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 Quarter Ending September 30, 1998

Commission File Number #33-38119-C

THE KENSINGTON COMPANY, INC.

(Exact name of registrant as specified in its charter)

Minnesota                                          41-1610632    
(State or other                              (IRS Employer
 jurisdiction of                               Identification No.)
 incorporation)

Suite 654 Interchange Tower, 600 S. Hy. 169, Minneapolis, Minnesota 55426  
(Address of principal executive offices)               (Zip code)

Registrant's telephone number, including area code (612) 546-2075

Indicate by Check mark whether the registration (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 of such shorter period that the 
registrant was required to file such reports), and 92) has been subject to 
such filing requirements for the past 90 days.

Yes   *                No         

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

Weighted Number of Shares are 3,163,340  of common
stock no par value.

-1-

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE 
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements in this discussion which are not historical facts may be considered 
"forward looking statements" within the meaning of Section 21E of the 
Securities Act of 1934, as amended, including projected sales based upon 
orders, estimated cost savings and savings that may be generated from 
restructuring. The words "believe", "expect", "anticipate", "estimate", and 
similar expressions identify forward looking statements. Any forward looking 
statement involves risks and uncertainties that could cause actual events or 
results to differ, perhaps materially, from the events described in the 
forward looking statements. Readers are cautioned not to place undue reliance 
on these forward looking statements. The Company undertakes no obligation to 
publicly update or revise any forward looking statement, whether as a result 
of new information, future events or otherwise. The risks associated with the 
Company's forward looking statements include, but are not limited to, risks 
associated with the Company's history of losses and uncertain profitability, 
reliance on a large customer, risks associated with competition, general 
economic conditions, reliance on key management and production people, future 
capital needs, dilution, effects of outstanding notes and convertible 
debentures, limited public market, low stock price, and lack of liquidity.

The following discussion and analysis should be read in conjunction with the 
Consolidated Financial Statements, related notes and other information 
included in this quarterly report on Form 10-QSB.  


Part I.  Financial Information

     Quarter Ended  September 30, 1998

     GENERAL

     The following financial information is submitted in response to the 
requirements of Form 10-QSB and does not purport to be financial statements 
prepared in accordance with generally accepted accounting principles. Certain 
information and footnote disclosures normally included in financial statements 
prepared in accordance with generally accepted accounting principles have been 
condensed or omitted, although the Company believes the disclosures that are 
made are adequate to make the information presented not misleading.  Further, 
in the opinion of the management, the interim financial statements reflect 
fairly the financial position and results of operations for the period 
indicated.

     The results of operations for the quarter ended as stated above are not 
necessarily indicative of results to be expected for the entire fiscal year 
ending December 31st.

-2-

Item 1.  Financial Statements

     The balance sheet of The Kensington Company, Inc. (the "Company") as of 
the Quarter stated above, and the related statement of income and changes in 
financial position thereto are incorporated herein by reference to the 
Company's quarterly report.

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


Results of Operations
For the quarter, revenues totaled $739k. This represents a 22% increase over 
revenue for the same period for 1997. Gross profits totaled $270k as compared 
to $204k for the previous year. Net income for the quarter totaled $25k, as 
compared to a $67k loss for the same period in 1997. Year to date revenues for 
1998 are up 15% over those of 1997. Net income for year to date 1998 is $96k 
as compared to a loss of $1k for 1997. Revenues continue to be strong from 
existing customers, which seems to parallel the economy. We have also 
continued to expand sales to new customers. The backlog of customer PO's as of 
the end of the quarter is approximately $1.1M. Therefore we expect the 4th 
quarter to exceed 1997 level.
                                  

Liquidity and Capital Resources
     For the quarter, the Company had a net income from operations of $53k. 
The company has been able to meet its debt obligations and has restructured or 
repaid the remaining debentures which had come 
due.                                  

     During the period stated the Registrant did not sell to directors, 
management and others, any common stock.

Inflation

     The rate of inflation has had a great impact on the Company's results of 
operations and is expected to have a continued impact on continuing operations 
due to the increase in wood product costs and the fact that we have to bid 
most of our projects and we can not pass all of the cost increases to our 
customers.

Part II.  Other Information

Item 1.  Legal Proceedings - None

Item 2.  Changes in Securities - None

Item 3.  Defaults upon Senior Securities - None

Item 4.  Submission of Matters to a Vote of Security Holders -                 
None

-3-

Item 5.  Other Information - 
During the third quarter of 1998, the sale and transfer of the corporate shell 
and some of the assets of American Gas Corporation was completed. This 
transaction was started in March, 1998, but was not completed until July, 
1998. During 1996, $1.02 million dollars of American Gas Corporation's assets 
were written down leaving only $173 in assets on the books of American Gas 
Corporation. This write down was mentioned in the Company's 10-KSB, Item 6, 
for both 1996 and 1997. American Gas Corporation is now known as PowerSource 
Corp. and is registered as an Electric Service Provider by the State of 
California, a Renewable Energy Provider, and as a Wholesale Electric Power and 
Energy Transactions Marketer and Public Utility Company by the Federal Energy 
Regulatory Commission. The Company will retain just under 10% ownership of 
PowerSource Corp. and has options and preferred stock to purchase 
approximately five percent more of PowerSource (there may be dilution). In 
addition, PowerSource is expected to pay the Company $3,000 a month for five 
years as a consultant.

The Kensington Company, Inc. has also been using the name "Kensington 
International Holding Corporation" The Minnesota Secretary of State's office 
has informed the Company that the state made a mistake when it allowed the 
Company to change it's name from Select Gas, Inc. to the "The Kensington 
Company, Inc." and it has requested that the Company change its name to 
Kensington International Holding Corporation.



Item 6.  Exhibits and Reports on Form 8-K and the October 18, 1995           
S-8 filing as described in Item 2 herein.

     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.

                                   THE KENSINGTON COMPANY, INC.

                                   Mark Haggerty
                                   Mark Haggerty
                                   Chief Executive Officer

                                   Jeff Etten
                                   Jeff Etten, C.F.O.
                                   
Dated:  November 02, 1998
        Minneapolis, Minnesota

-4-

THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1997 AND 1998
(UNAUDITED)                                                  
                                                  
                                        1997     1998
ASSETS                                                  
Current assets:                                                  
Cash                                   $106,683     $17,210
Accounts receivable                    214,159     318,963
Inventories     `                      208,370     254,366
Other current assets                   86,418     40,407
Total current assets                   615,630     630,946
                                                  
Other assets:                                                  
Investment in oil and gas properties, net     85,043     0
Investment in oil and gas partnerships        44,832     29,175
Investment in Ives                            0     
Investment in KEC partnerships                0     
Property and equipment, net                   299,516    386635
Loan Fees, Net                                           23,972
Notes receivable - related parties            24,125     18,125
Total other assets                            453,516    457,907
                                                  
                                              $1,069,146 $1,088,853
                                                  
LIABILITIES AND STOCKHOLDERS' 
EQUITY                                                  
                                                  
Current liabilities:                                                  
Line of Credit                               $53,857     $0
Note payable - related parties               299,041     196259
Current portion of long-term debt            375,633     33160
Current portion of obligations under 
capital leases                               13,341      24340
Accounts payable                             264,490     273770
Accrued payroll & related taxes              125,360     152087
Accrued interest                             29,412      38940
Accrued Expenses                             20,255      20021
Intercompany                                 0           0
Total current liabilities                    1,181,389   738,577
                                                  
Long-term debt, net of current portion       442,849     759010
Obligations under capital leases, net 
of current portion                           10,000      10000
Minority interest in consolidated 
Subsidiaries                                 11,239      0
Total liabilities                            1,645,477   1,507,587
                                                  
                                                  
STOCKHOLDERS' EQUITY                                                  
Common stock                                 3692923     3671883
Additional paid-in capital                   0           0
Accumulated deficit                          -3971922    -3842065
Stock subscriptions receivable               (297,332)   (248,552)
Total stockholders' equity                   (576,331)   (418,734)
                                                  
                                             $1,069,146  $1,088,853

THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES                         
CONSOLIDATING STATEMENT OF OPERATIONS                              
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND 1998                    
(UNAUDITED)          

                                             1997        1998
                                                  
Revenues:                                                  
Product sales                                $604,618    $738,884
Oil and gas sales                            513         0
Total revenues                               605,131     738,884
                                                  
Cost of sales:                                                  
Cost of products sold                        400991     468615
Oil and gas costs                            0          0
Total cost of sales                          400,991    468,615
                                                  
Gross profit                                 204,140    270,269
                                                  
Operating expenses                           232,140    216,883
                                                  
Income (loss) from operations                (28,000)   53,386
                                                  
Other income (expense):                                                  
Interest expense                             -38693     -38668
Minority interest in earnings of 
Consolidated Oil & Gas Ptsp                  (322)     
Miscellaneous income                         0          10,000
Total other income (expense)                 (39,015)   (28,668)
                                                  
Income (loss) before income taxes and 
extraordinary item                           (67,015)   24,718
Provision for income taxes (benefit)         0          0
                                                  
Income before extraordinary item             (67,015)   24,718
Extinguishment of debt, net of income 
taxes of $0                                  0          0
                                                  
Net income (loss)                            (67,015)   24,718
                                                  
Earnings Per Share                           ($0.02)     $0.01
WEIGHTED NUMBER OF SHARES OUTSTANDING        3,021,450   3,163,340
                         



                         
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES                         
CONSOLIDATING STATEMENT OF CASH FLOWS                              
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 & 1998                         
(UNAUDITED)                                                  
                                                  
                                                  1997     1998
                                                  
Cash flows from operating 
activities:                                                  
Net income (loss)                               ($67,015)     $24,718
Adjustments to reconcile net income (loss)                         
to cash flows from operating 
activities:                                                  
Depreciation, depletion and amortization         12286       14365
Changes in operating assets and 
liabilities:                                                  
Accounts receivable                              -28234       -2643
Inventories                                      -27229        -52000
Other current assets                             -83991        -23463
Other assets                                     3472          4500
Accounts payable                                 -16598       5738
Other current liabilities                        18,761        (46,650)
Cash flows from operating activities             (188,548)     (75,435)
                                                  
Cash flows from investing 
activities:                                                  
Decrease in notes receivable - related 
parties                                         661       2500
Purchase of property and equipment              667       4649
Sale of Stock                                   0         0
Cash flows from investing activities            (6)       (2,149)
                                                  
Cash flows from financing 
activities:                                                  
Increase (decrease) in Line of Credit           0         0
Increase (decrease) in notes payable - 
related parties                                 20485     -11396
Proceeds short, long-term debt                  365000    0
Payments on long-term debt                      -106921       16905
Payments on obligations under capital leases    (3,600)       1,000
Cash flows from financing activities            $274,964     ($29,301)
                                                  
Increase (decrease) in cash                    $86,422      ($106,885)
                                                  
Cash, beginning                                20,261      124,095
                                                  
Cash, ending                                   $106,683     $17,210