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, 1997


                                       OR

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

        For the transition period m __________________ 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 of                         (I.R.S. Employer
 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 [ ]          NO   [X]

      As of November 1, 1997, the Registrant had outstanding 1,524,291 shares of
common stock, par value $.01 per share and 22,254 shares of Class B common
stock, par value $.01 per share.

                                  Page 1 of 24
<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.....................................    15

PART II.    OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K..............................    23

                                  Page 2 of 24
<PAGE>
                               GOLDEN OIL COMPANY

                          PART I. FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                         THREE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                   -----------------------------
                                                       1997             1996
                                                   -----------      -----------
Revenues:
   Oil and gas production ....................     $   383,254      $   436,778
   Other .....................................           6,488            7,760
                                                   -----------      -----------
      Total revenues .........................         389,742          444,538
                                                   -----------      -----------
Costs and expenses:
   Production costs ..........................         323,077          263,130
   Pit impoundment costs .....................           4,743             --
   Depreciation, depletion and
     amortization ............................          79,020          106,969

   General and administrative ................          65,506          123,875
                                                   -----------      -----------
      Total costs and expenses ...............         472,346          493,974
                                                   -----------      -----------
                                                       (82,604)         (49,436)
Gain (loss) on sale of property,
   equipment and other assets ................          30,000             (100)
Interest expense, net ........................          (5,841)          (6,928)

Other income (expense) .......................            (610)          (3,133)
                                                   -----------      -----------
Net earnings (loss) ..........................     $   (59,055)     $   (59,597)
                                                   ===========      ===========
Net earnings (loss) per common share .........     $      (.04)     $      (.04)
                                                   ===========      ===========
Weighted average number of
   common shares and common
   share equivalents outstanding .............       1,430,812        1,424,291
                                                   ===========      ===========
               See Notes to Consolidated Financial Statements.

                                  Page 3 of 24
<PAGE>
                               GOLDEN OIL COMPANY
                          PART I. FINANCIAL INFORMATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                        NINE MONTHS ENDED
                                                                          SEPTEMBER 30,
                                                                 --------------------------
                                                                     1997           1996
                                                                 -----------    -----------
<S>                                                              <C>            <C>        
Revenues:
   Oil and gas production ....................................   $ 1,221,417    $ 1,031,347

   Other .....................................................        19,710         22,473
                                                                 -----------    -----------
      Total revenues .........................................     1,241,127      1,053,820
                                                                 -----------    -----------
Costs and expenses:
   Production costs ..........................................       848,899        656,295
   Pit impoundment costs .....................................        77,509           --
   Depreciation, depletion and
     amortization ............................................       239,926        308,935

   General and administrative ................................       230,590        256,016
                                                                 -----------    -----------
      Total costs and expenses ...............................     1,396,924      1,221,246
                                                                 -----------    -----------
                                                                    (155,797)      (167,426)

Gain (loss) on sale of property,
  equipment and other assets .................................        22,448           (100)
Interest expense, net ........................................       (15,484)       (18,174)

Other income (expense) .......................................        (2,200)        (9,871)
                                                                 -----------    -----------
Net earnings (loss)before
cumulative effect of accounting change .......................      (151,033)      (195,571)

Cumulative effect of accounting
   change (Note 1) ...........................................          --          (39,770)
                                                                 -----------    -----------
Net earnings (loss) ..........................................   $  (151,033)   $  (235,341)
                                                                 ===========    ===========
Per share data:
   Net earnings (loss) before
      cumulative effect of accounting
      change .................................................          (.11)          (.14)

   Cumulative effect of accounting change ....................          --             (.03)
                                                                 -----------    -----------
   Net earnings (loss) per common share ......................   $      (.11)   $      (.17)
                                                                 ===========    ===========
Weighted average number of
   common shares and common
   share equivalents outstanding .............................     1,426,489      1,424,291
                                                                 ===========    ===========
</TABLE>
               See Notes to Consolidated Financial Statements 

                                  Page 4 of 24
<PAGE>

                               GOLDEN OIL COMPANY

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                                  SEPTEMBER 30,     DECEMBER 31,
                                                       1997             1996
                                                   -----------      -----------
          ASSETS

Current assets:
    Cash and cash equivalents ................     $   134,414      $   165,209
    Short-term investments ...................            --             25,000
    Accounts receivable, net .................         468,219          440,224

    Prepaid expenses and other ...............          52,836           35,997
                                                   -----------      -----------
         Total current assets ................         655,469          666,430
                                                   -----------      -----------
Property and equipment, at cost:
    Oil and gas properties
    (using the successful efforts
    method of accounting)
         Producing properties ................       5,817,139        5,781,349
         Non-producing properties ............         105,000          105,000
                                                   -----------      -----------
         Total oil and gas properties ........       5,922,139        5,886,349
                                                   -----------      -----------
Pipeline, field and other well
    equipment ................................         236,932          242,902

Other property and equipment .................         412,790          468,911
                                                   -----------      -----------
                                                     6,571,861        6,598,162
Less accumulated depreciation,
    depletion and amortization ...............      (3,697,247)      (3,566,746)
                                                   -----------      -----------
   Net property and equipment ................       2,874,614        3,031,416
                                                   -----------      -----------
Investments, real estate .....................         192,446          196,234

Other assets .................................           1,481            1,481
                                                   -----------      -----------
                                                   $ 3,724,010      $ 3,895,561
                                                   ===========      ===========

                                   (Continued)

               See Notes to Consolidated Financial Statements.

                                  Page 5 of 24
<PAGE>


                               GOLDEN OIL COMPANY

                   CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                   (UNAUDITED)

                                                  SEPTEMBER 30,     DECEMBER 31,
                                                       1997            1996
                                                   ------------    ------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable and current
     portion of long-term debt .................   $    111,732    $    130,546
   Accounts payable ............................      1,211,231       1,392,984

   Accrued expenses ............................        206,054         131,496
                                                   ------------    ------------
        Total current liabilities ..............      1,529,017       1,655,026
                                                   ------------    ------------
Long-term debt .................................         54,023          69,383
Other liabilities ..............................        186,073          85,223

Commitments and contingencies
(See also Notes 4 and 5) .......................           --              --

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 1,674,291  shares at
    September 30, 1997, and
    1,424,291 at December 31, 1996 .............         16,743          14,243
  Class B common stock, par value $.01
    (convertible share-for-share into common
    stock);  authorized  3,500,000 shares;
    issued and outstanding 22,254 shares at
    September  30, 1997 and  December  31, 1996             223             223
  Additional paid-in capital ...................     13,928,855      13,864,479

  Accumulated deficit ..........................    (11,944,049)    (11,793,016)
  Treasury stock, at cost,
   150,000 shares at September 30, 1997 ........        (46,875)           --
                                                   ------------    ------------
        Total stockholders' equity .............      1,954,897       2,085,929
                                                   ------------    ------------
                                                   $  3,724,010    $  3,895,561
                                                   ============    ============

               See Notes to Consolidated Financial Statements.

                                  Page 6 of 24
<PAGE>
                               GOLDEN OIL COMPANY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                         NINE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                      -------------------------
                                                        1997            1996
                                                      ---------       ---------
Cash flows from operating activities:
   Net earnings (loss) .........................      $(151,033)      $(235,341)
   Adjustments to reconcile net
      income to net cash provided
      by operating activities:
   Depreciation, depletion
      and amortization .........................        239,926         316,696
   Equity in net loss of investment
      in commercial realty .....................          3,788          14,145
   Loss on sale of property
      and equipment ............................          7,552             100
   Gain on sale of producing
       properties ..............................        (30,000)           --
   Cumulative effect of accounting
       change ..................................           --            39,770
   Reserve for pit impoundment costs ...........         35,000            --
   Changes in components of working
       capital:
      (Increase) decrease in accounts
         receivable, net .......................        (27,995)         11,410
      (Increase) decrease in prepaid
         expenses and other ....................        (16,839)        (24,554)
      Increase (decrease) in accounts
         payable ...............................       (181,753)         43,993
      Increase (decrease) in accrued
         expenses ..............................         74,558         (38,687)
      Increase (decrease) in
         other liabilities .....................         65,850            --
                                                      ---------       ---------
Net cash provided by (used in)
   operating activities ........................      $  19,054       $ 127,532
                                                      =========       =========

                                   (Continued)

               See Notes to Consolidated Financial Statements.

                                  Page 7 of 24
<PAGE>
                               GOLDEN OIL COMPANY

              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)

                                                           NINE MONTHS ENDED
                                                             SEPTEMBER 30,
                                                       ------------------------
                                                          1997           1996
                                                       ---------      ---------
Cash flows from investing activities:
   Proceeds from sale of property
     and equipment ...............................     $   2,662      $     400
   Proceeds from sale of producing
     properties ..................................        30,000           --
   Additions of oil and gas properties ...........       (86,809)      (171,318)
   Additions of other property and equipment .....        (6,527)          (803)
   Decrease in short-term investments ............        25,000           --
                                                       ---------      ---------
Net cash used in investing activities ............     $ (35,674)     $(171,721)
                                                       ---------      ---------
Cash flows from financing activities:
   Proceeds from issuance of
     long-term debt ..............................        64,566        127,161
   Payment of long-term debt .....................       (98,741)       (95,627)
   Proceeds  from  the  exercise of
      stock warrants .............................        20,000           --
                                                       ---------      ---------
Net cash provided by (used in)
   financing activities ..........................     $ (14,175)     $  31,534
                                                       ---------      ---------
Net increase  (decrease) in cash
   and cash equivalents ..........................       (30,795)       (12,655)
Cash and cash equivalents at
   beginning of period ...........................       165,209         67,599
                                                       ---------      ---------
Cash and cash equivalents at
   end of period .................................     $ 134,414      $  54,944
                                                       =========      =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

      Cash paid for interest expense was $15,735 and $19,349 for the nine months
ended September 30, 1997 and 1996, respectively. No cash was paid for income
taxes during the same corresponding periods.

      In connection with the stock warrant agreement (See Note 5 to the
Consolidated Financial Statements) the Company issued 250,000 shares of common
stock as treasury stock during 1997 pending exercise by the guarantor. The
guarantor has exercised 100,000 shares of such warrants for cash proceeds to the
Company of $20,000. As of November 14, 1997, 150,000 unexercised shares are
included in treasury stock.

                See Notes to Consolidated Financial Statements

                                  Page 8 of 24
<PAGE>
                  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, 1996. 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 such
      adjustments as are necessary to present a fair statement of the financial
      position, results of operations and cash flows 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, 1996.

      RECLASSIFICATIONS

            Certain amounts from prior periods have been reclassified to conform
      to the presentation format for the 1997 Consolidated Financial Statements
      with no effect on reported results of operations.

      ACCOUNTS RECEIVABLE

            Amounts shown as accounts receivable are net of $91,718 at September
      30, 1997 and December 31, 1996 to reflect estimated provisions for
      doubtful collection of certain non-recourse obligations primarily in
      connection with certain working interest participants of Company
      subsidiaries. Accounts receivable reflect net amounts due from affiliates
      of $27,255 at September 30, 1997 and $55,803 at December 31, 1996.

      INVESTMENTS

            The Company's short-term investments at December 31, 1996 consisted
      of a certificate of deposit held by a federally insured bank. Certificates
      of deposit are held until maturity and, accordingly, are carried at cost.
      No such investments were held at September 30, 1997.

                                  Page 9 of 24
<PAGE>
            The Company holds a limited partnership interest in its headquarters
      office building. The Company accounts for this investment using the equity
      method and, accordingly, the Company recognizes its pro-rata share of net
      income or loss of the limited partnership 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 the field basis provides a better
      matching of expenses with revenues over the productive life of the
      properties and, therefore, the Company believes the field basis method is
      preferable to the property-by-property basis method. The cumulative
      negative 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.

(2)   CERTAIN FIXED PRICE SALE AGREEMENTS

            In order to plan Company operations and to provide protection
      against sudden declines in oil and gas prices, from time to time the
      Company enters into fixed price sales contracts. For the period of
      September through November 1997, the Company has fixed price arrangements
      with two of its purchasers for approximately 60% of its anticipated
      monthly oil volumes at a price of approximately $18.50 per barrel. In
      addition, beginning in December 1997, the Company has entered into fixed
      price arrangements for approximately 40% of its anticipated monthly oil
      volumes at a price of approximately $19.75 per barrel through March 1998.
      The Company anticipates it will enter additional fixed price arrangements
      in the near future for a portion of its remaining monthly oil production.
      The Company believes it has entered into these fixed price arrangements
      with financially capable purchasers and does not anticipate nonperformance
      by the counterparties to such transactions. In the event of nonperformance
      by any of the counterparties, the Company believes that, subject to future
      market prices, it will be able to market its production to other parties
      under similar or then market value terms and conditions.

(3)   DEVELOPMENT OF SOUTH DOG CREEK FIELD

            In March 1993, an agreement was reached between the Company and
      Calumet Oil Company, the principal operators in the South Dog Creek,
      Oklahoma field, aimed at enhancing and extending the producing life of the
      field by injection of water into the Mississippian formation in ten wells
      covering four separate quarter section leases. The operators filed for a
      water injection permit with the Environmental Protection Agency ("EPA"),
      and during October 1993, a field-wide water injection permit was granted

                                 Page 10 of 24
<PAGE>
      by the EPA to the Company and another interest holder and operator. During
      the fourth quarter of 1995 the Company initiated a limited waterflood
      injection program on one of its operated leases believed to have
      demonstrated engineering potential for success. The program involves
      converting certain marginally producing wells to water injectors and
      reworking producing wells and well equipment to increase the wells' fluid
      volume capacity. The cost of the initial phase of the waterflood project
      on this lease through September 1997 was approximately $259,000, exclusive
      of operating fees charged by the Company, of which the Company's share was
      approximately $192,000. The Company funded its share of costs through
      internal cash flows with the balance paid by outside working interest
      owners who elected to join the project.

            The Company is gradually increasing the rate and total volume of
      water injected into the producing formation. Management will continue to
      evaluate the results of current development before determining whether to
      undertake additional development. The Company does not anticipate
      significant increases in overall production volumes from the field unless
      further development is implemented across a more extensive area and such
      further development is successful. Currently, rates of total water
      injection are approximately 1,600 barrels per day into three (3) injection
      wells. The Company is currently reviewing alternatives for the acquisition
      or development of additional water sources for the Company's injection
      plan. To date approximately 220,000 barrels of new water have been
      injected into the producing formation; however, this volume is estimated
      to be at least 400,000 barrels below the level at which localized
      repressurization may be expected to occur. Based on indications available
      from the localized response to water injection to date, the Company plans
      to continue its injection program. If sufficient production response is
      achieved, the Company will pursue a field-wide implementation of its
      waterflood plan. Determination as to full scale, field-wide development
      for water injection remains subject to, among other things, engineering
      advice based on the localized injection summarized above; projected oil
      prices; and the availability of additional financing. At this time, due to
      the variables discussed above, the Company is not able to provide a
      definitive estimate of overall projected waterflood costs. As results are
      received and analyzed, the Company will continue to review the historical
      costs and the projected overall costs of the waterflood project. Subject
      to the foregoing the Company is using a projected waterflood cost of
      $750,000, inclusive of costs already incurred.

(4)   ENVIRONMENTAL MATTERS

            The Bureau of Land Management ("BLM") of the U.S. Department of the
      Interior has implemented extensive national regulations for the handling
      and maintenance of produced water from well sites on all federal lands.
      The stated objective of the extensive new regulations is to provide
      guidance for closure of unlined surface impoundments in a manner that
      assures protection of fresh waters, public health and the environment. The
      regulations require oil and gas companies to eliminate the use of unlined
      surface impoundments in the operation of wells and to remediate and
      replace them with lined and enclosed surface pits. Such new federal
      government regulations provide for implementation on a region-by-region
      basis.

                                 Page 11 of 24
<PAGE>
            During January 1997, the designated regions were expanded to include
      approximately 80 wells in the Company's field of operations in New Mexico.
      Pursuant to the Company's operating permit from the Jicarilla Apache
      Indian Nation, the Company's operating subsidiary has been required to
      develop a plan for remediation and improvement for every well site. During
      May 1997 the BLM and the Jicarilla Environmental Protection Office ("EPO")
      approved the initial phase of the Plan ("Plan"). The initial phase of the
      Plan provided for the remediation and enclosure of 14 surface pits located
      at the well sites by June 30, 1997 in accordance with applicable Ordinance
      95-0-308-03. Surface pits on such well sites and on an additional 14 well
      sites have been enclosed and soil remediation is complete in accordance
      with BLM and EPO regulations. Work is ongoing for an additional 25 well
      sites. Costs to date vary by well site but have ranged between $1,500 to
      $8,000 per well site, or approximately $91,000 in total, as to which the
      Company's pro-rata share allocable to its working interest is
      approximately $47,000, including operating charges by the Company's
      operating subsidiary.

            The required remediation on all well sites operated by the Company
      in New Mexico is currently required to be completed by December 1998.
      Numerous oil and gas producers in the region, including the Company, are
      seeking extensions to such date but have not yet received such extension.
      The total cost of such work is subject to a number of variable expense
      factors including, among others, the cost and manner of disposal of
      removed soil and the amounts of soil that may be required to be removed.
      The Plan allows relatively broad soil disposal options; however, other
      more costly soil disposal alternatives may be deemed necessary or may be
      mandated by the regulatory agencies governing the remediation and
      impoundment programs.

            Based upon the preliminary information available at this time, the
      Company has estimated the total cost to complete the entire remediation
      and enclosure program in the Company's operating area to be in the range
      of approximately $300,000 to $500,000. Total costs could vary
      significantly from the Company's estimate due to the numerous variable
      factors discussed above. In recognition of the above factors the Company
      has charged a provision reflecting its preliminary estimate of its share
      of such costs, net of operating charges, of $77,000 to earnings in the
      first nine months of 1997. The adequacy of such provision will be reviewed
      by the Company as actual costs are incurred and such provision may be
      increased in the future.

(5)   INDEBTEDNESS

            In April 1996, the Company entered into a new credit agreement with
      a commercial bank in Albuquerque, New Mexico ("Bank") under which the
      Company increased the borrowings available to it from $150,000 to
      $400,000. In addition, the maturity schedule of the Company's debt was
      extended to four years, subject to certain conditions. Such credit
      facility was further required by the Bank to be independently, personally
      guaranteed and to be collateralized by the Company's New Mexico oil and
      gas properties.

                                 Page 12 of 24
<PAGE>
            Proceeds from the new credit facility were utilized to refinance
      short-term debt then outstanding; to acquire additional interests in oil
      and gas properties offered to the Company by working interest holders on
      leases in which the Company is operator; 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. As a result of its financial position, the
      Company was not able to pay a cash fee for the personal guarantee required
      by the Bank as a condition of extending credit to the Company. In lieu of
      cash payment, the Company proposed to pay the financing fee by delivering
      to the guarantor warrants to purchase unregistered shares of its common
      stock. On March 29, 1996 the Board of Directors approved execution by the
      Company of the credit agreement of the Bank 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. As of March 28, 1997, the guarantor had exercised rights
      to purchase 100,000 shares of common stock granted under the warrants.
      Such shares were issued by the Company in the third quarter and
      accordingly, have been reflected in the financial statements in the third
      quarter of 1997. The Company maintains as treasury stock 150,000 shares of
      common stock pending exercise by the guarantor.

            Under the Company's new credit agreement, the Company is required to
      make monthly payments of principal and interest, of approximately $10,400
      through April 2000. As of November 14, 1997, the Company had borrowed
      $341,000 and had $59,000 remaining available under the new credit
      agreement.

            The Company also maintained a credit facility in the original amount
      of $100,000 with a commercial bank in Tulsa, Oklahoma and had borrowed
      $70,000 under such line of credit facility. In March 1996, the Company
      began reducing the principal amount borrowed under this credit facility by
      $5,000 each month. Such line of credit was fully paid as of April 1997.

(6)   PURCHASES OF OIL AND GAS INTERESTS

            The Company periodically purchases oil and gas interests offered to
      it by holders within its area of operations. During 1996 and 1997 the
      Company purchased for approximately $65,000 and $50,000, respectively, oil
      and gas interests in New Mexico. Such purchases contributed additional
      gross revenues and production costs for the nine months ended September
      30, 1997. The Company may acquire additional oil and gas interests,
      although it has no current plans to do so.

(7)   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 

                                 Page 13 of 24
<PAGE>
      high quality but higher fixed cost production in the San Juan Basin, New
      Mexico. The Company has acquired and plans to continue to acquire
      interests in oil and gas properties within its areas of operation which
      are offered to it on economically attractive terms. However, in the early
      1990s the Company believed that a number of material adverse changes were
      occurring in the independent oil and gas industry, including price
      volatility, increasing costs of operation and a relatively less attractive
      ratio of risk to potential revenue in both the acquisition of oil and gas
      properties or the potential purchase of other independent oil and gas
      companies. 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 reduce its oil and
      gas operations while adding significantly to its participation in real
      estate, financial services or other sectors.

            During late 1993 and 1994, the Company diversified outside of the
      energy sector through acquisition of ownership interests in the commercial
      real estate sector, in particular the office building in Houston, Texas
      where the Company maintains its principal offices. The Company is actively
      reviewing transactions outside the energy sector. While such
      diversification appears to offer more attractive long-term opportunities
      than are offered by the small oil and gas sector, the Company's ability to
      arrange financing to enter into any 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 existing or other businesses.

              End of Notes to Consolidated Financial Statements.

                                 Page 14 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's 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 acquisition of a
limited partnership interest in the Company's headquarters office building in
Houston, Texas. The Company is seeking new operations and is reviewing
transactions involving diversification outside the energy sector.

      The Company's operations during 1996, and to date during 1997, have been
funded primarily through internally generated funds from operating activities,
and from existing working capital and borrowings under its credit facilities.
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.

      In April 1996, the Company entered into a new credit agreement with a
commercial bank in Albuquerque, New Mexico ("Bank") under which the Company
increased the borrowings available to it from $150,000 to $400,000. In addition,
the maturity schedule of the Company's debt was extended to four years, subject
to certain conditions. Such credit facility was further required by the Bank to
be independently, personally guaranteed and to be collateralized by the
Company's New Mexico oil and gas properties.

      Proceeds from the new credit facility were utilized to refinance
short-term debt then outstanding; to acquire additional interests in oil and gas
properties offered to the Company by working interest holders on leases in which
the Company is operator; 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. As a result of
its financial position, the Company was not able to pay a cash fee for the
personal guarantee required by the Bank as a condition of extending credit to
the Company. In lieu of cash payment, the Company proposed to pay the financing
fee by delivering to the guarantor warrants to purchase unregistered shares of
its common stock. On March 29, 1996 the Board of Directors approved execution by
the Company of the credit agreement of the Bank 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 

                                 Page 15 of 24
<PAGE>
exercise price of $.20 per share. As of March 28, 1997, the guarantor had
exercised rights to purchase 100,000 shares of common stock granted under the
warrants. At September 30, 1997, the shares had been issued by the Company and
delivered by the Company's transfer agent. Accordingly, such transaction is
reflected in the financial statements in the third quarter of 1997.

      Under the Company's new credit agreement, the Company is required to make
monthly payments of principal and interest, of approximately $10,400 through
April 2000. As of August 14, 1997, the Company had borrowed $341,000 and had
$59,000 remaining available under the new credit agreement.

      The Company also maintained a credit facility in the original amount of
$100,000 with a commercial bank in Tulsa, Oklahoma and had borrowed $70,000
under such line of credit facility. In March 1996, the Company began reducing
the principal amount borrowed under this credit facility by $5,000 each month.
Such line of credit has been fully paid as of April 1997.

      Cash flow provided by operating activities was $19,054 for the first nine
months of 1997 compared to cash flow provided by operating activities of
$127,532 for the first nine months of 1996. The decrease from the first nine
months of 1996 is primarily due to expenditures associated with pit closures
(See Note 4 to Consolidated Financial Statements) offset by increases in oil and
gas revenues. Such increase in revenues have been utilized primarily to fund pit
closure costs and the reduction of trade payables.

      In order to plan Company operations and to provide protection against
sudden declines in oil and gas prices, from time to time the Company enters into
fixed price sales contracts. For the period of September through November 1997,
the Company has fixed price arrangements with two of its purchasers for
approximately 60% of its anticipated monthly oil volumes at a price of
approximately $18.50 per barrel. In addition, beginning in December 1997, the
Company has entered into fixed price arrangements for approximately 40% of its
anticipated monthly oil volumes at a price of approximately $19.75 per barrel
through March 1998. The Company anticipates it will enter additional fixed price
arrangements in the near future for a portion of its remaining monthly oil
production. The Company believes it has entered into these fixed price
arrangements with financially capable purchasers and does not anticipate
nonperformance by the counterparties to such transactions. In the event of
nonperformance by any of the counterparties, the Company believes that, subject
to future market prices, it will be able to market its production to other
parties under similar or then market value terms and conditions.

      In March 1993, an agreement was reached between the Company and Calumet
Oil Company, the principal operators in the South Dog Creek, Oklahoma field,
aimed at enhancing and extending the producing life of the field by injection of
water into the Mississippian formation in ten wells covering four separate
quarter section leases. The operators filed for a water injection permit with
the Environmental Protection Agency ("EPA"), and during October 1993, a
field-wide water injection permit was granted by the EPA to the Company and
another interest holder and operator. During the fourth quarter of 1995 the
Company initiated a limited waterflood injection program on one of its operated
leases believed to have demonstrated engineering potential for success. The
program involves converting certain marginally producing wells to water
injectors and reworking producing wells and well equipment to 

                                 Page 16 of 24
<PAGE>
increase the wells' fluid volume capacity. The cost of the initial phase of the
waterflood project on this lease through September 1997 was approximately
$259,000, exclusive of operating fees charged by the Company, of which the
Company's share was approximately $192,000. The Company funded its share of
costs through internal cash flows with the balance paid by outside working
interest owners who elected to join the project.

      The Company is gradually increasing the rate and total volume of water
injected into the producing formation. Management will continue to evaluate the
results of current development before determining whether to undertake
additional development. The Company does not anticipate significant increases in
overall production volumes from the field unless further development is
implemented across a more extensive area and such further development is
successful. Currently, rates of total water injection are approximately 1,600
barrels per day into three (3) injection wells. The Company is currently
reviewing alternatives for the acquisition or development of additional water
sources for the Company's injection plan. To date approximately 220,000 barrels
of new water have been injected into the producing formation; however, this
volume is estimated to be at least 400,000 barrels below the level at which
localized repressurization may be expected to occur. Based on indications
available from the localized response to water injection to date, the Company
plans to continue its injection program. If sufficient production response is
achieved, the Company will pursue a field-wide implementation of its waterflood
plan. Determination as to full scale, field-wide development for water injection
remains subject to, among other things, engineering advice based on the
localized injection summarized above; projected oil prices; and the availability
of additional financing. At this time, due to the variables discussed above, the
Company is not able to provide a definitive estimate of overall projected
waterflood costs. As results are received and analyzed, the Company will
continue to review the historical costs and the projected overall costs of the
waterflood project. Subject to the foregoing the Company is using a projection
of $750,000, inclusive of costs already incurred.

      The Bureau of Land Management ("BLM") of the U.S. Department of the
Interior has implemented extensive national regulations for the handling and
maintenance of produced water from well sites on all federal lands. The stated
objective of the extensive new regulations is to provide guidance for closure of
unlined surface impoundments in a manner that assures protection of fresh
waters, public health and the environment. The regulations require oil and gas
`companies to eliminate the use of unlined surface impoundments in the operation
of wells and to remediate and replace them with lined and enclosed surface pits.
Such new federal government regulations provide for implementation on a
region-by-region basis.

      During January 1997, the designated regions were expanded to include
approximately 80 wells in the Company's field of operations in New Mexico.
Pursuant to the Company's operating permit from the Jicarilla Apache Indian
Nation, the Company's operating subsidiary has been required to develop a plan
for remediation and improvement for every well site. During May 1997 the BLM and
the Jicarilla Environmental Protection Office ("EPO") approved the initial phase
of the Plan ("Plan"). The initial phase of the Plan provided for the remediation
and enclosure of 14 surface pits located at the well sites by June 30, 1997 in
accordance with applicable Ordinance 95-0-308-03. Surface pits on such well
sites and on an additional 14 well sites have been enclosed and soil remediation
is complete in accordance with BLM and EPO 

                                 Page 17 of 24
<PAGE>
regulations. Work is ongoing for an additional 25 well sites. Costs to date vary
by well site but have ranged between $1,500 to $8,000 per well site, or
approximately $91,000 in total, as to which the Company's pro-rata share
allocable to its working interest is approximately $47,000, including operating
charges by the Company's operating subsidiary.

      The required remediation on all well sites operated by the Company in New
Mexico is currently required to be completed by December 1998. Numerous oil and
gas producers in the region, including the Company, are seeking extensions to
such date but have not yet received such extension. The total cost of such work
is subject to a number of variable expense factors including, among others, the
cost and manner of disposal of removed soil and the amounts of soil that may be
required to be removed. The Plan allows relatively broad soil disposal options;
however, other more costly soil disposal alternatives may be deemed necessary or
may be mandated by the regulatory agencies governing the remediation and
impoundment programs.

      Based upon the preliminary information available at this time, the Company
has estimated the total cost to complete the entire remediation and enclosure
program in the Company's operating area to be in the range of approximately
$300,000 to $500,000. Total costs could vary significantly from the Company's
estimate due to the numerous variable factors discussed above. In recognition of
the above factors the Company has charged a provision reflecting its preliminary
estimate of its share of such costs, net of operating charges, of $77,000 to
earnings in the first nine months of 1997. The adequacy of such provision will
be reviewed by the Company as actual costs are incurred and such provision may
be increased in the future.

      At September 30, 1997, the Company had a working capital deficit of
$873,548 compared to a working capital deficit of $988,596 at December 31, 1996,
and a current ratio of .43 to 1.00 as of September 30, 1997 compared to a
current ratio of .40 to 1.00 as of December 31, 1996. The decrease in the
working capital deficit at September 30, 1997 primarily reflects the utilization
of increased revenues to reduce trade payables and the collection of receivables
from working interest participants.

      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, results of operations or cash flows from the adoption of
this standard. In the future, however, pursuant to SFAS No. 121, material
negative adjustments to the carrying value of the Company's producing oil and
gas properties could be required should prices for oil and gas decline
significantly or if the Company were to revise its estimates of recoverable oil
and gas reserves.

      In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("Statement No. 130"). The statement
establishes standards for reporting and display of comprehensive income and its
components. In June 1997, the FASB also issued Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" ("Statement No. 131"). The statement specifies revised guidelines
for determining an entity's operating and geographic segments and the type and
level of financial information about those segments to be disclosed. The Company
will adopt the provisions of Statements No. 130 and 131 in its 1998 financial
statements.

                                 Page 18 of 24
<PAGE>
      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 19 of 24
<PAGE>
RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1997 WITH THE THREE MONTHS
ENDED SEPTEMBER 30, 1996.

      REVENUES

      Revenues from oil and gas production decreased from $436,778 during the
third quarter of 1996 to $383,254 in the comparable 1997 quarter, a decrease of
$53,524. The decrease is primarily attributable to a decrease in production
volumes due to production downtime while the Company performed substantial
fieldwork in its San Juan basin field in New Mexico during the third quarter of
1997. Average oil prices increased $1.41 per barrel from $18.89 per barrel
during the third quarter of 1996 to $20.30 per barrel during the third quarter
of 1997. Average gas prices increased $.50 per mcf from $1.19 per mcf during the
third quarter of 1996 to $1.69 per mcf during the third quarter of 1997.

      Other revenue was $6,488 for the third quarter of 1997 compared to $7,760
for the comparable period in 1996, primarily due to a decrease in gas gathering
and operating fees charged to third parties.

      COSTS AND EXPENSES

      Oil and gas production costs increased by $59,947 from $263,130 for the
third quarter of 1996 to $323,077 for the same period in 1997. Such increase is
primarily due to production costs associated with the purchases of additional
interests in Company-operated properties and an above-average number of well
workovers in its San Juan field in New Mexico in the third quarter of 1997. Pit
impoundment costs were $4,743, net of operating charges, during the third
quarter of 1997. General and administrative expenses decreased by $58,369 from
$123,875 for the third quarter of 1996 to $65,506 for the same period in 1997.
This decrease is primarily due to increased operating fees allocable to outside
interest owners resulting from the waterflood project in Oklahoma and increased
operating charges to third parties related to increased workover activity during
the third quarter of 1997.

      Depreciation, depletion and amortization expenses decreased from $106,969
for the third quarter of 1996 to $79,020 for the comparable period of 1997.

      Gain on sale of property and equipment during the third quarter of 1997 of
$30,000 reflects the sale of certain non-strategic wells. Interest expense
decreased by $1,087 from $6,928 for the third quarter of 1996 to $5,841 for the
same period in 1997 due to a decrease in average outstanding borrowings.

      Primarily reflecting the factors discussed above, the Company reported a
net loss for the three months ended September 30, 1997 of $59,055 compared to a
net loss of $59,597 for the same period of 1996.

                                 Page 20 of 24
<PAGE>
RESULTS OF OPERATIONS

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997 WITH THE NINE MONTHS
ENDED SEPTEMBER 30, 1996.

      REVENUES

      Revenues from oil and gas production increased from $1,031,347 during the
first nine months of 1996 to $1,221,417 in the comparable 1997 period, an
increase of $190,070. The increase is primarily attributable to an increase in
average oil prices of $3.09 per barrel from $18.48 per barrel during the first
nine months of 1996 to $21.57 per barrel during the first nine months of 1997.
Average gas prices increased $.76 per mcf from $1.08 per mcf during the first
nine months of 1996 to $1.84 per mcf during the first nine months of 1997.
Production volumes declined slightly during the first nine months of 1997
compared to the same period in 1996.

      Other revenue was $19,710 for the first nine months of 1997 compared to
$22,473 for the comparable period in 1996, primarily due to a decrease in gas
gathering and operating fees charged to third parties.

      COSTS AND EXPENSES

      Oil and gas production costs increased by $192,604 from $656,295 for the
first nine months of 1996 to $848,899 for the same period in 1997. Such increase
is primarily due to the production costs associated with the purchases of
additional interests in Company-operated properties, increased operating costs
related to the waterflood project in Oklahoma and an above-average number of
well workovers in its San Juan Basin field in New Mexico. Pit impoundment costs
during the first nine months of 1997 were $77,509, net of operating charges.
General and administrative expenses decreased by $25,426 from $256,016 for the
first nine months of 1996 to $230,590 for the same period in 1997. This decrease
is primarily due to increased operating fees allocable to outside interest
owners in the Company's Oklahoma and New Mexico field operations.

      Depreciation, depletion and amortization expenses decreased from $308,935
for the first nine months of 1996 to $239,926 for the comparable period of 1997.

      Gain on sale of property and equipment during the first nine months of
1997 of $22,448 primarily reflects the sale of certain non-strategic wells and
well equipment. Interest expense decreased by $2,690 from $18,174 for the first
nine months of 1996 to $15,484 for the same period in 1997 due to a decrease in
average outstanding borrowings.

      As discussed more fully in Note 1 to the Consolidated Financial
Statements, the Company recognized a nonrecurring noncash charge during the
first nine months of 1996 for the cumulative effect of a change in the
accounting method for depletion of $39,770.

                                 Page 21 of 24
<PAGE>
      Primarily reflecting the factors discussed above, the Company reported a
      net loss for the first nine months ended September 30, 1997 of $151,033
      compared to a net loss of $235,341 for the same period of 1996.

                                 Page 22 of 24
<PAGE>
                           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 23 of 24
<PAGE>
                                   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, 1997       By:   /S/ RALPH T. MCELVENNY, JR.
                                    Chief Executive Officer



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

                                 Page 24 of 24