United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

       [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2004

        [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 For the transition period from_____ to _______

                        Commission file number 000-27783

                          NATHANIEL ENERGY CORPORATION


        (Exact Name of Small Business Issuer as Specified in its Charter)



Delaware                                                        84-1572525
(State or other jurisdiction of                              (I.R.S.Employer
incorporation or organization)                               Identification No.)


         8001 South InterPort Blvd. Suite 260, Englewood, Colorado 80112
                    (Address of principal executive offices)

                                 (303) 690-8300
                 (Issuer's telephone number including area code)

Check  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 [ ]

Applicable  only to  issuers  involved  in  bankruptcy  proceedings  during  the
preceding five years

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [ ] No [ ]

Applicable only to corporate issuers

State the number of shares  outstanding  of each of the issuer's class of common
equity, as of the latest practicable date:  October 26, 2004,  70,198,263 shares
of common stock, $.001 par value.

Transitional Small Business Disclosure Format (Check One) Yes [ ] No [X]





<PAGE>











                          NATHANIEL ENERGY CORPORATION



                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION                                          Page

Item 1.   Financial Statements (unaudited)

            Consolidated Balance Sheets as of September 30, 2004 and
            December 31, 2003                                              2


            Consolidated Statements of Operations for the Three
            and Nine Months ended September 30,2004 and 2003               3

            Consolidated Statements of Cash Flows for the Nine
            Months ended September 30, 2004 and 2003                       4


            Notes to Consolidated Financial Statements                     5

Item 2.  Management's Discussion and Analysis or Plan of Operation        10

Item 3.  Controls and Procedures                                          14


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                15

Item 2.  Unregistered Sales of Equity
         Securities and Use of Proceeds                                   15

Item 3.  Defaults Upon Senior Securities                                  15

Item 4.  Submission of Matters to a Vote of Security Holders              15

Item 5.  Other Information                                                15

Item 6.  Exhibits                                                         16

           Signatures                                                     17






<PAGE>

                          Nathaniel Energy Corporation
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                     September 30,         December 31,
                                                         2004                 2003
                                                      (unaudited)
                                                   ----------------        ------------

Assets
Current assets:

<S>                                                    <C>                  <C>
  Cash                                                 $   507,085          $   504,782
  Accounts receivable                                    1,667,954              960,555
  Inventory                                              3,014,305              637,174
  Prepaid expenses                                         141,224              130,669
  Advances and other receivables                             6,480               30,718
                                                      ---------------       -----------
Total current assets                                     5,337,048            2,263,898


Property, plant and equipment, net of accumulated
  depreciation                                          10,380,964           11,662,969
Intangible assets, net                                     308,549              339,473
Restricted cash                                            254,432              899,300
Related party receivables                                   11,438              345,959
Deposits                                                    60,127               50,000
Other assets                                                     -               42,794
                                                      --------------       ------------
Total Assets                                           $16,352,558          $15,604,393
                                                      ===============      ============


Liabilities and Stockholders' Equity

Current liabilities:

  Accounts payable                                     $ 2,262,299          $ 1,689,072
  Accrued compensation and payroll liabilities              42,326              109,065
  Accrued interest                                         508,070              141,402
  Accrued property tax                                     127,311               38,331
  Accrued income taxes                                     410,377                  -
  Other accrued expenses                                   237,783               25,018
  Notes payable, current portion                           493,258              406,644

                                                       ------------        ------------
Total current liabilities                                4,081,424            2,409,532


Long-term debt                                             373,008              230,989
Long-term debt, stockholder                              8,892,151            6,892,151
                                                   ---------------      ---------------
Total liabilities                                       13,346,583            9,532,672
                                                   ---------------      ---------------

Minority interest                                          338,919               34,139


Stockholders' equity:

  Preferred stock, 2,000,000 shares of $.001 par value
    authorized, none issued or outstanding                      -                    -
  Common stock, 75,000,000 shares of $.001 par value
    authorized, 70,198,263 and 69,719,414 shares,
    respectively, issued and outstanding                    70,198               69,719
Common stock to be issued                                   20,318               20,285
Additional paid-in capital                              64,851,656           64,682,652
Accumulated deficit                                    (62,275,116)        (58,735,074)

                                                   ---------------      ---------------

Total stockholders' equity                               2,667,056            6,037,582

                                                   ---------------      ---------------

Total Liabilities and Stockholders' Equity             $16,352,558          $15,604,393

                                                   ===============      ===============
     The accompanying notes are an integral part ofthe financial statements.

                                       2
</TABLE>



<PAGE>



                          Nathaniel Energy Corporation
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>




                                   For the Three Months Ended     For the Nine Months Ended
                                  September 30,  September 30,   September 30,  September 30,
                                       2004            2003           2004           2003
                                   -----------    -----------    -----------    -----------
<S>                                <C>            <C>            <C>            <C>
Revenue                            $ 3,433,929    $ 2,716,970    $10,390,073    $ 5,625,518


Cost of revenue                      2,833,250      2,834,531      8,846,865      5,672,998
                                   -----------    -----------    -----------    -----------
Gross profit (loss)                    600,679       (117,561)     1,543,208       (47,480)


Selling, general and administrative
 expenses                              653,974      1,126,838      2,056,771      2,647,341


Write-down of inventory                      -             -         274,000              -
Impairment of assets                         -             -       1,403,046              -
                                   -----------    -----------    -----------    -----------
Total operating expenses               653,974      1,126,838      3,733,817      2,647,341



Loss from operations                   (53,295)    (1,244,399)    (2,190,609)    (2,694,821)


Other income (expense)
  Partnership income                         -              -              -         20,733
  Loss on disposal of equipment              -              -        (18,912)       (13,207)
  Write-off of related party
    receivable                               -              -       (264,587)             -
  Interest expense                    (146,926)      (320,597)      (422,576)      (882,021)
  Other income                               -             75         71,800         26,208
                                    ----------    -----------    -----------    -----------
Loss before income taxes and
  minority interest                   (200,221)    (1,564,921)    (2,824,884)    (3,543,108)
Income tax expense                    (151,695)            -        (410,378)             -
                                    ----------    ------------   -----------    -----------
Loss before minority interest         (351,916)    (1,564,921)    (3,235,262)    (3,543,108)
Minority interest                     (111,495)       146,578       (304,780)        26,358
                                    ----------    -----------    -----------    -----------

Net loss                           $  (463,411)   $(1,418,343)   $(3,540,042)   $(3,516,750)

                                    ===========    ===========    ===========    ===========

Loss per share, basic and diluted  $     (0.01)   $     (0.04)   $     (0.05)   $     (0.09)
                                    ===========    ===========    ===========    ===========

Weighted average common
 shares outstanding                 70,198,263     38,362,664     69,866,008     38,244,349
                                    ==========     ============   ===========    ===========



                               The accompanying notes are an integral part of the financial statements.

                                       3

</TABLE>


<PAGE>


                          Nathaniel Energy Corporation
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>



                                                                  For the Nine Months Ended
                                                              September 30,         September 30,
                                                                  2004                   2003
                                                             --------------         -------------
Cash flows from operating activities:
<S>                                                          <C>                    <C>
Net loss                                                     $ (3,540,042)          $ (3,516,750)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
  Depreciation and amortization                                   727,149                479,557
  Stock issued for services                                            --                845,050
  Minority interest                                               304,780                (26,358)
  Loss on equipment                                                18,912                     --
  Loss on related party receivables                               264,587                     --
  Write down of inventory                                         274,000                     --
  Impairment of assets                                          1,403,046                     --
  Non-cash settlement of debt                                     (65,800)                    --

Changes in operating assets and liabilities:
  (Increase) decrease in:

    Inventory                                                  (2,325,351)               260,017
    Restricted cash                                               644,868               (199,970)
    Accounts receivable                                          (707,399)              (207,119)
    Prepaid expenses                                              (10,555)               (18,926)
    Advances receivable                                            24,238                  7,206
    Related party receivable                                       19,450                (58,962)
    Other assets                                                  (10,128)               (56,677)

  Increase in:

  Accounts payable and accrued expenses                         1,837,827              1,616,153
                                                             --------------         --------------
Net cash provided by (used in) operating activities            (1,140,416)              (876,779)
                                                             --------------         --------------
Cash flows from investing activities:
  Acquisition of assets                                          (793,384)            (9,396,414)
                                                             --------------         --------------
Net cash used in investing activities                            (793,384)            (9,396,414)
                                                             --------------         --------------
Cash flows from financing activities:
  Payments on debt                                                (63,897)               (55,522)
  Proceeds from issuance of notes and loans                     2,000,000             11,147,215
                                                             --------------         --------------
Net cash provided by financing activities                       1,936,103             11,091,693
                                                             --------------         --------------
Net increase in cash                                                2,303                818,500
Cash and cash equivalents, beginning of period                    504,782                202,057
                                                             --------------         --------------
Cash and cash equivalents, end of period                     $    507,085           $  1,020,557
                                                             ==============         ==============
Cash paid for interest                                       $     31,168           $     71,886
                                                             ==============         ==============
Cash paid for income taxes                                   $         --           $         --
                                                             ==============         ==============
Non cash financing activity:
  Notes payable related to construction in progress         $     325,780          $          --
                                                             ==============         ==============
  Issuance of shares of common stock for intangibles        $         --           $    150,000
                                                             ==============         ==============
   Issuance of shares of common stock to settle
     accounts and notes payable                              $    230,800                     --
                                                             ==============         ==============
   Cancellation of shares of common stock
      in settlement of a receivable from an officer          $     50,484                     --
                                                             ==============         ==============


    The accompanying notes are an integral part of the financial statements.

                                       4

</TABLE>

<PAGE>



                          Nathaniel Energy Corporation
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 and 2003
                                   (Unaudited)

1. Significant Accounting Policies and Nature of Operations:


Condensed Footnotes


As contemplated by the Securities and Exchange  Commission  instructions to Form
10-QSB, the following footnotes have been condensed and therefore do not contain
all  disclosures  required  in  connection  with  annual  financial  statements.
Reference should be made to the notes to Nathaniel Energy  Corporation's  annual
financial  statements  set forth in Form 10-KSB for the year ended  December 31,
2003.

Unaudited Interim Financial Statements


The accompanying  unaudited interim financial statements,  which include our 51%
owned  subsidiary,  have been prepared in  accordance  with  generally  accepted
accounting  principles pursuant to Regulation S-B of the Securities and Exchange
Commission.  The  financial  information  has not been audited and should not be
relied  on  to  the  same  extent  as  audited  financial  statements.   Certain
information  and footnote  disclosures  normally  included in audited  financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted. Accordingly,  these interim financial statements
should be read in conjunction with our financial statements and related notes as
contained in Form 10-KSB for the year ended December 31, 2003. In the opinion of
management, the interim financial statements reflect all adjustments,  including
normal  recurring  adjustments,  necessary for fair  presentation of the interim
periods presented. The results of operations for the three and nine months ended
September 30, 2004 are not necessarily indicative of results of operations to be
expected for the full year.


Description of Business


Nathaniel  Energy  Corporation  is a  renewable  energy  company  that  provides
industry with an  alternative  energy  comparable  to that of fossil fuels.  Our
proprietary  patented  technology,  the  Thermal  Combustor(TM),  is  a  2-stage
gasification  system  designed to convert  waste,  biomass,  tires and any other
solid,  carbon-based  materials into inexpensive  electrical and thermal energy,
while  exceeding  the most  stringent  EPA and European  Union  regulations.  By
converting waste material into valuable process heat and electricity  using best
available  technology,  we are  able to  provide  a  total  solution  to  select
industrial and municipal customers.

We focus our  business and utilize our  patented  technology  in three main
areas:
- licensing and joint venture of the proprietary technology,
- building,  owning,  operating and maintaining energy infrastructures, and
- building,  owning,  operating and maintaining  mini power plants.

We plan to enter into  licensing  and sale  agreements  to begin the  commercial
penetration of our patented technology.  We also plan to build, own, operate and
maintain energy  infrastructures that will provide industries and municipalities
an efficient, clean energy and waste removal solution.  Additionally, we plan to
build,  own,  operate and maintain mini power plants for businesses that seek an
independent and controllable  source of energy.  These mini power plants will be
built on our customers' business premises ("in the fence") and will reduce their
dependence on energy produced from fossil fuels provided by the local utility as
well as providing those customers a waste disposal solution.

We have also been in the fuel processing business, including used tire recycling
and collection services,  since 1997. We have operated a 27 acre fuel processing
facility  in  Hutchins,  Texas  since  1999 and have  operated  a helium and gas
processing facility in Keyes, Oklahoma since April 2003.

                                       5
<PAGE>


                          Nathaniel Energy Corporation
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           SEPTEMBER 30, 2004 and 2003
                                   (Unaudited)

Critical Accounting Policies

The financial  statements  include the accounts of Nathaniel Energy  Corporation
and its subsidiary.  All material  inter-company  accounts and transactions have
been eliminated in consolidation.

Inventory


Tire shred inventory is valued at the lower of cost to produce or net realizable
value, using the first-in  first-out method of accounting.  Net realizable value
is determined by reference to existing contractual sales prices reduced by costs
to complete the tire  processing.  Tire shred  inventory  value at September 30,
2004 is zero. Our gas processing facility has helium inventory in process stored
in the BLM (Bureau of Land  Management)  facility in Texas.  Helium inventory is
valued  at the lower of cost or market  using the  first-in-first-out  method of
accounting.  Under our contract with the BLM, the BLM provides  certain services
for which we pay activity  fees,  compression  fees,  storage fees and an annual
fee.  The BLM fees are expensed as  incurred.  We are also  building two Thermal
Combustors  (TM) for resale in Italy,  included as  construction in progress and
valued at cost.


Components of inventory at September 30, 2004 are as follows:


Helium and natural gas liquids          $  301,063
Construction in progress                 2,713,242
                                        ----------
Total                                   $3,014,305
                                        ==========


Research and Development

Research  and  development  expenditures,  all of which  relate  directly to the
design and development of our Thermal Combustor (TM) technology, are expensed as
incurred.  For the nine months ended  September  30, 2004 and 2003,  we expensed
$306,319  and  $-0-,  respectively,   as  selling,  general  and  administrative
expenses.

Property, Plant and Equipment and Related Depreciation

Property,  plant and  equipment  purchased or  constructed  is recorded at cost.
Direct costs, such as labor and materials,  and indirect costs, such as overhead
used during construction are capitalized.  Major units of property  replacements
or improvements  are  capitalized and minor items are expensed.  Gain or loss is
recorded in income for the  difference  between  the net book value  relative to
proceeds  received,  if any, when the asset is sold or retired.  Depreciation is
provided for using straight-line and accelerated methods. Estimated useful lives
of the assets used in the computation of depreciation are as follows:



                Machinery and equipment                 5 - 20 years
                Buildings                                   25 years
                Vehicles                                     5 years
                Gathering pipeline                          20 years


Long-Lived Assets


In accordance with the Financial Accounting Standards Board's ("FASB") Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  144,  "Accounting  for  the
Impairment or Disposal of Long-Lived  Assets",  we review our long-lived  assets
for impairment  whenever  events or changes in  circumstances  indicate that the
related  carrying amount may not be  recoverable.  Recovery of assets to be held
and used is measured by a comparison of the carrying amount of the assets to the
future net cash flows expected to be generated by the asset.  If such assets are
considered  to be impaired,  the  impairment to be recognized is measured by the
amount by which the carrying  amount of the assets exceeds the fair value of the
assets.  Assets to be  disposed  of are  reported  at the lower of the  carrying
amount  or fair  value  less  the  cost to  sell.  Management  uses  significant
judgments,  assumptions and estimates to calculate future cash flows expected to
be generated by the assets under impairment review.

                                       6
<PAGE>
                          Nathaniel Energy Corporation
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           SEPTEMBER 30, 2004 and 2003
                                   (Unaudited)

Revenue Recognition


Our fuel  processing  facility  earns  revenue  when tires are  accepted  at the
facility  ("tipping  fees")  and from the sale of  processed  tire  shreds.  The
revenues  from  tipping  fees are fully  earned  and  recognized  when tires are
accepted at the facility.  Processed tire shred revenues are recognized when the
shreds are  delivered  to the end user.  We have  established  internal  quality
control processes to ensure that shreds meet the standards  required by contract
for the  delivery of shreds.  Our quality  control  process  reduces the risk of
significant  returns and allowances of tire shreds sold.  Returns and allowances
are nominal.

Helium,  liquid gas and natural gas  revenues  are  recognized  in the period of
delivery.  The  revenues are fully  earned when  recognized.  We ensure that our
processed gases meet the requirements of the Bureau of Land Management  ("BLM"),
the natural gas pipeline  operators  and  wholesale  gas  customers  through our
quality  control  equipment  installed  at  our  processing  plant.  We  have  a
month-to-month  contract  in place  with a natural  gas  marketing  firm for the
natural gas  delivered to the  pipeline and a long-term  contract for the helium
processed.  The natural gas liquids  processed  are  currently  sold as produced
under a month-to-month agreement.

We recognize  revenue from the sale of Thermal  Combustors (TM) upon completion,
delivery and acceptance by the purchaser, using the completed contract method of
accounting.


Earnings Per Share

Basic earnings per share are computed by dividing earnings  available for common
stockholders by the weighted-average  number of common shares outstanding during
the  period.  Diluted  earnings  per share are  computed  by  dividing  earnings
available  for common  stockholders  by the diluted  weighted-average  number of
common shares outstanding during the period.  Diluted earnings per share reflect
the potential  dilution  that could occur if  securities or other  agreements to
issue  common  stock  which have met market  price or other  contingencies  were
exercised or converted into common stock.  Fully diluted  earnings per share are
not presented as the result would be antidilutive.

Use of Estimates


The  preparation  of our  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires our  management to make estimates and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.


Reclassifications


We have reclassified certain prior period amounts to conform to the current
period presentation.

2. Acquisition and Minority Interest

On April 3, 2003 we completed the  acquisition of the remaining  81.45% of Keyes
Helium  Company,  LLC ("Keyes  Helium") from Colorado  Interstate  Gas ("CIG") a
subsidiary  of El Paso  Corporation  through  our  subsidiary  Nathaniel  Energy
Oklahoma  Holdings  Corporation  ("NEC OK").  We  purchased  our initial  18.55%
interest in Keyes Helium on August 26, 2002.  On April 3, 2003 we also  acquired
the Keyes  gathering  system and Sturgis  gas  processing  plant and  compressor
station.  These  facilities  are  located on a 15 acre site in Keyes,  Oklahoma.
These facilities receive and process natural gas, remove liquid gases and helium
and then send the natural gas into a natural gas pipeline. We transferred 49% of
the ownership of NEC OK to a principal investor in consideration of an aggregate
of $11,997,476 of debt financing to effectuate the acquisition. Accordingly, our
interest in Keyes Helium and the helium  operations is through our 51% ownership
of NEC OK. NEC OK owns 100% of Keyes Helium.

The following table represents selected unaudited pro forma income statement
information for the nine months ended September 30, 2003, including the
operations of the 2003 acquisitions as if the acquisitions were owned for the
entire period shown.


                      Nine months ended September 30, 2003

                  Revenue                           $ 7,038,603
                  Net (loss)                         (3,641,403)
                  Loss per share                    $     (0.10)

                                       7
<PAGE>

                          Nathaniel Energy Corporation
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           SEPTEMBER 30, 2004 and 2003
                                   (Unaudited)

3. Notes Payable

On March 17, 2004 we borrowed  $2,000,000 from Richard Strain,  a related party,
bringing our total  indebtedness  to Mr.  Strain to  $8,892,151 at September 30,
2004.  Our  Promissory  Note II to Mr. Strain  relating to the  $2,000,000  loan
provides  a fixed  effective  interest  rate of 4.3%  and is  payable  in  equal
installments of $540,000 due on October 1, 2005,  January 1, 2006, April 1, 2006
and July 1, 2006.  Mr. Strain has the right,  at any time, to convert all or any
portion of the outstanding  indebtedness of $8,892,151 into shares of our common
stock. The conversion price is equal to 103% of the average closing price of our
common stock for the five trading days prior to March 17, 2004,  which was $0.78
per share.  The conversion price exceeded the market value of the stock on March
17, 2004.

On August 1, 2004, we issued a $126,153  promissory note to Merrick & Company, a
vendor providing services for delivery on our Thermal Combustor (TM) contract in
Italy, in payment for services rendered. The note is due on November 1, 2004. If
the note is not paid on that  date,  the  payee  may at its  option  extend  the
payment term and interest will accrue on the unpaid  principal at the prime rate
plus 2% per annum  (6.75% at September  30, 2004) from  November 2, 2004 through
January  31,  2005,  and then at the  prime  rate  plus 5% per  annum  (9.75% at
September 30, 2004) from February 1, 2005,  until the note is paid. On September
8, 2004, we entered into a $199,627  promissory  note  agreement  with Merrick &
Company  also in  payment  for  services  rendered  under  the  same  terms  and
conditions as those of the promissory  note dated August 1, 2004. As of November
1, 2004,  no  payments  have been made on either of the  promissory  notes,  and
Merrick has consented to extension of the payment term.


4. Economic Dependency - Major Customer


With the  acquisition of the Keyes Helium and the Sturgis gas  processing  plant
and compressor station and Keyes gathering system,  approximately 38% and 37% of
our  total  revenue  for the nine  months  ended  September  30,  2004 and 2003,
respectively is from helium and processed  natural gas sales to Air Products and
Chemicals,  Inc.  ("Air  Products").  Although we generate  additional  sales of
liquid  gases and monthly fees from a take and pay  blending  contract  with CIG
which reduces our dependency on any one customer,  Air Products purchases all of
our helium produced under a contract with us through 2021. Our contract with Air
Products  is  subject  to early  termination  in 2008 and 2015 if  either  party
requests a price  determination that is not agreed to by the other party. If the
contract is not terminated by either party prior to 2021, it will continue until
terminated by either party  providing two years'  advance notice of their intent
to terminate.  Should Air Products terminate this contract,  we believe we would
be able to sell  the  helium  produced  to  other  major  companies  which  have
previously stated an interest in purchasing the helium.


5. Related Party Transactions


See Note 3 - "Notes Payable" regarding loans from Richard Strain.

During the quarter  ended June 30, 2004,  we wrote off a $264,587  related party
receivable  from Ripetouch  Greenhouse  LLC, an entity  controlled by our former
chief executive officer,  Stan Abrams since debt collection was determined to be
uncertain.  In prior years, we paid certain expenses related to site clean-up on
behalf of Ripetouch Greenhouse LLC.

During  February 2004, our Board of Directors  adopted a policy that all related
party transactions must be approved by a majority of the disinterested directors
and that those transactions will be based on commercially reasonable terms which
are no less  favorable  to us than  terms  we  could  obtain  in an  arms-length
transaction with unaffiliated third parties.


6. Asset Impairment


During the quarter ended June 30, 2004, management changes prompted a review and
update of the  expected  cash flows  expected to be realized  from  certain long
lived  assets  and the  impact of that  review on the  asset  carrying  value in
accordance  with  SFAS  144.  Based  on this  review,  an  asset  impairment  of
$1,403,046  was  recognized  on the assets at the fuel  processing  facility  in
Hutchins,  Texas.  The  Company  discounted  the cash  flows  expected  from the
impaired long lived assets to determine  their current value and the  impairment
amount.  The  Company is  working  to add new  contracts  to  increase  the fuel
processing facility revenue,  but any new contracts cannot be assured,  and have
not been  considered in the most recent cash flow  expectations.  We realized no
impairment  of long lived assets  during the three months  ended  September  30,
2004.
                                       8

<PAGE>


                          Nathaniel Energy Corporation
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           SEPTEMBER 30, 2004 and 2003
                                   (Unaudited)
7. Inventory


During  the  quarter  ended June 30,  2004,  tire  shred  inventory  at the fuel
processing  facility was written down by $274,000 to a net  realizable  value of
zero. The net realizable  value was calculated  using  estimated  selling prices
less costs to process  the  inventory  into a salable  form.  During the quarter
ended  September 30, 2004, all costs  associated  with our tire shred  inventory
were expensed in cost of revenue.


We have included in inventory  $2,713,242 of costs  associated  with our Thermal
Combustor  (TM)  project  in  Italy  as work in  progress.  We  expect  to incur
additional  costs during the next quarter  resulting  from our previous  work in
progress,  but do not expect  those costs to exceed our contract  selling  price
plus freight and  delivery  costs which are  billable  separately.  We expect to
fully recover costs  included in work in progress  pursuant to our contract with
L&R Energy Company LLC or recover our costs  pursuant to a payment  guarantee we
received from the project owner, EcoIdea S.R.L., however, we can not assure that
we will recover all of our costs. Based on current negotiations and alternatives
for cost  recovery,  we do not consider it necessary to record an  impairment of
our work in process on the Thermal  Combustors  (TM) at September 30, 2004.  See
Subsequent Event Note.

8. Business Segments

The Company conducts business in three separate facilities  presently managed as
two energy  operating  business  segments,  helium and gas  processing  and fuel
processing. The location and use of our facilities are shown as follows:

- a fuel processing operation in Hutchins, Texas,
- the natural gas processing, gas liquids and helium production in Keyes,
  Oklahoma, and
- the alternate energy engineering and corporate offices in Englewood, Colorado.


9. Subsequent Event

On November 2, 2004, we announced the successful  gasification of refuse derived
fuel (RDF) in Cologna Veneta, Italy, from one of the two Thermal Combustors (TM)
we supplied in connection  with our Gasifier  Supply and Start Up Agreement with
L&R Energy  Company LLC proving that our patented  technology is successful  and
viable on a commercial level.

One of our Thermal  Combustors (TM) successfully  gasified and combusted RDF and
produced over one megawatt of electricity.

Although  we  proved  out  our  technology,  we  were  unable  to  complete  the
functionality  test  process  required  under our  contract to receive our first
payment of $1,500,000  representing  50% of the total contract price. We stopped
the testing  process to address the poor  quality  fuel being  supplied by other
contract   parties  that  is  and  remains   outside  the   specifications   and
densification requirements to successfully operate the Thermal Combustors.(TM)

We believe  that it was  necessary  to stop the  testing  process to protect our
equipment from damage and to discuss the contract  issues  surrounding  the fuel
specifications  with the other  contract  parties.  To date we are  continuing a
dialog with the other parties, but we have not come to a mutual understanding to
address the contract  issues.  We have retained  special counsel to preserve our
rights and remedies, and to protect our interests with respect to the contract.

                                       9

<PAGE>



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.

                           FORWARD LOOKING STATEMENTS

Certain  information  contained  in this  report  may  include  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995,  and is subject to the safe harbor created by that act. The safe harbor
created  by the  Securities  Litigation  Reform  Act will not  apply to  certain
"forward  looking  statements"  because we issued  "penny  stock" (as defined in
Section  3(a)(51) of the  Securities  Exchange Act of 1934 and Rule 3a51-1 under
the Exchange  Act) during the three year period  preceding  the date(s) on which
those forward looking statements were first made, except to the extent otherwise
specifically  provided  by  rule,  regulation  or order  of the  Securities  and
Exchange  Commission.  We caution  readers  that certain  important  factors may
affect our actual results and could cause such results to differ materially from
any  forward-looking  statements  which  may be deemed to have been made in this
Report or which are otherwise made by or on behalf of us. 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 generality
of the foregoing, words such as "may", "will", "expect",  "believe",  "explore",
"consider",  "anticipate",  "intend", "could", "estimate", "plan", or "continue"
or the negative variations of those words or comparable terminology are intended
to  identify  forward-looking  statements.  Factors  that may affect our results
include, but are not limited to, the risks and uncertainties associated with:

-    Our ability to reach a resolution of the disputes surrounding our contracts
     for the Italy project.
-    Risks as to whether we will prevail in any proceeding to enforce our rights
     under the Italy project contracts.
-    Our ability to pay our notes payable when due.
-    Our ability to raise capital necessary to implement our business plan.
-    Our ability to finance and complete planned projects.
-    Our  ability to execute our  business  plan and  commercialize  the Thermal
     Combustor (TM) technology,  including building Thermal  Combustors(TM) that
     meet customers' specifications and that meet local regulatory environmental
     and permit requirements.
-    Risks related to dependency on a small number of customers.
-    Risks  related to  dependency  on project  partners  and vendors for timely
     completion of project milestones.
-    Our ability to satisfy our customers'expectations.
-    Our ability to employ and retain qualified management and employees.
-    Changes in government regulations which are applicable to our business.
-    The  availability  of a consistent,  economically  viable,  and sustainable
     waste stream supply to fuel the Thermal Combustor(TM) operations.
-    Changes in the demand for our products and  services,  including the impact
     from changes in governmental regulation and funding for alternative energy.
-    The degree and nature of our  competition,  including the  reliability  and
     pricing of traditional  energy sources and the economic  viability of other
     alternative energy sources such as wind and solar power.
-    Operating hazards related to our Thermal Combustor(TM) business.
-    Potential mechanical failure of our plants or products.
-    Our ability to effectively  protect our patents and proprietary  technology
     from infringement.
-    Our ability to generate sufficient cash to pay our creditors.
-    Disruption  in the economic and  financial  conditions  primarily  from the
     impact of terrorist  attacks in the United States and overseas,  threats of
     future  attacks,  police  and  military  activities  and  other  disruptive
     worldwide political events.

We are  also  subject  to  other  risks  detailed  from  time to  time in  other
Securities and Exchange Commission filings and elsewhere in this report. Any one
or more of these  uncertainties,  risks and other  influences  could  materially
affect our results of operations and whether forward-looking  statements made by
us  ultimately  prove  to be  accurate.  Our  actual  results,  performance  and
achievements  could differ  materially  from those expressed or implied in these
forward-looking  statements.  We undertake no obligation  to publicly  update or
revise any  forward-looking  statements,  whether from new  information,  future
events or otherwise.

                                       10


<PAGE>


                                Company Overview


Our mission is to provide a lower cost, clean energy alternative to fossil fuels
worldwide. Our operational plan focuses on three major business models:


     o    license and sale of the proprietary technology,

     o    build, own and operate energy infrastructures, and

     o    build, own and operate mini power plants.


Revenue is generated in two business areas, the largest being our helium and gas
processing  plant,  generating  96% of our revenue,  or $9,923,264  for the nine
months  ended  September  30, 2004.  The second  business,  our fuel  processing
operation, generated 4% of our revenue, or $466,809 during the same period.

Our  revenue  during  the  nine  months  ended   September  30,  2004  increased
significantly over the nine months ended September 30, 2003 due to inclusion for
the entire period the revenue from the Keyes helium plant, the Sturgis gas plant
and the Keyes gathering  system.  We acquired these operating assets on April 3,
2003 and  included  revenue  and  expense  associated  with those  assets in our
operation for the period owned.

Our long term goal is to generate the majority of our revenue and cash flow from
the licensing and joint venture of our  proprietary  technology,  in addition to
building,  owning and operating energy infrastructures and mini power plants. As
a result,  the  majority  of our  resources  are  focused  on  developing  these
businesses  and we expect to market  our  capabilities,  raise  capital  for the
project construction and manage the projects from start to finish.

Historically,   we  have   not  had   difficulty   finding   potential   project
opportunities.  Worldwide,  industries and governments seek lower cost and clean
energy  alternatives  to fossil  fuels.  We expect that demand for these  energy
alternatives  will grow.  A key to our  success  will be wisely  choosing  among
project  opportunities  and focusing our  resources on those  projects  with the
greatest chance of success and returns for stockholders.

We have accomplished one of our 2004 goals in proving the commercial application
of our Thermal Combustor(TM)  technology. In addition, we are exploring numerous
project  opportunities  that will utilize our Thermal  Combustor's(TM)  patented
technology.


Executive Management


We are  currently  conducting  a search for a seasoned  CEO. We believe  current
management has sufficient  skills and experience to lead and manage the existing
operations and projects currently in process.


Intellectual Property


We own three U.S.  patents,  the latest issued in March 2003,  and have a patent
application   pending.  A  European  patent  application  covering  the  Thermal
Combustor(TM)  technology is also pending. The Thermal  Combustor(TM) is used to
produce energy using alternate fuel sources, which is then sold by the Company.

                                       11


<PAGE>


Results of Operations


The following tables set forth certain unaudited quarterly results of operations
of  Nathaniel  Energy  for the  first  three  quarters  of 2004.  The  quarterly
operating   results  are  not  necessarily   indicative  of  future  results  of
operations.



<TABLE>
<CAPTION>


                                                               Three Months Ended (unaudited)

                                     March 31        June 30      September 30    September 30  September 2004 vs. 2003
                                      2004            2004             2004           2003         increase (decrease)
                                                                                                   $            %
                                   -----------    ------------   -----------       --------      ------      ------

<S>                                 <C>             <C>            <C>              <C>           <C>             <C>
Revenue                             $3,346,792      $3,609,352     $3,433,929       $2,716,970    $716,959        26%
Cost of revenue                      2,891,376       3,122,239      2,833,250        2,834,531      (1,281)        -
                                    -----------    ------------   -----------      -----------    --------

 Gross profit (loss)                   455,416         487,113        600,679         (117,561)    718,240       542

Selling, general and
  administrative expenses              675,007         727,790        653,974        1,126,838    (472,864)      (42)
Write-down of inventory                     --         274,000             --               --
Impairment of assets                        --       1,403,046             --               --

                                    -----------    ------------   -----------       ----------
 Income (loss) from operations        (219,591)     (1,917,723)       (53,295)      (1,244,399)

  Interest expense, net               (144,582)       (131,068)      (146,926)        (320,597)
  Other non-operating
      income (expense)                   6,000        (217,699)            --               75
                                    -----------    ------------   -----------      -----------
  Loss before income taxes and
      minority interest               (358,173)     (2,266,490)      (200,221)      (1,564,921)
  Income tax expense                  (127,411)       (131,272)      (151,695)              --
  Minority interest                    (93,647)        (99,638)      (111,495)         146,578
                                    -----------    ------------   -----------      -----------
  Net loss                         $  (579,231)    $(2,497,400)    $ (463,411)     $(1,418,343)
                                    -----------    ------------   -----------      -----------

Significant non cash charges and
 expenses:
Depreciation and amortization      $   236,316     $   279,778      $  211,055        $ 162,455
Asset impairment                   $        --       1,403,046              --               --
Related party receivable
  write off                        $        --         264,587              --               --
Inventory write down               $        --         274,000              --               --

</TABLE>

For the quarter ended  September  30, 2004 revenue  increased by 26% compared to
same  period in 2003 due to our new  contracts  finalized  in  January  2004 and
$599,086 in  equipment  upgrades  completed  in March 2004 at our helium and gas
plants which provided additional plant processing and delivery capacity. Revenue
from the helium  and gas  processing  operations  was  $3,264,237  for the three
months ended  September 30, 2004,  compared to  $2,522,691  for the three months
ended  September 30, 2003, an increase of 29%.  Revenue from the fuel processing
operation  was  $169,692  during the  period,  down from  $194,279  in the third
quarter of the prior year, a decrease of 13%.

For the nine months ended September 30, 2004 revenue  increased by $4,764,555 or
85% to $10,390,073 from $5,625,518 for the nine months ended September 30, 2003.
The increase is primarily  due to inclusion of revenue from the operation of the
Keyes helium plant, the Sturgis gas plant and the Keyes gathering system for the
entire  nine  month  period  ended  September  30,  2004  of  which,  due to its
acquisition  on April 3, 2003,  only six months of revenue was  included for the
nine month period ended  September 30, 2003.  All revenue and expense of our 51%
owned subsidiary, Nathaniel Energy Oklahoma Holdings Corporation, which operates
the Keyes Helium  plant,  the Sturgis gas plant and the Keyes  gathering  system
have been included in consolidated  operations  beginning April 3, 2003. Revenue
from helium and gas  processing  operations  was  $9,923,264 for the nine months
ended  September  30 2004  compared  to  $5,179,927  for the nine  months  ended
September  30 2003,  ($7,038,603  pro forma for the entire nine month  period in
2003) an increase of 92% (41% pro forma).  The  increase in revenue  from helium
and gas  processing  operations  is due  primarily  to inclusion of three months
additional  revenue for the nine months ended September 30, 2004 compared to the
nine months ended September 30, 2003 and an increase in our plant processing and
delivery  capacity due to upgrades  completed  during the first quarter of 2004.
Revenue from fuel  processing  operations  was  $466,809  during the nine months
ended  September  30 2004,  up slightly by $21,218  from  $445,591  for the same
period in 2003.

Gross  profit  for the  three  months  ended  September  30,  2004 was  $600,679
representing  a gross  margin  of 18%  compared  to a gross  loss of  ($117,561)
representing  a gross margin of (4)% for the three months  ended  September  30,
2003, an increase in gross profit of $718,240 and an increase in gross margin of
22%. For the three months ended  September 30, 2004,  helium and gas  processing
operation gross profit was $607,001 representing a gross margin of 19% which was
offset by a gross loss of ($6,322)  representing  a gross loss of (4%) margin at
the fuel processing operation.  Gross profit for the nine months ended September
30, 2004 was $1,543,208  with gross margin of 15% compared to gross loss for the
nine months ended  September 30, 2003 of ($47,480)  with a gross margin of (1)%,
an increase in gross  profit of  $1,590,688  and an increase in gross  margin of
16%. The increase in gross profit and margin is primarily due to our  continuing
effort to improve  our  operations  at our helium  and gas  processing  facility
including our capital  expenditures  to upgrade  equipment at the facility,  new
contracts  with gas  customers  and  suppliers  and  inclusion  of three  months
additional  revenue for the nine months ended September 30, 2004 compared to the
nine months  ended  September  30,  2003.

                                       12
<PAGE>

On January 9, 2004 we  completed a new  contract  with Nexus  Energy  Company to
receive  additional  gas through Nexus Energy  Company's  existing  pipeline for
processing at our Keyes helium facilities.  In accordance with this contract, we
extract helium and natural gas liquids from this new gas stream.  New gas supply
processing  began at our Keyes plant in March 2004 after the successful  upgrade
of our helium equipment performed by Air Products and Chemicals, Inc. Total cost
of the upgrade was $599,086.

Total selling,  general and  administrative  expenses  decreased $472,864 or 42%
from  $1,126,838  for the three months ended  September 30, 2003 to $653,974 for
the three  months  ended  September  30,  2004 due  primarily  to a decrease  in
compensation and compensation  related costs and promotion  expense of $647,621,
offset  by  increased  research  and  development,  legal and  outside  services
expense.

Selling,  general and administrative expenses decreased $590,570 from $2,647,341
for the nine months ended  September 30, 2003 to $2,056,771  for the nine months
ended  September 30, 2004. The primary reasons for the decrease were a reduction
of  $845,050  in non  cash  marketing,  legal  and  professional  expense  and a
reduction in  compensation  expense of $227,248,  primarily  offset by other net
cost  increases  including  an increase in Thermal  Combustor(TM)  research  and
development  expense of $306,319,  an increase in our gas and helium  operations
general and administrative  expense of $87,827,  representing a full nine months
in 2004  compared to six months in 2003 and an  increase in outside  service and
legal expense of approximately $149,000.

Interest  expense for the nine months  ended  September  30, 2004  decreased  by
$459,445 to $422,576 from $882,021 for the nine months ended  September 30, 2003
resulting  primarily  from the  conversion  of $10 million of  indebtedness  due
Richard Strain into shares of our common stock.


Liquidity and Capital Resources

As of  September  30, 2004 we owed  $483,486 to financial  institutions  with an
average  interest  rate of  8.8%.  $253,174  of the  amount  due is  secured  by
equipment and $230,312 is secured by a  certificate  of deposit in the amount of
$237,000, which is included in restricted cash on the balance sheet at September
30, 2004.

Additionally,  the company has $8,892,151 in secured loans from Richard  Strain.
$2,000,000  of this  total was  loaned to us in March  2004 with  principal  and
interest  payable due in four quarterly  payments of $540,000 each on October 1,
2005, and January 1, April 1, and July 1, 2006. Another $2,000,000 of this total
was  loaned  to us in 2003  with  principal  and  interest  payable  due in four
quarterly  payments of $540,000 each on October 1, 2005, and January 1, April 1,
and July 1, 2006.  The  remaining  amount due Mr. Strain of $4,892,151 is due in
quarterly  principal  and interest  payments of $582,876 from March 2007 through
December 31, 2009.  All loan amounts from Mr. Strain to us may be converted,  at
Mr. Strain's option,  into shares of our common stock at a conversion rate equal
to 103% of the average closing price on the five trading days prior to March 17,
2004,  or $0.78 per share.  Additionally,  we agreed to  register  the shares of
common stock issuable upon conversion of these loans by September 18, 2004. This
registration has not occurred.

During the quarter  ended  September  30, 2004,  a note holder  agreed to accept
33,333 shares of common stock for payment of $12,000 of accrued interest due.


On August 1 and  September 8, 2004,  we issued  promissory  notes with Merrick &
Company,  a vendor, in the amounts of $126,153 and $199,627,  respectively,  for
services they provided  related to our Thermal  Combustor  (TM) project in Italy
due November 1, 2004. If the notes are not paid on that date,  the payee may, at
its option  extend  the  payment  term and  interest  will  accrue on the unpaid
principal at the prime rate plus 2% through  January 31, 2005,  and at the prime
rate plus 5% from  February 1, 2005 until paid. No payments have been made under
either of these notes,  and Merrick has consented to an extension of the payment
terms.

Included in accounts payable is $421,030 for equipment upgrades and services due
to Air Products,  a significant  customer,  with no stated  interest  rate.  The
payable  will be repaid over the next nine months,  approximately,  with monthly
installments that vary with revenue levels.

The  following  is a summary of our cash flows  sources  (uses) from  operating,
investing, and financing activities during the periods indicated:


                                    For the Nine Months
                                     Ended September 30,
                                   2004              2003

                               -------------    --------------

        Operating activities    $(1,140,416)    $  (876,779)
        Investing activities       (793,384)     (9,396,414)
        Financing activities      1,936,103      11,091,693

                               -------------    --------------
        Net effect on cash      $     2,303     $   818,500
                               =============    ==============

                                       13
<PAGE>

For the nine  months  ended  September  30,  2004,  net cash  used in  operating
activities of $1,140,416 is due to a net cash  operating  loss of  approximately
$613,000 and an increase in inventory of approximately $2,325,000,  offset by an
increase in accounts payable and accrued  expenses of approximately  $1,838,000.
The net cash  operating loss includes our net loss of  approximately  $3,540,000
offset by  approximately  $2,974,000 of non cash expenses in our operating  loss
including  depreciation and amortization,  minority interest, and the write down
of inventory, fixed assets and related party receivables.  During the first nine
months of 2004,  $881,868 of the  restricted  cash balance was used to construct
two  Thermal  Combustors  (TM)  which  also  significantly  increased  inventory
compared to December 31, 2003.


On July 1, 2004 we served notice of termination of the October 28, 2003 Gasifier
Supply and Start-Up  Agreement  with L & R Energy  Company LLC (L&R) relating to
the  supply  of two MCF 1800 BHP  Thermal  Combustors(TM)  for a waste to energy
project in Cologna Veneta, Italy.

On July 16, 2004 we entered into a new $3 million  contract with EcoIdea S.L.R.,
L&R and  others  for our  work on the  Cologna  Veneta  project.  Under  the new
agreement,  we placed one Thermal  Combustor(TM)  in service with natural gas by
July 29, 2004 and the plant  produced at least one  kilowatt of  electricity  at
that time, meeting the initial milestone toward the completion of the project in
accordance with the new agreement.  Under the terms of the new agreement, we are
required  to have two  Thermal  Combustors(TM)  operating  on RDF and  producing
57,600,000  BTU's per hour,  capable of producing  19,240 Kilograms of steam per
hour, by September 30, 2004.  Our  responsibilities  to perform our  obligations
under the new  agreement  are subject to other  parties  involved in the project
fulfilling  their respective  obligations,  which need to be completed before we
can perform  certain aspects of our  obligations.  At the time the new agreement
with  EcoIdea  S.L.R.,  L&R and  others  was  entered  into,  we  rescinded  our
termination of the Gasifier  Start-Up and Supply Agreement with L&R, and amended
it consistent with the new agreement with EcoIdea S.L.R.,  L&R and others.  This
agreement provided  liquidated damages at a rate of 3% of the contract price per
month if we had not completed this contract by September 30, 2004.

On September 13, 2004,  we executed an amendment to the new contact  executed on
July 16, 2004 with all contract  parties to allow for one Thermal  Combustor(TM)
to be completed  by  September  30, 2004 to receive 50% of our total price under
our  contract,  or  $1,500,000,  with the second  Thermal  Combustor  (TM) to be
completed by October 30, 2004.  This  amendment  was  effective as of August 25,
2004. In addition,  the amendment to the July 16, 2004  agreement  shortened the
performance testing requirements from fifteen days under the Gasifier Supply and
Start-Up Agreement with L&R to four days under the amended contract.


On November 2, 2004, we announced the successful  gasification of RDF in Cologna
Veneta,  Italy,  from  one of the two  Thermal  Combustors(TM)  we  supplied  in
connection  with our amended  Gasifier  Supply and Start Up Agreement  with L&R,
producing  over one  megawatt  of  electricity.  The one  Thermal  Combustor(TM)
successfully  gasifying  waste in Italy  proves  our  technology  is viable  for
commercialization  on a wide scale level in the 1 - 50 Megawatt markets.  We are
currently focusing on our plan to market our technology to niche energy markets.

Although  we  proved  out  our  technology,  we  were  unable  to  complete  the
functionality  test process  required under our amended  contract to receive our
first payment of $1,500,000  representing 50% of the total price. We stopped the
testing  process to  address  the poor  quality  fuel  being  supplied  by other
contract   parties  that  is  and  remains   outside  the   specifications   and
densification  requirements to successfully operate the Thermal  Combustors(TM).
We believe  that it was  necessary  to stop the  testing  process to protect our
equipment from damage and to discuss the contract  issues  surrounding  the fuel
specifications  with the other  contract  parties.  To date we are  continuing a
dialog with the other parties, but we have not come to a mutual understanding to
address the contract issues. We have retained special counsel, Sonnenschein Nath
&  Rosenthal  LLP,  to  preserve  our rights and  remedies,  and to protect  our
interests  with  respect to the  amended  contract.  Although we believe we have
performed in accordance with our amended contract and are working to collect the
full contract  price,  the amount of payment and date of collection is uncertain
at this time.  However,  we do not believe any impairment  currently exists with
respect to the work in process,  which is being  carried on the balance sheet at
approximately $2.7 million.

The net change in financing  activities  is due to a $2,000,000  debt  issuance,
offset by debt repayments of $63,897.


For the nine month period ended  September 30, 2003,  net cash used in operating
activities of $876,799 is due primarily to a loss of $3,516,750 and increases in
accounts  receivable  of $207,119 and  restricted  cash of  $199,970,  offset by
depreciation and amortization of $479,557,  a decrease in inventory of $260,017,
an increase in accounts payable and accrued  expenses of $1,616,153  million and
stock  issued for  services  of  $845,050.  Cash used for  investing  activities
resulted  from capital  expenditures  of  $9,396,414,  nearly all related to the
acquisition of the helium and gas facility in Keyes, OK on April 3 2003. The net
change in  financing  activities  is due to  proceeds  from debt of  $11,147,215
offset by debt repayments of $55,522.


Nathaniel  Energy had cash of $761,517 at  September  30,  2004.  This  includes
$254,432  of  restricted  cash,  $17,432  of  which  will be  used  to fund  our
operations,  pay current debts and fund current Thermal  Combustor(TM)  projects
and $237,000 of which is held as collateral for a bank loan.


Item 3. Controls and Procedures

Our Chief  Operating  Officer,  who is our Principal  Executive  Officer and our
Principal  Accounting  Officer,  conducted an evaluation of the effectiveness of
our disclosure  controls and  procedures.  Based on this  evaluation,  our Chief
Operating Officer and Principal Accounting Officer concluded that our disclosure
controls and procedures  were effective as of September 30, 2004 in alerting him
in a timely  manner to material  information  required to be included in our SEC
reports. In addition, no change in our internal control over financial reporting
occurred  during the fiscal quarter ended September 30, 2004 that has materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

                                       14
<PAGE>

                           PART 2: OTHER INFORMATION

Item 1. Legal Proceedings.

Nathaniel Energy is involved in litigation in the normal course of its business,
none of which is anticipated to have a material  adverse effect on its financial
condition, operations or prospects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Nathaniel  Energy issued an aggregate  529,333 shares of common stock during the
three months ended  September  30, 2004 in payment of accounts and notes payable
as follows:


<TABLE>
<CAPTION>

                         Issuance        CommonStock        Total          Type of
Holder Name                Date            Shares           Price       Consideration
-----------            -----------      -------------      --------    -----------------
<S>                         <C> <C>         <C>            <C>
Sol Adler         September 21, 2004        27,250         $27,250       Debt Conversion
Alvin Mordoh      September 21, 2004       450,000         $162,000      Debt Conversion
Isaac Nedd        September 21, 2004        52,083         $18,750       Debt Conversion

</TABLE>


Nathaniel  Energy  has also  agreed to issue  33,333  shares of common  stock to
William Morgan, as payment for $12,000 of accrued  interest.  The shares will be
issued in the fourth quarter of 2004.

Each of the above  issuances is exempt from  registration  under Section 4(2) of
the Securities Act of 1933. We did not use any underwriter or placement agent in
these  transactions,  and did not pay any  compensation  to anyone in connection
with these issuances.

All of these issuances have been or will be made directly by Nathaniel Energy to
persons who were  creditors of  Nathaniel  Energy with whom its  management  had
direct contact and personal  relationships,  or who were introduced to Nathaniel
Energy by members of Nathaniel Energy's management.

Item 3. Defaults Upon Senior Securities.

Not Applicable

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

Not Applicable

Item 5. Other Information.

Not Applicable

                                       15

<PAGE>


Item 6. Exhibits.


3(i).1 Certificate of Incorporation*
3(i).2 Articles of Amendment to Articles of Incorporation, as amended on August
6, 1999*
3(i).3 Certificate of Amendment of Certificate of Incorporation, as
amended on April 24, 2002* 3(ii).1 Amended and Restated By-Laws**
10.1  Agreement  dated  August 25, 2004 amending an agreement  dated July 16,
2004 among EcoIdea S.r.l.,  Electronic  Solar S.r.l.,  European Waste Solutions,
Ltd., L&R Energy Company, LLC and Nathaniel Energy Corporation.
31 Certification  of the Principal  Executive  Officer and Principal  Accounting
Officer  pursuant to Rule  13a-14(a)or  Rule  15d-14(a)  as adopted  pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification  of the Principal  Executive  Officer and Principal  Accounting
Officer  pursuant to 18 U.S.C.  Section 1350, as adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002


*Denotes  document  filed as an exhibit to our Current Report on Form 8-K for an
event dated December 31, 2002 and  incorporated  herein by reference.  **Denotes
document  filed as an exhibit to our Annual  Report on Form  10-KSB for the year
ended December 31, 2003 and incorporated herein by reference.

                                       16
<PAGE>


                                   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.

                          NATHANIEL ENERGY CORPORATION
                                  (Registrant)


Date: November 12, 2004






                           By: /s/ George A. Cretecos
                          ----------------------------
                           George A. Cretecos
                           Chief Operating Officer
                           Nathaniel Energy Corporation


                                       17
<PAGE>