SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     of the Securities Exchange Act of 1934

For the Quarterly Period Ended:
        June 30, 1998                            Commission File No. 0-9675


                           GREAT NORTHERN GAS COMPANY
                           --------------------------
             (Exact name of registrant as specified in its charter)


           Colorado                                        38-1900351
           --------                                        ----------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

                             621 Seventeenth Street
                                   Suite 2150
                             Denver, Colorado 80293
                -------------------------------------------------
               (Address of principal executive offices) (Zip Code)

     Registrant's telephone number, including area code: (303) 295-0938

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 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
                                -----               -----

Indicate the number of shares  outstanding  of each of the  Issuer's  classes of
common stock as of the latest practicable date:

                                  Shares                      As of Close of
 Title of Class                Outstanding                      Business on
 --------------                -----------                      -----------

Common Stock,
$.01 Par Value                   3,115,484                    August 10, 1998



                    Page 1 of 10 sequentially numbered pages.

<PAGE>





                                                             


                           GREAT NORTHERN GAS COMPANY




                                      INDEX




PART I.                    FINANCIAL INFORMATION                    Page No. (s)


         Balance Sheets as of June 30, 1998
         and December 31, 1997 (Unaudited)                              3-4

         Statements of Operations for the Three
         Months Ended June 30, 1998 and 1997 (Unaudited)                  5

         Statements of Operations for the Six Months
         Ended June 30, 1998 and 1997 (Unaudited)                         6

         Statements of Cash Flows for the Six Months
         Ended June 30, 1998 and 1997 (Unaudited)                         7

         Notes to Unaudited Financial Statements for the
         Six Months Ended June 30, 1998 and 1997                          8

         Management's Discussion and Analysis of
         Financial Condition and Results of Operations                    9


PART II.     OTHER INFORMATION                                           10

             SIGNATURES                                                  10







                                        2

<PAGE>

                           GREAT NORTHERN GAS COMPANY
                                 BALANCE SHEETS
                       JUNE 30, 1998 AND DECEMBER 31, 1997
                                   (UNAUDITED)



                                     ASSETS
                                     ------


                                                        June 30,    December 31,
                                                         1998           1997
                                                       ----------   ------------
CURRENT ASSETS:
    Cash and cash equivalents                          $1,205,094     $1,812,386
    Accounts receivable:
         Oil and gas sales                                 87,249         90,902
         Joint interest billings                          148,085        139,201
    Short term investments                              1,146,450           --
    Other                                                   9,619          9,619
                                                       ----------     ----------
                Total current assets                    2,596,497      2,052,108
                                                       ----------     ----------


PROPERTY AND EQUIPMENT, at cost:
    Oil and gas properties, accounted for
         using the full cost method                     1,744,606      2,682,627
    Furniture, fixtures and automobile                     60,105         60,105
                                                       ----------     ----------
                                                        1,804,711      2,742,732
    Less accumulated depreciation, depletion
         and amortization                                 976,726        881,735
                                                       ----------     ----------
            Net property and equipment                    827,985      1,860,997
                                                       ----------     ----------

                                                       $3,424,482     $3,913,105
                                                       ==========     ==========









         The accompanying notes to unaudited financial statements are an
                       integral part of these statements.

                                       3

<PAGE>



                           GREAT NORTHERN GAS COMPANY
                           BALANCE SHEETS - CONTINUED
                       JUNE 30, 1998 AND DECEMBER 31, 1997
                                   (UNAUDITED)



                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------


                                                    June 30,        December 31,
                                                      1998             1997
                                                  ------------     -------------
CURRENT LIABILITIES:
    Accounts payable:
         Trade                                    $     27,177     $     24,404
         Oil and gas sales                             122,778          229,707
    Income taxes                                         1,286           17,286
    Other                                               65,531           88,099
                                                  ------------     ------------
                Total current liabilities              216,772          359,496
                                                  ------------     ------------

DEFERRED INCOME TAXES                                  169,857          192,161
                                                  ------------     ------------

STOCKHOLDERS' EQUITY:
    Common Stock, $.01 par value;
      authorized 50,000,000 shares,
      issued 3,115,484 shares at
      June 30, 1998 and 3,297,343
      shares at December 31, 1997                       31,155           32,975
    Additional paid-in-capital                      38,718,628       39,004,013
    Accumulated deficit                            (35,711,930)     (35,675,540)
                                                  ------------     ------------

            Total stockholders' equity               3,037,853        3,361,448
                                                  ------------     ------------

                                                  $  3,424,482     $  3,913,105
                                                  ============     ============







         The accompanying notes to unaudited financial statements are an
                       integral part of these statements.

                                       4

<PAGE>



                                                            


                           GREAT NORTHERN GAS COMPANY
                            STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)



                                                    Three Months Ended June 30,
                                                    ---------------------------
                                                       1998             1997
                                                    -----------     -----------
REVENUES:
    Oil and gas sales                               $   143,957     $   160,981
    Interest and other income                            39,645          60,924
                                                    -----------     -----------
                                                        183,602         221,905
                                                    -----------     -----------


EXPENSES:
    Lease operating                                      44,062          70,524
    Production taxes                                     10,835          15,315
    Depreciation, depletion and amortization             34,878          65,823
    General and administrative                          100,848         152,078
                                                    -----------     -----------
                                                        190,623         303,740
                                                    -----------     -----------

GAIN FROM SALE OF PROPERTIES                               --           533,901
                                                    -----------     -----------

EARNINGS (LOSS) BEFORE INCOME TAXES                      (7,021)        452,066

INCOME TAX BENEFIT (PROVISION)                            2,668        (171,786)
                                                    -----------     -----------

NET EARNINGS (LOSS)                                 $    (4,353)    $   280,280
                                                    ===========     ===========

EARNINGS PER COMMON SHARE                           $         *     $       .08
                                                    ===========     ===========

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING                                          3,115,830       3,486,873
                                                    ===========     ===========

*less than $.01 per share











         The accompanying notes to unaudited financial statements are an
                       integral part of these statements.

                                       5



<PAGE>

                           GREAT NORTHERN GAS COMPANY
                            STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)



                                                      Six Months Ended June 30,
                                                       1998             1997
                                                    -----------     -----------
REVENUES:
    Oil and gas sales                               $   315,059     $   498,880
    Interest and other income                            66,704         121,883
                                                    -----------     -----------
                                                        381,763         620,763
                                                    -----------     -----------


EXPENSES:
    Lease operating                                     107,461         109,429
    Production taxes                                     24,205          37,359
    Depreciation, depletion and amortization             94,991         144,758
    General and administrative                          213,800         343,475
                                                    -----------     -----------
                                                        440,457         635,021
                                                    -----------     -----------

GAIN FROM SALE OF PROPERTIES                               --           155,864
                                                    -----------     -----------

EARNINGS (LOSS) BEFORE INCOME TAXES                     (58,694)        141,606

INCOME TAX BENEFIT (PROVISION)                           22,304         (53,810)
                                                    -----------     -----------

NET EARNINGS (LOSS)                                 $   (36,390)    $    87,796
                                                    ===========     ===========

EARNINGS (LOSS) PER COMMON SHARE                    $      (.01)    $       .02
                                                    ===========     ===========

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING                                          3,138,490       3,520,259
                                                    ===========     ===========









         The accompanying notes to unaudited financial statements are an
                        integral part of these statements


                                       6

<PAGE>
<TABLE>
<CAPTION>

                                      GREAT NORTHERN GAS COMPANY
                                       STATEMENTS OF CASH FLOWS
                            FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                              (UNAUDITED)

                                                                             Six Months Ended June 30,
                                                                             -------------------------
                                                                            1998                    1997
                                                                         -----------            -----------
<S>                                                                      <C>                     <C>   
CASH FLOWS FROM OPERATING
 ACTIVITIES:
    Net earnings (loss)                                                  $   (36,390)           $    87,796
    Adjustments to reconcile net earnings to net cash
     provided by (used in) operating activities:
         Depreciation, depletion and amortization                             94,991                144,758
         Gain on sale of properties                                             --                 (155,865)
         (Increase) decrease in accounts receivable                           (5,231)                94,794
         (Decrease) Increase in current liabilities                         (142,724)                31,620
         Deferred income tax (benefit) provision                             (22,304)                53,810
                                                                         -----------            -----------
            Net cash provided by (used in) operating activities             (111,658)               256,913
                                                                         -----------            -----------

CASH FLOWS FROM INVESTING
 ACTIVITIES:
    Proceeds from sale of oil and gas properties                           1,206,046              1,412,028
    Additions to property and equipment                                     (268,025)              (972,129)
    Purchase of short-term investments                                    (1,146,450)              (412,310)
                                                                         -----------            -----------
            Net cash provided by (used in) investing activities             (208,429)                27,589
                                                                         -----------            -----------

CASH FLOWS FROM FINANCING
 ACTIVITIES
    Repurchase of Common Stock                                              (287,205)              (185,639)
                                                                         -----------            -----------
         Net cash provided by (used in) financing activities                (287,205)              (185,639)
                                                                         -----------            -----------

INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                           (607,292)                98,863

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD                                                       1,812,386              1,404,099
                                                                         -----------            -----------

CASH AND CASH EQUIVALENTS AT
 END OF PERIOD                                                           $ 1,205,094            $ 1,502,962
                                                                         ===========            ===========







                       The accompanying notes to unaudited financial statements are an
                                      integral part of these statements


                                                      7
</TABLE>

<PAGE>


                           GREAT NORTHERN GAS COMPANY
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997


Note 1 - Financial Statements - Basis of Presentation
-----------------------------------------------------

     Great Northern Gas Company (the  "Company") is  exclusively  engaged in the
business of oil and gas exploration, development and production.

     The financial  statements included herein are unaudited.  In the opinion of
management,  such  statements  include  all  adjustments,  consisting  of normal
recurring  adjustments,  necessary  to present  fairly the  Company's  financial
position for all periods presented.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted as permitted by the rules and  regulations of the
Securities  and  Exchange  Commission.  Although the Company  believes  that the
disclosures are adequate to make the information presented not misleading, it is
suggested  that  these  financial  statements  be read in  conjunction  with the
December 31, 1997 financial  statements and the notes thereto as reported on the
Company's Annual Report on Form 10-KSB.

     Results of operations  for the six month period ended June 30, 1998 are not
necessarily indicative of the results to be expected for the full year.

Note 2 - Income Taxes
---------------------

     The  Company's net deferred tax liability at June 30, 1998 and December 31,
1997  primarily  relates  to book basis  being in excess of tax basis  partially
offset by loss carryforwards.

Note 3 - Sale of Properties
---------------------------

     On March 13, 1998 , the Company  closed on the sale of its  interest in all
the Haybarn  properties  in Freemont  County,  Wyoming.  These  properties  were
acquired in June of 1997. These properties were sold for $1,136,046.  On June 1,
1998,  the Company  closed on the sale of its  interest in all the East  Plateau
properties in Mesa County, Colorado. These properties were sold for $70,000. The
proceeds have been recorded as a reduction of the full cost pool.

Note 4 - Repurchase of Common Stock
-----------------------------------

     During  the first  and  second  quarters  of 1998 the  Company  repurchased
181,859 shares of the Company's Common Stock. The shares were retired.

                                       8

<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Liquidity and Capital Resources
-------------------------------

     At June 30, 1998 the Company had working capital of $2,379,725  compared to
working  capital of  $1,692,612  at December 31,  1997.  The increase in working
capital  is  primarily  related  to the  proceeds  from the sale of the  Haybarn
properties.  To minimize the taxes on such transactions,  the Company intends to
reinvest  the proceeds  under the  provisions  of Internal  Revenue Code Section
1031.

     Net cash used in operating activities was $111,658 for the first six months
of 1998  compared to net cash  provided by operating  activities of $256,913 for
the comparable  period of 1997. Such change is primarily due to the reduction in
oil and gas revenues as stated below.

Analysis of Results of Operations
---------------------------------

     The  $315,059  in oil and gas sales  for the  first  six  months of 1998 is
$183,821  less  than for the same  period in 1997  primarily  due to the sale of
South Douglas  Creek,  White River Dome and Gasaway  properties  in 1997.  Other
income has  decreased  due to the well  operation  income that was  generated by
Gasaway and White River Dome  Properties.  Production  taxes have decreased also
primarily  due to the  sale of  these  properties.  General  and  administrative
expenses for the six months ended June 30, 1998  decreased  compared to the same
period in 1997 mainly due to bonuses paid in 1997.










                                       9

<PAGE>


                           PART II - OTHER INFORMATION



Items 1 thru 5 not applicable.

Item 6 - Exhibits and Reports on Form 8-K None.



                                   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.


                                              GREAT NORTHERN GAS COMPANY
                                              (Registrant)



Dated:   August 13, 1998                  By:     /s/  Frank S. DiGrappa
        ----------------                         -------------------------------
                                                   Frank S. DiGrappa
                                                   Chairman of the Board,
                                                   and Treasurer



Dated:   August 13, 1998                  By:    /s/  Thomas L. DiGrappa
        ----------------                          ------------------------------
                                                   Thomas L. DiGrappa
                                                   President and Chief
                                                   Operating Officer










                                       10