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:
         March 31, 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                         3,115,984                May 8, 1998


                                        Page 1 of 9 sequentially numbered pages.


<PAGE>



                           GREAT NORTHERN GAS COMPANY




                                      INDEX




PART I.                    FINANCIAL INFORMATION                   Page No. (s)
                                                                   ------------

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

         Statements of Operations for the Three
         Months Ended March 31, 1998 and 1997 (Unaudited)              5

         Statements of Cash Flows for the Three Months
         Ended March 31, 1998 and 1997 (Unaudited)                     6

         Notes to Unaudited Financial Statements for the
         Three Months Ended March 31, 1998 and 1997                    7

         Management's Discussion and Analysis of
         Financial Condition and Results of Operations                 8


PART II.     OTHER INFORMATION                                         9

             SIGNATURES                                                9





                                     Page 2

<PAGE>



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



                                     ASSETS
                                     ------


                                                        March 31    December 31,
                                                          1998          1997
                                                       ----------   ------------
CURRENT ASSETS:
    Cash and cash equivalents                          $1,255,894     $1,812,386
    Accounts receivable:
         Oil and gas sales                                 52,880         90,902
         Joint interest billings                          129,516        139,201
    Short term investments                              1,136,046           --
    Other                                                   9,619          9,619
                                                       ----------     ----------
                Total current assets                    2,583,955      2,052,108
                                                       ----------     ----------


PROPERTY AND EQUIPMENT, at cost:
    Oil and gas properties, accounted for
         using the full cost method                     1,782,361      2,682,627
    Furniture, fixtures and automobile                     60,105         60,105
                                                       ----------     ----------
                                                        1,842,466      2,742,732
    Less accumulated depreciation, depletion
         and amortization                                 941,848        881,735
                                                       ----------     ----------
            Net property and equipment                    900,618      1,860,997
                                                       ----------     ----------

                                                       $3,484,573     $3,913,105
                                                       ==========     ==========







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

                                     Page 3

<PAGE>



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



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


                                                    March 31,       December 31,
                                                      1998              1997
                                                  -----------      -------------
CURRENT LIABILITIES:
    Accounts payable:
         Trade                                    $     21,561     $     24,404
         Oil and gas sales                             172,339          229,707
    Income taxes                                         1,286           17,286
         Other                                          73,906           88,099
                                                  ------------     ------------
                Total current liabilities              269,092          359,496
                                                  ------------     ------------

DEFERRED INCOME TAXES                                  172,525          192,161
                                                  ------------     ------------

STOCKHOLDERS' EQUITY:
    Common Stock, $.01 par value;
      authorized 50,000,000 shares,
      issued 3,115,984 shares at
      March 31, 1998 and 3,297,343
      shares at December 31, 1997                       31,160           32,975
    Additional paid-in-capital                      38,719,373       39,004,013
    Accumulated deficit                            (35,707,577)     (35,675,540)
                                                  ------------     ------------

            Total stockholders' equity               3,042,956        3,361,448
                                                  ------------     ------------

                                                  $  3,484,573     $  3,913,105
                                                  ============     ============





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

                                     Page 4

<PAGE>



                           GREAT NORTHERN GAS COMPANY
                            STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                   (UNAUDITED)



                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        1998            1997
                                                    -----------     -----------
REVENUES:
    Oil and gas sales                               $   171,102     $   337,899
    Interest and other income                            27,059          60,959
                                                    -----------     -----------
                                                        198,161         398,858
                                                    -----------     -----------


EXPENSES:
    Lease operating                                      63,399          38,905
    Production taxes                                     13,370          22,044
    Depreciation, depletion and amortization             60,113          78,935
    General and administrative                          112,952         191,397
                                                    -----------     -----------
                                                        249,834         331,281
                                                    -----------     -----------

LOSS FROM SALE OF PROPERTIES                               --          (378,037)
                                                    -----------     -----------

LOSS BEFORE INCOME TAXES                                (51,673)       (310,460)

INCOME TAX BENEFIT                                       19,636         117,975
                                                    -----------     -----------

NET LOSS                                            $   (32,037)    $ (192,485 )
                                                    ===========     ===========

EARNINGS (LOSS) PER COMMON SHARE                    $      (.01)    $      (.05)
                                                    ===========     ===========

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING                                          3,161,401       3,554,016
                                                    ===========     ===========





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

                                     Page 5

<PAGE>
<TABLE>
<CAPTION>

                                GREAT NORTHERN GAS COMPANY
                                 STATEMENTS OF CASH FLOWS
                    FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                        (UNAUDITED)

                                                                              Three Months Ended March 31,
                                                                           ---------------------------------
                                                                               1998                   1997
                                                                           -----------            ----------
<S>                                                                         <C>                    <C>   
CASH FLOWS FROM OPERATING
 ACTIVITIES:
    Net earnings (loss)                                                    $   (32,037)           $  (192,485)
    Adjustments to reconcile net earnings to net cash
     provided by (used in) operating activities:
         Depreciation, depletion and amortization                               60,113                 78,935
         Loss on sale of properties                                               --                  378,037
         Decrease in accounts receivable                                        47,707                 94,445
         Increase in other current assets                                         --                   (5,584)
         (Decrease) Increase in current liabilities                            (90,404)                56,367
         Deferred income tax benefit                                           (19,636)              (117,975)
                                                                           -----------            -----------
            Net cash provided by (used in) operating activities                (34,257)               291,740
                                                                           -----------            -----------

CASH FLOWS FROM INVESTING
 ACTIVITIES:
    Proceeds from sale of oil and gas properties                             1,136,046                672,805
    Additions to property and equipment                                       (235,780)               (95,981)
    Purchase of short-term investments                                      (1,136,046)              (495,099)
                                                                           -----------            -----------
            Net cash provided by (used in) investing activities               (235,780)                81,725
                                                                           -----------            -----------

CASH FLOWS FROM FINANCING
 ACTIVITIES
    Repurchase of Common Stock                                                (286,455)              (155,153)
                                                                           -----------            -----------
         Net cash provided by (used in) financing activities                  (286,455)              (155,153)
                                                                           -----------            -----------

INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                             (556,492)               218,312

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

CASH AND CASH EQUIVALENTS AT
 END OF PERIOD                                                             $ 1,255,894            $ 1,622,411
                                                                           ===========            ===========



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

                                                      Page 6
</TABLE>

<PAGE>

                           GREAT NORTHERN GAS COMPANY
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 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 three month period ended March 31, 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 March 31, 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.  The
proceeds have been recorded as a reduction of the full cost pool.

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

     During the first quarter of 1998 the Company  repurchased 181,539 shares of
the Company's Common Stock. The shares were retired.




                                     Page 7

<PAGE>


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



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

     At March 31, 1998 the Company had working capital of $2,314,863 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  $34,257  for the first  three
months of 1998 compared to net cash provided by operating activities of $291,740
for the comparable period of 1997. Such change is promarily due to the reduction
in oil and gas revenues as stated below.

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

     The  $171,102  in oil and gas sales for the first  three  months of 1998 is
$166,797  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.  Lease operating  expenses are greater
than 1997  mainly  due to the  Haybarn  purchase  in June of 1997.  General  and
administrative  expenses  for the three  months  ended March 31, 1998  decreased
compared to the same period in 1997 mainly due to bonuses paid in 1997.


                                     Page 8

<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:   May 15, 1998                     By:  /s/  Frank S. DiGrappa
        --------------                         ---------------------------------
                                                    Frank S. DiGrappa
                                                    Chairman of the Board,
                                                    and Treasurer



Dated:   May 15, 1998                     By:  /s/  Thomas L. DiGrappa
        --------------                         ---------------------------------
                                                    Thomas L. DiGrappa
                                                    President and Chief
                                                    Operating Officer





                                     Page 9