UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR
         15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 1996

                                       OR

[  ]     TRANSACTION REPORT PURSUANT TO SECTION 13 OR
         15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to

                          COMMISSION FILE NUMBER 0-9946

                               GOLDEN OIL COMPANY
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                       84-0836562
  (State or other jurisdiction                                (I.R.S. Employer 
of incorporation or organization)                            Identification No.)

550 POST OAK BOULEVARD, SUITE 550, HOUSTON, TEXAS                    77027
(Address of principal executive offices)                           (Zip Code)

                                                (713) 622-8492
               (Registrants 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 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 requirements for the past 90 days.

YES        X      NO       ___

         As of November 1, 1996, the Registrant had outstanding  1,424,291
shares of common stock, par value $.01 per share and 22,254 shares of Class B
convertible common stock, par value $.01 per share.

                                  Page 1 of 22
<PAGE>
                                    CONTENTS

                                                                       PAGE

PART I.  FINANCIAL INFORMATION

Item 1.           Financial Statements

                  -   Consolidated Statements of Operations.........    3

                  -   Consolidated Balance Sheets...................    5

                  -   Consolidated Statements of Cash Flows.........    7

                  -   Notes to Consolidated Financial Statements....    9

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.....   14

PART II. OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K..................   21

                                  Page 2 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                                             THREE MONTHS ENDED SEPTEMBER 30,
                                              ----------------------------
                                                 1996              1995
                                              -----------      -----------
Revenues:
  Oil and gas production ..................   $   477,313      $   293,631
  Other ...................................         7,760            8,500
                                              -----------      -----------
       Total revenues .....................       485,073          302,131
                                              -----------      -----------

Costs and expenses:
  Production costs ........................       295,904          203,989
  Depreciation, depletion and
    amortization ..........................       114,730          131,045
  General and administrative ..............       123,875          127,245
                                              -----------      -----------
       Total costs and expenses ...........       534,509          462,279
                                              -----------      -----------

Gain (loss) on sale of property,
  equipment & other assets ................          (100)            --
Equity in net loss of investments .........        (4,391)            --
Property acquisition costs ................          --            (66,142)
Interest expense ..........................        (6,928)          (6,292)
Other income (expense) ....................         1,258           (1,699)
                                              -----------      -----------

Net earnings (loss) .......................   $   (59,597)     $  (234,281)
                                              ===========      ===========

Net earnings (loss) per common share ......   $     (0.04)     $     (0.17)
                                              ===========      ===========

Weighted average number of
  common shares and common
     share equivalents outstanding ........     1,424,291        1,404,291
                                              ===========      ===========

                 See Notes To Consolidated Financial Statements.

                                  Page 3 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                                                        NINE MONTHS ENDED
                                                           SEPTEMBER 30,
                                                   ----------------------------
                                                       1996            1995
                                                   -----------      -----------
Revenues:
   Oil and gas production ....................     $ 1,071,882      $   929,677
   Other .....................................          22,473           25,400
                                                   -----------      -----------
        Total revenues .......................       1,094,355          955,077
                                                   -----------      -----------
Costs and expenses:
   Production costs ..........................         689,069          608,495
   Depreciation, depletion and
     amortization ............................         316,696          391,455
   General and administrative ................         256,016          314,852
                                                   -----------      -----------
        Total costs and expenses .............       1,261,781        1,314,802
                                                   -----------      -----------
Gain (loss) on sale of property,
   equipment and other assets ................            (100)           8,337
Equity in net loss of investments ............         (14,145)            --
Property acquisition costs ...................            --            (66,142)
Interest expense .............................         (18,174)         (25,303)
Other income (expense) .......................           4,274           (3,740)
                                                   -----------      -----------
Net earnings (loss) before cumulative
   effect of accounting change ...............        (195,571)        (446,573)

Cumulative effect of accounting
   change (Note 1) ...........................         (39,770)            --
                                                   -----------      -----------
Net earnings (loss) ..........................     $  (235,341)     $  (446,573)
                                                   ===========      ===========
Net earnings (loss) per common share .........     $     (0.17)     $     (0.32)
                                                   ===========      ===========
Weighted average number of
    common shares and common
        share equivalents outstanding ........       1,424,291        1,404,291
                                                   ===========      ===========

                 See Notes to Consolidated Financial Statements.

                                  Page 4 of 22
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                               GOLDEN OIL COMPANY

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                                                  September 30,     December 31,
                                                       1996             1995
                                                   -----------      -----------
          ASSETS
Current assets:
   Cash and cash equivalents .................     $    54,944      $    67,599
   Short-term investments ....................          24,264           24,264
   Accounts receivable, net ..................         377,285          388,695
   Prepaid expenses and other ................          53,781           29,227
                                                   -----------      -----------
        Total current assets .................         510,274          509,785
                                                   -----------      -----------
Property and equipment, at cost:
   Oil and gas properties
   (using the successful efforts
     method of accounting)
        Producing properties .................       6,018,519        5,847,201
        Non-producing properties .............         105,000          105,000
                                                   -----------      -----------
        Total oil and gas properties .........       6,123,519        5,952,201
                                                   -----------      -----------
Pipeline, field and other well
   equipment .................................         268,046          267,743
Other property and equipment .................         461,125          461,125
                                                   -----------      -----------
                                                     6,852,690        6,681,069
Less accummulated depreciation,
   depletion and amortization ................      (3,810,879)      (3,454,413)
                                                   -----------      -----------
   Net property and equipment ................       3,041,811        3,226,656
                                                   -----------      -----------
Investments in commercial realty .............         191,703          205,848
Other assets .................................           1,481            1,481
                                                   -----------      -----------
                                                   $ 3,745,269      $ 3,943,770
                                                   ===========      ===========
                                   (Continued)

                 See Notes to Consolidated Financial Statements.

                                  Page 5 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                   (UNAUDITED)
                                                   SEPTEMBER 30,   DECEMBER 31,
                                                        1996           1995
                                                   ------------    ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable and
     current portion of long-term debt .........   $    141,955    $    122,079
   Accounts payable ............................      1,278,467       1,234,474
   Accrued expenses ............................         87,688         126,375
                                                   ------------    ------------
        Total current liabilities ..............      1,508,110       1,482,928
                                                   ------------    ------------
Long-term debt .................................         98,198          86,540
Other liabilities ..............................         87,213          87,213

Commitments and contingencies

Stockholders' equity:
  Preferred stock, par value $.01;
    authorized 10,000,000 shares, none issued ..           --              --
  Common stock, par value $.01;
    authorized 15,000,000 shares,
    issued and outstanding 1,424,291
    shares at September 30, 1996 and
    December 31, 1995 ..........................         14,243          14,243
  Class B convertible common stock,
    par value $.01; authorized 3,500,000
    shares, issued and outstanding
    22,254 shares at September 30, 1996
    and December 31, 1995 ......................            223             223
Additional paid-in capital .....................     13,839,479      13,839,479
Accumulated deficit ............................    (11,802,197)    (11,566,856)
                                                   ------------    ------------
       Total stockholders' equity ..............      2,051,748       2,287,089
                                                   ------------    ------------
                                                   $  3,745,269    $  3,943,770
                                                   ============    ============

                 See Notes to Consolidated Financial Statements.

                                  Page 6 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                       ------------------------
                                                          1996          1995
                                                       ---------      ---------
Cash flows from operating activities:
Net earnings (loss) ..............................     $(235,341)     $(446,573)
Adjustments to reconcile net
     income to net cash provided
     by operating activities:
  Depreciation, depletion
     and amortization ............................       316,696        391,455
  Equity in net loss of
     investment in commercial realty .............        14,145          6,037
  Reserve for deferred property
     acquisition costs ...........................          --           66,142
  (Gain) loss on sale of property
     and equipment ...............................           100         (8,337)
  Cumulative effect of accounting
     change ......................................        39,770           --
  Changes in components of working capital:
     (Increase) decrease in accounts
        receivable, net ..........................        11,410          5,638
     (Increase) decrease in prepaid
        expenses and other .......................       (24,554)        (7,563)
     Increase (decrease) in accounts
        payable ..................................        43,993         94,260
     Increase (decrease) in accrued
        expenses .................................       (38,687)       (29,910)
                                                       ---------      ---------
     Net cash provided by (used
            in) operating activities .............     $ 127,532      $  71,149
                                                       ---------      ---------

                                  (Continued)

                 See Notes to Consolidated Financial Statements.

                                  Page 7 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)
                                                           NINE MONTHS ENDED
                                                             SEPTEMBER 30,
                                                      -------------------------
                                                         1996           1995
                                                      ---------       ---------
Cash flows from investing activities:
  Proceeds from sale of property
    and equipment ..............................      $     400       $   9,500
  Proceeds from sale of producing
    properties .................................           --            21,053
  Additions of oil and gas properties ..........       (171,318)        (12,277)
  Additions of other property and
    equipment ..................................           (803)         (7,413)
  Decrease (increase) in short-term
    investments ................................           --              (707)
                                                      ---------       ---------
Net cash provided by (used in)
    investing activities .......................      $(171,721)      $  10,156
                                                      ---------       ---------
Cash flows from financing activities:
  Proceeds from issuance of
    long-term debt .............................        127,161            --
  Payment of long-term debt ....................        (95,627)       (161,500)
                                                      ---------       ---------
Net cash provided by (used in)
    financing activities .......................      $  31,534       $(161,500)
                                                      ---------       ---------
Net increase (decrease) in cash and
  cash equivalents .............................        (12,655)        (80,195)
Cash and cash equivalents at
  beginning of period ..........................         67,599          92,609
                                                      ---------       ---------
Cash and cash equivalents at
  end of period ................................      $  54,944       $  12,414
                                                      =========       =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

         Cash paid for interest expense was $19,349 and $32,816 for the nine
months ended September 30, 1996 and 1995, respectively. No cash was paid for
income taxes during the same corresponding periods.

                 See Notes To Consolidated Financial Statements.

                                  Page 8 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                   Notes to Consolidated Financial Statements

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

                  For a summary of significant accounting principles, see Notes
         to Consolidated Financial Statements and Note 1 thereof contained in
         the Annual Report on Form 10-K of Golden Oil Company ("Golden" or
         "Company") for the year ended December 31, 1995, which is incorporated
         herein by reference. The Company follows the same accounting policies
         during interim periods as it does for annual reporting purposes.

                  The accompanying consolidated financial statements are
         condensed and unaudited and have been prepared pursuant to the rules
         and regulations of the Securities and Exchange Commission ("SEC"). In
         the opinion of management, the unaudited interim financial statements
         reflect all adjustments of a normal recurring nature which are
         necessary to present a fair statement of the financial position and
         results of operations for the interim periods presented. Interim
         results are not necessarily indicative of a full year of operations.
         Certain information and note disclosures normally included in annual
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted pursuant to SEC
         rules and regulations; however, the Company believes that the
         disclosures made are adequate to make the information presented not
         misleading. These financial statements should be read in conjunction
         with the financial statements and the notes thereto included in the
         Company's Form 10-K for the year ended December 31, 1995.

                  On January 1, 1996, the Company adopted Statement of Financial
         Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
         Long-lived Assets and for Long-lived Assets to be Disposed Of." There
         was no effect on the financial position or results of operations from
         the adoption of this standard. In the future, however, adjustments
         could be required to the Company's producing oil and gas properties
         should prices for oil and gas decline significantly or if the Company
         were to revise its estimates of recoverable oil and gas reserves.

         RECLASSIFICATIONS

                  Certain amounts from prior periods have been reclassified to
         conform to the presentation format for the 1996 Consolidated Financial
         Statements with no effect on reported results of operations.


                                  Page 9 of 22
<PAGE>
                               GOLDEN OIL COMPANY

         ACCOUNTS RECEIVABLE

                  Amounts shown as accounts receivable are net of $91,171 at
         September 30, 1996 and $73,118 at December 31, 1995 to reflect
         estimated provisions for doubtful collection of certain non-recourse
         obligations primarily in connection with certain working interest
         participants and drilling arrangements of a Company subsidiary.

         INVESTMENTS

                  The Company adopted the provisions of Statement of Financial
         Accounting Standards No. 115, Accounting for Certain Investments in
         Debt and Equity Securities ("SFAS 115") effective January 1, 1994.
         Prior to the adoption of SFAS 115, investment securities were carried
         at the lower of average cost or market. There was no impact resulting
         from the adoption of this standard as aggregate cost of investments
         approximates market value. The Company's short-term investments at
         September 30, 1996 and December 31, 1995 consisted of a certificate of
         deposit held by a federally insured bank.

                  The Company holds an ownership interest in its headquarters
         office building. For presentation purposes in the accompanying
         financial statements, the Company accounts for its investment using the
         equity method and recognizes its pro-rata share of net income or loss
         in its current operating statements.

         ACCOUNTING CHANGE

                  Effective January 1, 1996 the Company changed its depletion
         method on producing oil and gas properties from the
         property-by-property basis to the field basis of applying the
         unit-of-production method. The field basis provides for the aggregation
         of wells that have a common geological reservoir or field. The Company
         believes that the field basis provides a better matching of expenses
         with revenues over the productive life of the properties and,
         therefore, that the new method is preferable to the
         property-by-property basis. The cumulative effect of this change in
         accounting method of $39,770 ($.03 per share) is reported separately in
         the accompanying consolidated statements of operations. At the date of
         the change in accounting method, the net effect of the change was a
         $21,600 decrease in depletion and depreciation expense and a $21,600
         increase in net income ($.02 per share) reported for the three months
         ended March 31, 1996. Had the change in method been implemented at the
         beginning of 1995, the pro forma impact on the results of operations
         for the three months ended March 31, 1995 would have been a decrease in
         depletion and depreciation expense of approximately $22,800 and a
         $22,800 increase in net income ($.02 per share).

                                 Page 10 of 22
<PAGE>
                              GOLDEN OIL COMPANY

(2)      CERTAIN FIXED PRICE SALE AGREEMENTS

                  In order to plan Company operations and protect against sudden
         declines in oil and gas prices the Company entered into a fixed price
         agreement with one principal purchaser of its oil production in its
         South Dog Creek field in Oklahoma. Under such agreements, the Company
         has contracted for the sale of approximately fifty percent of its
         current average daily oil production at prices, net of all transport
         charges or "basis differential" adjustments, of $17.01 per barrel. Such
         agreements, which may be extended or modified, cover a term through at
         least December 31, 1996. The Company has also entered into a second
         fixed price agreement with one principal purchaser of its oil
         production in its San Juan Basin field in New Mexico. The Company has
         contracted for the sale of approximately twenty-five percent of its
         average daily oil production at prices, net of all transport charges or
         "basis differential" adjustments, of $21.17 per barrel. The agreement
         covers a term through June 30, 1997.

(3)      DEVELOPMENT OF SOUTH DOG CREEK FIELD

                  During the third quarter of 1996 the Company completed initial
         stage field work for the waterflood development of its South Dog Creek
         field in Osage County, Oklahoma. All of the Company's joint working
         interest owners have elected to participate in such development and to
         pay their respective pro-rata shares of the initial stage costs. At
         September 30, 1996 the Company has expended approximately $165,000 to
         complete the initial phase of development. Although substantially all
         of the field work has been completed, the Company does not anticipate
         the possibility of significant increases in production volumes from the
         South Dog Creek field until the reservoir is repressurized by
         waterflood injection and the field's response is evaluated. The Company
         will evaluate the response from the initial phase of development before
         proceeding with possible further development of the field. The
         Company's further development of the South Dog Creek field also is
         subject to the availability of financing from third party sources.
         Until actual production results are available there can be no
         determination as to the availability of such financing.

                                 Page 11 of 22
<PAGE>
                               GOLDEN OIL COMPANY

(4)      INDEBTEDNESS

                  In April 1996, the Company entered into a new credit agreement
         with a commercial bank which provides for an increase of the Company's
         borrowings from $150,000 up to $400,000 and extends the maturity
         schedule of the Company's debt to four years, subject to certain
         conditions.

                  Proceeds from the additional financing are needed to refinance
         short-term debt currently outstanding, to acquire additional interests
         in Company-operated properties and to pay other payables. At March 31,
         1996 the Company had a working capital deficit of approximately
         $1,000,000. In order to obtain the new financing the Company was
         required by the lending bank to provide a personal guarantee from a
         principal officer of the Company for repayment in full to the bank of
         all principal, interest and related costs. The Company's management and
         the bank were concerned about factors including the Company's lack of
         liquidity, the working capital deficit, and the threat of a repeat of
         the oil price collapse such as occurred throughout the first half of
         1994. As a result of its financial position, the Company was not able
         to pay a cash fee for the personal guarantee required by the lender as
         a condition of extending credit to the Company as above. In lieu of
         cash payment, the Company proposed to pay the financing fee by
         delivering to the guarantor unregistered shares of its common stock. On
         March 29, 1996 the Board of Directors approved execution by the Company
         of the bank credit agreement and the payment and delivery to the
         guarantor of warrants to purchase 250,000 unregistered shares of common
         stock of the Company through March 2006 for an exercise price of $.20
         per share. Prior to approving execution of the agreement to obtain
         additional bank credit and the related guarantee arrangements, the
         Board of Directors retained an independent investment banking firm to
         advise concerning the fairness, from a financial point of view, of
         terms proposed to be paid for such guarantee. In the regular course of
         its business, such investment banking firm renders advice and opinions
         regarding mergers, acquisitions, financing arrangements, and cash and
         share transactions for small capitalization natural resource companies.
         At the meeting of the Board of Directors on March 29, 1996 such
         independent investment bank delivered to the Board its written opinion
         to the effect that the proposed transaction was fair, from a financial
         point of view, to the Company and its stockholders.

                  Under the Company's new credit agreement, the Company is
         required to make monthly payments of principal and interest, beginning
         in May 1996, of approximately $10,400 through April 2000. As of
         November 15, 1996, the Company had borrowed $277,000 and had $123,000
         remaining available under the new credit agreement.

                                 Page 12 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                  In addition, the Company is paying down a line of credit with
         a second commercial bank under which a principal amount of $35,000
         remains owed at September 30, 1996. Effective March 1996, the Company
         began reducing the principal amount borrowed under such line by $5,000
         each month. No additional credit is available under such line.

(5)      STRATEGIC CONSIDERATIONS

                  In earlier stages of its development, the Company's strategic
         emphasis focused on oil and gas production and development,
         particularly of the substantial potential value possibly recoverable by
         waterflood of the South Dog Creek field in Oklahoma and of the high
         quality but higher fixed cost production in the San Juan Basin, New
         Mexico. More recently, a number of material adverse changes have
         occurred in the industry. These adverse developments have affected in
         particular small oil and gas companies whose operations were not
         diversified into other business sectors. In response to the changed
         operating environment, the Company is actively considering transactions
         by which its operations may be further diversified. In this process the
         Company may prune its oil and gas operations while strengthening its
         activities in real estate, financial services or other sectors.

                  During late 1993 and 1994, the Company diversified outside of
         the energy sector through acquisition of interests in the commercial
         office building in Houston, Texas where the Company maintains its
         principal offices. The Company is actively reviewing more substantial
         transactions outside the energy sector. While such diversification
         appears to offer more attractive long-term opportunities than are
         offered by the oil and gas sector currently, the Company's ability to
         arrange financing to enter into a material transaction is subject to a
         number of other factors, certain of which are difficult to predict or
         are beyond management's control. Such factors include the degree of the
         Company's future success in development of its proved undeveloped
         reserves; the respective future performance of oil and gas prices; and
         the availability to the Company of financing for other business.

               End of Notes to Consolidated Financial Statements.

                                 Page 13 of 22
<PAGE>
                              GOLDEN OIL COMPANY

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

         The Company is a diversified enterprise whose current operations
emphasize oil and gas production and development. Over the last several years,
the Company has increased the size and scope of its oil and gas operations
through a number of corporate transactions, primarily involving asset purchases
and mergers. Corporate transactions also have been undertaken or considered in
other business sectors. To date, an investment has been made in the real estate
sector through the acquisition of a limited partnership interest in the
Company's headquarters office building in Houston, Texas. The Company is seeking
new operations and is actively reviewing transactions involving diversification
outside the energy sector.

         The Company's operations during 1995 and to date during 1996 have been
funded primarily through internally generated funds from operating activities,
sale of scattered nonstrategic oil and gas properties, and from existing working
capital and borrowings under its credit facilities. During the second quarter of
1996, the Company completed negotiations to obtain new credit from a commercial
bank, the result of which increased its available borrowings to $400,000.
Management anticipates that the Company will meet ordinary operating needs for
working capital from internal sources. However, the Company will require
additional financing in order to complete development of its proved undeveloped
reserves, or to make acquisitions either within or outside of the oil and gas
sector. The Company may arrange new financing through public or private
offerings of the Company's securities, asset sales, joint ventures, or other
means. If the Company is successful in its financing efforts, a significant use
of proceeds will be to improve its current working capital position.

                                 Page 14 of 22
<PAGE>
                               GOLDEN OIL COMPANY

         In April 1996, the Company executed its new credit agreement which
increased its line of credit to $400,000 and extended the maturity schedule an
additional four years through April 2000, subject to certain conditions.

         Proceeds from the additional financing are needed to refinance
short-term debt currently outstanding, to acquire additional interests in
Company-operated properties and to pay other payables. At March 31, 1996 the
Company had a working capital deficit of approximately $1,000,000. In order to
obtain the new financing the Company was required by the lending bank to provide
a personal guarantee from a principal officer of the Company for repayment in
full to the bank of all principal, interest and related costs. The Company's
management and the bank were concerned about factors including the Company's
lack of liquidity, the working capital deficit, and the threat of a repeat of
the oil price collapse such as occurred throughout the first half of 1994. As a
result of its financial position, the Company was not able to pay a cash fee for
the personal guarantee required by the lender as a condition of extending credit
to the Company as above. In lieu of cash payment, the Company proposed to pay
the financing fee by delivering to the guarantor unregistered shares of its
common stock. On March 29, 1996 the Board of Directors approved execution by the
Company of the bank credit agreement and the payment and delivery to the
guarantor of warrants to purchase 250,000 unregistered shares of common stock of
the Company through March 2006 for an exercise price of $.20 per share. Prior to
approving execution of the agreement to obtain additional bank credit and the
related guarantee arrangements, the Board of Directors retained an independent
investment banking firm to advise concerning the fairness, from a financial
point of view, of terms proposed to be paid for such guarantee. In the regular
course of its business, such investment banking firm renders advice and opinions
regarding mergers, acquisitions, financing arrangements, and cash and share
transactions for small capitalization natural resource companies. At the meeting
of the Board of Directors on March 29, 1996 such independent investment bank
delivered to the Board its written opinion to the effect that the proposed
transaction was fair, from a financial point of view, to the Company and its
stockholders.

         Under the Company's new credit agreement, effective as of April 12,
1996, the Company is required to make monthly payments, including principal and
interest, beginning in May 1996 of approximately $10,400 through April 2000 and,
as of November 15, 1996, the Company had borrowed $277,000 and had $123,000
remaining available.

         In addition, the Company is paying down a line of credit with a second
commercial bank under which $35,000 in principal amount remained owed at
September 30, 1996. Effective during March 1996, the Company began reducing the
principal amount borrowed under such line by $5,000 per month. There is no
additional credit available under such line.

                                 Page 15 of 22
<PAGE>
                               GOLDEN OIL COMPANY

         Cash flow generated by operating activities was $127,532 for the first
nine months of 1996 compared to $71,149 the first nine months of 1995. The
increase from the first nine months of 1995 primarily reflects an increase in
oil and gas revenues due to an increase in oil and gas prices and the Company
purchasing additional interests in Company-operated properties in New Mexico
partially offset by an increase in production costs as a result of such
purchases. Additionally, general and administrative expenses have decreased
through reductions in personnel and fees for outside services.

         In order to plan Company operations and protect against sudden declines
in oil and gas prices, the Company has entered into a fixed price agreement with
one principal purchaser of its oil production in its South Dog Creek field in
Oklahoma. Under such agreement, the Company has contracted for the sale of
approximately fifty percent of its current average daily oil production at
prices, net of all transport charges or "basis differential" adjustments, of
$17.01 per barrel. Such agreement, which may be extended or modified, cover a
term through at least December 31, 1996. In the third quarter of 1996, the
Company entered into a second fixed price agreement with one principal purchaser
of its oil production in its San Juan Basin field in New Mexico. The Company has
contracted for the sale of approximately twenty-five percent of its average
daily oil production at prices, net of all transport charges or "basis
differential" adjustments, of $21.17 per barrel. The agreement covers a term
through June 30, 1997.

         During the third quarter of 1996 the Company completed initial stage
field work for the waterflood development of its South Dog Creek field in Osage
County, Oklahoma. All of the Company's joint working interest owners have
elected to participate in such development and to pay their respective pro-rata
shares of the initial stage costs. At September 30, 1996 the Company has
expended approximately $165,000 to complete the initial phase of development.
Although substantially all of the field work has been completed, the Company
does not anticipate significant increases in production volumes from the South
Dog Creek field until the reservoir is repressurized by waterflood injection and
the field's response is evaluated. The Company will evaluate the field response
from the initial phase of development before proceeding with possible further
development. The Company's further development of the South Dog Creek field also
is subject to the availability of financing from third party sources. Until
actual production results are available there can be no determination as to the
availability of such financing.
                                 Page 16 of 22
<PAGE>
                               GOLDEN OIL COMPANY

         At September 30, 1996, the Company had a working capital deficit of
$997,836 compared to a working capital deficit of $973,143 at December 31, 1995,
and a current ratio of .34 to 1.00 as of September 30, 1996 compared to a
current ratio of .34 to 1.00 as of December 31, 1995. The increase in the
working capital deficit at September 30, 1996 primarily reflects payables
associated with the increased capital expenditures on the waterflood project
partially offset by a reduction in receivables from working interest
participants.

         Due to factors including changes in tax laws, adverse changes in the
economics of exploration drilling and the availability to the Company of
alternative uses of capital, during the late 1980s the Company curtailed
exploration activities. If the Company commences such programs in the future, it
intends to continue its previous policy of sharing exploration risks with third
party drilling participants. Certain of the Company's oil and gas leases provide
for ongoing drilling arrangements for periodic development of proved reserves.
The Company's principal development obligations under such agreements have been
suspended pending clarification of title assignments on certain federal leases.
The Company expects to obtain drilling participation from industry partners so
as to reduce the amount of the Company's required drilling commitments.

                                 Page 17 of 22
<PAGE>
                               GOLDEN OIL COMPANY

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 1996 with the three months
ended September 30, 1995.

         REVENUES

         Revenues from oil and gas production increased from $293,631 during the
third quarter of 1995 to $477,313 in the comparable 1996 quarter, an increase of
$183,682. The increase is primarily attributable to an increase in average oil
price of $2.00 per barrel from $16.89 per barrel during the third quarter of
1995 to $18.89 per barrel during the third quarter of 1996. Additionally,
average gas prices increased $.25 per mcf from $.94 per mcf during the third
quarter of 1995 to $1.19 per mcf during the third quarter of 1996. In addition,
production volume increased 5,800 barrels and 27,000 mcf in the third quarter of
1996 compared to the same period in 1995 primarily due to the Company purchasing
additional interests in Company-operated properties in New Mexico.

         Other revenue was $7,760 for the third quarter of 1996 compared to
$8,500 for the comparable period in 1995, primarily due to a decrease in
gathering and operating fees resulting from the shut-in of certain marginally
producing wells in the San Juan Basin field in New Mexico.

         COSTS AND EXPENSES

         Oil and gas production costs increased by $91,915 from $203,989 for the
third quarter of 1995 to $295,904 for the same period in 1996. Such increases
are primarily due to the production costs associated with the purchases of
additional interests in Company-operated properties. General and administrative
expenses decreased by $3,370 from $127,245 for the third quarter of 1995 to
$123,875 for the same period in 1996.

         Depreciation,  depletion and amortization  expenses  decreased from
$131,045 for the third quarter of 1995 to $114,730 for the comparable period of
1996.

         Loss on sale of property and equipment during the third quarter of 1996
of $100 reflects the sale of field equipment. Property acquisition costs during
the third quarter of 1995 of $66,142 reflects the writedown of deferred property
acquisition costs related to the proposed purchase of properties in New Mexico.
Interest expense increased by $636 from $6,292 for the third quarter of 1995 to
$6,928 for the same period in 1996 due to an increase in average outstanding
borrowings.

         Primarily reflecting the factors discussed above, the Company reported
a net loss for the three months ended September 30, 1996 of $59,597 compared to
a net loss of $234,281 for the same period of 1995.

                                 Page 18 of 22
<PAGE>
                               GOLDEN OIL COMPANY

RESULTS OF OPERATIONS

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1996 WITH THE NINE MONTHS
ENDED SEPTEMBER 30, 1995.

         REVENUES

         Revenues from oil and gas production increased from $929,677 during the
first nine months of 1995 to $1,071,882 in the first nine months of 1996, an
increase of $142,205. The increase is primarily attributable to an increase in
average oil price of $1.16 per barrel from $17.32 per barrel during the first
nine months of 1995 to $18.48 during the first nine months of 1996.
Additionally, average gas prices increased $.14 per mcf from $.94 during the
first nine months of 1995 to $1.08 for the same period in 1996. Overall, gas
production volumes remained relatively constant and oil production volumes
increased 3,300 barrels in the first nine months of 1996 compared to the same
period in 1995 resulting from the Company purchasing additional interests in
Company-operated properties in New Mexico in the third quarter of 1996.

         Other revenue was $22,473 for the first nine months of 1996 compared to
$25,400 for the comparable period in 1995, primarily due to a decrease in
gathering and operating fees resulting from the shut-in of certain marginally
producing wells in the San Juan Basin field in New Mexico.

         COSTS AND EXPENSES

         Oil and gas production costs increased by $80,574 from $608,495 for the
first nine months of 1995 to $689,069 for the same period in 1996. Such increase
is primarily due to the production costs associated with the purchases of
additional interests in Company-operated properties. General and administrative
expenses decreased by $58,836 from $314,852 for the first nine months of 1995 to
$256,016 for the same period in 1996. The decrease is primarily attributable to
continuing reductions in personnel and corporate overhead.

         Depreciation, depletion and amortization expenses decreased from
$391,455 for the first nine months of 1995 to $316,696 for the comparable period
of 1996.

         Gain on property and equipment during the first nine months of 1995 of
$8,337 reflects the sale of a certain scattered, nonstrategic well. Property
acquisition cost during the first nine months of 1995 of $66,142 is due to the
writedown in the third quarter of deferred property acquisition costs related to
the proposed purchase of properties in New Mexico. Interest expense decreased by
$7,129 from $25,303 for the first nine months of 1995 to $18,174 for the same
period in 1996 due to reductions in average principal amounts outstanding for
the corresponding periods.
                                 Page 19 of 22
<PAGE>
                               GOLDEN OIL COMPANY

         As discussed more fully in Note 1 to the Consolidated Financial
Statements, the Company recognized a nonrecurring noncash charge for the
cumulative effect of a change in the accounting method for depletion of $39,770.

         Primarily reflecting the factors discussed above, the Company reported
a net loss for the nine months ended September 30, 1996 of $235,341 compared to
a net loss of $446,573 for the same period of 1995.

                                 Page 20 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                           PART II. OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K  (MATERIAL EVENT).

                  (a)      Exhibits

                           None.

                  (b)      Reports on Form 8-K

                           None.

                                 Page 21 of 22
<PAGE>
                               GOLDEN OIL COMPANY

                                   SIGNATURES

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

                                            GOLDEN OIL COMPANY

Date:    November 14, 1996          By:     /S/ RALPH T. MCELVENNY, JR.
                                                Chief Executive Officer

                                    By:     /S/ JEFFREY V. HOUSTON
                                                Chief Financial and Accounting 
                                                Officer
                                 Page 22 of 22