SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-KSB/A
       |X| SECOND AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
                           THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
                                       or
        |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                          Commission File Number 0-6580
                            PEASE OIL AND GAS COMPANY
           (Name of small business issuer as specified in its charter)

                Nevada                                         87-0285520
      State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                   Identification Number)

      751 Horizon Court, Suite 203,
      Grand Junction, Colorado                                    81506
     (Address of principal executive offices)                   (Zip code)

                                 (970) 245-5917
                (Issuer'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 $.10 Per Share)
   Series A Cumulative Convertible Preferred Stock (Par Value $0.01 Per Share)
             Common Stock Purchase Warrants (Expire August 13, 1998)
                                 Title of Class

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

 Check if disclosure of delinquent  filers in response to Item 405 of Regulation
 S-B, is not contained in this form and no disclosure will be contained,  to the
 best of registrant's  knowledge,  in definitive proxy or information statements
 incorporated  by reference in Part III of this Form 10-KSB or any  amendment to
 the Form 10-KSB. [ ]

     The issuer's revenues for its most recent fiscal year were $6,165,664.

As of February 21, 1997,  Registrant had 8,357,427 shares of its $0.10 par value
   Common Stock and 141,822 shares of its $0.01 par value Series A Cumulative
 Convertible Preferred Stock outstanding. As of February 21, 1997 the aggregate
 market value of the common stock, the Registrant's only class of voting stock,
   held   by non-affiliates was $23,584,935.  This calculation is based upon the
          closing sales price of $3.25 per share on February 21, 1997.





<PAGE>                  
                   PEASE OIL AND GAS COMPANY AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                        FOR THE YEARS ENDED
                                                             DECEMBER 31,
                                                       1996               1995
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                          $(1,411,582)   $  (765,436)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
       Provision for depreciation and depletion       1,009,645      1,200,487
       Amortization of intangible assets and
         discount on convertible debt                   236,963        109,487
       Deferred income taxes                               --         (400,000)
          equipment                                       6,660        (75,073)
       Provision for bad debts                           21,497         35,176
       Dry holes and abandonments                       525,000            --
       Issuance of common stock for services             85,288         71,392 
       Other                                            (54,942)       (41,770)
       Changes in operating assets and liabilities:
         (Increase) decrease in:
           Trade receivables                            342,170        625,286
           Inventory                                    124,502        296,824
           Prepaid expenses and other                   (14,316)        14,001
         Increase (decrease) in:
           Account payable                             (905,027)      (529,581)
           Accrued expenses                            (109,473)      (160,512)
       Net cash provided by (used in) operating        ---------      ---------
           activities                                  (143,615)       380,175
                                                       ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property,
    plant and equipment                              (1,403,413)      (387,403)
  Proceeds from redemption of certificate of deposit     53,500         43,000
  Proceeds from sale of property and equipment          163,821        823,631
                                                     -----------      ----------

       Net cash provided by (used in) investing
          activities                                 (1,186,092)      (479,228)
                                                     -----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of convertible debentures   5,000,000             -
   Repayment of long-term debt                        1,795,670)      (943,341)
   Proceeds from sale of common stock                   133,125        281,250
   Offering costs                                       (13,155)       (52,953)
   Debt issuance costs                                 (676,008)            -
                                                       ---------   -------------

       Net cash provided by (used in) financing
          activities                                  2,648,292       (715,044)

INCREASE (DECREASE) IN CASH AND EQUIVALENTS           1,318,585        144,359

CASH AND EQUIVALENTS, beginning of year                 677,275        532,916
                                                      ----------   -------------
CASH AND EQUIVALENTS, end of year                    $1,995,860       $677,275
                                                     ==========    =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
     Cash paid for interest                            $192,502       $273,735
                                                     ==========    ============

     Cash received (paid) for income taxes              $41,409       $(21,000)
                                                     ==========    ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
   AND FINANCING ACTIVITIES:

     Fair value of warrants granted for debt
        issuance costs                                 $600,000       $  -
     Fair value of warrants granted for discount
        on convertible debentures                     1,829,000          -
     Conversion of long-term debt to common stock       130,000          -
     Long-term debt incurred for purchase of vehicles     -             24,992
     Acquisition of oil and gas properties for
        common stock                                      -             59,922
     Common stock subscription receivable                 -             68,750

The accompanying notes are an integral part of these consolidated financial
statements.
                                   PAGE 57
<PAGE>

                                  SIGNATURES

In  accordance  with  Section 13 or 15 (d) of the Exchange  Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            PEASE OIL AND GAS COMPANY

Date: April 9, 1998                    By:/s/ Willard H. Pease, Jr.
                                       ----------------------------
                                       Willard H. Pease, Jr.
                                       President and Chief Executive Officer

Date: April 9, 1998                    By: /s/ Patrick J. Duncan
                                       -------------------------
                                       Patrick J. Duncan
                                       Chief Financial Officer, Treasurer,
                                       and Principal Accounting Officer

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.

Date: April 9, 1998                    By:/s/ Willard H. Pease, Jr.
                                       ----------------------------
                                       Willard H. Pease, Jr., President
                                       and Chairman of the Board

Date: April 9, 1998                    By: /s/ Patrick J. Duncan
                                       -------------------------
                                       Patrick J. Duncan
                                       Chief Financial Officer,
                                       Treasurer, and Director

Date: April 9, 1998                    By:/s/ Steve A. Antry
                                       ---------------------
                                       Steve A. Antry, Director

Date: April 9, 1998                    By:/s/ R. Thomas Fetters, Jr.
                                       -----------------------------
                                       R. Thomas Fetters, Jr., Director

Date: April 9, 1998                    By:/s/ Stephen L. Fischer
                                       -------------------------
                                       Stephen L. Fischer

Date: April 9, 1998                    By:/s/ Homer C. Osborne
                                       -----------------------
                                       Homer C. Osborne, Director

Date: April 9, 1998                    By:/s/ James C. Ruane
                                       ---------------------
                                       James C. Ruane, Director

Date: April 9, 1998                    By:/s/ Clemons F. Walker
                                       ------------------------
                                       Clemons F. Walker, Director

Date: April 9, 1998                    By:/s/ William F. Warnick
                                       -------------------------
                                       William F. Warnick, Director

                                       36



Exhibits are not attached to this amendment.  They were submitted in full with 
the filing of the 10-KSB/A dated March 9, 1998.  This amendment is for an error
in the figures shown on this page only.