UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ------------------


                                    FORM 10-Q



         [x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1996

         [  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
              SECURITIES EXCHANGE ACT OF 1934


                           Commission File No. 0-25058


                              FLORES & RUCKS, INC.
             (Exact Name of Registrant as Specified in its Charter)




                    Delaware                               72-1277752
         (State or Other Jurisdiction of                (I.R.S. Employer
         Incorporation or Organization)                Identification No.)

        8440 Jefferson Highway, Suite 420
             Baton Rouge, Louisiana                           70809
    (Address of Principal Executive Offices)               (Zip Code)

       Registrant's Telephone Number, Including Area Code: (504) 927-1450





          Securities Registered Pursuant to Section 12 (b) of the Act:
                          COMMON STOCK, $0.01 par value
                                (Title of Class)


           Securities Registered Pursuant to Section 12(g) of the Act:
                                      None



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or 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 [ ]



19,576,656  shares of the  registrant's  Common  Stock  were  outstanding  as of
November 1, 1996.




<PAGE>


                              FLORES & RUCKS, INC.

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                                             (Unaudited)
                                                                            September 30,           December 31,
                                                                                1996                    1995
                                                                           --------------            ----------
<S>                                                                      <C>                    <C>

Current assets:
    Cash and cash equivalents                                             $   18,982,894        $        212,238
    Joint interest receivables                                                 1,109,230                 390,275
    Oil and gas sales receivables                                             20,910,109              17,546,127
    Notes and accounts receivable -- stockholders                                      -                 129,129
    Accounts receivable--other                                                 1,500,000                       -
    Prepaid expenses                                                             809,597                 390,412
    Other current assets                                                         846,576                 424,824
                                                                          --------------          --------------
        Total current assets                                                  44,158,406              19,093,005
Oil and gas properties -- full cost method:
    Evaluated                                                                454,402,254             275,581,044
    Less accumulated depreciation, depletion, and amortization              (162,517,242)           (114,040,044)
                                                                          --------------          --------------
                                                                             291,885,012             161,541,000
    Unevaluated properties excluded from amortization                         78,043,576              19,041,148

Other assets:
    Furniture and equipment, less accumulated depreciation of
       $2,283,087 and $1,258,225 at September 30, 1996 and
       December 31, 1995, respectively                                         4,095,894               2,340,641
    Restricted deposits                                                        5,810,681               4,259,182
    Deferred financing costs                                                  10,291,343               5,127,974
    Deferred tax asset                                                                -                4,692,263
                                                                          --------------          --------------
       Total assets                                                      $   434,284,912           $ 216,095,213
                                                                         ===============           =============
</TABLE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S>                                                                      <C>                      <C>

Current liabilities:
    Accounts payable and accrued liabilities                              $   47,561,310          $   15,090,791
    Oil and gas sales payable                                                  4,915,528               5,177,277
    Accrued interest                                                           6,141,214               2,651,097
                                                                          --------------          --------------
       Total current liabilities                                              58,618,052              22,919,165

Long-term debt                                                               284,263,830             157,391,556
Notes payable to be refinanced under revolving line of credit                          -              14,300,000
Deferred tax liability                                                           223,590                       -
Other noncurrent liabilities                                                     638,609                 638,609
Deferred hedge revenue                                                           517,583                 870,333

Stockholders' equity:
    Preferred stock, $.01 par value; authorized 10,000,000 shares,
       no shares issued or outstanding at September 30, 1996                           -                       -
    Common stock, $.01 par value; authorized 100,000,000 shares;
       issued and outstanding 19,565,056 shares and 15,044,125
       shares at September 30, 1996 and December 31, 1995, respectively          195,651                 150,441
    Paid-in capital                                                           89,941,960              27,638,465
    Retained earnings (deficit)                                                 (114,363)             (7,813,356)
                                                                            ------------            ------------
       Total stockholders' equity                                             90,023,248              19,975,550
                                                                            ------------            ------------
       Total liabilities and stockholders' equity                          $ 434,284,912           $ 216,095,213
                                                                           =============           =============
</TABLE>

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

                                       2
<PAGE>


                              FLORES & RUCKS, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>

                                                     Nine Months Ended                  Three Months Ended
                                                     September 30,                       September 30,
                                                     -------------                       -------------

                                                   1996            1995              1996                1995
                                                   ----            ----              ----                ----
<S>                                            <C>              <C>                <C>               <C>

Revenues:
    Oil and gas sales                          $116,429,753     $89,935,815        $47,314,261       $34,514,355
    Plant processing income                         241,296         545,381            274,769            94,922
                                               ------------    ------------        -----------       -----------
       Total revenues                           116,671,049      90,481,196         47,589,030        34,609,277

Operating expenses:
    Lease operations                             24,930,765      22,780,454          8,408,735         8,555,152
    Severance taxes                               8,710,408       7,331,923          3,188,645         2,587,004
    Depreciation, depletion and amortization     48,477,198      38,545,070         19,504,158        15,378,162
                                                -----------    ------------        -----------       -----------
       Total operating expenses                  82,118,371      68,657,447         31,101,538        26,520,318
General and administrative expenses               9,946,556       8,248,117          3,921,556         2,634,736
Interest expense                                 12,028,892      13,000,489          3,840,866         4,507,876
Other income                                       (173,027)       (226,563)          (174,804)         (105,947)
                                                -----------    ------------        -----------       -----------
Net income before income taxes                   12,750,257         801,706          8,899,874         1,052,294
Income tax expense                                5,051,264               -          3,536,560                 -
                                                -----------    ------------        -----------       -----------
Net income                                    $   7,698,993    $    801,706       $  5,363,314      $  1,052,294
                                              =============    ============       ============      ============

Weighted average common and common
     equivalent shares outstanding               19,172,901      15,146,323         20,706,058        15,183,061

Primary and fully diluted earnings per
    common share                                       $.40            $.05               $.26              $.07

</TABLE>

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

                                       3
<PAGE>


                              FLORES & RUCKS, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                            September 30,
                                                                                            -------------
                                                                                       1996              1995
                                                                                       ----              ----
<S>                                                                             <C>               <C>    
                                                                                   
Operating activities:
    Net income                                                                  $     7,698,993   $      801,706
    Adjustments to reconcile net income to net
       cash provided by operating activities:
          Depreciation, depletion and amortization                                   49,502,060       38,954,132
          Deferred hedge revenue                                                       (352,750)        (100,000)
          Deferred tax expense                                                        4,915,853                -

    Changes in operating assets and liabilities:
       Accrued interest                                                               2,190,117        5,338,417
       Receivables                                                                   (5,453,805)      (3,556,195)
       Prepaid expenses                                                                (419,185)           9,168
       Other current assets                                                            (421,752)         (27,528)
       Accounts payable and accrued liabilities                                      32,470,519       11,993,376
       Oil and gas sales payable                                                       (261,752)         944,997
                                                                                 --------------    -------------
Net cash provided by operating activities                                            89,868,298       54,358,073
                                                                                 --------------    -------------

Investing activities:
    Additions to oil and gas properties and furniture and equipment                (240,603,753)     (64,552,329)
    Increase in restricted deposits                                                  (1,551,499)      (1,475,176)
                                                                                 --------------    -------------
Net cash used in investing activities                                              (242,155,252)     (66,027,505)
                                                                                 --------------    -------------

Financing activities:
    Sale of stock                                                                    62,348,705          369,949
    Borrowings on notes payable                                                     231,620,000       67,000,020
    Payments of notes payable                                                      (117,747,726)     (56,542,915)
    Deferred financing costs                                                         (5,163,369)         273,688
                                                                                 --------------     ------------
Net cash provided by financing activities                                           171,057,610       11,100,742
                                                                                 --------------     ------------
Increase (decrease) in cash and cash equivalents                                     18,770,656         (568,690)
Cash and cash equivalents, beginning of the period                                      212,238          568,690
                                                                                 --------------     ------------
Cash and cash equivalents, end of the period                                     $   18,982,894     $          -
                                                                                 ==============     ============

Interest paid during the period                                                  $   12,056,670     $  9,316,496
                                                                                 ==============     ============
</TABLE>

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

                                       4

<PAGE>


                              FLORES & RUCKS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1.   General Information

     The consolidated financial statements included herein have been prepared by
     Flores  & Rucks,  Inc.  (the  "Company")  without  audit  and  include  all
     adjustments (of a normal and recurring nature) which are, in the opinion of
     management,  necessary for the fair  presentation  of interim results which
     are not  necessarily  indicative  of  results  for  the  entire  year.  The
     financial  statements  should be read in conjunction  with the consolidated
     financial  statements  and notes thereto  included in the Company's  latest
     annual report.

2.   Earnings Per Share

     Earnings  per share  applicable  to common  stock are based on the weighted
     average  number  of shares of common  stock  outstanding  for the  periods,
     including  common  equivalent  shares which reflect the dilutive  effect of
     stock options granted to certain employees and outside directors on various
     dates through  September  30, 1996. As of September 30, 1996 and 1995,  the
     Company had 1,972,902 and 894,500 stock options outstanding,  respectively.
     The table below  reflects the weighted  average  common,  primary and fully
     diluted shares outstanding for the 1996 and 1995 periods.
<TABLE>
<CAPTION>

                                                       Nine Months Ended                Three Months Ended
                                                        September 30,                      September 30,
                                                       -------------                       -------------
                                                     1996           1995             1996               1995
                                                     ----           ----             ----               ----
<S>                                                <C>           <C>                <C>               <C>   

     Weighted average common shares
       outstanding                                 18,270,707    15,042,783         19,556,911        15,044,125
     Primary common equivalent shares                 902,194       103,540          1,149,147           138,936
                                                   ----------    ----------         ----------        ----------
     Weighted average common and primary
       common equivalent shares outstanding        19,172,901    15,146,323         20,706,058        15,183,061
     Additional fully diluted shares                  241,272        19,436             62,827                 -
                                                   ----------    ----------         ----------        ----------
     Weighted average common and fully diluted
       common equivalent shares outstanding        19,414,173    15,165,759         20,768,885        15,183,061
                                                   ==========    ==========         ==========        ==========
</TABLE>

3.   Hedging Activities

     The  Company  hedges  certain of its  production  through  two master  swap
     agreements ("Swap  Agreements").  The Swap Agreements  provide for separate
     contracts  tied to the NYMEX  light sweet crude oil and natural gas futures
     contracts.  The Company has  contracts  which contain  specific  contracted
     prices ("Swaps") that are settled monthly based on the differences  between
     the contract  prices and the average NYMEX prices for each month applied to
     the related contract volumes. To the extent the average NYMEX price exceeds
     the  contract  price,  the Company  pays the spread,  and to the extent the
     contract  price  exceeds the average  NYMEX price the Company  receives the
     spread. In addition,  the Company has combined  contracts which have agreed
     upon price  floors and  ceilings  ("Costless  Collars").  To the extent the
     average  NYMEX price  exceeds the  contract  ceiling,  the Company pays the
     spread  between  the ceiling  and the  average  NYMEX price  applied to the
     related  contract  volumes.  To the extent the contract  floor  exceeds the
     average  NYMEX price the Company  receives the spread  between the contract
     floor and the average NYMEX price applied to the related contract  volumes.
     Under the terms of the Swap Agreements,  each counterparty has extended the
     Company a $5 million line of credit for use in conjunction with its hedging
     activities.  As of November 1, 1996,  the Company's net exposure  under all
     contracts covered by the Swap Agreements was approximately $3.0 million.

                                       5

<PAGE>


                              FLORES & RUCKS, INC.

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)


     As of  September  30, 1996,  the  Company's  open  forward  position on its
     outstanding crude oil Swaps was as follows:


                                                               Average
                                  Year             MBbls        Price
                                  ----             -----        -----
                                  1996               75        $18.55
                                  1997              300        $18.55
                                  1998              300        $18.55
                                  1999              300        $18.55
                                  2000              300        $18.55
                                                    ----       ------
   Total                                           1,275       $18.55
                                                   =====       ======

The Company currently has no outstanding natural gas Swaps.

As of September 30, 1996, the Company's open forward position on its outstanding
Costless Collars was as follows:

                                         
                                         Contracted      Contracted   Contracted
                     Effective            Volumes          Floor       Ceiling
      Year        From      Through       (MBbls)          Price        Price
      ----        ----      -------       -------          -----        -----

      1997       January     March          600           $21.00         $24.45
      1997       January      June         1,200          $20.00         $24.25


4.   Common Stock Offering

     On March 19,  1996,  the Company  completed a public  offering of 4,500,000
     shares of common stock at a price of $14.75 per share (the "Offering"). Net
     proceeds of the Offering were approximately  $62.2 million,  of which $15.4
     million  was  used to repay a note  payable  to Shell  Offshore,  Inc.  and
     approximately  $33.0  million  was used to  repay  indebtedness  under  the
     Company's  senior  revolving bank credit  facility (the  "Revolving  Credit
     Facility").

5.   Central Gulf Acquisition

     On September  26, 1996,  the Company  completed an  acquisition  of certain
     interests  in eleven oil and gas  producing  fields and related  production
     facilities  primarily situated in the shallow federal waters of the central
     Gulf of Mexico, offshore Louisiana,  for an estimated net purchase price of
     approximately  $117.1  million (the  "Central Gulf  Acquisition").  Of this
     amount,  approximately  37% was allocated to  unevaluated  properties.  The
     allocation  of the  purchase  price is  subject  to  adjustment  in  future
     periods.

6.   Senior Subordinated Debt Offering

     On September 26, 1996, the Company completed an offering of $160,000,000 of
     9 3/4% Senior Subordinated Notes at a discount for proceeds of $159,120,000
     (before offering costs). The principal is due October 1, 2006.  Interest on
     the notes will be payable semi-annually in arrears on April 1 and October 1
     of each year,  commencing  April 1, 1997.  Net proceeds to the Company were
     approximately  $154  million,  which was used  primarily  to  complete  the
     Central Gulf Acquisition and to repay all outstanding indebtedness of $25.1
     million under the Company's Revolving Credit Facility. The remainder of the
     proceeds will be used for general corporate purposes.

                                       6
<PAGE>



Management's Discussion And Analysis Of Financial Condition And Results Of 
Operations

Results of Operations for the Three and Nine Months Ended September 30, 1995 
and 1996

The following table reflects  certain  information with respect to the Company's
oil and gas operations.
<TABLE>
<CAPTION>

                                                       Three Months Ended               Nine Months Ended
                                                          September 30,                   September  30,
                                                          -------------                   ---------  ---
                                                      1995             1996             1995           1996
                                                      ----             ----             ----           ----
                                                        (dollars in thousands, except per unit amounts)
<S>      <C>                                        <C>             <C>              <C>            <C>   

         Sales Volumes
             Oil (MBbls)                               1,709          1,909             4,340          4,917
             Gas (MMcf)                                3,361          4,657             8,980         11,672
             Oil and Gas (MBOE)                        2,270          2,685             5,837          6,863

         Revenues (1)
             Total Oil Revenues                      $28,741        $40,580           $75,469       $100,141
             Total Gas Revenues                        5,435         10,918            15,085         30,950

         Average Sales Prices (2)
             Oil (per Bbl)                            $16.81         $21.26            $17.39         $20.37
             Gas (per Mcf)                              1.62           2.34              1.68           2.65
             Per BOE                                   15.06          19.18             15.52          19.10

         Severance Taxes                              $2,587         $3,189            $7,332         $8,710
         Lease Operating Expenses                      8,555          8,409            22,780         24,931
         Lease Operating Expenses per BOE              $3.77          $3.13             $3.90          $3.63
</TABLE>
----------
(1)Excludes  the  results  of hedging  activities  which  increased  (decreased)
   revenue  recognized  in the three months and nine months ended  September 30,
   1995, by $.3 million and $(0.6) million,  respectively, and decreased revenue
   recognized  in the three months and nine months ended  September 30, 1996, by
   $4.2 million and $14.7 million, respectively.
(2)Excludes the results of hedging  activities.  Including the effect of hedging
   activities,  the Company's  average oil price per Bbl received was $17.01 and
   $17.20  in the  three  months  and nine  months  ended  September  30,  1995,
   respectively, and $19.31 and $18.46 in the three months and nine months ended
   September 30, 1996, respectively.  The average gas price per Mcf received was
   $1.70 in the nine months ended September 30, 1995, and $2.24 and $2.20 in the
   three months and nine months ended September 30, 1996,  respectively.  No gas
   volumes were hedged for the three months ended September 30, 1995.

Revenues.  The  following  table  reflects  an analysis  of  differences  in the
Company's oil and gas revenues  (expressed in thousands of dollars)  between the
three and nine months ending  September 30, 1996 and the  comparable  periods in
1995:
<TABLE>
<CAPTION>
                                                                       Third Quarter 1996       Nine Months 1996
                                                                           Compared to             Compared to
                                                                       Third Quarter 1995       Nine Months 1995
                                                                       ------------------       ----------------
<S>      <C>                                                              <C>                       <C>    
         Increase (decrease) in oil and gas revenues  resulting 
             from differences in:
             Crude oil and condensate-
                Price                                                      $  8,487                 $ 14,630
                Production                                                    3,352                   10,042
                                                                           --------                 --------
                                                                             11,839                   24,672
             Natural gas-
                Price                                                         3,388                   11,341
                Production                                                    2,096                    4,524
                                                                           --------                 --------
                                                                              5,484                   15,865
                                                                           --------                 --------
             Plant processing and hedging, net                               (4,343)                 (14,347)
                                                                           --------                 --------
         Increase in oil and gas revenues                                  $ 12,980                 $ 26,190
                                                                           ========                 ========

</TABLE>
                                       7
<PAGE>


The Company's total revenues increased  approximately  $13.0 million, or 38%, to
$47.6 million for the three months ended  September 30, 1996, from $34.6 million
for the comparable period in 1995.  Production levels for the three months ended
September  30,  1996,  increased  18% to  2,685  MBOE  from  2,270  MBOE for the
comparable period in 1995. The Company's average sales prices (excluding hedging
activities)  for oil and natural gas for the three  months ended  September  30,
1996, were $21.26 per Bbl and $2.34 per Mcf, respectively, versus $16.81 per Bbl
and  $1.62  per Mcf,  respectively,  in the  comparable  1995  period.  Revenues
increased by $5.4 million due to the aforementioned  production increases and by
$11.9 million as a result of increased oil and gas prices.  The Company's  total
revenues increased  approximately  $26.2 million,  or 29%, to $116.7 million for
the nine months ended  September 30, 1996, from $90.5 million for the comparable
period in 1995.  Production levels for the nine months ended September 30, 1996,
increased 18% to 6,863 MBOE from 5,837 MBOE for the  comparable  period in 1995.
The Company's  average sales prices (excluding  hedging  activities) for oil and
natural gas for the nine months ended September 30, 1996 were $20.37 per Bbl and
$2.65 per Mcf  versus  $17.39  per Bbl and  $1.68  per Mcf in the prior  period.
Revenues  increased  by  $14.6  million  due  to the  aforementioned  production
increases and by $25.9 million as a result of increased oil and gas prices.

The  increase  in the  Company's  total  revenues  for the  three  months  ended
September  30,  1996,  was further  affected by a $.2 million  increase in plant
processing  income and partially  offset by a $4.5 million decrease from hedging
activities.  For the nine months ended  September 30, 1996,  the increase in the
Company's total revenues was partially  offset by a $14.0 million  decrease from
hedging  activities and a $.3 million  decrease in plant processing  income.  In
order to manage  its  exposure  to price  risks in the sale of its crude oil and
natural  gas,  the  Company  from  time  to  time  enters  into  price   hedging
arrangements. See "--Other Matters--Energy swap agreements." The Company is also
contractually  committed to process its gas production from Main Pass 69 and the
East Bay fields under certain  processing  agreements.  Plant processing  income
(loss)  represents  revenues from the sale of natural gas liquids less the costs
of extracting such liquids,  which costs include  natural gas shrinkage.  Income
from plant  processing  fluctuates  primarily  as a result of changes in volumes
processed,  and changes in prices for natural  gas in  comparison  to changes in
prices for natural gas liquids. Such price changes are usually not proportionate
due to the  generally  higher  price  volatility  of natural  gas. For the three
months ended  September  30, 1996,  plant  processing  income  increased  due to
increased  natural gas liquid  prices and a 39%  increase in natural gas volumes
processed. For the nine months ended September 30, 1996, plant processing income
decreased  due to  increased  natural gas prices  partially  offset by increased
natural gas liquid prices during the three months ended September 30, 1996.

LEASE OPERATING EXPENSES. On a BOE basis, lease operating expenses decreased 17%
to $3.13 per BOE for the three  months ended  September  30, 1996 from $3.77 per
BOE in the comparable  1995 period.  On a BOE basis,  lease  operating  expenses
decreased 7% to $3.63 per BOE for the nine months ended  September 30, 1996 from
$3.90 per BOE in the comparable  1995 period.  These decreases are due primarily
to increased  production at the Company's  East Bay field.  For the three months
ended  September  30, 1996,  lease  operating  expenses  were $8.4  million,  as
compared to $8.6 million in the comparable 1995 period.  This decrease primarily
relates to a $.5  million  decrease in workover  expenses,  partially  offset by
fluctuations  in  normal  operating   expenses,   including  operating  expenses
associated  with increased  production.  Workover  expenses for the three months
ended  September 30, 1996,  were $.2 million,  as compared to $.7 million in the
comparable  1995 period.  For the nine months ended  September  30, 1996,  lease
operating expenses were $24.9 million,  as compared to $22.8 million in the 1995
period.  This increase  partially  results from fluctuations in normal operating
expenses,  including  operating expenses  associated with increased  production,
increases  as a  result  of  painting  and  other  preventive  maintenance  type
programs,  as well as an increase of $.1 million in workover  expenses.  For the
nine months ended September 30, 1996,  workover  expenses were $1.5 million,  as
compared to $1.4 million in the comparable 1995 period.

SEVERANCE TAXES. The effective severance tax rate as a percentage of oil and gas
revenues (excluding the effect of hedging activities)  decreased to 6.2% for the
three months ended  September 30, 1996,  from 7.6% in the  comparable  period in
1995.  The effective  severance tax rate as a percentage of oil and gas revenues
(excluding  the  effect of  hedging  activities)  decreased  to 6.6% in the nine
months ended September 30, 1996,  from 8.1% in the comparable  1995 period.  The
decrease was  primarily  due to increased  production  from new wells on federal
leases and on state  leases  which were  exempt from state  severance  tax under
Louisiana's severance tax abatement program.

GENERAL  AND  ADMINISTRATIVE  EXPENSES.  For the  three  and nine  months  ended
September 30, 1996,  general and  administrative  expenses were $3.9 million and
$9.9 million,  respectively, as compared to $2.6 million and $8.2 million in the
comparable 1995 periods.  These increases are primarily due to costs  associated
with increased  corporate staffing 

                                       8
<PAGE>


associated  with both an  increase  in  drilling  activities  and the  Company's
acquisition  of certain  interests  in eleven oil and gas  producing  fields and
related  production  facilities  primarily situated in the shallow waters of the
Central Gulf of Mexico, offshore Louisiana,  for an estimated net purchase price
of  approximately  $117.1  million (the "Central Gulf  Acquisition"),  partially
offset in the 1996 periods by increases  in the  capitalization  of a portion of
the salaries paid to employees directly engaged in the acquisition,  exploration
and development of oil and gas properties.

DEPRECIATION, DEPLETION, AND AMORTIZATION EXPENSE. For the three and nine months
ended  September 30, 1996,  depreciation,  depletion and  amortization  ("DD&A")
expense was $19.5 million and $48.5 million,  respectively, as compared to $15.4
million and $38.5 million,  respectively,  in the comparable 1995 periods.  On a
BOE basis,  DD&A for the three and nine months ended  September  30,  1996,  was
$7.26 per BOE and $7.06 per BOE, respectively,  as compared to $6.78 per BOE and
$6.60 per BOE for the three and nine months  ended  September  30,  1995.  These
variances can primarily be attributed to the Company's increased  production and
related  capital  cost  additions  from the 1995  and  1996  drilling  programs,
partially offset by the increase to proved reserves resulting from the programs.

INTEREST  EXPENSE.  For the three months  ended  September  30,  1996,  interest
expense  decreased to $3.8 million from interest  expense of $4.5 million in the
comparable 1995 period.  For the nine months ended September 30, 1996,  interest
expense  decreased to $12.0  million from $13.0 million in the  comparable  1995
period.  These decreases in interest  expense can primarily be attributed to the
repayment of a portion of the Company's  debt with proceeds from the issuance of
4,500,000  shares of common  stock at  $14.75  per share on March 19,  1996 (the
"Offering"),  as well as increases in the amount of interest capitalized in both
of the 1996 periods,  resulting  from an increase in the  Company's  unevaluated
assets,  including  additional  seismic data and acreage.  These  decreases were
partially offset by interest  expense of approximately  $.2 million in the three
months ended  September 30, 1996,  relating to the issuance of $160,000,000 of 9
3/4% Senior Subordinated Notes due 2006 (the "Senior  Subordinated  Notes"). See
Note 6 to the Consolidated Financial Statements.

INCOME TAX EXPENSE (BENEFIT).  For the three and nine months ended September 30,
1996, the Company  recorded income tax expense of $3.5 million and $5.1 million,
respectively.  During the  comparable  1995  periods,  no income tax expense was
recorded due to a valuation allowance which existed at September 30, 1995.

NET INCOME.  Due to the factors  described  above,  net income increased to $5.4
million for the three months ended  September 30, 1996 from $1.1 million for the
comparable  period in 1995.  Net income for the nine months ended  September 30,
1996 increased to $7.7 million from $.8 million for the comparable 1995 period.

LIQUIDITY AND CAPITAL RESOURCES

The following summary table reflects  comparative cash flows for the Company for
the nine months ended September 30, 1995 and 1996:
<TABLE>
<CAPTION>
                                                                                      Nine Months Ended
                                                                                        September 30,
                                                                                  1995               1996
                                                                                  ----               ----  
                                                                                       (in thousands)
<S>      <C>                                                                   <C>               <C>    

         Net cash provided by operating activities                             $ 54,358          $   89,868
         Net cash used in investing activities                                  (66,028)           (242,155)
         Net cash provided by financing activities                               11,101             171,058
</TABLE>

For the nine months ended  September  30, 1996,  net cash  provided by operating
activities  increased  by $35.5  million.  This  increase  relates  primarily to
increased revenues, partially offset by increases in severance taxes and general
and  administrative  expenses.  In addition,  the Company paid interest of $12.1
million  during the nine months ended  September  30, 1996,  as compared to $9.3
million in the comparable 1995 period.  This increase in interest is primarily a
result of the Company's  payment of $2.4 million of accrued interest relating to
a $13 million note to Shell  Offshore,  Inc.  which was repaid in March of 1996.
Accounts  receivable  increased  by $5.5  million  for  the  nine  months  ended
September 30, 1996. Of the $5.5 million increase, $3.4 million was related to an
increase in oil and gas sales receivables. This increase was further affected by
a $1.5 million receivable  associated with the Central Gulf Acquisition.  During
the nine months ended September 30, 1995, accounts receivable  increased by $3.6
million  primarily  relating to an  increase  in oil and gas sales  receivables.
Finally,  accounts payable  increased by $32.5 million during the 1996 period as
compared to an increase of $12.0  million in the  comparable  1995  period.  The
increase  in accounts  payable is  primarily  a result of  variances  in vendors
payable resulting from increased drilling activity in the 1996 period.

                                       9

<PAGE>


Cash used in investing  activities  during the nine months ended  September  30,
1996, increased to $242.2 million as compared to $66.0 million in the comparable
1995 period.  This increase is primarily a result of the Company's  Central Gulf
Acquisition for an estimated net purchase price of approximately $117.1 million,
as well as increased drilling activity in the 1996 period.

Financing  activities during the nine months ended September 30, 1996, generated
cash of $171.1  million,  as compared to $11.1  million in the  comparable  1995
period.  The  increase in cash during the 1996 period was  primarily a result of
the  issuance of  4,500,000  shares of common stock at $14.75 per share on March
19, 1996,  of which the  Company's  net  proceeds  totaled  approximately  $62.2
million and the issuance of the Senior Subordinated Notes of which the Company's
net proceeds totaled  approximately  $154 million.  These increases in cash were
partially  offset by the payment of a $13 million note to Shell  Offshore,  Inc.
and a  $32.2  million  reduction  in  net  borrowings  on the  Company's  senior
revolving bank credit facility (the  "Revolving  Credit  Facility").  During the
1995 period,  the Company  increased  its  borrowings  on the  Revolving  Credit
Facility by $20.5 million. In addition,  the Company received cash from the sale
of stock in the 1995 period of $.4 million.

CAPITAL  REQUIREMENTS.  The Company's  expenditures  for property  acquisition,
exploration  and  development  for the nine months ended  September 30, 1995 and
1996, were as follows:
<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                       September 30,
                                                                                   1995            1996
                                                                                   ----            ----  
                                                                                      (in thousands)
<S>      <C>                                                                         <C>          <C>   

         Property acquisition costs of evaluated properties                      $    39          $ 78,372
         Property acquisition costs of unevaluated properties                        338            48,892
         Exploration costs (drilling and completion)                               8,196            17,796
         Development costs (drilling and completion)                              42,948            60,807
         Abandonment costs                                                            72               225
         Geological and geophysical costs                                          5,188            10,559
         Capitalized interest and general and administrative costs                 2,842             4,670
         Other capital costs                                                       3,410            16,503
                                                                                 -------          --------
                                                                                 $63,033          $237,824
                                                                                 =======          ========
</TABLE>

A primary component of the Company's strategy is to continue its exploration and
development  activities.  The Company  intends to finance  capital  expenditures
related  to this  strategy  primarily  with funds  provided  by  operations  and
borrowings  under the Revolving  Credit  Facility.  During the nine months ended
September  30,  1996,  the  Company  spent  $78.6  million  on  exploration  and
development  drilling  and  $10.6  million  on 3-D  seismic  surveys  and  other
geological and geophysical costs.  Included in property acquisition costs in the
nine  months  ended  September  30,  1996  is   approximately   $117.1  million,
representing  the net  purchase  price of the Central Gulf  Acquisition.  Of the
total net purchase price, approximately $73.8 million was allocated to evaluated
properties and $43.3 million was allocated to unevaluated  properties.  Included
in other  capital  costs for the nine months ended  September 30, 1996, is $14.8
million,  which  relates  primarily  to capital  costs  incurred  to install and
upgrade production facilities and flowlines.  The Company is also a party to two
escrow  agreements  which provide for the future plugging and abandonment  costs
associated with oil and gas  properties.  The first  agreement,  related to East
Bay,  requires  monthly deposits of $100,000 through June 30, 1998, and $350,000
thereafter  until the balance in the escrow account  equals $40 million,  unless
the Company  commits to the plug and abandonment of a certain number of wells in
which case the increase will be deferred. The second agreement,  related to Main
Pass 69, required an initial deposit of $250,000 and monthly deposits thereafter
of $50,000  until the balance in the escrow  account  equals  $7,500,000.  As of
September 30, 1996, the escrow balances totaled $5.8 million.

In addition to developing  its existing  reserves,  the Company will continue to
attempt to increase its reserve  base,  production  and  operating  cash flow by
engaging  in  strategic  acquisitions  of oil and gas  properties.  In  order to
finance any such possible  future  acquisitions,  the Company may seek to obtain
additional debt or equity  financing.  The  availability and  attractiveness  of
these sources of financing  will depend upon a number of factors,  some of which
will relate to the financial condition and performance of the Company,  and some
of which will be beyond  the  Company's  control,  such as  prevailing  interest
rates, oil and gas prices and other market conditions. There can be no assurance
that the Company will acquire any additional producing properties.  In addition,
the ability of the Company to incur  additional  indebtedness and grant security
interests  with respect  thereto will be subject to the

                                       10

<PAGE>

terms of the indentures (the "Indentures")  governing the Company's $125,000,000
of  13  1/2%  Senior  Notes  due  2004  (the  "Senior  Notes")  and  the  Senior
Subordinated Notes.

The Company's other primary capital  requirements for the remainder of 1996 will
be for the payment of interest of approximately $8.4 million on its Senior Notes
and on any borrowings the Company may incur under the Revolving Credit Facility.
The Company expects to fund its current debt service  obligations with operating
cash flow.

LIQUIDITY.  The  ability  of the  Company to satisfy  its  obligations  and fund
planned  capital  expenditures  will be dependent  upon its future  performance,
which will be subject to prevailing economic  conditions,  including oil and gas
prices,  and to financial and business  conditions  and other  factors,  many of
which are beyond its control,  supplemented  with  existing cash balances and if
necessary,  borrowings under the Revolving Credit Facility.  The Company expects
that its cash flow from  operations,  existing  cash  balances and  availability
under the Revolving Credit Facility will be adequate to execute the remainder of
its 1996 business plan. However, no assurance can be given that the Company will
not  experience  liquidity  problems  from  time to time in the  future  or on a
long-term  basis.  If the  Company's  cash flow from  operations,  existing cash
balances and availability under the Revolving Credit Facility are not sufficient
to satisfy its cash requirements, there can be no assurance that additional debt
or equity financing will be available to meet its requirements.

The Revolving  Credit Facility has a borrowing base of $50 million.  The lenders
may  redetermine  the  borrowing  base at their  option once within any 12-month
period  as  well  as on  scheduled  redetermination  dates  as  outlined  in the
Revolving Credit Facility. The borrowing base automatically reduces by an amount
equal to one-sixteenth (1/16) of the borrowing base in effect on March 30, 1997,
and continues to reduce at each quarter end beginning March 31, 1997, unless the
Company requests and is granted a one-year deferral of such reductions.

The  Company's  ability  to draw  additional  amounts  on the  Revolving  Credit
Facility is limited to the extent that adjusted consolidated net tangible assets
(as  defined)  minus $25  million  exceeds  110% of all  indenture  indebtedness
excluding  subordinated  indebtedness  (as defined).  Adjusted  consolidated net
tangible   assets  is  determined   quarterly,   utilizing   certain   financial
information, and is primarily based on a quarterly estimate of the present value
of future  net  revenues  of the  Company's  proved oil and gas  reserves.  Such
quarterly estimates utilize the most recent year end oil and gas prices and vary
based on additions  to proved  reserves  and net  production.  As of November 1,
1996, the Company's  outstanding  balance on its Revolving  Credit  Facility was
$2.3 million,  all of which represented letters of credit,  primarily associated
with  bonding  for future  abandonment  obligations,  and thus the  Company  had
remaining availability of $47.7 million.

The  Company  recently  successfully  completed  a  consent  solicitation  which
resulted in the  amendment  of the  indenture  governing  the Senior  Notes (the
"Senior  Notes  Indenture").  The amendment  increases the company's  ability to
borrow under a revolving  credit facility from $50 million to the greater of (a)
$50 million and (b) $20 million plus 20% of adjusted  consolidated  net tangible
assets as defined in the Senior Notes Indenture.

EFFECTS OF LEVERAGE.  The Company is highly leveraged with outstanding long-term
debt of  approximately  $284.3  million as of September 30, 1996.  The Company's
level of indebtedness has several  important  effects on its future  operations,
including (i) a substantial  portion of the Company's cash flow from  operations
must be dedicated to the payment of interest on its indebtedness and will not be
available for other  purposes,  (ii) the covenants  contained in the  Indentures
require the Company to meet  certain  financial  tests,  and other  restrictions
which may limit its ability to borrow  additional  funds or to dispose of assets
and may affect the  Company's  flexibility  in planning  for,  and  reacting to,
changes in its business, including possible acquisition activities and (iii) the
Company's  ability to obtain  additional  financing  in the  future for  working
capital,  expenditures,   acquisitions,  general  corporate  purposes  or  other
purposes may be impaired.

The Company is required to make semi-annual  interest  payments of approximately
$8.4  million on its Senior  Notes each June 1 and  December 1 through  the year
2004 and semi-annual interest payments of $7.8 million on it Senior Subordinated
Notes each April 1 and October 1  commencing  April 1, 1997.  In  addition,  the
Company is required to make quarterly  interest payments on the Revolving Credit
Facility based on outstanding  borrowings for the quarterly period.  The Company
may also, at its  discretion,  make principal  payments on the Revolving  Credit
Facility.

Pursuant  to  the  Senior  Notes  Indenture,  the  Company  may  not  incur  any
indebtedness  other than permitted  indebtedness (as defined in the Senior Notes
Indenture)  unless the Company's  consolidated  fixed charge  coverage ratio (as
defined  in the  Senior  Notes  Indenture)  for the four  full  fiscal  quarters
preceding the proposed new  indebtedness is greater than 2.75 to 1.0 (3.0 to 1.0
if the  indebtedness  is incurred after December 1, 1997)after 

                                       11
<PAGE>

giving pro forma effect to the proposed new  indebtedness,  the  application  of
such  indebtedness  and other  significant  transactions  during the period.  In
addition, the Company's adjusted consolidated net tangible assets (as defined in
the Senior  Notes  Indenture)  must be greater than 150% of  indebtedness  after
giving effect to the proposed new indebtedness and related transactions.  If the
ratio of adjusted  consolidated net tangible assets to indebtedness  falls below
110%,  the Company  may be  required to buy back a portion of the Senior  Notes.
Pursuant to the  indenture  governing  the Senior  Subordinated  Notes (the "the
Senior   Subordinated  Notes   Indenture"),   the  Company  may  not  incur  any
indebtedness  other  than  permitted  indebtedness  (as  defined  in the  Senior
Subordinated  Notes Indenture)  unless the Company's  consolidated  fixed charge
coverage ratio (as defined in the Senior  Subordinated  Notes Indenture) for the
four full fiscal  quarters  preceding the proposed new  indebtedness  is greater
than 2.5 to 1.0 after giving pro forma effect to the proposed new  indebtedness,
the application of such indebtedness and other significant  transactions  during
the period.

In accordance with the terms of the Indentures,  if the Company  disposes of oil
and gas assets,  it must apply such  proceeds to  permanently  pay down  certain
indebtedness  or  within a  specified  time  from the  date of the  asset  sale,
purchase  additional  oil and gas assets.  If proceeds  not applied as indicated
above exceed $10 million  ($15  million with respect to the Senior  Subordinated
Notes),  the Company shall be required to offer to purchase  outstanding  Senior
Notes and  Senior  Subordinated  Notes or other pari  passu  indebtedness  in an
amount equal to the unapplied proceeds.

The Company believes it is currently in compliance with all covenants  contained
in the  Indentures  and has been in compliance  since the issuance of the Senior
Notes and the Senior Subordinated Notes.

The  Company's  ability to meet its debt service  obligations  and to reduce its
total  indebtedness  will be dependent  upon the Company's  future  performance,
which will be subject to oil and gas prices,  general economic conditions and to
financial,  business and other factors  affecting the operations of the Company,
many of which  are  beyond  its  control.  There  can be no  assurance  that the
Company's  future  performance  will not be adversely  affected by such economic
conditions and financial, business and other factors.

OTHER MATTERS

ENERGY SWAP  AGREEMENTS.  The Company hedges  certain of its production  through
master swap agreements  ("Swap  Agreements").  The Swap  Agreements  provide for
separate  contracts  tied to the NYMEX  light  sweet  crude oil and  natural gas
futures contracts.  The Company has contracts which contain specific  contracted
prices  ("Swaps") that are settled monthly based on the differences  between the
contract  prices and the  average  NYMEX  prices  for each month  applied to the
related  contract  volumes.  To the extent the average  NYMEX price  exceeds the
contract  price,  the Company  pays the spread,  and to the extent the  contract
price  exceeds the  average  NYMEX price the  Company  receives  the spread.  In
addition, the Company has combined contracts which have agreed upon price floors
and ceilings ("Costless Collars"). To the extent the average NYMEX price exceeds
the contract  ceiling,  the Company pays the spread  between the ceiling and the
average NYMEX price applied to the related contract  volumes.  To the extent the
contract  floor exceeds the average NYMEX price the Company  receives the spread
between the contract  floor and the average  NYMEX price  applied to the related
contract volumes. Under the terms of the Swap Agreements,  each counterparty has
extended the Company a $5 million line of credit for use in conjunction with its
hedging activities. As of November 1, 1996, the Company's net exposure under all
contracts covered by the Swap Agreements was approximately $3.0 million.

As of September 30, 1996, the Company's open forward position on its outstanding
crude oil Swaps was as follows:

                                                               Average
                                  Year             MBbls        Price
   
                                  1996               75        $18.55
                                  1997              300        $18.55
                                  1998              300        $18.55
                                  1999              300        $18.55
                                  2000              300        $18.55
                                                    ----       ------
                                                   1,275       $18.55
   Total

The Company currently has no outstanding natural gas Swaps.

As of September 30, 1996, the Company's open forward position on its outstanding
Costless Collars was as follows:

                                       12

<PAGE>

                                    Contracted      Contracted   Contracted
                 Effective           Volumes          Floor       Ceiling
 Year        From      Through       (MBbls)          Price        Price
 ----        ----      -------       -------          -----        -----

 1997      January      March          600           $21.00         $24.45
 1997      January       June        1,200           $20.00         $24.25

As a result of hedging  activity under the Swap Agreement,  on a BOE basis,  the
Company  estimates  that  approximately  26% of  its  estimated  remaining  1996
production which is classified as proved reserves as of September 30, 1996, will
not be subject to price fluctuation for 1996.

Currently, it is the Company's intention to commit no more than 50% of its total
annual  production  on a BOE  basis to such  arrangements.  Moreover,  under the
Revolving Credit  Facility,  the Company is prohibited from committing more than
75% of its production  estimates for the next 24 months to such  arrangements at
any point in time.  As the current swap  agreements  expire,  the portion of the
Company's oil and natural gas production which is subject to price  fluctuations
will increase  significantly,  unless the Company enters into additional hedging
transactions.

Despite the measures  taken by the Company to attempt to control price risk, the
Company  remains subject to price  fluctuations  for natural gas and oil sold in
the spot  market.  Prices  received  for natural gas sold on the spot market are
volatile due primarily to  seasonality  of demand and other  factors  beyond the
Company's  control.  Domestic oil prices  generally  follow worldwide oil prices
which are subject to price  fluctuations  resulting from changes in world supply
and  demand.  While the price the Company  receives  for its oil and natural gas
production has significant financial impact on the Company, no prediction can be
made as to what price the  Company  will  receive  for its oil and  natural  gas
production in the future.

GAS  BALANCING.  It is customary in the  industry for various  working  interest
partners  to produce  more or less than their  entitlement  share of natural gas
from time to time.  The Company's net  overproduced  position on its  properties
decreased from 1,080,726 Mcf at December 31, 1995, to 1,061,467 Mcf at September
30, 1996.  Under the provisions of the applicable gas balancing  agreement,  the
underproduced  party can take up to 50% of the Company's  entitled  share of gas
production  in future  months to  eliminate  the  imbalance.  During the make-up
period, the Company's gas revenues will be adversely  affected,  minimized by an
unjust enrichment clause contained in the gas balancing agreement.  In addition,
the Company assumed a net overproduced  position of 1,305,259 Mcf in conjunction
with the Central Gulf  Acquisition  which is subject to possible  adjustments in
future periods.  The Company recognizes revenue and imbalance  obligations under
the sales method of accounting.

Certain statements in this form 10-Q regarding future expectations and plans for
oil  and  gas  exploration,  development,  production  and  acquisitions  may be
regarded as "forward  looking  statements"  within the meaning of the Securities
Litigation  Reform Act.  They are subject to various  risks,  such as  operating
hazards,   drilling  risks,  and  the  inherent  uncertainties  in  interpreting
engineering  data relating to underground  accumulations of oil and gas, as well
as other risks  discussed in detail in the Company's SEC filings,  including the
Annual Report and Form 10-K for the year ended December 31, 1995. Actual results
may vary materially.

                                       13

<PAGE>


                              Flores & Rucks, Inc.

                           Part II - Other Information


Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         On  September  19, 1996 the Company  consummated  the  solicitation  of
         consents  from the  holders of the Senior  Notes.  99.79% of the Senior
         Notes  holders  consented  and .21% did not  consent  resulting  in the
         amendment of the  indenture as described  above under "--  Management's
         Discussion   And  Analysis  of  Financial   Condition  And  Results  Of
         Operations -- Liquidity and Capital Resources --Capital requirements".

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

         [A]   Exhibits

                4.1 Indenture dated September 26, 1996 governing the Senior
                    Subordinated Notes

               10.1 Second Amendment to Credit Agreement, dated August 14, 1996

               27.1 Financial data schedule


         [B]   Reports on Form 8-K

               The Company  filed a Form 8-K on October 10, 1996 to report:  (1)
               the Company's  acquisition of the Central Gulf Properties,  under
               Item 2, and (2) the public  offering by William W.  Rucks,  IV on
               September 25, 1996 of 1.55 million shares of common stock and the
               simultaneous granting of an option (with an irrevocable proxy) by
               Mr.  Rucks to James C. Flores to purchase  1.6 million  shares of
               common stock, under Item 5.


                                       14

<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                              FLORES & RUCKS, INC.



                                By:  /s/ James C. Flores
                                     ------------------------------------
                                     James C. Flores
                                     Chairman and Chief Executive Officer

Date: November 12, 1996

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed below by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>

              Signature                                  Title                              Date
              ---------                                  -----                              ----
<S>                                    <C>                                            <C>    

/s/ James C. Flores                      Chairman and Chief Executive Officer         November 12, 1996
-------------------------
James C. Flores



/s/ Robert L. Belk                      Senior Vice President, Chief Financial        November 12, 1996
-------------------------
Robert L. Belk                         Officer and Director (Principal Financial
                                                and Accounting Officer)
</TABLE>


                                       15