SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

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

                  For the quarterly period ended June 30, 2000

                                       or

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

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

                           Commission File No. 1-14754

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

                            PENDARIES PETROLEUM LTD.

             (Exact name of registrant as specified in its charter)


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

                        PROVINCE OF NEW BRUNSWICK, CANADA

                 (State or other jurisdiction of incorporation)

        Internal Revenue Service - Employer Identification No. 52-2051576

                8 Greenway Plaza, Suite 910, Houston, Texas 77046

                                 (713) 355-2900

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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes[X] No[ ]

         The total number of shares of the  registrant's  Common Shares,  no par
value, outstanding on June 30, 2000, was 9,113,370.

                                       1
<PAGE>

                            PENDARIES PETROLEUM LTD.


PART I - FINANCIAL INFORMATION                                              PAGE
                                                                            ----

 Item 1.  Financial Statements

          Consolidated Balance Sheets as of June 30, 2000
          (Unaudited) and December 31, 2000....................................3

          Consolidated Statements of Operations and Deficit for the
          three and six months ended June 30, 2000 (Unaudited)
          With Comparative Figures for the Preceding Year......................4

          Consolidated Statements of Cash Flow for the
          six months ended June 30, 2000 (Unaudited)
          With Comparative Figures for the Preceding Year......................5

          Notes to Consolidated Financial Statements (Unaudited)...............6
  Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations.................................10
  Item 3. Quantitative and Qualitative Disclosures About Market Risk........None


PART II.  OTHER INFORMATION

  Item 1.  Legal Proceedings................................................None

  Item 2.  Changes in Securities and Use of Proceeds........................None

  Item 3.  Defaults Upon Senior Securities..................................None

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

  Item 5.  Other Information................................................None

  Item 6.  Exhibits and Reports of Form 8-K.................................None


SIGNATURES....................................................................14








                                       2
<PAGE>




         PART I:


                     Item 1. FINANCIAL STATEMENTS

                            PENDARIES PETROLEUM LTD.
                           CONSOLIDATED BALANCE SHEETS

                      June 30, 2000 and December 31, 1999

                        (All figures are in U.S. dollars)






<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2000                1999
                                                                                    ----                ----
                       ASSETS                                                   (Unaudited)
                       ------

         CURRENT ASSETS
           <S>                                                                  <C>              <C>
           Cash and cash equivalents                                            $   3,499,055    $      6,983,680
           Accounts receivable                                                          2,524              43,577
           Prepaid expenses and other assets                                          221,828             231,651
                                                                                -------------    ----------------

                                                                                    3,723,407           7,258,908
                                                                                -------------    ----------------
         PROPERTY AND EQUIPMENT
           Oil and gas properties, recorded under the full cost method
             Proved                                                                20,737,934          17,761,478
             Unproved                                                               2,626,003           2,565,343
           Furniture, fixtures and office equipment                                   233,660             172,517
           Accumulated depreciation, depletion and amortization                       (95,830)            (76,484)
                                                                                -------------    ----------------

                                         Net property and equipment                23,501,767          20,422,854
                                                                                -------------    ----------------

                                   Total assets                                  $ 27,225,174        $ 27,681,762
                                                                                =============        ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

           CURRENT LIABILITIES
              Accounts payable                                                  $          -      $        36,845
              Accrued liabilities                                                      21,143              40,962
                                                                                -------------    ----------------

                                    Total current liabilities                          21,143     $        77,807
                                                                                -------------    ----------------

            SHAREHOLDERS' EQUITY
              Common shares
                 Authorized, unlimited number of common shares
                 Issued 9,113,370 and 8,879,470 common shares, respectively        32,930,654          32,580,051
                 Retained Deficit                                                  (5,726,623)         (4,976,096)
                                                                                   -----------         ----------


                                   Total shareholders' equity                      27,204,031          27,603,955
                                                                                -------------       -------------

                                   Total liabilities and shareholders' equity   $  27,225,174        $ 27,681,762
                                                                                =============        ============
</TABLE>

  The accompanying notes are an integral part of these consolidated statements.

                                       3
<PAGE>




                            PENDARIES PETROLEUM LTD.
                            ------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------

                        (All figures are in U.S. dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             For the                             For the
                                                           Three-Month                          Six-Month
                                                           Period Ended                        Period Ended
                                                             June 30,                            June 30,
                                                 --------------------------------- ---------------------------------
                                                      2000             1999             2000                 1999

                                                 ---------------- ---------------- --------------- -----------------
<S>                                              <C>              <C>              <C>             <C>
REVENUE
  Oil and gas revenue                            $           -    $        71,050  $        -      $       172,265
                                                 ---------------- ---------------- --------------- ----------------
EXPENSES
  Oil and gas operating expenses                             -             61,208              -           156,849
  General and administrative expenses                   448,134           381,357         840,283          757,277
  Depreciation, depletion and amortization               10,451            42,301          19,345           90,053
  Exchange (gain)/loss                                   22,617           (25,691)         28,982          (35,846)
                                                 ---------------- ---------------- --------------- ---------------
                                                 $      481,202    $      459,175   $     888,610  $       968,333
                                                 ---------------- ---------------- --------------- ---------------
OTHER INCOME
  Interest income                                        59,757            76,036         138,083          164,599
                                                 ---------------- ---------------- --------------- ---------------

NET LOSS                                         $     (421,445)  $      (312,089)     $ (750,527)       $(631,469)
                                                 ==============   ===============  ==============  ===============
NET LOSS PER SHARE
  Basic                                          $         (.05)  $         (.04)  $         (.08) $          (.07)
                                                 ==============   ==============   ==============  ===============
  Fully diluted                                  $         (.05)  $         (.04)  $         (.08) $          (.07)
                                                 ==============   ==============   ==============  ===============

</TABLE>


The accompanying notes are an integral part of these consolidated statements.

                                       4
<PAGE>

                            PENDARIES PETROLEUM LTD.
                            ------------------------

                       CONSOLIDATED STATEMENTS OF CASH FLOW
                       ------------------------------------

                                   (Unaudited)

                        (All figures are in U.S. dollars)
<TABLE>
<CAPTION>

                                                                                    For the           For the
                                                                                   Six-Month         Six-Month
                                                                                 Period Ended       Period Ended
                                                                                   June 30,           June 30,

                                                                                     2000              1999
                                                                                     -----             ----

        CASH FLOW FROM OPERATING ACTIVITIES
           <S>                                                                <C>               <C>
           Net loss                                                           $  (750,527)      $   (631,469)
           Items not affecting cash
             Depreciation, depletion and amortization                              19,345             90,053
             Changes in non-cash working capital items-
               Accounts receivable                                                 41,053            (42,561)
               Accounts payable                                                   (36,845)            (7,227)
               Accrued liabilities                                                 10,181            (48,820)
               Prepaid expenses and other assets                                    9,823            (44,202)
                                                                                    -----            -------
                           Net cash used in operating activities                 (706,970)          (684,226)
                                                                                 --------           --------

        CASH FLOW USED IN INVESTING ACTIVITIES
           Net additions to proved and unproved oil and gas
              properties                                                       (3,037,116)          (507,261)
           Additions to furniture, fixtures and office equipment
                                                                                  (61,143)               557
                                                                                ---------       ------------
                           Net cash used in investing activities               (3,098,259)          (506,704)

        CASH FLOW FROM FINANCING ACTIVITIES
           Net proceeds from exercise of common stock options                     320,604             50,000

                           Net cash provided by financing activities              320,604             50,000
                                                                                ---------       ------------

        DECREASE IN CASH AND CASH EQUIVALENTS                                  (3,484,625)        (1,140,930)


        CASH AND CASH EQUIVALENTS, beginning of period                          6,983,680          7,873,280
                                                                               ----------       ------------

        CASH AND CASH EQUIVALENTS, end of period                              $ 3,499,055       $  6,732,350
                                                                               ==========       ============
</TABLE>

 The accompanying notes are an integral part of these consolidated statem

                                       5
<PAGE>

                            PENDARIES PETROLEUM LTD.
                            ------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                                  JUNE 30, 2000
                                  -------------

                                   (Unaudited)

                        (All figures are in U.S. dollars)


1.   NATURE OF OPERATIONS
     --------------------

     Pendaries Petroleum Ltd.  ("Pendaries" or "the Company"),  a New Brunswick,
     Canada  corporation,  is a holding  company whose primary  interests are in
     exploration,  development  and  production of oil and gas properties in the
     People's Republic of China.

2.   NATURE OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
     ------------------------------------------------------

     The Company  completed  an  initial  public  offering  and  became a public
     company in Canada on December 12, 1996.

     The consolidated  interim  financial  statements  included herein have been
     prepared by the Company  without  audit and reflect all  adjustments  which
     are, in the opinion of management, necessary to present a fair statement of
     the results of the interim period  pursuant to the rules and regulations of
     the  Securities  and Exchange  Commission  ("SEC").  These  statements  are
     presented on a basis consistent with annual audited consolidated  financial
     statements.   Certain   information,   accounting   policies  and  footnote
     disclosures normally included in consolidated financial statements prepared
     in accordance  with  generally  accepted  accounting  principles  have been
     omitted, although the Company believes that the disclosures are adequate to
     make the information  presented not misleading.  These consolidated interim
     financial  statements  should be read in conjunction  with the consolidated
     financial statements and the summary of significant accounting policies and
     notes thereto  included in the Company's  latest annual report on Form 10-K
     for the year ended December 31, 1999 filed with the SEC.

     The consolidated  financial  statements  include the accounts of Pendaries,
     Pendaries    Production,    Inc.,    Sino-American    Energy    Corporation
     (Sino-American)  and  Sino-American   Overseas  Energy   Corporation.   All
     significant intercompany transactions and balances have been eliminated.

     The  Company's  registration  statement  filed on Form  20-F  was  declared
     effective by the U.S. Securities and Exchange Commission in June 1998. This
     permitted the Company to list its common shares for trading on the American
     Stock Exchange.


3.   OIL AND GAS PROPERTIES - ALBERTA, CANADA
     ----------------------------------------

     In November 1996, the Company  purchased an interest in three producing oil
     and gas properties located in Alberta,  Canada for $1,966,088.  In November
     1999,  Pendaries  sold all of its  interest in the Alberta  properties  for
     approximately  $1,200,000,  which  approximated its book value. The Company
     will  use the  proceeds  to  partially  fund  exploration  and  development
     activities in the two core Bohai Bay blocks.

                                       6
<PAGE>

4.   OIL AND GAS PROPERTIES - CHINA
     ------------------------------

     At the end of  1998,  the  Company  owned an  interest  in five oil and gas
     exploration  petroleum  contracts  covering blocks in the Gulf of Bohai and
     the  Pearl  River  Mouth  Basin of the  South  China  Sea.  A  wholly-owned
     subsidiary  of  Kerr-McGee  serves as the operator of all five blocks.  The
     Company,  the operator,  and in one  concession an additional  partner,  as
     owners of the working  interests,  serve as the foreign  contractors  under
     these petroleum contracts. In addition, a Chinese government company serves
     as the Chinese  counter party to each  petroleum  contract.  For each block
     covered by a  petroleum  contract,  the  foreign  contractors  maintain  an
     operating  agreement among themselves for handling the operational  issues.
     During  1999 the  Company  and the  operator  decided  to  concentrate  its
     resources and efforts on the two primary blocks in the Bohai Bay which have
     exhibited the most potential for success, Block 04/36 and Block 05/36. As a
     result, the  Company and  the operator relinquished  the other  two smaller
     blocks in the Bohai Bay and the block in the South China Sea.

     Originally  three  companies  held  interests  in  Block  04/36.  Effective
     September 1, 1999, Murphy Exploration & Petroleum Company ("Murphy"), which
     owned a 45% interest in Block 04/36, dropped out of the block. This allowed
     Pendaries and Kerr-McGee, the two remaining foreign contractors, to pick up
     Murphy's  interest  without  cost,  other  than the  obligation  to pay the
     increased  proportional  shares of  prospect  expenses.  As a  result,  the
     Company  increased  its  proportionate  interest  from  10% to  18.2%.  The
     operator,  Kerr-McGee,  increased  its  proportionate  interest from 45% to
     81.8%. Thus, the Company and the operator are the only foreign  contractors
     under the petroleum  contract for Block 04/36. The China National  Offshore
     Oil Corporation, or CNOOC, is the Chinese counter party under the contract.

     In Block 05/36,  Pendaries  owns a 15%  interest,  the operator  owns a 50%
     interest,  and Newfield Exploration  Company,  another U.S. independent oil
     and gas company,  owns the  remaining  35%  interest.  CNOOC is the Chinese
     counter party under this petroleum contract as well.

     Oil and gas  exploration  in the two  Bohai  Bay  blocks  are  governed  by
     separate  petroleum  contracts.  The table  below  provides  details on the
     Company's  interest in each of each of these two  concessions.

Block        Pendaries  Original  Current    Concession           End of
             Interest   Acreage   Acreage       Date         Exploration Period
--------------------------------------------------------------------------------

04/36 Block   18.2%     560,000   420,000    August 1994       August 2001
05/36 Block   15.0%     416,000   312,000   January 1996      January 2003

     In each block, CNOOC has the  option  to  obtain  as much as a 51%  working
     interest  during  the  development  and  production  periods  by paying its
     proportionate  share of the  development  and operating costs and receiving
     its  proportionate  share of oil and gas  production.  Although the foreign
     contractors  bear 100% of the exploration  costs,  they receive up to a 68%
     share of the oil and gas  produced,  (rather  than the 45% share  that they
     would otherwise be entitled to) until they have recovered these exploration
     costs.

                                       7
<PAGE>

5.   RELINQUISHMENT
     --------------

     At the end of phase one of the exploration  period, the foreign contractors
     must relinquish 25% of the contract area acreage, excluding the development
     and/or production areas. At the end of phase two of the exploration period,
     the foreign  contractors must relinquish 25% of the remaining contract area
     acreage,  excluding the development  and/or production areas. At the end of
     phase  three  of the  exploration  period,  the  foreign  contractors  must
     relinquish  all contract areas not under  development or production.  After
     completion of all work and financial  obligations,  the foreign contractors
     may  relinquish  their  entire  interest  in any  block  at the  end of its
     exploration period.

     Due to the extensive  exploration  efforts  expended on Block 04/36, at the
     beginning of the second phase, CNOOC did not require  relinquishment of 25%
     of the contract area. The second phase  continued  until August 1999.  Upon
     entry into the third  phase in  September  1999,  the  foreign  contractors
     relinquished 25% of the contract area acreage.

     In March 1999,  the  foreign  contractors  entered  into phase two on Block
     05/36 and relinquished 25% of the contract area acreage.  We do not believe
     that the  potential  for  production  on  either  block  was  harmed by the
     relinquishment of the contract areas.

6.   COMMON SHARES
     -------------
     Issuance of Stock Options
     -------------------------

     On March 9, 1999,  certain  outside  directors  of the Company were granted
     stock options for a total of 84,500 common  shares.  The exercise  price is
     U.S. $0.59 per common share  and  the options expire on  March 9, 2004.  No
     stock options were granted in the first quarter of 2000.

     On April 20, 2000, certain directors, officers and employees of the Company
     were issued options to purchase an aggregate of 122,000 common shares.  The
     exercise price is U.S. $2.00 per common share, the market price on the date
     of issuance,  with an  expiration date of  April 20, 2005.  No options were
     granted in the comparable period for 1999.

     Issuance of Common Shares
     -------------------------

     On March 9, 1999,  certain  outside  directors  of the Company were granted
     47,500 common shares as compensation,  the value of which was U.S. $28,209.
     There were no such shares issued in the first quarter of 2000.

     On April 20,  2000,  certain  outside  directors of the Company were issued
     15,000 common shares as compensation  valued at U.S. $2.00 per common share
     for a total of U.S. $30,000.

     No other compensatory shares were issued in 1999 or 2000.

     Stock Option Exercise and Cancellations
     ---------------------------------------

     On June 16, 2000,  25,900  Pendaries  shares were  exercised at an exercise
     price of Cdn.  $0.90.  Total proceeds to Pendaries from  this exercise were
     U.S. $15,853.

                                       8
<PAGE>


     During  the second  quarter of 2000,  193,000  Sino-American  options  were
     exercised and exchanged for Pendaries  shares with exercise  prices ranging
     from U.S.  $1.00 to U.S.  $2.00.  Total  proceeds to the Company from these
     exercises were U.S. $304,750.

     As of June 30, 2000,  28,000  Sino-American  options  expired  unexercised.
     After the above-mentioned  exercises and expirations,  90,000 Sino-American
     options remain  outstanding with an exercise price of U.S. $1.25 per share.
     These  remaining  options  expire on August  17,  2000.  As a result of the
     above-mentioned exercises and expirations,  at June 30, 2000, the number of
     outstanding  shares is 9,113,370 and the number of outstanding  shares on a
     fully diluted basis is 9,801,470.

7.   RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  ---------------------------------------------------------------------------

     These  consolidated  financial  statements  are expressed in U.S.  dollars,
     which  is the  functional  currency  in all  areas  of  operation,  and are
     prepared in accordance  with generally  accepted  accounting  principles in
     Canada  ("Canadian GAAP") which conform in all material respects with those
     in the  United  States  ("U.S.  GAAP") for the years  presented,  except as
     outlined below.

     Oil and Gas Properties
     ----------------------

     In Canada, if the net capitalized costs of oil and gas properties in a cost
     center  exceed an amount equal to the sum of estimated  future net revenues
     from  proved oil and gas  reserves  in  the  cost  center  and the costs of
     properties not being amortized,  both adjusted for income tax effects, such
     excess is charged to expense. Also, the total capitalized costs of all cost
     centers are subject to a further recoverability test which includes,  among
     other things,  provision for site  development  and  restoration and future
     general,  administrative  and financial costs.  This is not consistent with
     U.S.  GAAP.  For U.S.  GAAP,  if the net  capitalized  costs of oil and gas
     properties  in a cost center exceed an amount equal to the sum of estimated
     discounted  present value at 10% of future net revenues from proved oil and
     gas  reserves  in the cost  center  and the costs of  properties  not being
     amortized,  both adjusted for income tax effects, such excess is charged to
     expense.  Included  in the  estimated  future net cash  flows are  Canadian
     provincial tax credits expected to be realized beyond the date at which the
     legislation, under its provisions, could be repealed. To date, the Canadian
     provincial  government  has not  indicated  an  intention  to  repeal  this
     legislation.

     There were no material  differences  between  Canadian  GAAP and U.S.  GAAP
     during the quarters and six months ended June 30, 2000 and 1999.


                                       9
<PAGE>






ITEM  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
unaudited  consolidated  financial  statements  included  elsewhere and with the
Company's Annual Report filed on Form 10-K for the year ended December 31, 1999.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2000 and 1999:
------------------------------------------

The Company incurred a net loss of $421,445(.05 per share) and $312,089 (.04 per
share) for the quarters ended June 30,2000 and 1999, respectively.  The $109,356
increase in net loss was a result of the following:

Oil and gas revenue from the Company's properties located in Alberta,  Canada of
$71,050 in the second quarter  ended June 30, 1999 was zero  for the same period
in 2000 due to the  sale of  these oil and gas  properties  in November of 1999.
Oil and gas  operating  expenses of $61,208 for the second  quarter of 1999 were
zero for the same period in 2000 for the same reason.

General and administrative expense increased from $381,357 in the second quarter
of 1999 to $448,134 in the second  quarter of 2000.  The  $66,777  increase  was
due to  outside  professional  costs,  primarily  a  separate  company  audit of
Pendaries' wholly  owned  subsidiary,  Sino-American Energy Corporation, for the
years 1994-1999 which was required by the Chinese taxing authorities.  There was
no similar audit expense for the comparable period in 1999.

Depreciation,  depletion and  amortization  decreased by $31,850 from $42,301 in
1999 to  $10,451 in 2000 due to the sale of the Canadian oil and gas properties.

The Company  incurred an exchange  loss of $22,617 for the three  months  ending
June 30, 2000 as  compared to an exchange  gain of $25,691 in the same period of
1999  due to the  strengthening  of the  U.S. dollar in relation to the Canadian
dollar in the 2000 period.

Interest income  decreased by $16,279 from $76,036 in the second quarter of 1999
to $59,757 in the second  quarter of 2000. The decrease was due to the reduction
of cash available for investment in the 2000 period.

Six Months Ended June 30, 2000 and 1999:
----------------------------------------

The  Company incurred  a net loss of  $750,527 (.08 per share) and $631,469 (.07
per share) for the six  months ended June 30, 2000 and 1999,  respectively.  The
$119,058 increase in net loss was due to the following:

Oil and gas revenue from the Company's properties located in Alberta,  Canada of
$172,265  for the six months ended June 30, 1999 was zero for the same period in
2000 due to the sale of the  Canadian  properties  in November of 1999.  For the
same reason, oil and gas operating expenses of $156,849 for the six months ended
June 30, 1999 were zero for the same period in 2000.

                                       10
<PAGE>

General and  administrative  expense  increased  from  $757,277 in the first six
months  of 1999 to  $840,283  for the  comparable  period of 2000.  The  $83,006
increase was primarily due to increased outside professional costs,  principally
the separate company audit of Sino-American Energy Corporation discussed above.

Depreciation,  depletion and  amortization  decreased by $70,708 from $90,053 in
1999 to $19,345 in 2000 due to the sale of the Canadian  oil and gas  properties
in November 1999.

The Company  incurred an exchange loss of $28,982  for the six months ended June
30, 2000 as compared to an exchange  gain of $35,846 for the same period in 1999
as a result of the  strengthening of the U.S. dollar against the Canadian dollar
in the 2000 period.

Interest income decreased by $26,516 from $164,599 in the second quarter of 1999
to $138,083 in the second quarter of 2000. The decrease was due to the reduction
of cash available for investment in the 2000 period.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

From inception(July 5, 1994) the Company's equity transactions by year are shown
below.  Of the total,  $31,378,364  represents cash raised by issuance of common
equity,  $1,325,000  represents oil and gas  properties  paid for by issuance of
common equity, and $227,290  represents  services paid for by issuance of common
equity.


                  Common
                   Share        Exercise of       Exercise of
    Period        Equity         Warrants           Options           Total
    ------        ------         --------           -------           -----

     1995       $ 3,287,500     $      -        $       -        $  3,287,500
     1996        22,812,658            -            20,000         22,832,658
     1997            68,000         944,488      5,196,115          6,208,603
     1998           131,081            -            42,000            173,081
     1999            28,209            -            50,000             78,209
 Yr to Date 2000     30,000            -           320,603            350,603
                -----------     -----------     ----------     --------------
      Totals    $26,357,448     $   944,488     $5,628,718       $ 32,930,654
                ===========        ========     ==========       ============


During the same periods, the Company incurred capital expenditures as follows:

                   Oil and Gas    Oil and Gas    Furniture,
                   Properties     Properties    Fixtures and
   Period            Canada         China         Equipment          Total
   ------            ------         -----         ---------          -----
    1995          $     -        $ 3,597,631     $  59,758       $  3,657,389
    1996            1,966,088      2,981,853        62,613          5,010,554
    1997                -          7,739,641       105,286          7,844,927
    1998                -          4,843,827       (57,719)         4,786,108
    1999           (1,966,088)(1)  1,163,869        (2,579)          (804,798)
 Yr to Date 2000        -          3,037,116        66,301          3,103,417
                   ----------    -----------     ---------        -----------
      Totals      $     -        $23,363,937     $ 233,660        $23,597,597
                  ===========    ===========     =========        ===========

           (1)      The Company received  proceeds from the sale of its Canadian
                    properties of $1,200,000. The difference of $766,088  is due
                    to accumulated depletion on the properties.

                                       11
<PAGE>

After capital expenditures and funds used in operations, the Company had cash of
approximately  $3.5 million at June 30, 2000. The Company has no credit facility
with any financial institution or any other outstanding debt. We expect the cash
on hand at June 30,2000,  to be sufficient to meet cash calls for exploration in
the Bohai Bay through  most of the fourth  quarter of 2000.  Prior to the end of
2000, the Company will be required to raise additional  capital in order to meet
its cash calls for exploration  and  development  expenditures in the Bohai Bay,
China.

Management currently estimates that the Company will need $10.2 million for pre-
production  exploration  drilling  and  seismic  costs  (with  first  production
currently  expected in the second  quarter of 2002),  plus another $10.0 million
for  pre-  production   development  drilling  and  construction  of  production
facilities  anticipated  to be spent from the second quarter of 2001 through the
first quarter of 2002.  During these same periods,  the Company expects to incur
general and administrative  costs of approximately  $2.6 million.  Management is
actively  pursuing   various  alternatives  for  raising  the  required capital.
Management believes that it will be successful in its efforts.

We  anticipate  focusing  most of our  expenditures  during the next year on the
three oil fields  discovered  to date (the 11-1 field in Block  04/36,  the 12-1
field in Block  05/36,  and the 2-1 field in Block  04/36) in order to speed the
declaration of commerciality  and the  commencement of development  drilling and
construction  of  production  facilities on both the 11-1 and 12-1 fields during
the  second and third  quarters  of 2001.  Once  production  begins,  management
believes that it will be able to secure any  additional  capital  needed through
conventional  debt  financing,  for which it hopes to have a commitment in place
during the first half of 2001.  After 2003 the Company believes that all capital
costs in the Bohai Bay and its general and administrative expenses can be funded
from internal cash flow.



DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
-----------------------------------------------

The  statements  contained  in this  Quarterly  Report on Form 10-Q  ("Quarterly
Report")  that  are  not  historical  facts,  including,  but  not  limited  to,
statements  found in this  Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations,  are  forward-looking  statements,  as that
term is defined in Section 21E of the  Securities  and Exchange Act of 1934,  as
amended, that involve a number of risks and uncertainties.  Such forward-looking
statements may be or may concern, among other things, sources of future capital,
capital  expenditures,  drilling  activity,  acquisition plans and proposals and
dispositions,  development  activities,  cost  savings,  production  efforts and
volumes, hydrocarbon reserves, hydrocarbon prices, liquidity, regulatory matters
and competition.  Such  forward-looking  statements generally are accompanied by
words  such  as  "plan,"  "estimate,"   "expert,"  "predict,"   "anticipate,   "
"projected,  " "should, " "assume, " "believe,  " or other words that convey the
uncertainty of future events or outcomes.  Such  forward-looking  information is
based upon management's current plans,  expectations,  estimates and assumptions
and is subject to a number of risks and uncertainties  that could  significantly
affect current plans,  anticipated  actions,  the timing of such actions and the
Company's  financial  condition  and results of  operations.  As a  consequence,
actual results may differ materially from expectations, estimates or assumptions
expressed in or implied by any  forward-looking  statements made by or on behalf
of the  Company.  Among the factors  that could cause  actual  results to differ
materially are:  fluctuations of the prices received or demand for the Company's
oil and natural gas, the uncertainty of drilling results and reserve  estimates,
operating hazards, acquisition risks, requirements for capital, general economic
conditions,  competition  and government  regulations,  as well as the risks and
uncertainties discussed in this Quarterly Report, including, without limitation,
the portions referenced above, and the uncertainties set forth from time to time
in the Company's other public reports, filings and public statements.

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                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings - N/A

Item 2.  Changes in Securities - N/A

Item 3.  Defaults Upon Senior Securities - N/A

Item 4.  Submission of Matters to a Vote of Security Holders - N/A

Item 5.  Other Information - N/A

Item 6.  Exhibits and Reports on Form 8-K - N/A


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SIGNATURES

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

                                               PENDARIES PETROLEUM LTD.

Date:   July 7, 2000                           By:  /s/Bobby J. Fogle
                                                    --------------------
                                                       Bobby J. Fogle
                                                    Vice President, Finance and
                                                    Chief Financial Officer

                                       14
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