<TABLE>
<CAPTION>




<S>                                                              <C>
                            EMPIRIC ENERGY, INC.
               (Name of small business issuer in its charter)

<S>                                                              <C>
            TEXAS
(State or other jurisdiction of                         75-2455467
incorporation or organization)           (IRS Employer Identification No.)


 12750 MERIT DRIVE, SUITE 750
         DALLAS, TEXAS                                    75251
(Address of principal executive offices)                (Zip Code)

                             (972) 387-4100
               (Registrant's telephone number, including area code)


        Securities registered under Section 12(b) of the Exchange Act:

Title of each class on which registered                   Name of each exchange
COMMON STOCK ($.01 PAR VALUE)                               OVER THE COUNTER
</TABLE>


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  No   x
                                                                           ----

Check  if  disclosure of delinquent filers in response to Item 405 of Regulation
S-B  is  not  contained in this form and no disclosure will be contained, to the
best  of  the  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part III of this Form 10-KSB or any
amendment  to  this  Form  10-KSB.   Yes    x  No
                                         ----

<PAGE>
<TABLE>
<CAPTION>

                              EMPIRIC ENERGY, INC.
                              Index to Form 10-KSB

<S>                                                                         <C>
PART I                                                                    PAGE #

  Item 1.  Description of Business                                          1

  Item 2.  Description of Property                                          1

  Item 3.  Legal Proceedings                                                3

  Item 4.  Submission of Matters to a Vote of Security Holders              3

PART II.

  Item 5.  Market for Common Equity and Related Stockholder Matters         4

  Item 6.  Management Discussion and Analysis of Financial
             Condition and Results of Operations                            4

  Item 7.  Financial Statements                                             5

  Item 8.  Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure                            5

PART III.

  Item 9.  Directors, Executive Officers, Promoters and Control Persons;
             Compliance with Section 16(a) of the Exchange Act              7

  Item 10. Executive Compensation                                           8

  Item 11. Security Ownership of Certain Beneficial Owners and Management  10

  Item 12. Certain Relationships and Related Transactions                  10

  Item 13. Exhibits and Reports on Form 8-K                                11

SIGNATURE PAGE.                                                            11

</TABLE>




                                     PART I.

ITEM I.  DESCRIPTION OF BUSINESS

Background  -  From Inception to Present
--------------------------------------------------------------------------------

The Company is an independent oil and gas exploration and production
company with leasehold properties in the Hugoton Panhandle Field (the "Panhandle
Field"), Holmes County, Mississippi, Pennsylvania and South Texas.

On March 21, 1996, the Company signed an agreement with Westar Energy,
Inc.  ("Westar")  to take part in a joint venture drilling program to be drilled
in  "segments".  The number of wells to be drilled in each "segment" were to be
mutually agreed upon between the parties.  The drilling program was accomplished
on  leases  owned  by Westar in Indiana and Westmoreland Counties, Pennsylvania.
Empiric received up to 55% working interest in the eight wells, seven of which
have been successfully completed and were on production at December 31, 1997.
The Company financed its portion of the drilling and completion costs of the
first eight wells by obtaining outside investors and entered into an agreement
wherein the Company will retain 20% of the revenues and the investors will
receive 80% until the investors receive up to 117% of their investment, at which
time  the  revenues will be split 50/50 for the remaining production life of the
wells.  The above formal agreement with Westar is no longer in effect.

In April 1998 the Company acquired 89 producing wells and four newly
drilled wells  located  on  approximately 18,000 acres in Zavala County, Texas.
Initial production rates and tests were very promising and the Company expected
to utilize  a financial commitment, also received in April, to begin a drilling
program on  the  remaining  acreage.  Unfortunately, the investor was unable to
fulfill his commitment and the drilling program did not materialize.  During the
year,  rapid production declines and falling prices required several wells to be
shut-in until  prices  rebound  and  one  well  to  be  plugged and abandoned.

The  Company  is  also  actively seeking the acquisition of additional
producing  and  non-producing  oil  and  gas  leases  directly  or  through  the
acquisition  of or business combinations with all or a portion of energy-related
companies  or  properties.  (See  Planned  Activities.)

ITEM  2.     DESCRIPTION  OF  PROPERTY

Oil  and  Gas  Properties

     The  following  is  a  description  of  the  Company's  natural  resource
properties.  The  Company  has  no agreement for sales of oil and gas to foreign
governments  or  authorities.

     The  Company  has interests in oil and gas leases and wells in the Thornton
(Smackover)  Field located in Holmes County, Mississippi, the Panhandle Field of
Texas,  primarily in Moore and Potter Counties, and in Zavala and Frio Counties,
Texas,  as  well  as  in  Indiana  and  Westmoreland  Counties,  Pennsylvania.

    HOLMES  COUNTY,  MISSISSIPPI.  The  Company  acquired  all  of  the  working
interest  of  the Thomas E. Smith 9-2 Well No. 1 (the "Smith Well"), a producing
gas  well  in Mississippi.  The Smith well is a gas well completed at 11,800 ft.
in  the  Smackover  Formation  in  the  Thornton  Smackover Field.  Although not
currently  producing, the well produced gas and condensate on a test run through
a  nearby  gas plant at rates up to 800 Mcf of gas and 30 Bbls of condensate per
day.  The  Company  is  not  able to accurately predict when it will receive any
cash flow from the well but believes production and cash flow will begin as soon
as plans are developed and placed into operation to remove the 48 percent carbon
dioxide  and  the  3  percent hydrogen-sulfide which require separation from the
main  gas  stream.   However,  there  is  no assurance that this processing will
prove  economically  feasible.

     PANHANDLE  FIELD AREA.  The Panhandle Field covers 19 counties in the Texas
and  Oklahoma  panhandles  and  in  Western  Kansas.

     In  October  1997,  the  Company  sold all its working interest only in the
Baker lease of its West Texas Panhandle production properties (approximately 580
acres)  and  granted  a  two  year  option  to  sell  its  leasehold interest in
approximately  13,500  non-producing  acres  for  total  consideration  of
approximately  $230,000.  Should  the  option  be  exercised,  the Company would
receive  an  additional  $500,000.

     PENNSYLVANIA  PROPERTIES.  (See  Westar  Energy,  Inc.  above.)

     SOUTH  TEXAS  PROPERTIES.  The  Company owns interests, varying from 33% to
51%, in 12 producing wells in Zavala County, Texas.  The gas is gathered by Frio
Pipeline  Company  and  is sold into markets and delivered into the Houston Ship
Channel  area.  All  production  is  shallow, less than 3,000 feet and there are
additional  locations  on  the  properties  available  for  drilling.

Planned  Activities

     As  described  elsewhere  in  this  report,  the Company has developed many
contacts  in  the  industry  and  has been presented with many opportunities for
investments  in acquisitions or combinations with other companies and/or working
interest  participation  in  promising proved and undeveloped acreage prospects.
The  Company  is  negotiating  agreements  in  principal to acquire interests in
producing  wells  and  leasehold acreage with further development possibilities.
The  Company  also has an option agreement to participate in the exploration and
development  of  potential  drilling  prospects  utilizing  these  proprietary
techniques  in  West Texas and Morocco.  This program for development, expansion
and  financial growth depends on the Company' obtaining adequate working capital
although  a  substantial  portion  of the cost will be provided by the Company's
equity  securities.

Productive  Well  Summary

     The  following table sets forth certain information regarding the Company's
ownership,  as of December 31, 1998, of productive wells in the areas indicated.

<TABLE>
<CAPTION>

                                       Productive Wells
                                  Oil           Gas        Total
                              Gross  Net   Gross   Net  Gross  Net
<S>                          <C>     <C>   <C>     <C>  <C>    <C>

 Zavala County .               4.0   1.6     8.0  3.9   12.0  5.5
Mississippi
 Smith (1) . . .                --    --     1.0  1.0    1.0  1.0
Pennsylvania (2)                --    --     7.0  3.0    7.0  3.0

   Totals. . . .               4.0   1.6    16.0  7.9   20.0  9.5

<FN>

(1)     This well is currently shut-in.  It is expected that production will not
begin  earlier  than  late  1999.
(2)     Assumes approximately 54% working interest remaining after all costs and
"back-ins".
</TABLE>

Acreage

          The  following  table  sets  forth  certain  information regarding the
Company's developed and undeveloped leasehold acreage as of December 31, 1998.

<TABLE>
<CAPTION>
                          Developed      Undeveloped       Total
                        Gross    Net    Gross    Net    Gross    Net
<S>                     <C>     <C>     <C>     <C>     <C>     <C>
South Texas. . .        480     220   17,202   8,248  17,692   8,468
Richmond Acreage        -0-     -0-   21,535  13,211  21,535  13,211
Mississippi. . .        320     320     -0-     -0-      320     320
South Louisiana.        -0-     -0-      300     300     300     300
 Total . . . . .        800     540   39,047  21,759  39,847  22,299
<FN>

NOTE:  Does  not  include  Pennsylvania properties in which Empiric owns working
interest  in  the  well  bores  only.
</TABLE>


ITEM  3.     LEGAL  PROCEEDINGS

     The  Company  is  involved  in  litigation  in  the  ordinary course of its
business and operations.  The Company does not expect the outcome of any current
litigation  to  have  a  material impact on its financial position or results of
operations.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     No  matters have been submitted to the vote of security holders through the
date  of  this  report.

<PAGE>
                                    PART II.

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

     The Company's Common Stock and Series A Warrants were listed for trading on
the  Boston  Stock Exchange from October 24, 1994 to December 10, 1996, at which
time  the  securities were de-listed because of minimum unit prices being bid on
the Boston Stock Exchange.  The Common shares are now quoted on the OTC Bulletin
Board  market.  The  following are the high and low bid prices for the Company's
Common  Stock  as  reported  by  the  NASDAQ  OTC Bulletin Board for the periods
indicated  in  1998  and  1999  regarding  the  OTC  market.

<TABLE>
<CAPTION>

                                     High     Low     Close
                            Volume    Bid     Bid     Bid
                            -------  ------  ------  ------
<S>                         <C>      <C>     <C>     <C>
1998
First Quarter. . . . . . .  477,600  0.7200  0.3400  0.6300
Second Quarter . . . . . .  450,100  0.9400  0.5000  0.5000
Third Quarter. . . . . . .  285,000  0.5000  0.1700  0.1700
Fourth Quarter . . . . . .  436,900  0.6900  0.1600  0.4500

1999
First Quarter Thru 3/31/98  128,000  0.5600  0.3800  0.3100
</TABLE>
<PAGE>
     As  of  March  31, 1999, there were approximately 596 record and beneficial
holders  of  the  Common  Stock  and  Series  A  Warrants.

ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             FINANCIAL  RESULTS

     The  following schedule sets forth in summary form the financial results of
operations  of the Company for the years ended December 31, 1996, 1997 and 1998.
<TABLE>
<CAPTION>

<S>   <C>        <C>            <C>
YEAR  REVENUES   PROFIT/LOSS    COMMENTS
----  ---------  -------------  ----------------

1997  $ 102,270  $   (160,166)
1998  $ 201,102  $ (1,413,831)  See Note 1 below
<FN>

Note  1:  Includes  a  special "non-cash" charge of $716,401 to adjust the total
capitalized  value  of oil and gas properties to the discounted value of oil and
gas  reserves at December 31, 1998 in accordance with reserve evaluations.  This
adjustment  is  required by the "full cost" method of accounting as explained in
Notes  of  the  Financial  Statements.

     During  the  year  1998,  the Company issued the following securities which
were  outstanding  at  the  end  of  the  year:

         1,765,577     Common  Shares,  par  value  $0.01
     $     575,000     Principal  Amount  preferred  Series  'A'  Convertible at
                          $3.33  into  Common  Shares  (valued  at  $43,168)
          327,490     Class  'B'  Warrants,  each  allowing  the purchase of one
                          Common  Share  for  $2.50  until  May  13,  2001
          215,000     Class  'C'  Warrants,  each  allowing  the purchase of one
                          Common  Share  for  $3.00  until  May  13,  2002.

     The above securities were issued for the purpose of acquiring properties or
working  capital.  The  Common Shares were issued at prices from $0.23 to $0.81.
None  of  the  above  securities  were  registered.

     As  noted  in  the financial statements, the Company has suffered recurring
losses from operations.  Future positive results are a function of the Company's
ability  to  raise capital or utilize securities to acquire producing properties
or  drill  developmental  wells  in order to generate profits.  In the event the
Company is not able to raise capital or acquire properties, there is doubt about
the  Company's  ability  to  continue  as  a  going  concern.
</TABLE>

Liquidity

     As of December 31, 1998, the Company had limited long term debt of $141,760
and  a  total  equity-to-debt  ratio  of  about  2-to-1.  On the other hand, the
Company had a working capital deficit and a need for adequate working capital to
take advantage of its many promising opportunities to achieve growth in earnings
through  acquisitions  and  developmental  programs  and  to produce oil and gas
reserves.  The  Company needs and is seeking the infusion of working capital for
expanded drilling and developmental programs, for further debt reduction and for
acquisition  of  production properties to obtain improved cash flow as set forth
in  the  Planned  Activities  section  above.

Year  2000  Compliance

     The  Company  has  assessed  the  impact  of  the  Year  2000  issue on its
operations,  including  the  development and implementation of project plans and
cost  estimates  required  to  make its information systems Year 2000 compliant.
The  Company  outsources its financial and evaluation functions and has received
written  representation  from  every  significant  vendor  supplying software or
services,  including  revenue  checks,  that each vendor's information system is
Year  2000 compliant.  Therefore, the Company believes that anticipated spending
necessary  to  become Year 2000 compliant will not have a material effect on the
financial  position,  cash flows or results of operations of the Company.  There
can  be  no assurance, however, as to the ultimate effect of the Year 2000 issue
on  the  Company.

ITEM  7.     FINANCIAL  STATEMENTS

        The  following  financial statements are included as part of this Form
10-KSB  following  the  signature  page:
                                                                       Page
  Independent Auditors Report as of December 31, 1998                    F-1
  Independent Auditors Report for year ended December 31, 1997           F-2
  Consolidated Balance Sheet - December 31, 1998                         F-3
  Statements of Operations - Years ended December 31, 1998 and 1997      F-4
  Statements of Changes in Stockholders' Equity                        F-5
  Statements of Cash Flow - Years ended December 31, 1998 and 1997       F-6
  Notes to Financial Statements                                  F-7 to F-17

ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL  DISCLOSURE

     On  June  9, 1998, the Board of Directors of the Company dismissed the firm
of  Thomas  O.  Bailey  & Associates (TOB) as the Company's independent auditor.

     The  reports of TOB on the Company's financial statements for the two years
ended  December  31,  1997 did not contain an adverse opinion or a disclaimer of
opinion  and  were  not  qualified or modified as to uncertainty, audit scope or
accounting  principles, except that the report of TOB on the Company's financial
statements  for  the  years  ended  December  31,  1997  and  1996  included  an
explanatory  paragraph relating to an uncertainty about the Company's ability to
continue  as  a  going  concern.

     There  were  no  disagreements  with TOB during the audits of the Company's
financial  statements  for  the  two  years  ended  December  31,  1997, and any
subsequent  interim  period  preceding  the  change  on any matter of accounting
principles  and  practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of TOB, would
have  caused  it  to make reference to the subject matter of the disagreement in
connection  with  its  report.

     On  June  9,  1998,  the  Company  appointed  Hein + Associates, LLP as its
independent  accountant.  Hein + Associates, LLP accepted such appointment.  The
Company  had no relationship with Hein + Associates, LLP required to be reported
pursuant  to Regulation S-K Item 304 (a) (2) during the two years ended December
31,  1997  or  the  subsequent  interim  prior  to and including March 31, 1998.

<PAGE>
                                    PART III.

ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
             COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT

          The  Company has three executive officers and four directors, James J.
Ling,  Chairman  and  Chief Executive Officer, Renn Rothrock, Jr., President and
Chief  Operating  Officer  and  Clyde  E.  Skeen, Secretary, Treasurer and Chief
Financial  Officer and Robert L. Thomas, Director.  Following is a brief summary
of  the  business background and experience of Messrs. Ling, Rothrock, Skeen and
Thomas:

          James  J.  Ling,  age  76, is a co-founder of the Company and has been
Chairman of the Board, Chief Executive Officer and a Director since inception in
September,  1992.  Since  1985,  Mr.  Ling has been President of Hill Investors,
Inc.,  a  company  organized  to  hold  oil  and  gas  investments and to render
consulting  services.  Mr.  Ling  founded Ling Electronics in 1955 and through a
series  of  mergers and acquisitions, which included Temco Aircraft Corporation,
Chance  Vought,  Wilson  & Co., Braniff Airlines, Jones & Laughlin, and National
Car  Rental,  guided  the  conglomerate,  LTV,  to  a position among the largest
industrial companies in the nation.  Mr. Ling resigned his positions with LTV in
1971  and  disposed  of  all  his  stock  in  the  Company.

          R. Renn Rothrock, Jr., age 56, has been President of the Company since
December  1997.  Mr.  Rothrock served as President of both Hunter Gas Gathering,
Inc.  and  Gruy  Petroleum Management Co. and Executive Vice President of Magnum
Hunter  Production,  Inc.  from  January  1994  to  December 1997.  He served as
Executive Vice President and Chief Operating Officer of Gruy from May 1988 until
January  1994.  Mr. Rothrock was Executive Vice President and General Manager of
Gruy Engineering Corporation from 1986 until May 1988.  Over his 33-year career,
Mr.  Rothrock  has  also  served as a reservoir engineer and operations research
engineer  at  Skelly  Oil  Company  and as an area engineer at Amerada Petroleum
Corporation;  the  Engineering  Editor  of  Petroleum  Engineer  International
Magazine;  Vice  President  and  Energy  Manager  of  the First National Bank of
Mobile,  Alabama;  Executive  Vice  President  of  Energy  Assets  International
Corporation,  a  public  company  that  financed  oil  and gas ventures; and the
producer  and  operator  of  his  own  gathering and transportation system.  Mr.
Rothrock  earned  a  BS  degree  in  Petroleum  Engineering  and an MS degree in
Engineering  from  the University of Oklahoma.  He is a member of the Society of
Professional  Engineers,  the  National  Society  of Professional Engineers, the
National  Academy  of  Forensic  Engineers and the Texas Society of Professional
Engineers.  Mr.  Rothrock  is  a  registered  Professional Engineer in Texas and
Oklahoma.

          Clyde  E. Skeen, age 82, is a co-founder of the Company and has been a
Director,  Secretary  and  Treasurer  of  the Company since November 1992.  From
January,  1987  to  June,  1989,  Mr. Skeen was Executive Vice President of Bell
Textron,  Inc.  in  charge of the V-22 Osprey Program of Bell Helicopter Company
and  Boeing  Vertol  Company.  From 1979 until his retirement in 1985, Mr. Skeen
was  Senior  Vice  President  of The Boeing Company, in charge of all government
business  operations  and  a member of Boeing's senior management council.  From
1985  to  1987,  Mr.  Skeen was a full-time consultant to Boeing on a variety of
government  and management issues.  Mr. Skeen joined Boeing in 1940 upon earning
a  Bachelor's  Degree  in Business Administration from Pittsburgh State College,
Kansas,  and  from  1949  to  1960  he  held various corporate officer positions
including  Controller,  Vice  President  and  Director of Program Management for
Boeing's  space  and  intercontinental  ballistic missile programs. In 1960, Mr.
Skeen  joined Temco Aircraft Corporation as a Director, Executive Vice-President
and  General Manager and was instrumental in the formation of Ling-Temco-Vought,
Inc.  (LTV) in 1961. In 1964, Mr. Skeen was elected President of LTV, a position
he  held  until  his  resignation in 1971.  Mr. Skeen is also President of Clyde
Skeen Business Consultants, Inc., a private business consulting firm, a majority
of  the  stock  of  which  is  owned  by  Mr.  Skeen.

          Robert  L.  Thomas,  age  44,  has been a Director of the Company
since  July  15,  1998.  From 1982-1988, Mr. Thomas founded and was President of
Crown  Energy  Company,  an oil and gas company based in Oklahoma.  From 1977 to
1982,  Mr. Thomas worked for Phillips Petroleum Company.  Mr. Thomas also worked
for  Ernst  &  Young,  American  Airlines  and the Zale Corporation implementing
management  information  systems.  Mr. Thomas is currently President of Thomas &
Associates  consulting,  a boutique consulting practice specializing in business
strategy  development  and technology driven process re-engineering.  Mr. Thomas
graduated  from  Oklahoma  State  University  with  a  BS  Degree  in Industrial
Engineering  and  Management  in  May  1977.

ITEM  10.     EXECUTIVE  COMPENSATION

     The following table sets forth the compensation paid by the Company to each
of its executive officers for services rendered to the Company in all capacities
during  the  fiscal  year  ended  December  31,  1997  and  1998.
<TABLE>
<CAPTION>
                                           Summary Compensation Table

<S>                          <C>          <C>               <C>      <C>
Name/Position . . . . . . .  Fiscal Year  Salary (1)(2)(3)   Bonus*   Stock Options

                                    1997  $         90,000      -0-  $       51,000
James J. Ling(1). . . . . .         1998  $         90,000      -0-  $      121,000

                                    1997  $         25,000      -0-  $        6,000
Renn Rothrock, Jr.. . . . .         1998  $        120,000  $20,000  $      150,000

                                    1997  $         42,000      -0-  $       27,000
Clyde E. Skeen(2) . . . . .         1998  $         42,000      -0-  $       40,000
<FN>

*See  Employment  Contract  Summary.

(1)  Mr.  Ling  does not receive compensation directly from the Company.  Under the
terms  of  a  management  consulting agreement entered into between the Company and
Hill  Investors,  Inc,  Hill  provides management consulting services for which the
Company  paid  Hill  a monthly fee of $7,500 until April 1998 and $10,000 per month
until  October  2001.

(2)  Mr. Skeen does not receive compensation directly from the Company, but is paid
through  Clyde  Skeen Business Consultants, Inc., which is paid $3,500 per month by
the  Company.

(3)  Because  of  the Company's working capital condition, neither Mr. Ling nor Mr.
Skeen  have  received  full  cash  compensation through their respective associated
companies  for years 1995, 1996 and 1997.  They have received notes payable for the
remainder  of the consulting fees not paid in cash, which are or have been recorded
on  the  books  of  the  Company.

          In  the  opinion  of  Mr.  Ling  and  Mr.  Skeen,  the fact that they are
compensated  through consulting contracts rather than directly from the Company has
no  adverse  effect  on  their  duties  and fiduciary obligations to the Company as
officers  and  directors.  Both  Mr. Ling and Mr. Skeen devote substantially all of
their  time  to  the  business  of  the  Company and are not engaged in significant
outside  activities.

     Mr.  R.  Renn  Rothrock,  Jr.  is  employed  under  the  term of an Employment
Agreement  effective  December 1, 1997 for a period of five years from the original
effective  date.  The  term  of  the  contract  will  automatically  extend  for an
additional  period  of  five  years from each full year anniversary date unless the
Company  notifies  Mr.  Rothrock  to  the contrary.  Mr. Rothrock may terminate the
contract  at  the  third anniversary from the original effective date by giving six
months  notice  to  the  Company.

The  employment  contract provides for a minimum annual salary of $120,000 plus 50%
of  the  fees  billed  to outsiders for Mr. Rothrock's consulting or expert witness
services.  Mr.  Rothrock  will also be entitled to a cash bonus of up to 75% of his
minimum  annual  salary  based  upon  his  performance  in  obtaining  goals  to be
established yearly by the Compensation Committee, with a minimum amount of $20,000.

Mr.  Rothrock  will  be  granted certain fringe benefits including a car allowance,
participation  in  health,  dental  and  group  life  insurance  plans  and will be
reimbursed  for  reasonable  and  supportable  expenses  incurred  in the Company's
interest.
</TABLE>

1994  Stock  Option  Plan

     The Board of Directors of the Company, on January 10, 1994, adopted a stock
option plan (the "Plan") to provide for the grant of non-qualified stock options
to  employees and advisors of the Company.  A total of 1,950,000 shares has been
authorized  and  reserved  for issuance under the Plan, subject to adjustment to
reflect  changes  in the Company's capitalization in the event of a stock split,
stock  dividend  or  similar  event.  The  Plan  is administered by the Board of
Directors  who  has  the  sole authority to interpret the Plan, to determine the
persons  to  whom  options  will  be granted, the number of options granted, the
exercise  price,  duration  and other terms of the options.  Stockholders of the
Company  approved  the  Plan  on  March  29,  1994.

          During  1998 the Board of Directors authorized an additional 1,250,000
shares  to  be  set  aside for issuance under the Plan bringing to 1,950,000 the
total  shares  authorized  for  the  Stock  Option  Plan and, on that date, also
awarded  additional  stock  options  as  follows:

     a.     Five  (5)  year  option  granted  to  Clyde  Skeen  Business
Consultants,  Inc. to purchase up to 100,000 shares at a purchase price of $1.00
per  share;

     b.     Five  (5)  year  option  granted  to  Hill  Investors,  Inc. to
purchase  up  to  300,000  shares  at  a  purchase  price  of  $1.00  per share.

     c.     Five (5) year option granted to Renn Rothrock to purchase up to
200,000  shares  at  a  purchase  price  of  $1.00  per  share.

     d.     Five  (5)  year  option  granted  to  Vicki Newman to purchase up to
15,000  shares  at  a  purchase  price  of  $1.00  per  share.

     e.     Five  (5)  year  option  granted  to John Sobehrad to purchase up to
25,000  shares  at  a  purchase  price  of  $1.00  per  share.

          The above options are subject to all the same conditions and covenants
of the original Stock Option Plan dated January 10, 1994.  The exercise price of
all  of  the options granted under the 1994 Stock Option Plan were repriced from
$1.00  per  share  of  Common  stock  to  $0.50  per  share  of  Common  stock.

ITEM  11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth the number of shares of Common Stock and
Series A Warrants held by the principal Officers and Directors of the Company as
of  December  31,  1998:

<TABLE>
<CAPTION>
                         Shares Beneficially Owned  % of Class
                          -------------------------  ----------

<S>                    <C>           <C>         <C>      <C>
Name. . . . . . .  . .  Common     Warrants    Common   Warrants
---------------------  ---------  ----------  -------  ---------

James J. Ling(1). . .    781,105      18,095    10.2%       7.2%

Clyde E. Skeen(2) . .    305,750      28,250     4.0%      11.2%

Renn Rothrock, Jr.(3)    425,000          __     5.6%       0.0%

Robert L. Thomas. . .     20,000          __      <1%        __
<FN>

(1)     Includes  369,525  shares  of Common Stock held by the Dorothy Ruth Ling
Trust, of which Mr. Ling is Trustee; and, 406,580 shares of Common Stock held by
Hill  Investors,  Inc.,  owned  by the DRL Trust of which Mr. Ling is President.

(2)     Clyde  Skeen  Business  Consultants, Inc. is a corporation, of which the
majority  of  the  stock  is  owned  by  Mr.  Skeen.

(3)     Includes  425,000 shares of Common Stock held by Susan J. Rothrock, wife
of  Renn  Rothrock,  Jr.
</TABLE>



ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  Company entered into a three year management consulting agreement with
Hill  Investors,  Inc. ("Hill") dated October 1, 1992 (renewed for another three
year  period in October 1998), whereby Hill provides the services of Mr. Ling as
Chairman  and  Chief  Executive Officer of the Company for which Hill received a
monthly fee of $7,500 until April 1998 and $10,000 per month thereafter.  In the
event  of  the death or disability of Mr. Ling during the term of the agreement,
the  agreement shall automatically terminate or, in the case of a reorganization
of the Company during the term of the agreement, the agreement may be terminated
at  Mr. Ling's option.  Upon any such termination for the foregoing reasons such
payments  shall  continue  for  a  period  of  36  months  from the date of such
termination.  Mr.  Ling  presently  devotes the majority of his working time and
efforts to the business and affairs of the Company and expects to continue doing
so  for the foreseeable future.  Under the terms of the agreement the Company is
obligated  to provide to Hill suitable office facilities and to reimburse it for
expenses  incurred  in  connection  with  Hill's  or  Mr. Ling's services to the
Company,  including, without limitation, the cost of providing an automobile and
health  and  life  insurance  for  Mr. Ling.  Pursuant to the agreement, Hill is
obligated  to  certain  covenants  of confidentiality and non-competition and is
entitled  to receive the benefits of indemnification against damages and cost of
defense  of  litigation  or  claims resulting from certain acts in the course of
performance  of  its  or  Mr.  Ling's  management  duties as provided for in the
Company's  By-Laws.  This  contract  will  automatically  be  extended  for  an
additional period of three years from each full year anniversary date unless the
Company  notifies  Mr.  Ling  to  the  contrary.

     Hill is a Delaware corporation which currently owns 406,580 shares or about
8  percent  of  the  Company's  outstanding  Common Stock.  Mr. Ling is the sole
officer and director of Hill, and under existing SEC regulations, the beneficial
owner  of  100  percent  of  its  outstanding  capital  stock.

     On  May  13,  1998,  the R. Renn Rothrock Trust, a Trust for the benefit of
Dorothy  Rothrock,  Trustee, Thomas Rothrock, purchased a $50,000 three (3) year
note,  50,000  shares  of  Common  stock  and  12,500  Series "B" Warrants for a
consideration  of  approximately  $80,000  in  cash  and New York Stock Exchange
securities.  Dorothy  Rothrock  is a stepmother and Thomas Rothrock is a brother
to  Renn  Rothrock, Jr., President of the Company.  Mr. Rothrock, Jr. is not the
beneficial  owner  of  any  of  these  securities.

ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

     8-K     Dated  April  9,  1998, describing acquisition of certain producing
properties  for  securities  of  the  Company.

     8-K          Dated  June  9,  1998,  electing Hein + Associates, LLP as new
independent  accountant.

SIGNATURES

     In  accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused  this report to be signed on its behalf by the undersigned, hereunto duly
authorized.


                                       _______________________________
                                       James  J.  Ling
                                       Chairman and Chief Executive Officer


                                       _______________________________
                                       R.  Renn  Rothrock,  Jr.
                                       President and Chief Operating Officer


                                       _______________________________
                                       Clyde E. Skeen
                                       Secretary/Treasurer and
                                       Chief Financial Officer


                                       _______________________________
                                       Robert L. Thomas
                                       Director

<PAGE>


                           INDEPENDENT AUDITOR'S REPORT

Board  of  Directors  and  Stockholders
Empiric  Energy,  Inc.
Dallas,  Texas

We  have  audited  the  accompanying balance sheet of Empiric Energy, Inc. as of
December  31,  1998,  and  the  related  statement  of  operations,  changes  in
stockholders'  equity  and  cash flows for the year then ended.  These financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those  standards require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audit  provides  a  reasonable  basis  for  our opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the  financial  position of Empiric Energy, Inc. as of
December  31, 1998, and the results of its operations and its cash flows for the
year  then  ended,  in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
has  defaulted on several notes payable, and future working capital requirements
are  dependent  on  the  Company's ability to generate profitable operations, to
restructure  its  financing arrangements, and to continue its present short-term
financing,  or  obtain  alternative funding.  These conditions raise substantial
doubt  about the Company's ability to continue as a going concern.  Management's
plans  in  regard  to  these  matters  are  described  in Note 1.  The financial
statements  do not include any adjustments that might result from the outcome of
this  uncertainty.



Hein + Associates LLP

Dallas, Texas
April 15, 1999


<PAGE>


                         INDEPENDENT  AUDITOR'S  REPORT

TO  THE  SHAREHOLDERS  OF  EMPIRIC  ENERGY,  INC.

We have audited the accompanying statement of operations, cash flows and changes
in  stockholders' equity of Empiric Energy, Inc. for the year ended December 31,
1997.  Our responsibility is to express an opinion on these financial statements
based  on  our  audit.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audit  provides  a  reasonable  basis  for  our opinion.

In our opinion, the financial statements referred to above present fairly in all
material  respects,  the results of operations and cash flows of Empiric Energy,
Inc.  for the year ended December 31, 1997 in conformity with generally accepted
accounting  principles.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as a going concern.  During the year ended December 31,
1997,  the  Company  incurred  a  net  loss of $160,164.  Future working capital
requirements  are  dependent  on  the  Company's ability to restore and maintain
profitable  operations,  to  restructure  its  financing  arrangements,  and  to
continue  its  present  short-term financing, or obtain alternative financing as
required.  It  is  not  possible  to predict the outcome of future operations or
whether  the  necessary alternative financing may be arranged, if needed.  Those
conditions  raise substantial doubt about the Company's ability to continue as a
going  concern.  The  financial  statements  do  no include any adjustments that
might  result  from  the  outcome  of  this  uncertainty.



/c/  Thomas  O.  Bailey  and  Associates,  P.C.
Certified  Public  Accountants

Dallas,  Texas
March  4,  1998


<PAGE>

<TABLE>
<CAPTION>
                              EMPIRIC ENERGY, INC.

                                  BALANCE SHEET
                                DECEMBER 31, 1998

ASSETS
--------------------------------------------------------------------------------------
<S>                                                                         <C>
CURRENT ASSETS:
 Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       721
 Accounts receivable:
   Oil and gas sales . . . . . . . . . . . . . . . . . . . . . . . . . . .       43,188
   Employee advances . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,041
                                                                            ------------
     Total current assets. . . . . . . . . . . . . . . . . . . . . . . . .       46,950

PROPERTY AND EQUIPMENT:
 Oil and gas properties (full cost method):
      Unproved leasehold costs . . . . . . . . . . . . . . . . . . . . . .      179,609
      Proved leasehold costs and well equipment. . . . . . . . . . . . . .    4,318,875
 Less accumulated depletion, depreciation and impairment . . . . . . . . .   (2,444,578)
                                                                            ------------
     Net property and equipment. . . . . . . . . . . . . . . . . . . . . .    2,053,906

OTHER FURNITURE AND EQUIPMENT, net of accumulated  depreciation of $22,472        8,346

DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,281
                                                                            ------------

                                                                            $ 2,112,483
                                                                            ============
       Total assets
</TABLE>
<TABLE>
<CAPTION>


LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------
<S>                                                                                    <C>
CURRENT LIABILITIES:
 Current portion of long-term debt, including related parties. .. . . . . .  $   411,043
 Accounts payable and accrued expenses . . . . . . . . . . . . . .. . . . .      141,740
 Oil and gas revenues payable. . . . . . . . . . . . . . . . . . .  . . . .        8,962
 Due to related parties. . . . . . . . . . . . . . . . . . . . . . .. . . .       21,731
                                                                            ------------
     Total current liabilities . . . . . . . . . . . . . . . . . . . .. . .      583,476

LONG -TERM DEBT, net of current portion, including related parties . .. . .      141,760

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY:

 Common stock, $.01 par value, 20,000,000 shares authorized; 7,625,353
         shares issued and outstanding                                           76,254
 Series A convertible preferred stock, no par value, $575,000
         liquidation preference . . . . . . . . . . . . . . .                    43,168
 Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . .    4,987,884
 Receivables - Texoil. . . . . . . . . . . . . . . . . . . . . . . . . . .      (74,061)
 Obligation to repurchase treasury stock . . . . . . . . . . . . . . . . .      (11,875)
 Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . .   (3,634,123)
                                                                            ------------
     Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . .    1,387,247
                                                                            ------------

     Total liabilities and stockholders' equity. . . . . . . . . . . . . .  $ 2,112,483
                                                                            ============
</TABLE>


<TABLE>
<CAPTION>

                           EMPIRIC ENERGY, INC.
                        STATEMENTS OF OPERATIONS

<S>                                     <C>         <C>
                                        Years Ended December 31,
                                       --------------------------
                                             1998         1997
                                        -----------  -----------
REVENUE -
 Oil and gas sales . . . . . . . . . .  $   201,102   $  102,270

COSTS AND EXPENSES:
 Production expense. . . . . . . . . .       85,425       70,812
 Depletion and depreciation. . . . . .      175,224       19,417
 Impairment of oil and gas properties.      716,401            -
 Bad debt expense. . . . . . . . . . .       32,457            -
 General and administrative. . . . . .      569,776      335,591
                                       ------------  -----------
   Total costs and expenses. . . . . .    1,579,283      425,820

OTHER INCOME (EXPENSE):
 Dividend income . . . . . . . . . . .            -       45,000
 Interest income . . . . . . . . . . .        3,102        3,100
 Consulting  income. . . . . . . . . .       11,141            -
 Gain on sale of lease option. . . . .            -       50,000
 Interest expense. . . . . . . . . . .      (49,894)      (6,839)
                                       -------------  -----------
   Total other income (expense). . . .      (35,651)      91,261
                                       -------------  -----------

LOSS BEFORE EXTRAORDINARY ITEM . . . .   (1,413,832)    (232,289)

EXTRAORDINARY ITEM -
 Gain from extinguishment of debt. . .            -       72,125
                                       -------------  -----------

NET LOSS . . . . . . . . . . . . . . .  $(1,413,832)  $ (160,164)
                                        ============  ===========

BASIC AND DILUTED LOSS PER SHARE:
 Loss before extraordinary item. . . .  $     (0.21)  $    (0.05)
                                        ============  ===========
 Extraordinary item. . . . . . . . . .  $         -   $     0.01
                                        ============  ===========
 Net loss. . . . . . . . . . . . . . .  $     (0.21)  $    (0.04)
                                        ============  ===========

WEIGHTED AVERAGE SHARES OUTSTANDING. .    6,855,574    4,900,617
                                        ============  ===========
</TABLE>
      SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                              EMPIRIC ENERGY, INC.
                    STATEMENTS OF STOCKHOLDERS' EQUITY
               For the period from January 1, 1997 to December 31, 1998

<S>                                                   <C>           <C>       <C>          <C>
                                                         Common Stock      Preferred Stock Series B    Preferred
                                                   -----------------------  -------------------------    Stock
                                                     Shares       Amount     Shares      Amount         Series A
                                                   ----------   ---------   ---------  ----------     ----------
BALANCES, January 1, 1997. . . . . . . . . . .      4,330,700    $ 43,307       4,488   $ 448,803     $    -

Conversion of preferred stock to common stock .       448,803       4,488      (4,488)   (448,803)         -

Common stock issued for debt or by purchase.  .     1,080,273      10,803        -           -             -

Net loss for the year. . . . . . . . . . . . .            -           -          -           -             -
                                                   ----------   ---------    ---------  ----------     ----------

BALANCES, December 31, 1997. . . . . . . . . ..     5,859,776      58,598        -           -             -

Agreement to repurchase treasury stock . . . .            -           -          -           -             -

Equity instruments issued in the purchase of
 oil and gas properties. . . . . . . . . . . .        992,577       9,926        -           -           39,414

Common stock issued for services . . . . . . .        243,000       2,430        -           -             -

Warrants and options issued for services . . .            -           -          -           -             -

Equity instruments issued for debt or by purchase.    300,000       3,000        -           -            3,754

Conversion of notes payable to common stock. . . . .  230,000       2,300        -           -             -

Reclass of receivable to equity. . . . . . . . . . .      -           -          -           -             -

Net loss for year. . . . . . . . . . . . . . . . . .      -           -          -           -             -
                                                    ---------  ----------    ----------  ----------  ----------

BALANCES, December 31, 1998. . . . . . . . . . . . .7,625,353   $  76,254        -       $    -      $  43,168
                                                    =========  ==========    ==========  ==========  ==========

                                      STATEMENTS OF STOCKHOLDERS' EQUITY
                         For the period from January 1, 1997 to December 31, 1998

<S>                                                       <C>                <C>              <C>          <C>           <C>
                                                          Additional        Obligation to
                                                           Paid-In           Repurchase     Receivable   Accumulated
                                                           Capital        Treasury Stock      Texoil      Deficit       Total
                                                        --------------    ---------------   ----------   -----------   -----------
BALANCES, January 1, 1997. . . . . . . . . . . . . . .  $ 3,579,342        $      -         $    -       $(2,060,127)  $ 2,011,325

Conversion of preferred stock to common stock. . . . .      444,315               -              -             -             -

Common stock issued for debt or by purchase. . . . . . .    263,004               -              -             -           273,807

Net loss for the year. . . . . . . . . . . . . . . . . .       -                  -              -          (160,164)     (160,164)
                                                        ---------------   -------------     ----------   -----------    -----------

BALANCES, December 31, 1997. . . . .  . . . . . . . . .   4,286,661               -              -        (2,220,291)    2,124,968

Agreement to repurchase treasury stock . . . . . . . .         -               (11,875)          -             -           (11,875)

Equity instruments issued in the purchase of
 oil and gas properties. . . . . . . . . . . . . . . .      314,149               -              -             -           363,489

Common stock issued for services . . . . . . . . . . .      114,715               -              -             -           117,145

Warrants and options issued for services . . . . . . . .     31,382               -              -             -            31,382

Equity instruments issued for debt or by purchase. . . .    128,277               -              -             -           135,031

Conversion of notes payable to common stock. . . . . . .    112,700               -              -             -           115,000

Reclass of receivable to equity. . . . . . . . . . . . .       -                  -          (74,061)          -           (74,061)

Net loss for year. . . . . . . . . . . . . . . . . . . .       -                  -              -         (1,413,832)   1,413,832)
                                                          -----------    -------------      ----------   ----------    ------------

BALANCES, December 31, 1998. . . . . . . . . . . . . .   $4,987,884      $    (11,875)       $(74,061)  $(3,634,123)   $ 1,387,247
                                                         ===========      ============      ==========   ===========   ============
</TABLE>

<TABLE>
<CAPTION>
                                           EMPIRIC ENERGY, INC.
                                        STATEMENTS OF CASH FLOWS

                                                                      Years Ended December 31,
                                                                     --------------------------
<S>                                                                   <C>               <C>
                                                                         1998           1997
                                                                 --------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  (1,413,832)  $    (160,164)
 Adjustments to reconcile to net cash from operating activities:
   Depletion, depreciation and impairment. . . . . . . . . . . .         891,625          24,947
   Gain on sale of assets. . . . . . . . . . . . . . . . . . . .          32,457            -
   Common stock, warrants and  options issued for services . . .         148,527            -
 Changes in assets and liabilities:
   Accounts receivable . . . . . . . . . . . . . . . . . . . . .          16,996           5,992
   Other assets. . . . . . . . . . . . . . . . . . . . . . . . .          (1,205)           (731)
   Accounts payable and accrued expenses . . . . . . . . . . . .          62,327        (182,946)
   Oil and gas revenues payable. . . . . . . . . . . . . . . . .           8,962            -
   Due to related parties. . . . . . . . . . . . . . . . . . . .           3,750            -
   Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3,748            -
                                                                 ---------------  ---------------
   Net cash used by operating activities . . . . . . . . . . .          (246,645)       (312,902)

CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sale of oil and gas properties. . . . . . . . . .            -            220,000
 Purchase of oil and gas properties. . . . . . . . . . . . . . .        (349,995)        (18,328)
 Purchase of furniture and equipment . . . . . . . . . . . . . .         (10,626)           -
 Advances to Texoil. . . . . . . . . . . . . . . . . . . . . . .         (43,061)           -
                                                                 ---------------  ---------------

     Net cash (used) provided by investing activities. . . . . .        (403,682)        201,672

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from long-term debt. . . . . . . . . . . . . . . . . .         537,960            -
 Repayments of long-term debt. . . . . . . . . . . . . . . . . .            (102)       (144,850)
 Proceeds from sales of common stock . . . . . . . . . . . . . .          94,379            -
 Proceeds from sale of preferred stock . . . . . . . . . . . .              -            273,807
                                                                 ---------------  --------------

     Net cash provided by financing activities . . . . . . . . .         632,237         128,957

NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . . . . . . .         (18,090)         17,727

CASH, beginning of the year. . . . . . . . . . . . . . . . . . .          18,811           1,084
                                                                 ---------------  --------------

CASH, end of the year. . . . . . . . . . . . . . . . . . . . . . $           721  $       18,811
                                                                 ===============  ==============

SUPPLEMENTAL INFORMATION -
 Cash paid during the year for interest. . . . . . . . . . . . . $        17,390  $        6,599
                                                                 ===============  ==============

NON-CASH INVESTING AND FINANCING ACTIVITY:

 Purchase of oil and gas properties with equity securities,
  Including convertible notes payable                            $       455,989  $         -
                                                                 ===============  ==============
 Obligation to repurchase treasury stock .  . . . . . . . . . .  $        11,875  $         -
                                                                 ===============  ==============
 Unamortized portion of notes payable discount . . . . . . . . . $        26,930   $       -
                                                                 ===============  ==============

</TABLE>

<PAGE>

1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
       ----------------------------------------------

     Organization  and  Nature  of  Operations
     -----------------------------------------
     Empiric Energy, Inc. (the "Company") was incorporated under the laws of the
state  of Delaware in 1982. The Company is engaged in the acquisition, operation
and  development  of  oil  and  gas  properties,  which  are  located  in Texas,
Mississippi  and  Pennsylvania  as  of  December 31, 1998.  The Company also has
working  interests  in  unproved  leasehold acreage in Texas and Louisiana as of
December  31,  1998.

     Continued  Operations
     ---------------------
     The  accompanying consolidated financial statements have been prepared on a
going  concern  basis,  which  contemplates  the  realization  of  assets  and
liquidation  of  liabilities  in the normal course of business.  The Company has
suffered  significant recurring losses from operations, has defaulted on several
notes  payable,  and  future  working  capital requirements are dependent on the
Company's  ability  to  generate  profitable  operations,  to  restructure  its
financing  arrangements,  and  to  continue its present short-term financing, or
obtain  alternative  funding.  These  issues  raise  substantial doubt about the
Company's  ability  to  continue  as  a  going concern.  Management is currently
attempting  to raise capital through a private placement of equity securities in
order  to  complete  one  or  more  acquisitions of oil and gas properties in an
attempt  to  improve  operating  results.

     Cash  and  Cash  Equivalents
     ----------------------------
     The  Company considers all highly liquid debt instruments purchased with an
original  maturity  of  three  months  or  less  to  be  cash  equivalents.

     Oil  and  Gas  Properties
     -------------------------
     The  Company  uses  the  full cost method of accounting for its oil and gas
properties.  The  Company's properties are all located in the continental United
States,  and therefore, its costs are capitalized in one cost center.  Under the
full  cost  method,  all  costs  related  to  the  acquisition,  exploration  or
development of oil and gas properties are capitalized into the "full cost pool".
Such  costs  include those related to lease acquisitions, drilling and equipping
of  productive  and  non-productive  wells,  delay  rentals,  geological  and
geophysical  work  and  certain  internal  costs  directly  associated  with the
acquisition,  exploration  or development of oil and gas properties.  During the
year ended December 31, 1998, internal costs capitalized into the full cost pool
were  approximately  $236,800.  Upon  the  sale  or  disposition  of oil and gas
properties,  no  gain or loss is recognized, unless such adjustments of the full
cost  pool  would significantly alter the relationship between capitalized costs
and proved reserves.  Unproved properties are assessed periodically for possible
impairment.  Any impaired amounts are charged to the full cost pool. The Company
had  no  impaired  unproved  properties  as  of  December  31,  1998.

     Under  the  full-cost  method  of accounting, a "full-cost ceiling test" is
required  wherein  net capitalized costs of oil and gas properties cannot exceed
the  present  value  of  estimated  future  net revenues from proved oil and gas
reserves,  discounted  at  10%, less any related income tax effects.  During the
year  ended  December 31, 1998, the Company recorded impairment of the full cost
pool in the amount of $716,401 based on the full-cost ceiling test. There was no
impairment  recorded  for  the  year  ended  December  31,  1997.

     Depletion,  depreciation,  and  amortization  of  oil and gas properties is
computed  using  the unit-of-production method based on estimated proved oil and
gas  reserves.  Depletion, depreciation and amortization expense of $172,927 and
$19,417  was  recorded  for  the  years  ended  December  31,  1998  and  1997,
respectively.  Depletion,  depreciation  and  amortization per equivalent Mcf of
natural  gas  was approximately $1.35 and $0.57 for the years ended December 31,
1998  and  1997,  respectively.

     Other  Property
     ---------------
     Other  assets  classified  as  property  and equipment are primarily office
furniture  and equipment and vehicles, and are carried at cost.  Depreciation is
provided using the straight-line method over estimated useful lives ranging from
three to five years.  Gain or loss on retirement or sale or other disposition of
assets is included in income in the period of disposition.  Depreciation expense
for  other property and equipment was $2,297 and $0 for the years ended December
31,  1998  and  1997,  respectively.

     Loss  Per  Share
     ----------------
     Basic  loss  per  share is computed based on the weighted average number of
shares  of  common  stock outstanding during the period.  Diluted loss per share
takes  common  stock  equivalents (such as options and warrants) and convertible
securities  into  consideration.  As  of  December  31,  1998,  the  Company had
convertible notes payable, convertible preferred stock, outstanding warrants for
542,500  shares  of common stock and outstanding options for 1,285,000 shares of
common  stock  which  are  not  included in the dilutive calculation of loss per
share  as  the  effect  would  be  antidilutive.

     Income  Taxes
     -------------
     Income  taxes  are provided for the tax effects of transactions reported in
the  financial  statements  and consist of taxes currently due, if any, plus net
deferred  taxes related primarily to differences between the bases of assets and
liabilities  for  financial  and  income tax reporting.  Deferred tax assets and
liabilities  represent  the future tax return consequences of those differences,
which  will  either be taxable or deductible when the assets and liabilities are
recovered  or  settled.  Deferred  tax  assets  include recognition of operating
losses  that  are available to offset future taxable income and tax credits that
are available to offset future income taxes. Valuation allowances are recognized
to  limit  recognition of deferred tax assets where appropriate. Such allowances
may be reversed when circumstances provide evidence that the deferred tax assets
will  more  likely  than  not  be  realized.

     Stock-Based  Compensation
     -------------------------
     In  January  1997,  the  Company  adopted Statement of Financial Accounting
Standards  (SFAS)  No.  123  "Accounting  for  Stock-Based  Compensation", which
requires recognition of the value of stock options and warrants granted based on
an  option  pricing  model.  However,  as  permitted  by  SFAS  123, the Company
continues  to  account  for  stock options and warrants granted to directors and
employees  pursuant  to  Accounting Principles Board Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees",  and  related  interpretations.  See Note 7.


     Use  of  Estimates  and  Certain  Significant  Estimates
     --------------------------------------------------------
     The  preparation  of  the Company's financial statements in conformity with
generally  accepted  accounting  principles requires the Company's management to
make  estimates  and  assumptions  that  affect  the  amounts  reported in these
financial  statements  and accompanying notes.  Actual results could differ from
those  estimates.  Significant  assumptions  are  required  in  the valuation of
proved  oil  and gas reserves, which as described above may affect the amount at
which  oil  and gas properties are recorded.  It is at least reasonably possible
those  estimates  could be revised in the near term and those revisions could be
material.

     Reclassifications
     -----------------

     Certain  reclassifications  have  been  made  to conform the 1997 financial
statements  to the presentation in 1998.  The reclassifications had no effect on
net  income.

2.     ACQUISITION  AND  DISPOSITION  OF  OIL  AND  GAS  PROPERTIES

     In  April  1998,  the  Company  acquired  interests  in  certain  producing
properties in Texas and unproved leasehold properties in Texas and Louisiana for
total consideration of approximately $456,000. Consideration paid by the Company
for  the  acquisition  included  common  stock,  convertible  notes  payable,
convertible  preferred  stock,  300,000  Series  B warrants and 200,000 Series C
warrants.  The  following unaudited pro forma information is presented as if the
interests  in  the property had been acquired at the beginning of the respective
periods.

<TABLE>
<CAPTION>
<S>                              <C>           <C>
                                 Year Ended December 31,
                                 -------------------------
                                    1998          1997
                                 -----------  ------------
   Revenues . . . . . . . . . .  $   251,664   $   455,832
   Net income (loss). . . . . .  $(1,421,007)  $   (53,720)
   Net income (loss) per share.  $     (0.21)  $     (0.01)
</TABLE>

In October 1997, the Company sold its producing properties on the Baker 39 lease
in  the  Texas  Panhandle for $220,000 in cash and granted an option to sell its
leasehold  interest  in  approximately  13,500  acres  for $540,000 of which the
Company's  net  interest is approximately $378,000.  The balance of the interest
has  been  pledged to cover prior indebtedness.  The Company received $50,000 in
cash  for  the  option  which  is non-refundable.  The optionee has the right to
exercise  the  option at any time on or before October 11, 1999 at which time at
least  50%  of  the  Company's  leasehold  interest  must  be purchased.  If the
optionee  purchases  more than 50% but less than 100% of the Company's leasehold
interest,  the  option  period  for  any  remaining interest will be extended to
October  1,  2000.

3.     RELATED  PARTY  TRANSACTIONS

     Hill  Investors,  Inc., an affiliate of the chairman of the Company's board
of directors, has a consulting agreement with the Company that calls for monthly
payments  of  $10,000 for management consulting services.  The agreement expires
in October 2001.  During the years ended December 31, 1998 and 1997, the Company
incurred  expense  under  this  agreement  of $112,500 and $90,000 respectively.

     Clyde Skeen Business Consultants, an affiliate of a member of the Company's
board  of  directors  and  an officer of the Company, has a consulting agreement
with  the  Company  that  calls  for  monthly  payments of $3,500 for management
consultant  services.  The  agreement  is on a month to month basis.  During the
years  ended December 31, 1998 and 1997, the Company incurred expense under this
agreement  of  $42,000  in  each  year.

     At  December  31,  1998,  the Company had a liability to two members of its
board  of  directors  of  $21,731 for unreimbursed expenses and management fees.

     At December 31, 1998, the Company had notes payable to members of its board
of  directors and certain family members for approximately $257,000 as described
in  Note  4.

4.     LONG-TERM  DEBT
     Long-term  debt  at  December  31,  1998  consisted  of  the  following:

<TABLE>
<CAPTION>
<S>                                                                          <C>
THIRD PARTY NOTES PAYABLE:
------------------------------------------------------------------------------------------
Unsecured note payable to a finance company, interest at 10.0%,
monthly payments of interest with principal due at maturity in July 1998.
This note is in default as of December 31, 1998.                             $    100,000

Unsecured notes payable to an individual, interest at 8%, principal
and interest due at maturity in January 1999                                       75,000

Unsecured notes payable to a company, interest at 8.0%, monthly payments
of interest with principal due at maturity in December 1998.  These notes
were not paid upon maturity and subsequently defaulted in 1999.                    52,500

Note payable to an individual, interest at 8%, quarterly payments of
interest with principal due at maturity in February 2001.  This note is
collateralized by the potential proceeds from the exercise of the option
for the Panhandle property.                                                        50,000

Unsecured note payable to a finance company, interest at 8.0%, principal
and interest due on demand                                                         30,000

Unsecured notes payable to an individual, interest at 8.0%, principal and
interest due on demand                                                             11,875

Note payable to a commercial lender, interest at 14.5%, monthly payments
of $114 of principal and interest until maturity in November 2001.  This
note is collateralized by computer equipment.                                       3,184

RELATED PARTIES NOTES PAYABLE:
------------------------------------------------------------------------------------------
Unsecured notes payable to an affiliate of the chairman of the board,
interest at 8.0%, quarterly payments of interest with principal due
at maturity in December 1998 and December 1999.  These notes are convertible
into common stock at $0.60 per share.  These notes were converted into
common stock in 1999.                                                              92,074

Notes payable to family members of the chairman of the board, interest
at 8%, quarterly payments of interest with principal due at maturity in
January 2001.  These notes are collateralized by the potential proceeds
from the exercise of the option for the Panhandle property.                        50,000

Unsecured note payable to a trust of a family member of the president of
the Company, interest at 8%, quarterly payments of interest with principal
due at maturity in June 2003.                                                     50,000

Unsecured note payable to a board member and officer, interest at 8.0%,
quarterly payments of interest with principal due at maturity in December
1999.  This note is convertible into common stock at $0.60 per share.             27,600

Unsecured notes payable to family members of the chairman of the board,
interest at 8%, principal and interest due at maturity in January 2001.            25,000

Note payable to a board member and officer, interest at 8%, quarterly
payments of interest with principal due at maturity in January 2001.  This
note is collateralized by the potential proceeds from the exercise of the
option for the Panhandle property.                                                12,500
                                                                            ------------
Total notes payable                                                              579,733
Discounts on notes payable (net of accumulated amortization of $23,604)          (26,930)
                                                                             ------------
Net notes payable                                                                552,803
Less current portion                                                            (411,043)
                                                                             ------------
                                                                             $   141,760
                                                                             ============

</TABLE>

The  discounts on notes payable resulted because the notes included an agreement
to  issue shares of common stock along with the face amount of the related notes
payable.  The discount represents the amount of cash received that was allocated
to  stockholders'  equity.  The  discounts  are  amortized  using  the effective
interest  method  over  the  terms  of  the  related  notes.

Maturities  of  long-term  debt  based  on contractual requirements for the
years  ending  December  31,  1999  through  2003  are  as  follows:

<TABLE>
<CAPTION>

<S>       <C>
1999 . .  $415,002
2000 . .     1,105
2001 . .   113,626
2003 . .    50,000
          ---------
          $579,733
          =========
</TABLE>

5.     INCOME  TAXES

The  Company's  deferred  tax  assets  and  (liabilities)  are  composed  of the
following  at  December  31,  1998:


<TABLE>
<CAPTION>

<S>                                                  <C>
Deferred tax assets:
Difference in bases of oil and gas properties . . .  $   514,000
Net operating loss carryforward . . . . . . . . . .    1,952,000
                                                     ------------
Total deferred tax asset before valuation allowance    2,466,000
Valuation allowance . . . . . . . . . . . . . . . .   (2,466,000)
                                                     ------------
Net asset . . . . . . . . . . . . . . . . . . . . .  $         -
                                                     ============
</TABLE>
As  of  December 31, 1998, the Company has a net operating loss carryforward for
federal  income tax purposes of approximately $5,421,000, which will expire from
2007  to  2018.

6.     STOCKHOLDERS  EQUITY

     During  1998,  the  Company  issued Series A convertible preferred stock in
connection  with the acquisition of oil and gas properties and for cash.  Series
A  preferred stock is denominated in face amounts rather than shares, has no par
value,  no  interest rate, no dividend rate, no voting privileges, a liquidation
preference  equal  to  the face amount and is convertible into common stock at a
rate  of  $3.33  per  share of common stock.  There is $1,150,000 of face amount
authorized  for  the  Series A convertible preferred stock, of which $575,000 is
issued  at  December  31, 1998.  Due to the features of the Series A convertible
preferred  stock,  the Company recorded its value based on the fair market value
of  the  underlying  convertible shares of common stock at the time of issuance.

     During  1998, the Company entered into an agreement and a note payable with
a  former  employee  to  repurchase the common stock held by the stockholder for
total  consideration  of  $11,875.  This amount is reflected as an obligation to
repurchase  treasury  stock  in  the  accompanying  financial  statements  as of
December  31,  1998.

     As  of  December  31,  1998, the Company has a receivable of $74,061 from a
related  entity located in Canada. The Canadian entity has no significant assets
or  operations  other than its holding of approximately 130,000 shares of common
stock  of the Company.  Management anticipates that the amount of the receivable
will  be  used  by the Company to purchase the common stock held by the Canadian
entity  and  the  common  stock  will  be  placed  into  treasury  during  1999.

     During  1998, the Company designated two new series of warrants to purchase
common  stock.  The  Series B warrants have an exercise price of $2.50 per share
of  common  stock  and  expire  three years from the date of grant. The Series C
warrants  have  an  exercise price of $3.00 per share of common stock and expire
four  years  from  the date of grant. As of December 31, 1998, there are 327,490
and  215,000  warrants  outstanding  for  the  Series  B  and Series C warrants,
respectively.  There  were  no  Series B warrants or Series C warrants exercised
during  the  year  ended  December  31,  1998.

     During  May  1998,  the Company granted 15,000 Series B warrants and 15,000
Series  C  warrants to a consultant in exchange for services.  The fair value of
these  warrants,  as  determined  by  the Black-Scholes option pricing model, of
$13,758  was  recorded  as  an  expense during the year ended December 31, 1998.

     As  of  December  31,  1998,  the  Company has 252,266 of Series A warrants
outstanding.  These  warrants  were initially issued in 1994, are exercisable at
$4.25  per share of common stock and expire in June 1999. There were no Series A
warrants  exercised  during  the  year  ended  December  31,  1998.

     In  1997, the holders of the Company's Series B convertible preferred stock
converted  all  4,488  outstanding  shares  into 448,403 shares of common stock.
After  the  conversion,  there were no additional shares of Series B convertible
preferred  stock  authorized,  available  for  issuance  or  outstanding.

7.     STOCK  BASED  COMPENSATION

     Stock  Option  Plans
     --------------------
     In  1994,  the  Company  established  a  Stock  Option  Plan  to compensate
directors,  employees,  advisors and consultants.  All options granted under the
plan  are  exercisable at $1.00 per share and expire five years from the date of
grant.  The  exercise  price  for  all  options  granted  under  this  plan  was
subsequently  repriced  in March 1999 to $0.50 per share.  At December 31, 1998,
there are 635,000 stock options reserved and available for grant under the plan.

     In April 1998, the Company granted 25,000 stock options under the 1994 plan
to  a consultant in exchange for services.  The options are exercisable at $1.00
per  share  (subsequently repriced to $0.50 per share) until expiration in April
2003.  The  fair  market  value  of  these  options,  as  determined  by  the
Black-Scholes option pricing model, of $17,624 was recorded as an expense during
the  year  ended  December  31,  1998.

     The  following  is  a summary of activity for the stock options granted for
the  years  ended  December  31,  1998  and  1997:


<TABLE>
<CAPTION>

<S>                             <C>        <C>       <C>        <C>
                                 December 31, 1998     December 31, 1997
                                --------------------  ---------------------
                                            Weighted              Weighted
                                             Average               Average
                                  Number    Exercise    Number    Exercise
                                of Shares    Price    of Shares     Price
                                ---------- ---------  ---------  ---------
Outstanding, beginning of year    675,000   $   1.00    260,000  $    1.00

Canceled or expired. . . . . .    (30,000)  $   1.00      -          -
Granted. . . . . . . . . . . .    640,000   $   1.00    415,000  $    1.00
Exercised. . . . . . . . . . .       -         -          -          -
                                ---------- ---------  ---------  ---------

Outstanding, end of year . . .  1,285,000   $   1.00    675,000  $    1.00
                                ========== =========  =========  =========
Exercisable, end of year . . .  1,095,000   $   1.00    385,000  $    1.00
                                ========== =========  =========  =========
</TABLE>

If  not  previously  exercised,  options  outstanding  at December 31, 1998 will
expire  as  follows:

<TABLE>
<CAPTION>
<S>                <C>               <C>
                                     Weighted
                                      Average
                        Number       Exercise
                      of Shares        Price
                   ----------------  ---------

December 31, 1999           115,000  $    1.00
December 31, 2001           115,000  $    1.00
December 31, 2002           415,000  $    1.00
December 31, 2003           640,000  $    1.00
                   ----------------  ---------
Total . . . . . .         1,285,000  $    1.00
                   ================  =========

</TABLE>

Presented below is a comparison of the weighted average exercise prices and fair
values  of  the  Company's  common  stock  on the measurement date for the stock
options  granted  during  fiscal  years  1998  and  1997.


<TABLE>
<CAPTION>
<S>                                       <C>       <C>     <C>         <C>       <C>     <C>
                                                     1998                         1997
                                          --------------------------- ---------------------------
                                            Number  Exercise   Fair     Number  Exercise    Fair
                                          of Shares  Price   Value    of Shares   Price    Value
----------------------------------------  --------   ------  -------  --------  --------  -------
Exercise price greater than market price   640,000   $ 1.00  $  0.42   415,000  $ 1.00     $0.83
</TABLE>

     Pro  Forma  Stock-Based  Compensation  Disclosures
     --------------------------------------------------
     As  discussed in Note 1, the Company applies APB Opinion No. 25 and related
interpretations  in  accounting  for  its  stock  options.  Accordingly,  no
compensation  cost  has been recognized for grants of options to employees since
the  exercise  prices  were  not  lower  than the market prices of the Company's
common stock on the measurement dates. Had compensation been determined based on
the  estimated  fair value at the measurement dates for awards under those plans
consistent  with  the  method prescribed by SFAS No. 123, the Company's December
31,  1998  and 1997 income and earnings per share would have been changed to the
pro-forma  amounts  indicated  below.

<TABLE>
<CAPTION>
<S>                                  <C>           <C>
                                         1998        1997
                                     ------------  ----------
Net income (loss):
   As reported. . . . . . . . . . .  $(1,413,832)  $(160,164)
   Pro forma. . . . . . . . . . . .  $(1,800,586)  $(246,899)
Net income (loss) per common share:
   As reported. . . . . . . . . . .  $     (0.21)  $   (0.04)
   Pro forma. . . . . . . . . . . .  $     (0.26)  $   (0.05)
</TABLE>

     The  estimated  fair  value of each officer and director option and warrant
granted  during  fiscal  year  1998  and 1997 was estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>

<S>                        <C>     <C>
                            1998    1997
                           ------  ------
Expected volatility . . .  153.2%  153.2%
Risk-free interest rate .    6.0%    6.0%
Expected dividends. . . .      -       -
Expected terms (in years)      5       5
</TABLE>

8.          ENVIRONMENTAL  ISSUES

     The  Company  is  engaged in oil and gas exploration and production and may
become  subject  to certain liabilities as they relate to environmental clean up
of  well  sites  or other environmental restoration procedures as they relate to
the  drilling  of oil and gas wells and the operation thereof.  In the Company's
acquisition of existing or previously drilled well bores, the Company may not be
aware  of  what  environmental safeguards were taken at the time such wells were
drilled  or  during  such time the wells were operated.  Should it be determined
that  a  liability  exists  with  respect  to  any  environmental  clean  up  or
restoration, the liability to cure such a violation could fall upon the Company.
No  claim  has  been  made,  nor is the Company aware of any liability which the
Company  may  have,  as it relates to any environmental clean up, restoration or
the  violation  of  any  rules  or  regulations  relating  thereto.

9.          COMMITMENTS  AND  CONTINGENCIES

     The Company has an employment agreement with its president that calls for a
minimum  annual salary of $120,000 and expires in December 2002.  In addition to
the minimum salary, the agreement provides for a guaranteed minimum annual bonus
of  $20,000.  The  bonus  could  potentially  be significantly more based on the
Company  meeting  certain  goals  outlined  by  its  board  of  directors.

     The  Company  has  a  non-cancelable  sublease for office space.  The lease
requires  minimum  monthly  rental  payments  of $3,281 until expiration in July
2000.  Future minimum lease payments under the lease are $39,372 and $22,967 for
the  years  ending  December  31,  1999  and  2000,  respectively.

     The  Company  incurred  rent  expense  of $45,959 and $26,614 for the years
ended  December  31,  1998  and  1997,  respectively.

     The Company has guaranteed the value of 113,500 shares of common stock held
by  one  stockholder  to  be     worth  at  least  the  amount  borrowed  by the
stockholder  from  a  bank to purchase the shares plus any accrued interest.

     At December 31, 1998, the amount guaranteed by the Company is approximately
$75,000  and  the  underlying  fair  market  value  of  the  common  stock  is
approximately  $57,000.  If  the  stockholder  decides  to sell the common stock
subject  to  the  guarantee,  the  Company  would  be  required to reimburse the
stockholder for any deficiency. As of December 31, 1998, the stockholder has not
sold any of the common stock subject to the guarantee and any potential loss for
the  Company  due to this guarantee is not accrued in the accompanying financial
statements.

     The  Company  is  involved  in  litigation  in  the  ordinary course of its
business  and  operations.  The  Company     does  not expect the outcome of any
current  litigation  to  have  a  material  impact  on its financial position or
results  of  operations.

10.  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  AND  CONCENTRATION  OF CREDIT RISK
     ---------------------------------------------------------------------------

     The  Company's  financial  instruments  are  cash,  amounts  receivable and
payable  and  long-term  debt.  Management  believes  the  fair  values of these
instruments,  with the exception of the long-term debt, approximate the carrying
values,  due  to  the short-term nature of the instruments.  Management believes
the  fair  value  of  long-term  debt  also reasonably approximates its carrying
value,  based  on  expected  cash  flows  and  interest  rates.

     Financial  instruments  that  subject  the  Company  to credit risk consist
principally of receivables.  The receivables are primarily from companies in the
oil  and  gas  business or from individual oil and gas investors.  These parties
are  primarily  located  in  the  southwestern region of the United States.  The
Company  does  not  ordinarily  require  collateral.  The  Company  believes the
allowance  for  doubtful  accounts  at  December  31,  1998  is  adequate.

11.     FOURTH  QUARTER  ADJUSTMENTS
        ----------------------------

     In  the  fourth  quarter  of  1998,  the  Company  made  some  significant
adjustments  that  impacted  previously  reported  quarterly  results.  These
adjustments  would  have  increased  depletion, depreciation and amortization by
approximately $90,000 and increased impairment expense for the full cost pool by
approximately  $535,000  for  the  nine-month  period  ended September 30, 1998.

12.     SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
        ------------------------------------------------------------------------

     The  following table sets forth certain information with respect to the oil
and  gas  producing  activities  of  the  Company:

<TABLE>
<CAPTION>
<S>                                                                 <C>                  <C>
                                                                     Year Ended December 31,
                                                                    -------------------------
                                                                         1998          1997
                                                                    ------------  ------------
Costs incurred in oil and gas producing activities:
 Acquisition of unproved properties. . . . . . . . . . . . . . . .  $    151,905   $         -
 Exploration costs . . . . . . . . . . . . . . . . . . . . . . . .         2,504             -
 Acquisition of proved properties. . . . . . . . . . . . . . . . .       304,084             -
 Development costs . . . . . . . . . . . . . . . . . . . . . . . .       347,491        18,328
                                                                    ------------  ------------

 Total costs incurred. . . . . . . . . . . . . . . . . . . . . . .  $    805,984   $    18,238
                                                                    ============  ============
                                                                         1998          1997
                                                                    ------------  ------------
Net capitalized costs related to oil and gas producing activities:
 Unproved leasehold costs. . . . . . . . . . . . . . . . . . . . .  $    179,609   $    25,200
 Proved leasehold costs. . . . . . . . . . . . . . . . . . . . . .     4,318,875     3,667,300
 Less accumulated depletion, depreciation and impairment . . . . .    (2,444,578)   (1,555,250)
                                                                    ------------  ------------
 Net oil and gas property costs. . . . . . . . . . . . . . . . . .  $  2,053,906   $ 2,137,250
                                                                    ============  ============
</TABLE>

The  following  table,  based  on  information prepared by independent petroleum
engineers  and  Company  management,  summarizes changes in the estimates of the
Company's  net interest in total proved reserves of crude oil and condensate and
natural  gas,  all  of  which  are  domestic  reserves:


<TABLE>
<CAPTION>

<S>                              <C>        <C>
                                    Oil        Gas
                                 (Barrels)    (MCF)
                                 ---------  -----------
Balance, January 1, 1997. . . .   122,326    2,697,560
 Sales of minerals in place . .   (26,856)     (71,348)
 Extensions and discoveries . .         -      354,032
Production. . . . . . . . . . .    (3,748)     (11,594)
                                 ---------  -----------
Balance, December 31, 1997. . .    91,722    2,968,650

Purchase of minerals in place .    29,125      894,154
Revisions of previous estimates   (30,639)  (1,902,562)
Production. . . . . . . . . . .      (410)    (125,695)
                                 ---------  -----------
Balance, December 31, 1998. . .    89,798    1,834,547
                                 =========  ===========

Proved developed reserves:
December 31, 1997 . . . . . . .    91,722    2,968,650
                                 =========  ===========
December 31, 1998 . . . . . . .    70,423    1,720,115
                                 =========  ===========
</TABLE>

Proved  oil  and  gas  reserves  are  the  estimated  quantities  of  crude oil,
condensate  and  natural  gas  which geological and engineering data demonstrate
with  reasonable  certainty  to  be  recoverable  in  future  years  from  known
reservoirs  under  existing economic and operating conditions.  Proved developed
oil  and  gas reserves are reserves that can be expected to be recovered through
existing  wells  with  existing  equipment  and  operating  methods.  The  above
estimated net interests in proved reserves are based upon subjective engineering
judgments  and  may  be affected by the limitations inherent in such estimation.
The  process  of  estimating  reserves  is  subject  to  continual  revision  as
additional  information  becomes  available  as  a  result of drilling, testing,
reservoir  studies  and  production history. There can be no assurance that such
estimates  will  not  be  materially  revised  in  subsequent  periods.

13.     STANDARDIZED  MEASURE  OF  DISCOUNTED  FUTURE NET CASH FLOWS (UNAUDITED)
        ------------------------------------------------------------------------

     The  standardized  measure  of discounted future net cash flows at December
31,  1998  and 1997, relating to proved oil and gas reserves is set forth below.
The assumptions used to compute the standardized measure are those prescribed by
the  Financial  Accounting  Standards  Board  and,  as  such, do not necessarily
reflect  the  Company's expectations of actual revenues to be derived from those
reserves  nor  their  present  worth.  The  limitations  inherent in the reserve
quantity  estimation  process are equally applicable to the standardized measure
computations  since  these  estimates  are  the basis for the valuation process.


<TABLE>
<CAPTION>

<S>                                                       <C>                <C>
                                                            Year Ended December 31,
                                                           -------------------------
                                                              1998          1997
                                                          ------------  ------------

Future cash inflows. . . . . . . . . . . . . . . . . . .  $  4,848,000   $ 4,315,000
Future development and production costs. . . . . . . . .    (2,069,000)     (777,000)
                                                          ------------  ------------

Future net cash flows, before income tax . . . . . . . .     2,779,000     3,538,000
Future income taxes. . . . . . . . . . . . . . . . . . .          -             -
                                                          ------------  ------------

Future net cash flows. . . . . . . . . . . . . . . . . .     2,779,000     3,538,000
10% annual discount. . . . . . . . . . . . . . . . . . .      (905,000)   (1,260,000)
                                                          ------------  ------------

Standardized measure of discounted future net cash flows  $  1,874,000   $ 2,278,000
                                                          ============  ============
</TABLE>

Future  net  cash  flows  were  computed  using  year-end  prices and costs, and
year-end statutory tax rates (adjusted for permanent differences) that relate to
existing  proved  oil  and  gas  reserves  at  year  end.  The following are the
principal  sources  of change in the standardized measure of discounted net cash
flows:


<TABLE>
<CAPTION>

<S>                                                     <C>                  <C>
                                                         Year Ended December 31,
                                                        --------------------------
                                                             1998         1997
                                                        -------------  -----------

Sales of oil and gas produced, net of production costs  $   (116,000)  $  (31,000)
Purchase of minerals in place. . . . . . . . . . . . .       931,000            -
Sales of minerals in place . . . . . . . . . . . . . .          -        (220,000)
Net changes in prices and production costs . . . . . .      (225,000)           -
Revisions and other. . . . . . . . . . . . . . . . . .    (1,222,000)     (68,000)
Accretion of discount. . . . . . . . . . . . . . . . .       228,000      236,000
                                                        -------------  -----------
   Net change. . . . . . . . . . . . . . . . . . . . .      (404,000)     (83,000)
Balance, beginning of year . . . . . . . . . . . . . .     2,278,000    2,361,000
                                                        -------------  -----------
Balance, end of year . . . . . . . . . . . . . . . . .  $  1,874,000   $2,278,000
                                                        =============  ===========

</TABLE>

14.     SUBSEQUENT  EVENTS

     None.