**U.S. SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549******FORM 10-QSB**
 
** X      Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 or**
      **   ****Transition report pursuant to section 13 or 15(d) or the Securities Exchange Act of 1934**
 
**FOR THE QUARTER ENDED SEPTEMBER 30, 2001****Commission File Number 0-6580**(Exact name of small business issuer as specified in its charter)
**Nevada**(State or other jurisdiction ofincorporation or organization)
**87-0285520**(I.R.S. EmployerIdentification Number) 
**743 Horizon Court, Suite 333Grand Junction, Colorado 81506**(Address of Principal executive offices)
**(970) 245-5917**(Registrant's telephone number, including area code)
          Indicate by check mark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.    Yes   **X **  No**       **          As of November 19, 2001 the registrant had 2,939,815 shares of its $0.10 par value CommonStock issued and outstanding.
          Transitional Small Business Issuer Disclosure Format (check one):   Yes **       **  No   **X**  
 
 
 
 
**TABLE OF CONTENTS****PART I - Financial Information****Page  Number****  Item 1.  Unaudited Financial Statements**    Consolidated Balance Sheets as of September 30, 2001 and December 31, 20003    Consolidated Statements of Operations For the Three And Nine Months Ended          September  30, 2001 and 20004    Consolidated Statements of Cash Flows For the Three and Nine Months Ended          September 30, 2001 and 20005    Notes to Consolidated Financial Statements6-8**  Item 2.  Mgt's Discussion & Analysis of Financial Condition & Results of Operations**    Liquidity, Capital Expenditures and Capital Resources9    Results of Operations10      Overview10      Oil and Gas10-12      General and Administrative12      Depreciation, Depletion and Amortization12-13      Impairment of Oil and Gas Properties13      Interest Expense13      Disclosure Regarding Forward-Looking Statements14**PART II - Other Information**  Item 1.  Legal Proceedings14  Item 2.  Changes in Securities14  Item 3.  Defaults Upon Senior Securities15  Item 4.  Submission of Matters to a Vote of Security Holders15  Item 5.  Other Information15  Item 6.  Exhibits and Reports on Form 8-K16**PART III - Signatures**16 
 

 

**PART 1- FINANCIAL INFORMATION****ITEM 1.  FINANCIAL STATEMENTS**
**Republic Resources, Inc.CONSOLIDATED BALANCE SHEETS(unaudited)**
 **September 30,**
**December 31,****ASSETS**                             
**         2001       **
**        2000        ****CURRENT ASSETS:**  Cash and equivalents$      862,872 $  1,407,769   Trade receivables, net265,540 634,107   Prepaid expenses and other
          76,625 
         60,144     *Total current assets*
     1,205,037 
    2,102,020 **OIL AND GAS PROPERTIES, at cost (full cost method):**  Unevaluated properties2,072,559 2,600,657   Costs being amortized   22,328,580   19,539,376     *Total oil and gas properties*24,401,139 22,140,033   Less accumulated amortization (17,577,607)(15,866,536)    *Net oil and gas properties*     6,823,532     6,273,497 **OTHER ASSETS:**  Office equipment and vehicle112,575 230,624   Less accumulated depreciation         (94,525)     (195,508)    *Net office equipment and vehicle*18,050 35,116   Note receivable, net-       90,000   Debt issuance and debt restructuring costs72,868 46,079   Deposits               300            4,995     *Total other assets*          91,218        176,190 **TOTAL ASSETS**$   8,119,787   $  8,551,707   
**LIABILITIES AND STOCKHOLDERS' EQUITY****CURRENT LIABILITIES:**  Current maturities of long-term debt:    Convertible Debenture, net$           -       $     308,387     Other7,395 6,873   Accounts payable, trade169,250 328,744   Accrued preferred stock dividends77,737 -         Accrued expenses          85,442          77,882     *Total current liabilities*        339,824        721,886 **LONG-TERM DEBT, **less current maturities:     2,649,373     2,410,525   *Total liabilities*     2,989,197     3,132,411 **REDEEMABLE PREFERRED STOCK:**  Series C Preferred Stock, par value $0.01 per share, 99,503 shares    authorized, issued and outstanding (redeemable for $3,316,767    and a Liquidation Preference of $5,037,339 at September 30, 2001).    4,975,150     4,975,150 **OTHER STOCKHOLDERS' EQUITY:**  Undesignated Preferred Stock, par value $0.01 per share, 2.0 million    shares authorized, of which 1,395,000 have been retired,    and 99,503 have been designated as Series C.-       -         Common Stock, par value $0.10 per share, 4,000,000 shares    authorized, 2,939,815 and 1,924,398 shares issued and    outstanding, respectively.293,981 192,440   Additional paid-in capital32,925,946 32,519,779   Accumulated deficit (33,064,487)(32,268,073)*    Total Other Stockholders' Equity*        155,440        444,146 **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY**$   8,119,787   $  8,551,707   
 
 
 
**Republic Resources, Inc.CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)**
 
******For the Three Months**
**For the Nine Months**
**     Ended September 30,    **
**     Ended September 30,   **
**       2001     **
**       2000     **
**       2001     **
**       2000     ****REVENUE:**  Oil and gas sales$    487,289 $ 1,005,474 $ 2,080,301 $ 2,633,412 **OPERATING COSTS AND EXPENSES:****************************  Oil and gas production costs100,241 79,050 349,214 397,949   General and administrative183,732 130,950 555,393 476,421   Depreciation, depletion and      288,219       255,592       795,359       763,380   Impairment of oil and gas properties      928,000             -             928,000             -          Total operating costs and expenses   1,500,192       465,592    2,627,966    1,637,750 **INCOME (LOSS)       FROM OPERATIONS**(1,012,903)539,882 (547,665)995,662 **OTHER INCOME (EXPENSES):**  Loss on sale of assets(4,223)           -       (4,223)           -         Interest and other income6,725 18,592 34,658 39,359   Interest expense      (11,217)      (89,788)    (139,258)    (269,718)**NET INCOME (LOSS)**(1,021,618)468,686 (656,488)765,303 **PREFERRED STOCK DIVIDEND      CHARGES**      (46,642)      (66,504)    (139,926)    (198,066)**NET INCOME (LOSS) AVAILABLE TO      COMMON STOCKHOLDERS**$(1,068,260)  $    402,182   $  (796,414)  $    567,237   **BASIC:****************************  Earnings Per Share$        ( 0.36)$          0.23 $        (0.34)$          0.33   Weighted Average Shares Outstanding2,938,619 1,731,398 2,341,358 1,731,398 **DILUTED:**  Earnings Per Share$         (0.36)$          0.03 $        (0.34)$          0.04   Weighted Average Shares Outstanding2,938,619 17,264,316 2,341,358 17,264,316  
 

 

 
**Republic Resources, Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)**
 
**For the Nine Months**
**       Ended September 30,   **
**       2001      
**       2000      **CASH FLOWS FROM OPERATING ACTIVITIES:**  Net Income (Loss)$   (656,488)$     765,303   Adjustments to reconcile net income to net cash provided by        operating activities:    Depreciation, depletion and amortization795,359 763,380     Impairment of oil and gas properties928,000 -           Amortization of debt discount and issuance costs138,368 268,181     Loss on sale of assets4,223 -           Changes in operating assets and liabilities:      (Increase) decrease in:        Trade receivables368,567 11,844         Prepaid expenses and other assets(11,786)2,257       Increase (decrease) in:        Accounts payable(25,205)(19,974)        Accrued expenses          7,560       (36,273)          *Net cash provided by operating activities*   1,548,598    1,754,718 **CASH FLOWS FROM INVESTING ACTIVITIES:**  Capital expenditures for property, plant and equipment(2,394,841)(885,809)  Proceeds from redemption of Certificate of Deposit           -               15,000     *Net cash used in investing activities* (2,394,841)    (870,809)**CASH FLOWS FROM FINANCING ACTIVITIES:**  Proceeds from exercise of warrants502,709 -         Proceeds from exercise of options5,000 -         Proceeds from note receivable90,000 -         Repayment of long-term debt(142,130)(4,483)  Deferred debt restructuring costs      (92,044)           -         Payment of preferred stock dividends      (62,189)            -            *Net cash provided by (used in) financing activities*      301,346          (4,483)**INCREASE (DECREASE) IN CASH AND EQUIVALENTS**      (544,897)      879,426 **CASH AND EQUIVALENTS, beginning of period**   1,407,769       724,354 **CASH AND EQUIVALENTS, end of period**$     862,872   $ 1,603,780   **SUPPLEMENTAL DISCLOSURE OF CASH      FLOW INFORMATION:**    Cash paid for interest$     148,646   $    209,846       Cash paid for income taxes$           -        $          -        **SUPPLEMENTAL DISCLOSURE OF NON-CASH      INVESTING AND FINANCING ACTIVITIES:**    (Decrease) increase in accounts payable for oil & gas activities$   (133,736)  $    114,497   
 
**Note 1 - Name Change:**
Effective July 11, 2001, the Company's stockholders approved, among other things, a change in theCompany's name from Pease Oil and Gas Company to Republic Resources, Inc. (hereafter referredto as the "Company").**Note 2 - Basis of Presentation:**The accompanying unaudited condensed consolidated financial statements have been prepared inaccordance with generally accepted accounting principles for interim financial information.  They donot include all information and notes required by generally accepted accounting principles for completefinancial statements.  However, except as disclosed herein, there has been no material change in theinformation disclosed in the notes to consolidated financial statements included in our Annual Reporton Form 10-KSB for the year ended December 31, 2000.  In our opinion, all adjustments (consistingof normal recurring accruals) considered necessary for a fair presentation have been included.Operating results for the periods presented are not necessarily indicative of the results that may beexpected for the full year.The accounting policies we followed are set forth in Note 1 to our financial statements in Form 10-KSBfor the year ended December 31, 2000.  We suggest that these financial statements be read inconjunction with the financial statements and notes included in the Form 10-KSB.**Note 3 - Debt Financing Arrangements:**          *Long-Term Debt* - Long-term debt consists of the following:**September 30,****December 31,****        2001        ****       2000        **Convertible debentures, interest at 11%,       Original maturity April 2001, senior and unsecured$ 2,645,500 $ 2,782,500   Less unamortized discount            -             (73,113)    Net carrying value2,645,500 2,709,387 Note payable to bank, interest at 8.5%, monthly payments      of $669, due March 2003, collateralized by a vehicle        11,268         16,398     Total long-term debt2,656,768 2,725,785       Less current maturities, net of unamortized discount        (7,395)    (315,260)        Long-term debt, less current maturities$ 2,649,373   $ 2,410,525   When the Company filed its Annual Report on Form 10-KSB on April 16, 2001, we had reportedthat approximately 86%, or $2,401,000, of the outstanding debentures had been restructured.  Thesedebenture holders agreed to extend their maturity date for two years, from April 15, 2001 to April15, 2003, in exchange for: a) lowering the conversion rate from $30.00 to $1.75 per share; and b)increasing the interest rate from 10% to 11% per annum.  Subsequent to April 16, 2001, an additional$244,500 of the debentures were restructured under the same terms and the remaining balance of$137,000 was paid in full.  Interest  will continue to be due and payable on the restructured debentureon a quarterly basis.  The new conversion rate of $1.75 represented the current market rate of theCompany's common stock on the date the restructuring plan was accepted by the majority of thedebenture holders and formally committed to by the Board of Directors.  In addition, the Companyagreed that, subject to certain exceptions, it is prohibited from incurring indebtedness that is senior tothe Debentures so long as they are outstanding.The balance of the debentures that were restructured have been classified as long-term debt on theDecember 31, 2000 and September 30, 2001 balance sheets in accordance with SFAS No. 6 titled"Classification of Short-Term Obligations Expected to be Refinanced".**Note 4 - Preferred Stock:**
The Company was authorized to issue up to 2,000,000 shares of Preferred Stock of which 1,395,000shares were retired as of September 30, 2001.  The remaining 605,000 shares of Preferred Stock maybe issued in such series and with such preferences as determined by the Board of Directors.In December 1997, the Board of Directors "designated" 145,300 shares as the Series B 5% PIKCumulative Convertible Preferred Stock (the "Series B Preferred Stock") and on December 31, 1997,the Company issued 113,333 shares of Series B Preferred Stock for $5,666,650.The Series B Preferred Stock was convertible into common stock at a 25% discount to the market price.This discount feature became hyper-dilutive when the common stock price decreased beginning shortlyafter its issuance in December 1997. Based on the average price of the common stock during the first sixmonths of 2000, the outstanding Series B could have been converted into approximately 16.4 millionshares of common, or over 90% of the common equity after a conversion.In November 2000, six institutional holders, holding approximately 94% of the Series B preferred stockwith a stated value of over $4.97 million, exchanged their Series B for a new class of non-voting,non-convertible, preferred stock designated as the "Series C" Preferred stock. The Series C Preferredmust be redeemed, at its stated value, on December 31, 2005. However, the Company may, at itselection, redeem the Series C at a 33% discount (or approximately $3.31 million if all of it is redeemed),either in whole or in part, through December 31, 2003. The Company redeemed the remaining 6% of theSeries B Preferred at a 33% discount, or $210,833.  Therefore, as of the date of this report, there is nooutstanding hyper-dilutive Series B Preferred Stock.In connection with this restructuring, all the holders of the Series B Preferred stock waived all of thedividends in arrears (the Company had not paid any dividends on the Series B Preferred stock sinceSeptember 1, 1999). The Series C Preferred Stock will receive dividends at a rate of 5% per annum.These dividends started to accrue on April 1, 2001 and the first dividend was paid in July 2001.In November 2001, with the unanimous approval of all the Preferred Stockholders, the Series CCertificate of Designation was amended to provide for the deferment of any future dividend paymentuntil such time the Preferred Stock is redeemed.  Accordingly, the dividend for the period endingSeptember 30, 2001 was not paid but has been accrued as a liability in the accompanying financialstatements.  The Company does not expect to declare and pay any of the Series C Preferred Stockdividends in the foreseeable future but will continue to accrue them on a quarterly basis.As an inducement for the Series B Preferred stockholders to restructure their investment and grant adiscounted redemption feature, the Company issued warrants to acquire up to 1,763,800 shares ofcommon stock exercisable at $0.50 per share. During the second quarter of 2001, warrants to acquire1,005,417 of these shares were exercised generating proceeds of $502,709.  The remaining unexercisedwarrants will expire on December 31, 2003.**Note 5 - Net Income Available to Common Stockholders:**The net income available to common stockholders is determined by deducting any dividends accruing tothe benefit of the preferred stockholders from our net income.  Accordingly, a reconciliation of netincome available to common stockholders is as follows:
 
**For the Three Months  ****For the Nine Months**
**   Ended September 30,   **
**  Ended September 30,  **
**      2001      **
**     2000    **
**     2001    **
**     2000     **Net Income (Loss)$(1,021,618)$468,686 $(656,488)$ 765,303 Dividends Paid for the Series C Pfd Stock-       -       (62,189)-       Dividends in Arrears for the Series C Pfd Stock(46,642)-       (77,737)-       Dividends in Arrears for the Series B Pfd Stock           -         (66,504)        -        (198,066)Net Income (Loss) Available to Common     Stockholders$(1,068,260)  $402,182   $(796,414)  $ 567,237   The dividends in arrears at September 30, 2000 have been included for purposes of determining the netincome available to common stockholders for those periods presented even though they weresubsequently waived in connection with the preferred stock restructuring discussed in Note 4.**Note 6 - Earnings Per Common Share:**The Company follows SFAS No. 128 "Earnings Per Share".  Accordingly, "basic" earnings per commonshare is computed by dividing *income available to common stockholders *(the "numerator") by the*weighted-average number of common shares outstanding *(the "denominator") during the periodspresented.  "Diluted" earnings per common share reflects the potential dilution that could occur ifsecurities or other contracts to issue common stock were exercised or converted into common stock.A reconciliation of the components of basic and diluted net income per common share for the periodspresented is as follows:
 

**              For the Three Months Ended September 30,                 **
**                      2001                      **
**                    2000                  ****Basic**
**    Income    **
**  Shares   **
**PerShare**
** Income **
**  Shares   **
**PerShare** Income (Loss) available to      common stockholders$(1,068,260)2,938,619$(0.36)$402,1821,731,398$0.23 **Effect of Dilutive Securities**  Assumed exercise of dilutive        options and warrants-    -    -    -    -    -      Assumed conversion of debt-    -    -    -    -    -      Assumed conversion of the        Series B preferred stock              -                -            -        66,50415,532,918 (0.20)**Diluted**  Income (Loss) available to        common stock including        assumed conversions  $(1,068,260)    2,938,619    $(0.36)    $468,686    17,264,316    $0.03   
**                For the Nine Months Ended September 30,                   **
**                      2001                      **
**                    2000                   ****Basic**
**    Income    **
**  Shares  **
**PerShare**
** Income **
**  Shares  **
**PerShare** Income (Loss) available to      common stockholders$   (796,414)2,341,358$(0.34)$567,2371,731,398$0.33 **Effect of Dilutive Securities**  Assumed exercise of dilutive        options and warrants-      -      -     -      -      -       Assumed conversion of debt-      -      -     -      -      -       Assumed conversion of the        Series B preferred stock            -                -          -       198,06615,532,918 (0.29)**Diluted**  Income available to common       stock including assumed       conversions  $   (796,414)    2,341,358    $(0.34)    $765,303    17,264,316    $0.04   
For the three and nine months ending September 30, 2000, the "diluted" earnings per common shareassumes that the Series B preferred stock, which was restructured in November 2000, was converted intocommon stock using an assumed conversion price of $0.3281 per share (this represents the price theSeries B preferred stock could have been converted into using the market price of the common stock onSeptember 30, 2000).None of the Company's potential dilutive options or warrants are included for purposes of calculating"diluted" earnings per share in 2001 since the affect of including them would have been anti-dilutive.The Company's Debentures outstanding at September 30, 2001, are convertible into approximately 1.5million common shares at a price of $1.75 per share.  However, those shares have been excluded fromthe calculation of "diluted" earnings per share since the affect of including them would have beenanti-dilutive.**ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF****OPERATIONS****LIQUIDITY, CAPITAL EXPENDITURES AND CAPITAL RESOURCES**At September 30, 2001, our cash balance was $862,872 with a positive working capital position of$865,213, compared to a cash balance of $1,407,769 and a positive working capital position of$1,380,134 at December 31, 2000.  The change in our cash balance is summarized as follows:
 Cash balance at December 31, 2000$ 1,407,769   Sources of Cash:    Cash provided by operating activities1,548,598     Proceeds from exercise of warrants and options     507,709     Proceeds from note    receivable        90,000        Total sources of cash during the period  2,146,307   Uses of Cash:    Capital expenditures for oil and gas activities(2,394,841)    Repayment of long-term debt(142,130)    Debt restructuring costs      (92,044)    Payment of preferred stock    dividends      (62,189)      Total uses of cash during the period (2,691,204)        Cash balance at September 30, 2001$    862,872    
We were able to generate positive cash flow from operating activities of $1,548,598 during the first ninemonths of 2001 principally due to the favorable oil and gas prices being enjoyed this year.  As discussedmore thoroughly later in the Results of Operations section under the caption "Oil and Gas", the averageprices received by the Company during the first nine months of 2001 were $26.49 per bbl of oil and$5.09 per Mcf of natural gas.   In addition, the Company received proceeds aggregating $507,709 whenwarrants and options to exercise approximately 1.0 million shares of common stock were exercisedduring the second and third quarters of 2001. As a word of caution, the oil and gas prices beingreceived by theCompany as of thedate of this report (which is approximately $17.00 per bbl of oil and$2.50 per Mcf of gas) is significantly lower than those received during thefirst nine months of 2001.Accordingly, we expect our future cash flows, at least in the near term, to besignificantly lower than themonthly average was for the first nine months of 2001.The costs incurred for our oil and gas activities for the first nine months of 2001 are summarized as follows(the $133,736 difference between the total cash paid for exploration activities in the above table and theamount presented below, represents the net decrease in accounts payable for the exploration activitiesbetween December 31, 2000 and September 30, 2001):
 
**Internal****Category:**
**           Program Operator          **
**& Other**
**    NEG   **
**  Parallel  **
**   AHC   **
**   Costs   **
**    Total     ****    %   ****  Acquisition of unproved        properties$    3,727$   105,149$  11,297$104,851$   225,02410%  Exploration costs-      1,001,734442,204127,8441,571,78270%  Development & workovers242,6617,651-        -      250,31211%  Capitalized interest       -                -             -        213,987     213,987     9%    Total$246,388  $1,114,534  $453,501  $446,682  $2,261,105   100%      Percent11%49%20%20%100%A description of the areas we have an oil and gas interest in are more thoroughly discussed in our 2000Annual Report on Form 10-KSB.  In addition to thoseproperties, in 2001 the Company acquired certaininterests in approximately 26,000 gross undeveloped acres (9,000 net) in three separate prospect areasin the state of Utah.  These prospects target various oil and gas objectives ranging in depth from 4,800 ft.to 15,000 ft.  The Company expects to drill at least one exploratory well on this acreage, targeting ashallow oil objective, sometime during the fourth quarter of 2001.  Regarding the deeper moreexpensive objectives, the Company will attempt to farm-out, or otherwise promote, those prospects toother parties in order to mitigate the corresponding financial risk associated with exploration activities.With the exception of the prospects located in Utah, we are a non-operator in the areas in which we holdan oil and gas interest.  Accordingly, we do not control the timing of any development or explorationactivities and therefore have little control over the corresponding required cash outlays.  However, wecurrently expect the expenditures that will be proposed by the respective operators and by ourselves forthe new Utah properties to be within the following ranges through the first quarter of 2002:
**   Estimated Investment   ****                    Area                 **                        Operator                         **
** Minimum** 
** Maximum **Formosa, Texana, & Ganado Parallel Petroleum, Inc. ("Parallel")$   350,000$    700,000East Bayou SorrelNational Energy Group, Inc. ("NEG")150,000   400,000Maurice ProspectAmerada Hess Corporation ("AHC")          -            100,000Utah ProspectsRepublic Resources, Inc. (the "Company")     100,000      400,000          Total $   600,000  $ 1,600,000  
 

In addition, the Company is currently evaluating other prospects and exploration opportunities which,if pursued, would require even more capital. The Company's future success will depend upon its abilityto continually find or acquire additional oil and natural gas reserves.  Consequently, the pursuit ofadditional reserves will require the Company to make substantial capital expenditures.  Currently, theonly source of capital the Company has to fund any of its oil and gas activities is through the existingworking capital and future operating cash flows.  The Company does not believe these resources alonewill be sufficient to fund all of the necessary and anticipated future oil and gas activities.  Should this bethe case, we may: a) seek additional financing, the source or terms which is currently unknown; b)pursue a merger acquisition or other business combination transaction; c)sell existing assets; or d) elect other alternatives including: farming out ofspecific projects to another party, establishing a joint venture for a particular project, or opting out of aproposed operation or activity. **RESULTS OF OPERATIONS****Overview**

Our largest source of operating revenue is from the sale of produced oil, natural gas, and natural gasliquids.  The level of our revenues and earnings are affected by prices at which natural gas, oil andnatural gas liquids are sold.  Therefore, our operating results for any prior period are not necessarilyindicative of future operating results because of the fluctuations in price and production levels.**Oil and Gas**
Operating statistics for oil and gas production for the periods presented are as follows:**Production:****For the Three Months****For the Nine Months****  Ended September 30,   ****  Ended September 30,   ****     2001     ****     2000     ****     2001     ****    2000       Oil (bbls)10,300 21,200 29,000 67,100   Gas (Mcf)68,700 81,800 258,000 183,800   BOE (6:1)21,800 34,900 72,000 97,800 **Average Sales Price:**  Oil (per bbl)$       25.29 $       30.36 $       26.49 $       28.70   Gas (per Mcf)3.30 4.42 5.09 3.84   Per BOE (6:1)22.35 28.81 28.89 26.93 **Operating Margins:**  **Revenue -**    Oil$   260,534 $   643,788 $   768,181 $1,927,011     Gas     226,755      361,686   1,312,120      706,401       Total Revenue$   487,289 $1,005,474 $2,080,301 $2,633,412   **Costs** -    Lifting Costs(55,316)(67,309)(183,044)(208,086)    Production taxes     (44,925)     (11,741)   (166,170)   (189,863)      Total Costs   (100,241)     (79,050)   (349,214)   (397,949)        **Operating Margin**$   387,048   $   926,424   $1,731,087   $2,235,463           **Operating Margin Percent** 79% 92%  83% 85% **Production Costs per BOE before DD&A**$         4.60 $         2.27 $         4.85 $       4.07 **Change in Revenue Attributable to :**  Production$  (388,826)$  (808,572)  Price   (129,359)     255,431     Net Decrease in Revenue$  (518,185)  $  (553,141)  
*Comparison of Oil and Gas Production for the Three Months Ended September 30, 2001 & 2000:*The Company's oil production decreased by 10,900 bbls and the Company's gas productiondecreased 13,100 Mcf for the three months ended September 30, 2001, when compared to the same period in 2000, primarily because: a) the Schwing # 1 well, located in the East Bayou Sorrel field, has not produced since December 2000; and b) the R. Trahan #1, located in the Maurice field, is experiencing a natural decline in production.  The R. Trahan #1 produced, net to the Company, 36,435 Mcf for the three months ended September 30, 2000 compared to 8,774 Mcf for the same period in 2001.  For the three months ended September 30, 2000, the Company's proportionate share of production from the Schwing # 1 was 11,388 bbls of oil and 11,598 Mcf of gas - representing 54% of the Company's oil production and 14% of the Company's total gas production for that quarter. The Schwing # 1 has been shut in due to apparent formation problems that started in September 2000, when sand began showing up in the production fluids.  At that time, in order to mitigate the sand, NEG (the operator of the well) cut the production rate back to approximately 500 bbls per day and 500 Mcf per day.  The well produced at that level until late December 2000 when the sand emulsion reappeared and production ceased.  Remedial efforts, utilizing coiled tubing, were attempted to clean out the well bore and restore production, however, those efforts failed.The Company believes the well should be sidetracked to an up-dip location in the productive reservoir.This procedure, if successful, would accomplish two objectives: 1) it would place the new bottom hole location away from the apparently damaged producing interval; and 2) it would relocate the "take point" of this reservoir to an up-dip location to recover the "attic" oil that could not have been recovered from the present bottom hole location even if the well bore had not sanded up.  However, NEG proposed another procedure that the Company disagreed with, and as a result, we elected not to participate in that particular procedure.  That procedure is currently underway, and if successful, the Company would incur a 400%  penalty of the costs incurred to perform that procedure prior to being able to participate in future production.  However, should the current procedure fail and should NEG propose another remedial procedure, such as sidetracking to an up-dip location, the Company would have the rightto participate on a heads-up basis and would not be obligated for, or penalized for, any of the costs incurred on the previous procedure. Some of the net gas production lost from the Schwing #1 and the R. Trahan #1 has been offset by the discovery wells in Jackson County, Texas.  These wells were completed during the last half of 2000 and the first half of 2001 and collectively produced over 37,268 net Mcf during the third quarter of 2001.*Comparison of Oil and Gas Production for the Nine Months Ended September 30, 2001 & 2000:*The Company's oil production decreased by 38,100 bbls for the nine months endedSeptember 30,2001, when compared to the same period in2000, primarily because the Schwing # 1 has been shutin for all of2001.  During the first nine months of 2000, the  Schwing # 1 produced38,041 net bblsof oiland 38,136 net Mcf of gas representing 57%of the Company's oilproduction and 21% ofthe Company'sgas production for that period.  The Company's net gas production increased 74,200 Mcf for the nine months endedSeptember 30,2001, when compared to the same period in 2000, as a result of the discovery wells in Jackson County,Texas, that have been completed since the third quarter of last year.  Thesewells collectively producedover 171,889 net Mcf during the firstnine months of 2001 representing over 67% of the Company'snet gas production this year.*Comparison of Oil and Gas Revenue for the Three Months Ended September 30, 2001 & 2000:* Oil and gas revenue for the three months ended September 30, 2001, when compared to the same period in 2000, decreased by $518,185.  This change in total revenue is attributable to a $388,826 decrease associated with a loss of production, as discussed above, and a decrease of $129,355 associated with lower oil and gas prices in 2001.  We received an average price of $3.30  per Mcf of gas during the third quarter of 2001 compared to $4.42 per Mcf for the same period in 2000 - representing a $1.12, or 25%, decrease per Mcf in 2001.  We received  an average price of $25.29 per bbl of oil during the third quarter of 2001 compared to $30.36 for the same period in 2000 - representing a $5.07, or 17% decrease per bbl in 2001.*Comparison of Oil and Gas Revenue for the Nine Months Ended September 30, 2001 & 2000:* Oil and gas revenue for the nine months ended September 30, 2001, when compared to the same period in 2000, decreased by $553,111.  This change in total revenue is attributable to a $808,542 decrease associated with loss of production, as discussed above, that was largely offset by a price increase of $255,431 primarily associated with higher natural gas prices received in 2001.  Wereceived an average price of $5.09 per Mcf of gas during the first nine months of 2001 compared to$3.84 for the same period in 2000 - representing a $1.25, or 34%, increase per Mcf in 2001.  We received an average price of $26.49 per bbl of oil during the first nine months of 2001 compared to $28.70 for the same period in 2000 - representing $2.21, or 8%, decrease per bbl in 2001.*Drilling Results in 2001:* An exploratory well that commenced drilling in October 2000 in our Maurice prospect area, located in Lafayette Parish, Louisiana, logged more than 67-ft of apparent net pay in five sand intervals. During the second quarter of 2001, this well was completed and tested at an initial rate of 7,200 Mcf and 300bbls of condensate per day. However, shortly after the well was placed on production, the flowing tubing pressure began rapidly declining and indicating either a smaller than anticipated reservoir and/or possible depletion in that sand interval.  In addition, the well began producing heavy volumes of water indicating a potential faulty completion.  This well is currently being evaluated and it cannot be determined at this time what future economic benefit, if any, this well will ultimately provide.  The Company has a 9.5% working interest in this well.  The Company incurred over $440,000 in costs in this well during 2001 through September 30th. This year, through the date of this report, we have participated in the drilling of eight (8) exploratory wells located in or around Jackson County, Texas, within the prospect areas operated by Parallel. Of these eight(8)  wells, two (2) have been deemed commercially productive with economic reserves, and six (6) wereessentially dry.  The costs incurred by the Company this year for all these wells has been approximately $1.0 million through September 30, 2001.*Comparison of Production Costs for the Three Months Ended September 30, 2001 and 2000:*Lifting costs decreased by $11,993 during the three months ended September 30, 2001, whencompared to the same period in 2000, primarily because the Schwing #1 was shut-in during 2001 and the corresponding production costs were not incurred. Production taxes increased $33,184 during the three months ended September 30, 2001, whencomparedto the same period in 2000, primarily because the Company received a one time credit in the thirdquarter of 2000 on accrued but unpaid taxes from the State of Louisiana (through AHC, the operator).This credit was for $59,848 representing severance tax relief associated with the wells located in theMaurice field.  Without this one time credit to offset the third quarters production taxes in 2000, theoverall costs incurred would have been higher when compared to the same period in 2001 because asubstantial portion of the production taxes are based on the revenue generated and not on volumeproduced.*Comparison of Production Costs for the Nine Months Ended September 30, 2001 and 2000:*Lifting costs decreased by $25,042 during the nine months ended September 30, 2001, when comparedto the same period in 2000, primarily because the Schwing #1 was shut-in during 2001 and thecorresponding production costs were not incurred.Production taxes decreased $23,693 during the first nine months of 2001, when compared to the sameperiod in 2000, primarily because the total severance tax for our oil revenue was less in 2001 because ofthe net decrease in oil production.  Our average severance tax burden is approximately 12% for oil revenue and approximately 6% for gas revenue.  Accordingly, since our oil revenue, which has thehigher severance tax burden, was down during 2001, the corresponding severance tax liability was alsodown.**General and Administrative**

Total general and administrative ("G&A") expenses increased $52,782 for the three months endedSeptember 30, 2001 when compared to the same period in 2000 and increased $78,972 for the ninemonths ended September 30, 2001 when compared to the same period in 2000.  This increase issubstantially attributable to costs incurred for: a) the Annual Meeting of Stockholders (e.g. mailing, printingetc.) held on July 11, 2001 - the Company did not hold an Annual Meeting in 2000; and b) legal andother incidental costs associated with the Company's name change.**Depreciation, Depletion and Amortization**
Depreciation, Depletion and Amortization ("DD&A") for the periods presented consisted of thefollowing:
 
**For the Three Months**
**For the Nine Months**
** Ended September 30, **
** Ended September 30, **
**    2001     **
**    2000    **
**    2001    **
**     2000    **Oil and Gas Properties$ 284,745 $ 250,695$ 783,071$  748,649Furniture, Fixtures and Equipment       3,474        4,898     12,288      14,732  Total$ 288,219   $ 255,593  $ 795,359  $  763,381  DD&A for the oil and gas properties, per BOE:$     13.06   $       7.19  $     10.88  $        7.66  
 
The DD&A for oil and gas properties is computed using the units-of-production method utilizing onlyproved reserves at the end of the respective period.  The DD&A rate increased $5.87 per BOE for thethree months ended September 30, 2001, and $3.22 per BOE for the nine months ended September 30,2001 when compared to the same periods in 2000, as a result of the total costs subject to amortizationincreased by approximately $3.2 million between September 30, 2000 and September 30, 2001.  Thisincrease is attributable to the costs of new wells drilled, including direct drilling costs and allocatedseismic costs, that were added to the costs subject to amortization during that period.**Impairment of Oil and Gas Properties**The Company incurred a non-cash impairment charge of $928,000 during the third quarter of 2001associated with a "ceiling test" write-down pursuant to Regulation S-X, Rule 4-10(e)(4).  According tothe authoritative accounting literature, the Company is required to calculate the "ceiling" on a quarterlybasis and expense any of the net costs accumulated in the full cost pool that exceed that "ceiling".  The"ceiling" at September 30, 2001 is substantially lower than previous periods (no impairment chargeshave been incurred for previous periods presented) primarily because of the decrease in oil and gasprices that have occurred since the beginning of the year and in particular subsequent to September 11,2001.  The terrorist attacks, recent actions taken by OPEC, unexpected weather patterns, and otherfactors, have recently created an extremely volatile oil and gas price environment.  These factors, alongwith the ultimate successor failure of future exploration and development activities, will affect futureceiling calculations and may ultimately lead to additional impairment charges, the extent can not bedetermined at this time.**Interest Expense**
Total interest incurred, and its allocation, for the periods presented is as follows:
**For the Three Months******For the Nine Months**
**   Ended September   ****  Ended September 30,  
**   2001   
**   2000   ******     2001    
     **2000**    Interest paid or accrued$ 73,567 $ 70,337 $ 214,878 $ 209,845 Amortization of debt discount-       54,834 73,113 164,503 Amortization of debt issuance costs-       34,559 19,176 103,677 Amortization of debt restructuring costs  11,000       -           46,078         -         Total interest incurred84,567 159,730 353,245 478,025 Interest capitalized for exploration activities (73,350) (69,942) (213,987) (208,307)  Interest expense$ 11,217   $ 89,788   $ 139,258   $ 269,718   As discussed in the Company's Annual Report on Form 10-KSB and Footnote 2 on page 6 of thisreport, the Company's convertible debentures, with an aggregate balance of $2,782,500, had anoriginal maturity of April 16, 2001.  Approximately 95%, or $2,695,500, of the debenture holdersagreed to extend the maturity for 2 years in exchange for: a) lowering the conversion rate from $30.00to $1.75: and b) increasing the interest rate from 10% to 11% per annum.  Accordingly, the total interestpaid and accrued increased slightly for the periods presented in 2001, when compared to 2000 as aresult of the higher interest rate.  Total interest incurred decreased in 2001 primarily as a result of theoriginal debt discount and issuance costs incurred in 1997 (which aggregated over $1.6 million) becamefully amortized in April 2001.  Total costs incurred to restructure the debenture this year totaled $92,044and are being amortized over the new term of two years.The total interest capitalized for exploration activities has remained relatively constant when comparingthe periods presented since we have, and will continue to, incur costs on our unevaluated oil and gasproperties.  Interest is being capitalized in accordance with FAS 34 and FASB Interpretation No. 33,on the unevaluated oil and gas costs.  Interest capitalization on the unevaluated oil and gas costs ceaseswhen the corresponding asset has become evaluated and is ready for its intended use.**Disclosure Regarding Forward-Looking Statements**
This report on Form 10-QSB includes "forward-looking statements" within the meaning of Section 27Aof the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the SecuritiesExchange Act of 1934, as amended (the "Exchange Act").  All statements other than statements ofhistorical facts included in this report, including, without limitation, statements under "Management'sDiscussion and Analysis of Financial Condition and Results of Operations" regarding our financialposition, reserve quantities, plans and objectives of the Company's management for future operationsand capital expenditures are forward-looking statements and the assumptions upon which such forward-looking statements are based are believed to be reasonable.  We can give no assurance that suchexpectations and assumptions will prove to be correct.  Reserve estimates of oil and gas properties aregenerally different from the quantities of oil and natural gas that are ultimately recovered or found.  Thisis particularly true for estimates applied to exploratory prospects. Additionally, any statementscontained in this report regarding forward-looking statements are subject to various known andunknown risks, uncertainties and contingencies, many of which are beyond our control.  Such risks anduncertainties may cause actual results, performance, achievements or expectations to differ materiallyfrom the anticipated results, performance, achievements or expectations.  Factors that may affect suchforward-looking statements include, but are not limited to: our ability to generate sufficient cash flowfrom operations to complete our planned drilling and exploration activities; risks inherent in oil and gasacquisitions, exploration, drilling, development and production; price volatility of oil and gas;competition; shortages of equipment, services and supplies; government regulation; environmentalmatters; financial condition of the other companies participating in the exploration, development andproduction of oil and gas programs; and other matters beyond our control.  In addition, since all of theprospects in the Gulf Coast are currently operated by another party, we may not be in a position tocontrol costs, safety and timeliness of work as well as other critical factors affecting a producing wellor exploration and development activities.  All written and oral forward-looking statementsattributable to our Company or persons acting on ourbehalf subsequent to the date of this report areexpressly qualified in their entirety by this disclosure.**PART II - OTHER INFORMATION****Item 1. Legal Proceedings**We may from time to time be involved in various claims, lawsuits disputes with third parties, actionsinvolving allegations of discrimination, or breach of contract incidental to the operation of its business.At September 30, 2001 and as of the date of this report, we were not involved in any litigation whichwe believe could have a materially adverse effect on our financial condition or results of operations.**Item 2. Change in Securities.**     (a)     Recent Sales of Unregistered Securities.  The Company sold the following securities withoutregistration under the Securities Act of 1933, as amended ("Securities Act") during the quarterended September 30, 2001 and through the date of this report:          1.	On May 17, 2001, two entities, Ramat Securities, Ltd. and Tamar Securities, Inc.,purchased55,417 shares of the Company's common stock.  On May 17, 2001, one entity , Howard Amster, IRA, purchased 16,667 shares of the Company's common stock.  On June 7, 2001, BellSouth Master PensionTrust purchased 233,333 shares of the Company's common stock and Metropolitan Life InsuranceCompany Separate Acct EN purchased 433,333 shares.  On June 21, 2001 Arbco Associates, L.P.purchased 266,667 shares common stock.  All these purchases were at $0.50 per share resulting fromthe exercise of outstanding warrants and generated proceeds of $502,708.50.  Certificates, representingthe shares issued upon exercise, were restricted and each included a restrictive legend prohibitingtransfer without registration under the Securities Act.  The Company relied upon Section 4(2) of theSecurities Act in issuing the securities without registration.  The institutions to whom the securities wereissued had full information concerning the business and affairs of the Company.  No underwriteror other sales agent participated in the exercise of the warrants.  The shares issued upon exercise of thewarrants were registered by the Company for resale by the holders in registration No.333-59188.          2.	On July 11, 2001 the Company issued 5,000 shares of common stock to Clemons F. "Bud"Walker and on July 12, 2001 the Company issued 5,000 shares to James C. Ruane.  Messrs. Walkerand Ruane exercised vested stock options held by them at the time they left the Company's Board ofDirectors following the Annual Meeting of Stockholders.  The exercise price was $0.50 per share andthe Company received proceeds totaling $5,000.00 upon issuance of the securities.  The Companyrelied upon Section 4(2) of the Securities Act in issuing the securities without registration.  The twopersons to whom the securities were issued were formerly directors and had full information concerningthe business and affairs of the Company and acquired the shares for investment purposes.  Certificatesrepresenting the securities issued bear a restrictive legend and stop transfer instruction have been enteredprohibiting transfer of the securities except in compliance with applicable securities laws.**Item 3. Defaults Upon Senior Securities**     (a)	There has been no material default in the payment of principal, interest, or any other material default,with respect to any indebtedness of the small business issuer during the period covered by this report.     (b)	There has been no material default in the payment of dividends for any class of preferred stockduring the period covered by this report.**Item 4. Submission of Matters to a Vote of Security Holders.**     (a)	The Company held its Annual Meeting of Stockholders in Grand Junction, Colorado on July 11,2001.  The following matters were considered and voted upon at the meeting.          1.	The following directors were elected for the terms indicated:** Name of Director **
**Terms Expires AtAnnual Meeting In**Steve A. Antry2002J. Peter Koonce2002David A. Melman2003Homer C. Osborne2003Patrick J. Duncan2004 
                     Voting for nominees for director was as follows:
**     No. of Votes     **No. of**
**Votes Received******Withheld**Patrick J. Duncan2,033,29121,833David A. Melman2,020,96234,162Homer C. Osborne2,046,4128,712J. Peter Koonce2,020,96234,162Steve A. Antry2,033,741
21,383 
          2. Stockholders approved Restated and Amended Articles of Incorporation for the Companywhich provided for:               (a)The Company's name to be changed from "Pease Oil and Gas Company" to "RepublicResources,  Inc."; and               (b)		an increase in the number of authorized common shares from 4.0 million to 10.0 million.

                      Voting on this matter was as follows:
Votes In Favor:1,995,669Votes Opposed:57,332Votes Abstained and Broker Non-votes:2,123 
**Item 5. Other Information**There is no information reportable under this item for the period covered by this report.**Item 6. Exhibits and Reports on Form 8-K**     (a) The following exhibit is filed with this report.
            (1) Exhibit4.1, *"Certificate of Amendment to the Certificate of Designation ofSeries C Redeemable 5% Cumulative Preferred Stock*".
     (b)We have not filed any reports on Form 8-K for the period covered by this report.
**SIGNATURES**
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.
                                                                        **REPUBLIC RESOURCES, INC.**
Date: November 19, 2001                               By: /s/ Patrick J. Duncan                                                                                  Patrick J. Duncan                                                                        Principal Executive Officer and                                                                          Principal Accounting Officer********************************************