U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB
                                   (Mark One)

          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                 For the quarterly period ending June 30, 2003


          TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
             For the transition period from __________ to__________


                         Commission file number 0-29613


                         TIDELANDS OIL & GAS CORPORATION
           -----------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)


             NEVADA                                      66-0549380
-----------------------------------          -----------------------------------
     (State of Incorporation)                 (IRS Employer Identification No.)



1862 West Bitters Rd., Bldg.#1, San Antonio, TX             78248
-----------------------------------------------   ------------------------------
(Address of principal executive offices)                  (Zip Code)



Issuer's telephone number, (   210    )     764       -          8642
                           -----------  -------------   ------------------------

                   13330 Leopard St., Corpus Christi, TX 78410
          -------------------------------------------------------------
          Former Name, former address and former fiscal year if changed
                                since last report

         Indicate  by check  mark  whether  the  issuer  (1) filed  all  reports
required to be filed by Section 13 or 15(d) of the  Exchange Act during the past
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No
            ---   ---


         State the number of shares outstanding of each of the issuer's class of
common  equity,  as of the latest  practicable  date:  As of June 30, 2003,  the
registrant had 40,383,907 shares of common stock, par value 0.001 outstanding.

         Transitional Small Business Disclosure Format
         (Check One)
         Yes    No
            ---   ---



<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                                   FORM 10-QSB


                                      INDEX
                                      -----

                                                                            Page
PART I - Financial Information

Item 1 - Financial Statements
         Condensed Consolidated Balance Sheets as of
         June 30, 2003 and December 31, 2002...............................  3-4

         Condensed Consolidated Statements of Operations
         For the Three Months Ended June 30, 2003 and 2002.................    5

         Condensed Consolidated Statements of Operations
         For the Six Months Ended June 30, 2003 and 2002...................    6

         Condensed Consolidated Statements of Cash Flows
         For the Six Months Ended June 30, 2003 and 2002...................  7-8

         Notes to Condensed Consolidated Financial Statements..............9 -12

Item 2 - Management's Discussion and Analysis or Plan of Operation........13 -14

Item 3.  Controls and Procedures...........................................   15

PART II - Other Information

Item 1 - Legal Proceedings ................................................   15

Item 2 - Changes in Securities and Use of Proceeds.........................   16

Item 3 - Defaults Upon Senior Securities...................................   16

Item 4 - Submission of Matters to a Vote of Security Holdings..............   17

Item 5 - Other Information.................................................   17

Item 6 - Exhibits and Reports on Form 8K ..................................   17


Signature..................................................................   17


















                                       2
<PAGE>

                          PART I-FINANCIAL INFORMATION


                         TIDELANDS OIL & GAS CORPORATION
                                   FORM 10-QSB


Item 1.  Financial Statements.  (Unaudited)


                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS
                                     ------



                                         June 30, 2003         December 31, 2002
                                       -----------------       -----------------
                                          (Unaudited)
Current Assets:
   Cash                                $         212,788       $         193,669
   Accounts Receivable                               887                  16,306
   Inventory                                      12,155                  12,155
   Prepaid Expenses                               31,425                  43,601
                                       -----------------       -----------------
      Total Current Assets                       257,255                 265,731
                                       -----------------       -----------------

Property Plant and Equipment, Net                486,787               1,111,617
                                       -----------------       -----------------

Investment - Reef Ventures, L.P.                  98,629                    --
                                       -----------------       -----------------

All Other Assets                                   1,058                   1,995
                                       -----------------       -----------------

         Total Assets                  $         843,729       $       1,379,343
                                       =================       =================






















      See Accompanying Notes to Condensed Consolidated Financial Statements


                                       3
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)


                     LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                     ---------------------------------------


                                                  June 30, 2003       December 31, 2002
                                                ------------------    -----------------
                                                   (Unaudited)
<S>                                             <C>                   <C>
Current Liabilities:
   Accounts Payable and
      Accrued Expenses                          $          809,436    $       1,369,220
   Current Maturities of Long-Term Debt                    325,000              826,691
                                                ------------------    -----------------
        Total Current Liabilities                        1,134,436            2,195,911

Long-Term Debt                                                   0                    0

Due to Related Parties                                           0            1,719,362
                                                ------------------    -----------------

        Total Liabilities                                1,134,436            3,915,273
                                                ------------------    -----------------

Commitments and Contingencies                                 --                   --

Stockholders' (Deficit)
   Common Stock, $.001 par value per share,
     100,000,000 shares authorized;
     40,383,907 shares issued and
     outstanding June 30, 2003
     33,683,329 shares issued and outstanding
     December 31, 2002                                      40,385               33,684

Additional Paid-in Capital                               7,995,128            6,715,108
Subscriptions Receivable                                   (18,000)             (18,000)
Accumulated (Deficit)                                   (8,308,220)          (9,266,722)
                                                ------------------    -----------------

        Total Stockholders' (Deficit)                     (290,707)          (2,535,930)
                                                ------------------    -----------------

        Total Liabilities and
          Stockholders' (Deficit)               $          843,729    $       1,379,343
                                                ==================    =================
</TABLE>























      See Accompanying Notes to Condensed Consolidated Financial Statements



                                       4
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                            Three Months Ended    Three Months Ended
                                              June 30, 2003         June 30, 2002*
                                            ------------------    ------------------
<S>                                         <C>                   <C>
Revenues:
   Gas Processing Sales                     $                0    $          238,345
   Other                                                14,827                 2,231
                                            ------------------    ------------------
        Total Revenues                                  14,827               240,576
                                            ------------------    ------------------

Operating Expenses:
   Purchases                                                 0               147,908
   Operating Expenses                                    9,268                65,223
Depreciation and Amortization                           10,664                11,262
Interest                                                 7,966                22,994
   Officers and Directors Salaries & Fees               75,000                75,000
   General and Administrative                          179,875               494,268
                                            ------------------    ------------------
      Total Operating Expenses                         282,773               816,655
                                            ------------------    ------------------
Net (Loss) From Continuing Operations                 (267,946)             (576,079)
Extraordinary Item - Gain on Partial Sale
   Of Subsidiary                                     1,533,731                     0
(Loss) From Discontinued Operations
     (Note 2)                                                0               (77,872)
                                            ------------------    ------------------
Net Income (Loss)                           $        1,265,785    $         (653,951)
                                            ==================    ==================

Net (Loss) Per Common Share
   Basic
   Loss From Continuing Operations          $           (0.007)   $           (0.019)
   Gain - Extraordinary Item                             0.041                (0.000)
   Loss From Discontinued Operations                    (0.000)               (0.003)
                                            ------------------    ------------------
      Total                                 $           (0.034)   $           (0.022)
                                            ==================    ==================
Weighted Average Number of Common
   Shares Outstanding, Basic                        37,765,368            29,745,365
                                            ==================    ==================

   Diluted
   Loss From Continuing Operations          $           (0.007)   $           (0.019)
   Gain - Extraordinary Item                             0.039                (0.000)
   Loss From Discontinued Operations                    (0.000)               (0.003)
                                            ------------------    ------------------
      Total                                 $           (0.032)   $           (0.022)
                                            ==================    ==================
Weied Average Number of Common
   Shares Outstanding, Diluted                      39,765,368            29,745,365
                                            ==================    ==================
</TABLE>





*    The statement of  consolidated  operations  for the three months ended June
     30,  2002 has been  reclassified  to conform  with the  December  31,  2002
     presentation.






      See Accompanying Notes to Condensed Consolidated Financial Statements


                                       5
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                           Six Months Ended    Six Months Ended
                                            June 30, 2003       June 30, 2002*
                                           ----------------    ----------------

Revenues:
   Gas Processing Sales                    $              0    $        376,591
   Other                                             20,092               4,574
                                           ----------------    ----------------
        Total Revenues                               20,092             381,165
                                           ----------------    ----------------

Operating Expenses:
   Purchases                                              0             237,732
   Operating Expenses                                14,693             118,330
Depreciation and Amortization                        21,320              22,313
   Interest                                          33,641              44,011
   Office and Directors Salaries & Fees             150,000             150,000
   General and Administrative                       375,667             666,965
                                           ----------------    ----------------
      Total Operating Expenses                      595,321           1,239,351
                                           ----------------    ----------------
Net (Loss) From Continuing Operations              (575,229)           (858,186)
Extraordinary Items - Gain on Partial Sale
  Of Subsidiary                                   1,533,731                   0
(Loss) From Discontinued Operations
  (Note 2)                                                0            (174,068)
                                           ----------------    ----------------
Net  Income (Loss)                         $        958,502    $      1,032,254)
                                           ================    ================

Net (Loss) Per Common Share
   Basic
   Loss From Continuing Operations         $         (0.015)   $         (0.031)
   Gain - Extraordinary Item                          0.041              (0.000)
   Loss From Discontinued Operations                 (0.000)             (0.006)
                                           ----------------    ----------------
      Total                                $         (0.026)   $         (0.037)
                                           ================    ================
Weighted Average Number of Common
   Shares Outstanding, Basic                     37,033,618          27,735,365
                                           ================    ================

   Diluted
   Loss From Continuing Operations         $         (0.015)   $         (0.031)
   Gain - Extraordinary Item                          0.040               0.000
   Loss From Discontinued Operations                 (0.000)             (0.006)
                                           ----------------    ----------------
      Total                                $         (0.025)   $         (0.037)
                                           ================    ================
Weighted Average Number of Common
   Shares Outstanding, Diluted                   38,033,618           7,760,365
                                           ================    ================









*    The statement of consolidated  operations for the six months ended June 30,
     2002  has  been   reclassified  to  conform  with  the  December  31,  2002
     presentation.

      See Accompanying Notes to Condensed Consolidated Financial Statements


                                       6
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                 STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
                                   (UNAUDITED)

                                                    Six Months Ended    Six Months Ended
                                                     June  30, 2003      June 30, 2002
                                                    ----------------    ----------------
<S>                                                 <C>                 <C>
Cash Flows Provided (Required) By
  Operating Activities:
    Net Income (Loss)
      Continuing Operations                         $        958,502    $       (858,186)
      Discontinued Operations                                      0            (174,068)
    Adjustments to Reconcile Net (Loss)
       to Net Cash Provided (Required) By
       Operating Activities:

    Depreciation and Amortization
       Continuing Operations                                  21,320              22,313
Discontinued Operations                                            0              13,397
   Issuance of Common Stock
       For Services Provided                                 109,297             250,373
Officers' Salaries                                            40,000             120,000
   Changes in
       Accounts Receivable                                    15,419             (40,043)
       Inventory                                                   0              (6,085)
       Prepaid Expenses                                       12,176              68,122
       Other Assets                                              937             (18,733)
       Accounts Payable and Accrued Expenses                (556,818)            260,769
       Current Maturities of Long-Term Debt                 (302,924)           (100,095)
                                                    ----------------    ----------------

Net Cash Provided (Required)
   by Operating Activities                                   297,909            (462,236)
                                                    ----------------    ----------------
Cash Flows Provided (Required)
   by Investing Activities:
      (Increase) in Investments                              (98,629)                  0
      Disposals of Property, Plant & Equipment               696,436                   0
      Acquisitions of Property, Plant & Equipment            (92,926)           (251,030)

 Net Cash Provided (Required)
    by Investing Activities                                  504,881            (251,030)
                                                    ----------------    ----------------
</TABLE>







      See Accompanying Notes to Condensed Consolidated Financial Statements


                                       7
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                 STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
                                   (UNAUDITED)

                                   (CONTINUED)

                                                 Six Months        Six Months
                                                   Ended             Ended
                                               June 30, 2003     June 30, 2002*
                                               --------------    --------------

Cash Flows Provided (Required) by
  Financing Activities
    Proceeds From Issuance of Common Stock             50,000                 0
Proceeds From Long-Term Loans                               0            98,615
    Repayments of Loans, Fees and
      Accrued Salaries Due Related Parties           (848,671)                0
    Proceeds of Loans From
      Related Parties                                  15,000           430,311
                                               --------------    --------------


Net Cash Provided (Required) by
   Financing Activities                              (783,671)          528,926
                                               --------------    --------------

Net Increase (Decrease) in Cash                        19,119          (184,340)
Cash at Beginning of Period                           193,669           397,491
                                               --------------    --------------
Cash at End of Period                          $      212,788    $      213,151
                                               ==============    ==============

Supplemental Disclosures of
   Cash Flow Information
      Cash Payments for Interest               $       33,141    $       22,825
                                               ==============    ==============

      Cash Payments for Income Taxes           $            0    $            0
                                               ==============    ==============
Non-Cash Financing Activities:
   Issuance of Common Stock:
      Operating Activities                     $      109,297    $      250,373
      Payment of Accounts Payable                      62,500           452,000
      Repayment of Loans                              198,767
      Prepayment of Consulting Contract                     0           716,667
      Prepayment of Financing Fee                           0           832,000
      Repayment of Loans and Accrued
        Salaries From Related Parties                 866,157           738,621
                                               --------------    --------------

      Total Non-Cash Financing Activities      $    1,236,721    $    2,986,661
                                               ==============    ==============




*The statement of consolidated cash flows for the six months ended June 30, 2002
has  been  reclassified   (Note  2)  to  conform  with  the  December  31,  2002
presentation.

      See Accompanying Notes to Condensed Consolidated Financial Statements


                                       8
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - BASIS OF PRESENTATION
------   ---------------------

         The accompanying  unaudited condensed consolidated financial statements
         for the six  month  periods  ended  June 30,  2003 and 2002  have  been
         prepared in conformity with accounting principles generally accepted in
         the United States of America for interim financial information and with
         the  instructions  to Form 10-QSB and  Regulation  S-B.  The  financial
         information  as of December 31, 2002 is derived  from the  registrant's
         Form 10-KSB for the year ended December 31, 2002.  Certain  information
         or  footnote  disclosures  normally  included in  financial  statements
         prepared in accordance with accounting principles generally accepted in
         the United States of America have been condensed or omitted pursuant to
         the rules and regulations of the Securities and Exchange Commission.

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America requires
         management to make estimates and  assumptions  that affect the reported
         amounts  of  assets  and  liabilities  at the  date  of  the  financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates.  In
         the  opinion  of  management,  the  accompanying  financial  statements
         include all adjustments  necessary (which are of a normal and recurring
         nature) for the fair presentation of the results of the interim periods
         presented. While the registrant believes that the disclosures presented
         are  adequate  to keep the  information  from being  misleading,  it is
         suggested  that  these  accompanying  financial  statements  be read in
         conjunction  with  the  registrant's  audited  consolidated   financial
         statements and notes for the year ended December 31, 2002,  included in
         the registrant's Form 10-KSB for the year ended December 31, 2002.

         Operating  results for the six-month period ended June 30, 2003 are not
         necessarily  indicative  of the results  that may be  expected  for the
         remainder of the fiscal year ending December 31, 2003. The accompanying
         unaudited  condensed  consolidated  financial  statements  include  the
         accounts  of the  registrant  and its  wholly-owned  subsidiaries.  All
         significant   inter-company   accounts  and   transactions   have  been
         eliminated in consolidation.
















                                       9
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - DISCONTINUED OPERATIONS
------   -----------------------

         As a result of management  activities,  the Company  segregated  losses
         from  discontinued  operations  for its  December  31,  2002  financial
         statements.   Accordingly,  we  have  restated  herein,  the  Condensed
         Consolidated  Statement of Operations for the six months ended June 30,
         2002 to reflect these losses from discontinued operations.

         On February 18, 2003,  effective January 1, 2003, the Company sold 100%
         of the  outstanding  common  stock of  Tidelands  Gas  Corporation  and
         Tidelands Oil Corporation to an officer of the Company for the net book
         value of $48,471.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
------   -----------------------------

         A summary  of  property,  plant and  equipment  at June 30,  2003 is as
         follows:


                                                                     Estimated
                                                                   Economic Life
                                                                   -------------
             Equipment and
                Leasehold Improvements            $       13,925    3-10 Years
             Pipelines                                   431,560     15 Years
             Processing Plant                            166,410     15 Years
                                                  --------------
                       Total                             611,895
             Less Accumulated Depreciation               125,108
                                                  --------------
                       Total                      $      486,787
                                                  ==============

NOTE 4 - LITIGATION
------   ----------

         On January 6, 2003,  the Company was served as a third party  defendant
         in a lawsuit titled Northern  Natural Gas Company vs. Betty Lou Sheerin
         vs. Tidelands Oil & Gas Corporation, ZG Gathering, Ltd. and Ken Lay, in
         the 150th Judicial District Court,  Bexar County,  Texas,  Cause Number
         2002-C1-16421.  the lawsuit was initiated by Northern  Natural Gas when
         it sued Betty Lou Sheerin  for her  failure to make  payments on a note
         she executed  payable to Northern in the original  principal  amount of
         $1,950,000.  Northern's  suit was filed on November 13,  2002.  Sheerin
         answered  Northern's  lawsuit  on January  6,  2003.  Sheerin's  answer
         generally denied Northern's claims and raised the affirmative  defenses
         of fraudulent inducement by Northern,  estoppel, waiver and the further
         claim that the note does not comport with the legal  requirements  of a
         negotiable instrument. Sheerin seeks a judicial ruling that Northern be
         denied  any  recovery  on  the  note.   Sheerin's   answer  included  a
         counterclaim  against  Northern,  ZG  Gathering,  and Ken Lay generally
         alleging, among other things, that Northern, ZG Gathering, Ltd. and Ken













                                       10
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - LITIGATION (CONTINUED)
------   ----------------------

         Lay, fraudulently induced her execution of the note. Northern has filed
         a general denial of Sheerin's counterclaims.  Sheerin's answer included
         a third party cross claim against Tidelands. She alleges that Tidelands
         entered into an agreement to purchase the Zavala  Gathering System from
         ZG Gathering , Ltd.  and that,  as a part of the  agreement,  Tidelands
         agreed to satisfy  all of the  obligations  due and owing to  Northern,
         thereby relieving Sheerin of all obligations she had to Northern on the
         promissory  note in question.  She alleges that  Tidelands is liable to
         her for all of her  actual  damages,  costs of the  lawsuit  and  other
         unstated  relief.  Tidelands and Sheerin agreed to delay the Tideland's
         answer  date  in  order  to  allow  time  for  mediation  of the  case.
         Tideland's  participated in a mediation on March 11, 2003. The case was
         not settled at that time. Tideland's answered the Sheerin suit on March
         26, 2003.  Tideland's  answer denies all of Sheerin's  allegations.  No
         discovery   has  been   completed  at  this  time.   Based  on  initial
         investigations,   however,  Tidelands  appears  to  have  a  number  of
         potential  defenses  to  Sheerin's  claims  and  Tidelands  intends  to
         aggressively defend the lawsuit.

         In September  2002, as a pre-closing  deposit to the purchase of the ZG
         pipelines,  the Company executed a $300,000 promissory note to Betty L.
         Sheerin,  a partner of ZG  Gathering,  Ltd.  In  addition,  the Company
         issued  1,000,000  shares of its  restricted  common  stock to  various
         partners  of  ZG  Gathering,   Ltd.  The  company   believes  that  the
         aforementioned  promissory  note and shares of restricted  common stock
         will be cancelled  based upon the outcome of the  litigation  described
         above.

         On December  23,  2002,  the  Company  was served as a  defendant  in a
         lawsuit  titled  El  Viejo  Ranch,   Ltd.  vs.   Tidelands  Oil  &  Gas
         Corporation,  in the 293rd Judicial  District,  Zavala  County,  Texas,
         Cause  Number  02-12-10606-ZCV.  The lawsuit was  initiated by El Viejo
         Ranch,  Ltd. on December 10, 2002.  El Viejo  contends  that a pipeline
         right of way  agreement  was breached as a result of certain  insurance
         coverage,  required to be maintained under the right-of-way  agreement,
         being allowed to lapse  resulting in  termination  of the  right-of-way
         easement.  El Viejo seeks a declaratory  judgment that the right-of-way
         agreement was properly terminated, that Tidelands is obligated to cease
         use of the pipeline,  reconvey the easement to El Viejo,  to remove the
         pipeline,  and to  remediate  the  property.  El  Viejo  also  seeks  a
         temporary injunction to enjoin Tidelands' use of the easement,  damages
         in an  unstated  amount and  recovery  of  attorneys'  fees.  Tidelands
         answered  the El Viejo  lawsuit  in early  February,  2003.  Tidelands'
         answer denies all of El Viejo's allegations.






                                       11
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 5 - OTHER
------   -----

         On June 30, 2003,  the Company  issued  3,596,169  common shares to two
         officers for accrued  officer's  salaries totaling $791,157 at $.22 per
         share.  The shares were issued under the Company's 2003 Stock Grant and
         Option Plan that was registered on Form S-8 in June 11, 2003.

         On June 30,  2003,  the  Company  issued  340,909  common  shares  to a
         director  for  accrued  director's  fees  totaling  $75,000 at $.22 per
         share.  These shares were issued under the  Company's  2003 Stock Grant
         and Option Plan.

         On June 30, 2003, the Company issued 1,300,000 restricted common shares
         as  full  payment  of an  outstanding  promissory  note  obligation  to
         Guernsey Partners of $198,767.  Unpaid interest was waived.  The shares
         were issued to nine individuals.

NOTE 6 - PARTIAL SALE OF SUBSIDIARIES
------   ----------------------------

         In April 2003, the Company completed transactions with several entities
         hereafter known as Impact Energy Services  (Impact) for the sale of 75%
         interest  of  Reef  International,  LLC  and  Reef  Marketing,  LLC for
         $1,960,867.  In addition,  Impact will contribute additional funding up
         to  $6,039,133  for  the  construction  of our  multiple  international
         pipelines from South Texas to Mexico.

         Upon the commencement of operations, the pipeline will be owned by Reef
         Ventures,  L.P. (a Texas limited  partnership) of which Tidelands Oil &
         Gas  Corporation  will hold a 25%  interest.  During  the  construction
         period  of the  natural  gas  pipeline,  the  Company  will  receive  a
         management  fee of $155,000,  and an  additional  management  fee to be
         determined  during the construction  period of the "liquids"  pipeline.
         After the  construction  period the Company  will be a limited  partner
         with no direct management responsibilities for the limited partnership.
         Impact will receive a priority return of 150% of all actual  investment
         in the project before other partners receive their respective shares.

         In addition,  "Impact" has received the right for two years to purchase
         restricted  common stock of the Company equal to 19% of the outstanding
         shares of the common stock of the Company. The initial number of shares
         is 6,830,000 at a maximum cost of $.35 per share.

         The Company  recorded a gain on the partial sale of two subsidiaries of
         $1,533,731.





                                       12

<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operation.

Business Overview

Tidelands  Oil  &  Gas  Corporation  (the  "Company"),   formerly  known  as  C2
Technologies,  Inc., was  incorporated  under the laws of the State of Nevada on
February 25, 1997. C2 Technologies, Inc. changed its name to Tidelands Oil & Gas
Corporation  on November 19, 1998. The Company had six  subsidiaries:  Tidelands
Oil Corporation (TOC),  Tidelands Gas Corporation (TGC), Rio Bravo Energy,  LLC,
Sonora Pipeline, LLC, Reef International, LLC and Reef Marketing LLC.

The Company's plan of operations  has been refocused  towards our gas processing
plant and pipeline interest along with a new international pipeline crossing.

Tidelands Oil  Corporation  was formed in May 1985.  Since inception and through
the second  quarter of 2001,  Tidelands Oil  Corporation  had devoted all of its
efforts to acquiring control of leases which comprised a portion of the Sacatosa
Field in Maverick County,  Texas. The Company discontinued all of its activities
related to oil and gas producing properties during 2001. Management proceeded to
dispose all Company  interests  in its oil and gas  properties,  terminated  all
leases,  disbanded all joint  ventures and settled  related claims and disputes.
After liquidating all of the properties Tidelands sold Tidelands Oil Corporation
for book value to Royis Ward a director of the company.

Tidelands  Gas  Corporation  was  formed  on  August  29,  1996.  Tidelands  Gas
Corporation was formed primarily for the purpose of acquiring the Delhi Pipeline
System for use as a gas  transportation  outlet  for the  shallow  gas  reserves
underlying  Tideland's  leases.  After  liquidating  all of the oil & gas leases
Tidelands elected to sell Tidelands Gas to Royis Ward for book value.

Tidelands Oil & Gas Corporation organized two Texas Limited Liability companies,
Rio Bravo Energy, LLC and Sonora Pipeline, LLC.

Rio Bravo Energy,  LLC was formed on August 10, 1998. It was formed primarily to
operate the Chittim Gas Processing Plant. Rio Bravo Energy,  LLC.  purchased the
Chittim gas processing  plant from Conoco,  Inc. This plant was purchased by Rio
Bravo in 1999 and processed  natural gas from Conoco Oil's  Sacatosa Field which
consists  of  approximately  3000  wells.  The gas plant has the  capability  to
fractionate the natural gas into commercial grade propane and butane. However in
October 2002 Rio Bravo  temporarily shut down the plant due to low volume of gas
and plans to reopen the plant  sometime in the third  quarter of 2003  utilizing
gas  produced  from third  party  producers  before  going to our  international
crossing.  This would  maximixe  all of the  capacity  of the  plant.  Therefore
allowing  more  liquids to be  stripped  from the gas,  thus  complimenting  our
propane/butane terminal and crossing into Mexico.

Sonora  Pipeline,  LLC was formed in January  1998.  It was formed  primarily to
operate the Sonora pipeline  network which delivers natural gas to the Rio Bravo
Chittim  Gas  Processing   Plant.   Sonora's   pipeline   network   consists  of
approximately 80 miles of gas pipeline.

Sonora will  transport gas produced from other  operators in the area to the Rio
Bravo gas plant.  Rio Bravo will  operate  the gas plant.  It will  process  the
natural gas into gas products such as natural  gasoline,  propane,  butane.  Rio
Bravo will also market the gas products.

Rio Bravo intends to ship all propane and butane  products to Mexico and to sell
natural gasolines to domestic customers.  We believe the plant will be operating
at full  capacity  with our  fractionating  facilities  also  running at maximum
capacity.

The  Texas  Railroad  Commission   regulates  all  aspects  of  the  production,
transportation and processing of petroleum products.

Reef  International,  LLC  was  formed  to  obtain  permits  and  construct  two
international  pipeline  crossings between Texas and Mexico.  The pipelines when
constucted will transport natural gas to Piedra Negras,  Mexico for distribution
by CONAGAS (Cianacional DE Gas, S.A. DE C.V.). Reef intends to transport propane
and butane into Mexico via its  propane/butane  terminal to be constucted on the
U.S.  side of the river.  Reef has been  successful  in  obtaining  presidential
permits  for  both  the  natural  gas  and  the  propane/butane  crossigs.  Reef
Marketing,  LLC  was  formed  as a  marketing  company  to  market  all  gas and
propane/butane into Mexico.


                                       13
<PAGE>

As previously  disclosed in our quarterly report for the period ending September
30, 2002, we executed a Purchase and Sale Agreement with ZG Gathering,  Ltd. for
the purpose of acquiring  their  pipeline  system.  Although,  the agreement was
formally  executed,  ZG failed to deliver us  control  of the  pipeline  system,
including,  but not limited to,  financial  and other  records  necessary to the
operation of the system,  including  monthly  revenues.  We are seeking judicial
rescission and cancellation of the purchase and sale agreement.

On April 16, 2003, we sold a Seventy-five  (75%)  interest in our  subsidiaries,
Reef  International,  L.L.C.  and Reef  Marketing,  L.L.C.  for  $1,960,867 on a
Purchase  and Sale  Agreement.  The L.L.C.  interests  were  acquired  by Impact
International,  L.L.C. (99% of the 75%) and Coahuila Pipeline, L.L.C. (1% of the
75%).  Immediately after the transactions,  Tidelands,  Impact International and
Coahuila  transferred  their respective  interests in both Reef L.L.C.'s to Reef
Ventures,  L.P., a Texas limited partnership.  Tidelands retained a 25% interest
in Reef Ventures, L.P.

Reef International, L.L.C. is the holder of United States, Texas permits for the
construction,  ownership,  operation and  maintenance of a twelve (12") pipeline
and a six (6") liquids line  (together  with loading and  unloading  facilities)
from Eagle Pass,  Texas to Piedras Negras,  Mexico.  Reef Marketing,  L.L.C. was
organized for the  marketing,  gathering and  transportation  of natural gas and
natural gas liquids from Eagle Pass, Texas to Piedras Negras, Mexico.

Impact has agreed to finance the construction of the Reef Ventures, L.P. natural
gas pipeline. The financial commitment is $3,315,906.  Additionally,  Impact has
agreed to finance the construction of the 6 inch propane/butane liquids pipeline
subject to the negotiation and execution of definitive  agreements.  The liquids
pipeline financial commitment is $2,723,226. Impact's total financial commitment
to Tidelands regarding the sale of the Reef interests and pipeline  construction
is not to exceed $8,000,000.

Reef International LLC, has commenced  construction on the natural gas pipeline.
The  project  is ahead of  schedule.  All rights of way have been  acquired  and
cleared.  All pipe has been delivered and assembled along the rights of way. The
pipeline ditching has commenced and is nearing completion.  The pipeline welding
is  approximately  50%  completed.  Boring of the Rio Grand  River  pipeline  is
expected to begin the week of 8/11/03. We estimate that the natural gas pipeline
construction will be completed in September 2003.

RESULTS OF OPERATIONS

REVENUES:  The Company reported  revenues of $20,092 from continuing  operations
for the six months ended June 30, 2003 as compared with revenues from continuing
operation's  of $381,165  for the six months  ended June 30,  2002.  The revenue
reductions were due to the temporary closing of our Gas Processing Plant.

TOTAL COSTS AND EXPENSES:  Total costs and expenses from  continuing  operations
decreased from $1,239,351 for the six months ended June 30, 2002 to $595,321 for
the six months ended June 30, 2003.

COST OF  SALES:  The  cost  of  sales  (purchases)  from  continuing  operations
decreased  from  $237,732  for the six months ended June 30, 2002 to -0- for the
six  months  ended June 30,  2003.  The  reduction  of  $237,732  was due to the
temporary closing of our Gas Processing Plant.

OPERATING  EXPENSES:   Other  operating  expenses  from  continuing   operations
decreased from $1,001,619 for the six months ended June 30, 2002 to $595,321 for
the six months  ended June 30,  2003.  The  decrease of $406,298  was due to the
temporary  closing of our Gas Processing Plant and reduced selling,  general and
administrative expenses.

SELLING GENERAL AND ADMINISTRATIVE EXPENSES:  Selling general and administrative
expenses from continuing  operations  decreased from $666,965 for the six months
ended June 30,  2002 to $375,667  for the six months  ended June 30,  2003.  The
decrease of $291,298 was  primarily due to decreased  consulting  and legal fees
and financing costs.

INCOME TAX:  The pre-tax loss  imporoved  from  ($1,032,254)  for the six months
ended June 30, 2002 to net income of $958,502  for the six months ended June 30,
2003; an improvement of $1,990,756.

LIQUIDITY  AND CAPITAL  RESOURCES:  Capital  expenditures  during the six months
ended June 30, 2003 totaled $92,926 as compared with $251,030 for the six months
ended June 30,  2002.  The  increase of  $158,104  consists  primarily  of lower
pre-construction costs regarding our international pipeline crossing to Mexico.

Total debt decreased from  $3,915,273 at December 31, 2002 to $1,134,436 at June
30, 2003.  Total debt as of June 30, 2003 and  December 31, 2002  expressed as a
percentage  of the sum of total debt and  shareholders'  equity was  134.46% and
283.85% respectively.

                                       14

<PAGE>

Net income for the six months  ended June 30,  2003 was  $958,502 an increase of
192.81%  from the net loss of  ($1,032,254)  for six months ended June 30, 2002.
Diluted  net loss per  common  share  improved  167.57% to $0.025 net income per
common share for the six months  ended June 30,  2003.  The net income per share
calculation  for the six months  ended June 30,  2003  included  an  increase in
actual and equivalent shares outstanding.

FORWARD-LOOKING STATEMENTS:

We have included  forward-looking  statements in this report.  For this purpose,
any  statements  contained in this report that are not  statements of historical
fact may be  deemed to be  forward  looking  statements.  Without  limiting  the
foregoing,  words  such as "may",  "will",  "expect",  "believe",  "anticipate",
"estimate",  "plan" or "continue" or the negative or other variations thereof or
comparable  terminology  are  intended to identify  forward-looking  statements.
These statements by their nature involve  substantial  risks and  uncertainties,
and actual  results  may differ  materially  depending  on a variety of factors.
Factors that might cause  forward-looking  statements to differ  materially from
actual  results  include,  among other  things,  overall  economic  and business
conditions,  demand  for the  Company's  products,  competitive  factors  in the
industries  in which we compete or intend to compete,  natural gas  availability
and cost and timing,  impact and other  uncertainties of our future  acquisition
plans.

Item 3.  Controls and Procedures.

(a)      Evaluation of Disclosure Controls and Procedures.

         Within the 90 days prior to the date of this  Quarterly  Report for the
period ended June 30, 2003, we carried out an evaluation,  under the supervision
and with the participation of our management,  including the Company's  Chairman
and  Chief  Executive   Officer  and  the  Chief  Financial   Officer,   of  the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  pursuant to Rule 13a-14 of the Securities  Exchange Act of 1934 (the
"Exchange Act"), which disclosure controls and procedures are designed to insure
that  information  required to be  disclosed by a company in the reports that it
files under the  Exchange Act is recorded,  processed,  summarized  and reported
within required time periods specified by the SEC's rules and forms.  Based upon
that evaluation, the Chairman and the Chief Financial Officer concluded that our
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information  relating  to the  Company  required to be included in the
Company's period SEC filings.

(b)      Changes in Internal Control.

         Subsequent to the date of such  evaluation as described in subparagraph
(a)above,  there were no significant  changes in our internal  controls or other
factors that could significantly affect these controls, including any corrective
action with regard to significant deficiencies and material weaknesses.

                           PART II- OTHER INFORMATION

Item 1.  Legal Proceedings.

         On January 6, 2003,  we were  served as a third  party  defendant  in a
lawsuit titled Northern  Natural Gas Company vs. Betty Lou Sheerin vs. Tidelands
Oil & Gas  Corporation,  ZG Gathering,  Ltd. and Ken Lay, in the 150th  Judicial
District Court, Bexar County, Texas, Cause Number 2002-C1-16421. The lawsuit was
initiated by Northern Natural Gas when it sued Betty Lou Sheerin for her failure
to make  payments on a note she  executed  payable to  Northern in the  original
principal amount of $1,950,000.  Northern's suit was filed on November 13, 2002.
Sheerin  answered  Northern's  lawsuit  on January  6,  2003.  Sheerin's  answer
generally  denied  Northern's  claims  and raised the  affirmative  defenses  of
fraudulent inducement by Northern,  estoppel,  waiver and the further claim that
the not does not comport with the legal requirements of a negotiable instrument.
Sheerin  seeks a judicial  ruling that  Northern  be denied any  recovery on the
note. Sheerin's answer included a counterclaim  against Northern,  ZG Gathering,
and Ken Lay generally alleging, among other things, that Northern, ZG Gathering,
Ltd. and Ken Lay,  fraudulently  induced her execution of the note. Northern has
filed a general denial of Sheerin's  counterclaims.  Sheerin's answer included a
third party cross claim against  Tidelands.  She alleges that Tidelands  entered
into an agreement to purchase the Zavala Gathering System from ZG Gathering Ltd.
and that,  as a part of the  agreement,  Tidelands  agreed to satisfy all of the
obligations  due  and  owing  to  Northern,  thereby  relieving  Sheerin  of all
obligations she had to Northern on the promissory note in question.  She alleges
that  Tidelands  is liable to her for all of her  actual  damages,  costs of the


                                       15
<PAGE>

lawsuit and other  unstated  relief.  Tidelands and Sheerin  agreed to delay the
Tideland's  answer  date in order  to allow  time  for  mediation  of the  case.
Tideland's  participated  in a  mediation  on March 11,  2003.  The case was not
settled at that time.  Tideland's  answered  the Sheerin suit on March 26, 2003.
Tideland's  answer  denies all of Sheerin's  allegations.  No discovery has been
completed  at this time.  Based on  initial  investigation,  however,  Tidelands
appears to have a number of potential  defenses to Sheerin's claims.  Tideland's
intends  to  aggressively  defend  the  lawsuit.  At  this  early  stage  in the
litigation,  and in light of our continuing  investigation  of the facts and the
issues in the case,  we cannot give a more  definitive  evaluation of the extent
Tideland's liability exposure.

         On December 23, 2002, we were served as a defendant in a lawsuit titled
El Viejo Ranch, Ltd. vs. Tidelands Oil & Gas Corporation,  in the 293rd Judicial
District,  Zavala County, Texas, Cause Number  02-12-10606-ZCV.  The lawsuit was
initiated by El Viejo Ranch, Ltd. on December 10, 2002. El Viejo contends that a
pipeline  right of way agreement  was breached as a result of certain  insurance
coverage,  required to be maintained  under the  right-of-way  agreement,  being
allowed to lapse resulting in termination of the right-of-way easement. El Viejo
seeks a  declaratory  judgement  that the  right-of-way  agreement  was properly
terminated,  that Tidelands is obligated to cease use of the pipeline,  reconvey
the easement to El Viejo, to remove the pipeline, and to remediate the property.
El Viejo also  seeks a  temporary  injunction  to enjoin  Tidelands'  use of the
easement,  damages  in an  unstated  amount and  recovery  of  attorneys'  fees.
Tidelands'  answered the El Viejo lawsuit in early  February,  2003.  Tidelands'
answer denies all of El Viejo's allegations.  The case is set for trial November
10, 2003.

Item 2.  Changes in Securities.

         Recent Sales of Unregistered Securities

         During the second  quarter of 2003,  the  Company  offered and sold the
following  securities pursuant to exemptions from the registration  requirements
of the Securities Act of 1933, as amended (the "Securities Act").

         On June 30, 2003, we issued 1,300,000 common shares as full payment for
an outstanding  promissory note obligation to Guernsey Partners. The transaction
value was $198,767,  representing unpaid principal.  Unpaid interest was waived.
The shares were issued to nine individuals.

         We believe the shares issued above were issued in private  transactions
pursuant  to  Section  4(2) of the  Securities  Act of 1933,  as  amended,  (the
"Securities Act"). These shares are considered restricted securities and may not
be publicly resold unless  registered for resale with  appropriate  governmental
agencies or unless exempt from any applicable registration requirements.

Item 3.  Defaults Upon Senior Securities.

         None.


                                       16
<PAGE>

Item 4.  Submission of Matters to a Vote of Security Holders.

         No matter was submitted to a vote of the security holders,  through the
solicitation  of proxies or  otherwise,  during the first  quarter of the fiscal
year covered by this report. Item 5. Other Information.


Item 5.  Other Information

         On June 19,  2003,  we  issued  3,596,169  common  shares  for  accrued
officers  salaries totaling  $791,157 or twenty-two  Cents($0.22)per  share. The
shares  were  issued  under our 2003  Stock  Grant  and  Option  Plan  which was
registered on Form S-8 on June 11, 2003.

         On August 7, 2003, we moved our corporate  offices from Corpus Christi,
Texas to 1862 West  Bitters Rd.  Bldg.#1,  San  Antonio,  Texas  78248.  Our new
telephone number is (210) 764-8642. Our fax number is (210) 764-2930.

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

         (a) Exhibits

Exhibit No.                Exhibit Name

  31.1   Chief  Executive   Officer-Section   302   Certification   pursuant  to
         Sarbane-Oxley Act.

  31.2   Chief  Financial   Officer-  Section  302  Certification   pursuant  to
         Sarbane-Oxley Act.

  32.1   Chief  Executive   Officer-Section   906   Certification   pursuant  to
         Sarbane-Oxley Act.

  32.2   Chief  Financial   Officer-  Section  906  Certification   pursuant  to
         Sarbane-Oxley Act.

         (b) Reports on Form 8-K. During the second quarter of 2003 we filed one
report on Current  Report  Form 8-K. On May 8, 2003,  we filed a Current  Report
disclosing  matters relating to Item 2,  "Acquisition or Disposition of Assets",
Item 5, "Other Events", and Item 7, "Financial Statements and Exhibits".


SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: August 12, 2003

TIDELANDS OIL & GAS CORPORATION


 /s/ Michael Ward
--------------------------
By: Michael Ward
Title: President


 /s/ Royis Ward
--------------------------
By: Royis Ward
Title: Secretary/Treasurer


 /s/ Ahmmed Karim
--------------------------
By: Ahmmed Karim
Title: Vice President





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