that did not occur in the beginning of
fiscal 1997, the effect of which caused general and
administrative costs to be significantly lower than normal for
the three months ended October 31, 1995.    Oil and gas revenues
approximated $227,000 for the three months  ended October 31,
1996, while revenues for the same period in 1995 approximated
$194,000.  Production and operating expenses for the quarter
ended October 31, 1996, were approximately $56,000, as compared
to the quarter ended October 31, 1995, which were approximately
$117,000.  The decrease in lease operating expenses to 25 percent
of oil and gas sales from 60 percent generally reflects the
activities detailed above with respect to the increase in oil and
gas revenues for the three months ended October 31, 1996.

General and administrative expenses for the three months ended
October 31, 1996, increased by approximately $71,000 from the
corresponding three months ended October 31, 1995, due to an
adjustment made at the beginning of fiscal year 1996 as explained
above.  

Series A Preferred Stock Cumulative Dividends In Arrears 

The terms of the Series A Shares provide that no dividends may be
paid on the Common Shares or Series C or E Preferred Shares while
dividends on the Series A Shares are in arrears.  The Company has
not paid any dividends on the Series A Shares since June 30,
1988.  As of October 31, 1996, dividends on the Company's Series
A Shares are in arrears $17.54 per share for a total of
$10,514,852.






                              9 <PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES

Part II.  Other Information


                                                                  

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

        None

Item 6. Exhibits and Reports on Form 8-K


(a)     Exhibits - none

(b)     Reports on Form 8-K - none













               



















                              10
<PAGE>
                               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.



                                      CASPEN OIL, INC.




December 9, 1996                      By:/s/ Gary N. Davis      
                                          Gary N. Davis,
                                            Treasurer



































                              11