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                     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) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                          Commission File Number 0-6580

                                [GRAPHIC OMITTED]






                        PEASE OIL AND GAS COMPANY (Exact
                name of small business issuer as specified in its
                                    charter)


               Nevada                                   87-0285520
    (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)               Identification Number)
                          751 Horizon Court, Suite 203
                         Grand 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 by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the past 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.
Yes   X    No

         As of August 14, 2000 the registrant had 1,731,398  shares of its $0.10
par value Common Stock issued and outstanding.

         Transitional Small Business Issuer Disclosure Format (check one):
Yes        No   X

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<PAGE>





                                TABLE OF CONTENTS
                                                                          PAGE
                                                                         NUMBER

PART I - Financial Information..............................................3
     Item 1.  Unaudited Financial Statements................................3
         Consolidated Balance Sheets as of June 30, 2000
           and December 31, 1999............................................3
         Consolidated Statements of Operations For the
           Three and Six Months Ended June 30, 2000 and 1999................4
         Consolidated Statements of Cash Flows For the
           Three and Six Months Ended June 30, 2000 and 1999................5
         Notes to Consolidated Financial Statements.......................6-7
     Item 2.  Management's Discussion and Analysis..........................8
         Liquidity, Capital Expenditures and Capital Resources............8-9
              Results of Operations........................................10
                  Overview.................................................10
                  Oil and Gas..............................................10
                  Consulting Arrangement - Related Party...................11
                  General and Administrative...............................11
                  Depreciation Depletion and Amortization..................11
                  Interest Expense.........................................12
                  Impairment Expense - Oil and Gas Properties..............12
              Other Matters................................................12
                  Disclosure Regarding Forward-Looking Statements..........12
PART II - Other Information................................................13
         Item 1.  Legal Proceedings........................................13
         Item 2.  Changes in Securities....................................13
         Item 3.  Defaults Upon Senior Securities..........................13
         Item 4.  Submission of Matters to a Vote of Security Holders......13
         Item 5.  Other Information........................................13
         Item 6.  Exhibits and Reports on Form 8-K.........................13
PART III - Signatures......................................................14



<PAGE>



PART 1- FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                   PEASE OIL AND GAS COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                         June 30,     December 31,
                                                           2000          1999
                               ASSETS                  (unaudited)
CURRENT ASSETS:
<S>                                                   <C>             <C>
   Cash and equivalents ...........................   $  1,348,407    $    724,354
   Trade receivables, net .........................        317,765         402,847
   Debt issuance costs, net .......................        115,197            --
   Prepaid expenses and other .....................         66,446          76,349
                                                      ------------    ------------
        Total current assets ......................      1,847,815       1,203,550
                                                      ------------    ------------
OIL AND GAS PROPERTIES, at cost (full cost method):
   Unevaluated properties .........................      2,494,162       2,281,732
   Costs being amortized ..........................     18,499,829      18,278,461
                                                      ------------    ------------
        Total Oil and gas properties ..............     20,993,991      20,560,193
   Less accumulated amortization ..................    (15,366,241)    (14,868,287)
                                                      ------------    ------------
        Net oil and gas properties ................      5,627,750       5,691,906
                                                      ------------    ------------
OTHER ASSETS:
   Debt issuance costs, net .......................           --           184,315
   Office equipment and vehicles, net .............         44,364          54,198
   Deposits and other .............................          4,995           7,493
                                                      ------------    ------------
        Total other assets ........................         49,359         246,006
                                                      ------------    ------------
TOTAL ASSETS ......................................   $  7,524,924    $  7,141,462
                                                      ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Current maturities of long-term debt:
        Convertible Debenture, net of
         unamortized discount .....................   $  2,599,719    $       --
        Other .....................................          6,640           6,352
   Accounts payable, trade ........................        165,393         140,554
   Accrued expenses ...............................         89,747         134,539
                                                      ------------    ------------
              Total current liabilities ...........      2,861,499         281,445
                                                      ------------    ------------
LONG-TERM DEBT, less current maturities: ..........         13,009       2,506,218
                                                      ------------    ------------
STOCKHOLDERS' EQUITY:
   Preferred Stock,  par value  $0.01 per share, 2,000,000
        shares  authorized, 105,828 shares of Series B 5%
        PIK Cumulative Convertible Preferred Stock
        issued and outstanding (liquidation preference of
        $5,511,000 at June 30, 2000) ..............          1,058           1,058
   Common Stock, par value $0.10 per share, 4,000,000
        shares authorized, 1,731,398 shares issued and
        outstanding ...............................        173,140         173,140
   Additional paid-in capital .....................     37,636,191      37,636,191
   Accumulated deficit ............................    (33,159,973)    (33,456,590)
                                                      ------------    ------------
        Total Stockholders' equity ................      4,650,416       4,353,799
                                                      ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........   $  7,524,924    $  7,141,462
                                                      ============    ============
</TABLE>

<PAGE>

                   PEASE OIL AND GAS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                       For The Three Months     For The Six Months
                                          Ended June 30,          Ended June 30,
                                      --------------------   ---------------------
                                        2000        1999        2000        1999
                                      --------    --------   ---------    --------

REVENUE:
<S>                                  <C>         <C>         <C>         <C>
   Oil and gas sales ................$  828,940  $ 551,065   $1,627,938  $ 962,859
                                     ----------  ---------   ----------   --------
OPERATING COSTS AND EXPENSES:
   Oil and gas production costs .....   155,821     86,958      318,899    171,434
   Consulting arrangement-related
     party ..........................      --         --           --       37,750
   General and administrative .......   172,104    206,357      345,471    386,017

   Depreciation, depletion and
     amortization ...................   256,031    284,614      507,788    547,989
                                     ----------  ---------   ----------  ---------
        Total operating costs and
          expenses ..................   583,956    577,929    1,172,158  1,143,190
                                     ----------  ---------   ----------  ---------
INCOME (LOSS) FROM OPERATIONS .......   244,984    (26,864)     455,780   (180,331)
OTHER INCOME (EXPENSES):
   Interest and other income ........    11,543     13,611       20,767     25,008
   Interest expense .................   (89,884)   (89,981)    (179,930)  (179,911)
                                     ----------  ---------   ----------  ---------
NET INCOME (LOSS) ...................$  166,643  $(103,234)  $  296,617  $(335,234)
                                     ==========  =========   ==========  =========
NET INCOME (LOSS) AVAILABLE TO COMMON
   STOCKHOLDERS .....................$  100,502  $(169,396)  $  164,335  $(467,742)
                                     ==========  =========   ==========  =========
BASIC:
   Earnings (Loss) Per Share.........$     0.06  $   (0.10)  $     0.09  $   (0.28)
   Weighted Average Shares
     Outstanding .................... 1,731,398  1,688,698    1,731,398  1,657,570
DILUTED:
   Earnings (Loss) Per Share ........$     0.01  $   (0.10)  $     0.02  $   (0.28)
   Weighted Average Shares
     Outstanding ....................18,127,075  1,688,698   18,127,075  1,657,570
</TABLE>


                                       -3-

<PAGE>


                   PEASE OIL AND GAS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                  For The Six Months
                                                                     Ended June 30,
                                                                  2000           1999
                                                                 ------         ------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>            <C>
   Net Income (Loss).......................................   $   296,617    $  (335,234)
   Adjustments to reconcile net Loss to net
     cash provided by (Used in) operating activities:
       Depreciation, depletion and amortization ...........       507,788        547,989
       Amortization of debt discount and issuance costs ...       178,787        178,786
                                                              -----------    -----------
            Cash flows before working capital adjustments .       983,192        391,541
       Changes in operating assets and liabilities:
            (Increase) decrease in:
                Trade receivables .........................        85,082         99,190
                Prepaid expenses and other assets .........        (2,599)           (60)
            Increase (decrease) in:
                Accounts payable ..........................        (6,717)      (113,290)
                Accrued expenses ..........................       (44,792)       (81,918)
                                                              -----------    -----------
       Net cash provided by (used in) operating activities      1,014,166        295,463
                                                              -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for property, plant and equipment .      (402,242)      (461,084)
   Proceeds from redemption of CD .........................        15,000        100,000
   Proceeds from sale of property and equipment ...........          --           69,910
                                                              -----------    -----------
        Net cash provided by (used in)
          investing activities ............................      (387,242)      (291,174)
                                                              -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of long-term debt ............................        (2,871)        (2,889)
   Payment of Series B Preferred Stock Dividends ..........          --         (132,508)
   Purchase and retirement of Series B Preferred Stock ....          --          (51,313)
                                                              -----------    -----------
        Net cash provided by (used in)
          financing activities ............................        (2,871)      (186,710)
                                                              -----------    -----------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS ...............       624,053       (182,421)
                                                              -----------    -----------
CASH AND EQUIVALENTS, beginning of period .................       724,354      1,049,582
                                                              -----------    -----------
CASH AND EQUIVALENTS, end of period .......................   $ 1,348,407    $   867,161
                                                              ===========    ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:
   INFORMATION:
   Cash paid for interest .................................   $   139,508    $   138,774
                                                              ===========    ===========
   Cash paid for income taxes .............................   $      --      $      --
                                                              ===========    ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
   FINANCING ACTIVITIES:
   Increase (decrease) in payables for oil & gas
     exploration activities ...............................   $    31,556    $   (14,805)
                                                              ===========    ===========
</TABLE>


                                       -4-

<PAGE>


                   PEASE OIL AND GAS COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

Note 1 - Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. They do not include all information and notes required by
generally  accepted  accounting  principles for complete  financial  statements.
However,  except as disclosed  herein,  there has been no material change in the
information disclosed in the notes to consolidated financial statements included
in our Annual Report on Form 10-KSB for the year ended December 31, 1999. In our
opinion,  all adjustments  (consisting of 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 be
expected for the full year.

The  accounting  policies we followed  are set forth in Note 1 to our  financial
statements in Form 10-KSB for the year ended  December 31, 1999. We suggest that
these financial  statements be read in conjunction with the financial statements
and notes included in the Form 10-KSB.

Note 2 - Dividends and Earnings (Loss) Per Common Share:

We have adopted SFAS No. 128 titled "Earnings Per Share".  Accordingly,  "Basic"
earnings  (loss)  per share  ("EPS")  is  computed  by  dividing  income  (loss)
available  to common  stockholders  (the  "numerator")  by the  weighted-average
number of common  shares  outstanding  (the  "denominator")  during the  periods
presented.

The net  income  (loss)  available  to  common  stockholders  is  determined  by
including any dividends accruing to the benefit of the preferred stockholders to
the net income (loss). The dividends included for this calculation  include:  1)
paid  dividends;  2)  accrued  but unpaid  dividends;  and 3) any  dividends  in
arrears. Accordingly, the net loss available to common stockholders includes the
following charges associated with the Series B preferred stock.


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

<S>                                      <C>                   <C>
Dividends declared and paid       --     $ 66,162       --     $132,508

Dividends in arrears ......     66,141       --      132,282       --
                              --------   --------   --------   --------
                                                               --------
         Total ............   $ 66,141   $ 66,162   $132,282   $132,508
                              ========   ========   ========   ========
</TABLE>

In  connection  with an  agreement  signed  by the  Preferred  Stockholders  and
associated with the contemplated  merger with Carpatsky,  we have not accrued or
paid  any  dividends  to the  Series  B  Preferred  Stockholders  subsequent  to
September 1, 1999.  However,  should the merger be abandoned  the amount that we
would be obligated  to pay for the periods  presented  has been  included in the
calculation of net income per share as "Dividends in arrears".

Computing  the "Diluted" EPS for the three months ended June 30, 2000 is similar
to the Basic EPS except  for:  a.) the  numerator  is  adjusted  to add back the
$66,141  of  convertible  preferred  stock  dividends  in  arrears:  and b.) the
denominator is increased to include the number of additional  common shares that
would have been outstanding assuming the preferred stock had been converted into
16,395,677  shares of common stock on January 1, 2000. This assumption  presumes
the preferred  stock would have been  converted  into common stock in accordance
with its original terms of a 25% discount to a reported  closing market price of
$.4375 (a recent price of our common stock).  Our Articles of Incorporation only
authorize  the  issuance of up to 4.0 million  shares,  of which  1,731,398  are
currently  issued and  outstanding.  Accordingly,  the  "Diluted"  EPS is only a
hypothetical  computation  since we  would be  required  to  obtain  shareholder
approval for any shares to be issued  beyond  million.  Pursuant to the terms of
our proposed merger with Carpatsky Petroleum, Inc.


                                       -5-

<PAGE>

                   PEASE OIL AND GAS COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

("Carpatsky")  which is more  thoroughly  discussed in our Annual Report on Form
10-KSB,  our Preferred  Stockholders have agreed to exchange all the outstanding
Preferred  Shares for 8,865,665 shares of Common stock when and if the merger is
ultimately consummated.

"Diluted"  EPS for both the three months and the six months ended June 30, 1999,
is  identical  to the  "Basic"  EPS for the same  period  since the  affects  of
including any potential common shares would have been antidilutive.

Note 3 - Comprehensive Income:

There are no  components of  comprehensive  income which have been excluded from
net income and,  therefore,  no separate statement of comprehensive  income have
been presented.


                                       -6-

<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

Liquidity, Capital Expenditures and Capital Resources
At June 30,  2000,  our cash  balance  was  $1,348,407  with a negative  working
capital  position of  $1,275,464,  compared to a cash  balance of $724,354 and a
positive  working capital  position of $922,105 at December 31, 1999. The change
in our working capital position can be attributed to the reclassification of our
convertable  debentures,  with a  balance  of  $2.8  million,  from a  long-term
liability  to a current  liability  during  the second  quarter  of 2000.  These
debentures  become  due in  April  2001.  The  change  in our  cash  balance  is
summarized as follows:


<TABLE>
<CAPTION>
<S>                                                          <C>
Cash balance at December 31, 1999 ........................   $   724,354
                                                             -----------
Sources of Cash:
    Cash provided by operating activities ................     1,014,166
    Proceeds from the redemption of certificate of deposit        15,000
                                                             -----------
         Total sources of cash ...........................     1,029,166
Uses of Cash:
    Capital expenditures for exploration activities ......      (402,242)
    Repayment of long term debt ..........................        (2,871)
                                                             -----------
         Total uses of cash ..............................      (405,113)
                                                             -----------
Cash balance at June 30, 2000 ............................   $ 1,348,407
                                                             ===========
</TABLE>


As a result of oil prices  averaging  almost  $27.95 per barrel during the first
six months of 2000, we were able to generate  positive cash flow from  operating
activities  of  $1,014,166.  As far as our uses of  cash,  the  following  table
illustrates  the costs incurred for our  exploration  activities (the difference
between the total cash paid for  exploration  activities  in the above table and
the amount  illustrated  below,  relates to the net increase in accounts payable
for those activities between December 31, 1999 and June 30, 2000):

<TABLE>
<CAPTION>
                                           PROGRAM OPERATOR
                                   --------------------------------    Internal
                                      NEG        Beta         AHC       Costs        Total         %
                                   --------    --------    --------    --------    --------     -----
Category:
<S>                                <C>         <C>         <C>         <C>         <C>            <C>
     Productive Efforts ........   $ 14,551    $ 38,148    $ 83,792    $   --      $136,491       31%
     Exploratory Dry Holes .....       --        35,639        --          --        35,639        8%
     Land, G&G Costs on Seismic
         Programs ..............       --       115,740        --          --       115,740       27%
     Capitalized Interest ......       --          --          --       138,365     138,365       32%
     Other Exploration Costs ...       --          --          --         7,563       7,563        2%
                                   --------    --------    --------    --------    --------     -----
         Total Exploration Costs   $ 14,551    $189,527    $ 83,792    $145,928    $433,798      100%
                                   ========    ========    ========    ========    ========     =====
         Percent ...............         3%         44%         19%         34%        100%
</TABLE>

A  description  of the  areas  we  have  an oil and  gas  interest  in are  more
thoroughly  discussed in our 1999 Annual Report on Form 10-KSB.  There have been
no significant  changes in our areas of operation since the date of that report.
However, effective June 1, 2000, Beta Oil and Gas, Inc. ("Beta") a publicly held
entity headquartered in Tulsa, Oklahoma, took over operations of the Formosa and
Ganado 3-D prospect  areas in and around  Jackson  County Texas.  These prospect
areas were previously operated by Parallel Petroleum,  headquartered in Midland,
Texas. It is expected that Parallel will remain a non-operating working interest
owner in the prospect areas. Beta became the designated operator for these areas
in an effort to better  exploit  the  prospects.  As a result of this  change in
operator,  we  expect  that  some of the 3-D data  will be  reprocessed  and the
drilling  program will be significantly  accelerated.  Beta's  president,  Steve
Antry, is also a director of Pease.

Since we are a non-operator  in all of the areas in which we hold an oil and gas
interest,  we do not  necessarily  control  the  timing  of any  development  or
exportation  activities and therefore have little control over the corresponding
required cash outlays.  However,  we currently expect the expenditures that will
be  proposed  by the  respective  operators  of our core  areas to be within the
following ranges through the second quarter of 2001:


                                       -7-

<PAGE>


<TABLE>
<CAPTION>
                                                                     Estimated Investment
        Area                            Operator                 Minimum          Maximum
---------------------------       ---------------------------   ---------       -----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
East Bayou Sorrel                 National Energy Group, Inc.
                                  ("NEG")                       $  50,000       $   400,000
Formosa, Texana, and Ganado       Beta Oil and Gas, Inc.
                                  ("Beta")                        250,000         1,100,000
Maurice Prospect                  Amerada Hess Corporation
                                  ("AHC")                         350,000           500,000
                                                                ---------       -----------
         Total                                                  $ 650,000       $ 2,000,000
                                                                =========       ===========
</TABLE>

In addition to the potential capital  necessary for our exploration  activities,
in April 2001 our convertible  debentures with a current  outstanding balance of
$2,782,500  will  become  due and  payable.  Accordingly,  given  the  range  of
potential capital  requirements  through the first part of next year (2001), our
current and anticipated  cash position may not be sufficient to cover the future
working capital and exploration obligations. We have vigorously explored various
alternatives for additional sources of capital. However, with the hyper-dilutive
potential of the outstanding  Series B Preferred Stock (should the holders elect
to convert into common stock), we have been unable to attract  additional equity
capital.  For  example,  using our recent  common  stock price of  $0.4375,  and
applying the applicable  discount of 25%, should all the holders of the Series B
Preferred  Stock  elect to convert  into common  stock,  we would be required to
issue approximately 16.6 million shares in the conversion.  This would represent
approximately 90% of the then outstanding common shares. Presently, we have only
4.0 million shares of common stock  authorized and are obligated under the terms
of the Preferred  Stock  Agreement to seek approval of additional  shares at our
next meeting of stockholders and if not, what the consequences may be.

In  September  1998,  we  engaged  San  Jacinto  Securities,  Inc.  ("SJS"),  an
investment  banking  firm  located in Dallas,  Texas,  to assist us in  pursuing
various strategic alternatives.  Their efforts have focused primarily on seeking
a potential  merger  candidate for us. In exchange for their  services,  SJS was
paid a  $150,000  non-refundable  cash  fee in  1999  (which  was  expensed  for
financial statement reporting purposes) and will receive an additional 3% of the
merger value in excess of $5.0 million should it close.  On September 1, 1999 we
entered into a Merger Agreement with Carpatsky Petroleum, Inc. ("Carpatsky"),  a
company whose primary oil and gas assets are located in the Republic of Ukraine.
The potential merger with Carpatsky and a description of Carpatsky's assets, are
more thoroughly  discussed in our 1999 Annual report on form 10-KSB.  We entered
into the merger  agreement  with  Carpatsky  in order to,  among  other  things,
increase  and  diversify  our asset base and improve  the  chances of  financing
future opportunities.

If the  contemplated  merger  with  Carpatsky  cannot  be  consummated  within a
reasonable period of time, or is other wise abandoned,  then we may have to seek
additional financing and attempt to restructure both our outstanding convertable
debentures  and the Series B  Preferred  Stock.  However,  our common  stock was
delisted from the NASDAQ SmallCap  electronic  market system on January 14, 1999
for failure to  maintain  an average bid price of at least $1.00 per share.  The
stock is now listed on the  over-the-counter  market on the NASD Bulletin  Board
(OTC BB).  It is  believed  that this  delisting  will have a material  negative
impact on our  ability to raise  additional  equity  capital.  Therefore,  it is
unclear  at this time what  alternatives  for  future  working  capital  will be
available, or to what extent the potential dilution to the existing shareholders
may be. If additional  sources of financing are not ultimately  available and/or
we cannot satisfactorily  restructure our capital should it be necessary, we may
have to consider  other  alternatives,  including  the sale of existing  assets,
cancellation  of existing  exploration  agreements,  farm outs,  joint ventures,
restructuring  under  the  protection  of the  federal  Bankruptcy  Laws  and/or
liquidation.


                                       -8-

<PAGE>


RESULTS OF OPERATIONS

Overview
Our  largest  source of  operating  revenue  is from the sale of  produced  oil,
natural gas, and natural gas liquids.  Therefore,  the level of our revenues and
earnings  are  affected  by prices at which  natural  gas,  oil and  natural gas
liquids are sold. Therefore,  our operating results for any prior period are not
necessarily  indicative of future operating  results because of the fluctuations
as well as changes in production levels.

Oil and Gas
Operating statistics for oil and gas production for the periods presented are as
follows:

<TABLE>
<CAPTION>
                                             For the Three Months             For the Six Months
                                                 Ended June 30,                Ended June 30,
                                             2000            1999           2000             1999
                                            ------          ------         ------           ------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Production:
  Oil (Bbl) ........................        22,839          18,741          45,911          36,912
  Gas (Mcf) ........................        49,538         105,696         101,935         213,052
  BOE (6:1) ........................        31,095          36,357          62,900          72,421

Average Collected Price:
  Oil (per Bbl) ....................   $     27.97     $     15.79     $     27.95     $     13.37
  Gas (per Mcf) ....................          3.84            2.41            3.38            2.20
  Per BOE (6:1) ....................         26.66           15.15           25.88           13.30

Operating Margins;
     Revenue -
       Oil .........................   $   638,726     $   295,831     $ 1,283,223     $   493,368
       Gas .........................       190,214         255,234         344,715         469,491
                                       -----------     -----------     -----------     -----------
         Total Revenue .............       828,940         551,065       1,627,938         962,859

     Costs
       Lifting Costs ...............       (66,978)        (40,302)       (140,777)        (84,383)
       Production taxes ............       (88,843)        (46,656)       (178,122)        (87,051)
                                       -----------     -----------     -----------     -----------
         Total Costs ...............      (155,821)        (86,958)       (318,899)       (171,434)
                                       -----------     -----------     -----------     -----------
     Operating Margin ..............   $   673,119     $   464,107     $ 1,309,039     $   791,425
                                       ===========     ===========     ===========     ===========
     Operating Margin Percent ......            81%             84%             80%             82%

Production Costs per BOE before DD&A   $      5.01     $      2.39     $      5.07     $      2.37

Change in Revenue Attributable to :
     Production ....................   $   (70,922)    $  (219,421)    $  (124,581)    $  (379,876)
     Price .........................       348,797         114,826         789,660          95,467
                                       -----------     -----------     -----------     -----------
Total Increase in Revenue ..........   $   277,875     $  (104,595)    $   665,079     $  (284,409)
                                       ===========     ===========     ===========     ===========
</TABLE>

The  decrease  in gas  production  between the periods  presented  is  primarily
attributed to the Maurice Field operations  (operated by AHC) where: a.) we have
experienced  the  natural  decline  of  production   inherent  in  oil  and  gas
operations;  and b.) the loss of one  well in  September  1999 due to  down-hole
mechanical problems.  Absent any unforeseen negative circumstances or additional
discoveries,  we expect our total gas production for the remainder of 2000 to be
approximately 45% of what it was in 1999.

The  increase  in oil  production  between the periods  presented  is  primarily
attributable to increase  production from the Schwing #1, one of the three wells
located at East Bayou Sorrel.  NEG, the operator of the East Bayou Sorrel field,
has been  adjusting  the choke of the  Schwing  #1 to allow it to  produce  at a
higher  rate.  Absent  any  unforeseen  negative   circumstances  or  additional
discoveries,  we expect our total oil production for the remainder of 2000 to be
at least equal to what it was in 1999 or as much as 20% higher.

                                       -9-

<PAGE>
Production costs per BOE have increased during the periods presented due to: 1.)
a  substantial  portion of the  production  taxes are based on revenue  (vs. the
volume  produced),  and 2.) increased water  production at the East Bayou Sorrel
facility  has  significantly  increased  the  lifting  costs for the three wells
currently  producing  there.  We  expect  the  production  costs  to  remain  at
approximately $5.00 per BOE for the remainder of 2000.

Substantially,  all of our current oil and gas  production is now generated from
four of the ten  wells in which we hold a  working  interest.  Of the four  main
producing  wells,  three are  operated by NEG,  and the other one is operated by
AHC. All these wells are deep, high pressure,  water driven  reservoirs that are
inherently   laden  with  geologic,   geophysical,   and  mechanical  risks  and
uncertainties.  The  unexpected  loss of any one of  these  wells  would  have a
material negative impact on our estimated reserves, future production and future
cash flows.

Consulting Arrangement - Related Party
In March  1996 we  entered  into a  three-year  consulting  agreement  with Beta
Capital  Group,  Inc.  ("BCG")  located  in  Newport  Beach,  California.  BCG's
chairman,  Steve  Antry,  has been a director of Pease since  August  1996.  The
Consulting agreement, which ended in February 1999, provided for minimum monthly
cash payments of $17,500 plus reimbursement for out-of-pocket expenses.  Stephen
Fischer,  an  independent  contractor  for BCG, is also a member of our Board of
directors.  Messrs.  Antry and  Fischer are also  principals  of Beta Oil & Gas,
Inc., a publicly held oil and gas company located in Tulsa, Oklahoma.

General and Administrative
General and  administrative  ("G&A") expenses  decreased:  i) $40,546 during the
first six  months  of 2000 when  compared  to the same  period in 1999;  and ii)
$34,253  during the second  quarter of 2000 when  compared to the same period in
1999.  These decreases are  attributable to and overall effort  initiated in the
fourth quarter of 1998 to substantially  reduce G&A costs. Actions taken include
reducing  personnel,  limiting travel,  eliminating  unnecessary  administrative
services and only  utilizing  consultants  on an as needed  bases.  A portion of
these savings have been offset by costs incurred in connection  with the efforts
to consummate the merger with  Carpatsky.  The following  table  illustrates the
merger costs that are included in our G&A during the periods presented:
<TABLE>
<CAPTION>
        For the Three Months                         For the Six Months
           Ended June 30,                              Ended June 30,
          ----------------                            ---------------
       2000               1999                    2000               1999
      ------             ------                  ------             -----
<S>  <C>                <C>                     <C>                <C>
     $ 47,088           $ 20,413                $ 74,955           $ 20,413
</TABLE>

We expect "core" G&A costs for the  foreseeable  future to be between $40,000 to
$50,000 per month. However, we do expect additional amounts (aggregating $50,000
to $75,000 ) will be incurred in connection  with the efforts to consummate  the
merger transaction with Carpatsky.

Depreciation, Depletion and Amortization
Depreciation,  Depletion and Amortization  ("DD&A") for the periods presented by
cost center consisted of the following:
<TABLE>
<CAPTION>
                                               For the Three Months   For the Six Months
                                                   Ended June 30,        Ended June 30,
                                                  2000       1999       2000       1999
                                                --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>
       Oil and Gas Properties ...............   $251,126   $278,801   $497,954   $535,892
       Furniture and Fixtures ...............      4,905      5,813      9,834     12,097
                                                --------   --------   --------   --------
         Total ..............................   $256,031   $284,614   $507,788   $547,989
                                                ========   ========   ========   ========
DD&A for the oil and gas properties, per BOE:   $   8.08   $   7.67   $   7.92   $   7.40
                                                ========   ========   ========   ========
</TABLE>

DD&A for the oil and gas  properties  is  computed  based on one full  cost pool
using the total estimated reserves at the end of each period presented and prior
to applying the ceiling test discussed  later in this section under  "Impairment
Expense".  The increased  rate of the DD&A for the oil and gas  properties,  per
BOE, between the periods  presented can be  substantially  attributed to: a) the
decrease in natural gas  production  (which  decrease was  previously  discussed
under the  caption  "oil and gas");  and b) an increase in the total costs being
amortized in the full cost pool.

                                      -10-
<PAGE>
Interest Expense
Total interest  incurred,  and its allocation,  for the periods  presented is as
follows:

<TABLE>
<CAPTION>
                                                   For the Three Months       For the Six Months
                                                     Ended June 30,             Ended June 30,
                                                     2000         1999         2000         1999
                                                    ------       ------       ------       ------
<S>                                               <C>          <C>          <C>          <C>
Interest paid or accrued ......................   $  69,674    $  69,958    $ 139,508    $ 139,105
Amortization of debt discount .................      54,834       54,835      109,669      109,669
Amortization of debt issuance costs ...........      34,559       34,559       69,118       69,118
                                                  ---------    ---------    ---------    ---------
    Total interest incurred ...................     159,067      159,352      318,295      317,892
Interest capitalized for exploration activities     (69,183)     (69,371)    (138,365)    (137,981)
                                                  ---------    ---------    ---------    ---------
    Interest expense ..........................   $  89,884    $  89,981    $ 179,930    $ 179,911
                                                  =========    =========    ---------    =========
</TABLE>

Impairment - Oil and Gas Properties
We use the full cost method of accounting  for out oil and gas  activities.  The
full cost method regards all costs of acquisition,  exploration, and development
activities as being  necessary for the ultimate  production of reserves.  All of
those  costs  are  incurred  with the  knowledge  that  many of them  relate  to
activities  that do not result  directly  in finding  and  developing  reserves.
However,  the benefits  obtained  from the prospects  that do prove  successful,
together with benefits from past discoveries,  may ultimately  recover the costs
of all activities, both successful and unsuccessful.  Thus all costs incurred in
those  activities are regarded as integral to the  acquisition,  discovery,  and
development of reserves that  ultimately  result from the efforts as a whole and
are thereby  associated  with Pease's  proved  reserves.  Establishing  a direct
cause-and-effect  relationship  between  costs  incurred and  specific  reserves
discovered, which is the premise under the successful efforts accounting method,
is not relevant to the full cost concept.  However, the costs accumulated in our
full cost pool are  subject to a  "ceiling,"  as defined by  Regulation  SX Rule
4-10(e)(4).  No charge for  impairment  has been  recognized  during the periods
presented  because our ceiling is in excess of the costs accumulated in our full
cost pool.

OTHER MATTERS

Disclosure Regarding Forward-Looking Statements
This  report on Form 10-QSB  includes  "forward-looking  statements"  within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and Section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"). All statements other than statements of historical
facts included in this report, including,  without limitation,  statements under
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" regarding Pease's contemplated merger,  financial position,  reserve
quantities, plans and objectives of Pease's management for future operations and
capital   expenditures,   and   statements   regarding  the  planned   Carpatsky
transactions  and the Carpatsky  assets 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 such  expectations and assumptions
will  prove to be  correct.  Reserve  estimates  of oil and gas  properties  are
generally  different  from  the  quantities  of oil and  natural  gas  that  are
ultimately  recovered or found.  This is particularly true for estimates applied
to exploratory prospects.  Additionally, any statements contained in this report
regarding  forward-looking  statements  are subject to various known and unknown
risks,  uncertainties and  contingencies,  many of which are beyond our control.
Such risks and uncertainties may cause actual results, performance, achievements
or expectations to differ materially from the anticipated results,  performance,
achievements  or  expectations.  Factors  that may affect  such  forward-looking
statements  include,  but are not  limited  to: the  contemplated  merger not be
consummated,  our ability to generate additional capital to complete our planned
drilling and exploration activities: risks inherent in oil and gas acquisitions,
exploration,  drilling,  development and production: price volatility of oil and
gas:  competition;  shortages  of  equipment,  services and  supplies;  U.S. and
foreign government regulation;  environmental matters; implications to Carpatsky
form conduction its operations un Ukraine and related political and geographical
risks;  financial  condition  of  the  other  companies   participating  in  the
exploration,  development  and  production  of oil and gas  programs;  and other
matters beyond our control. In addition,  since all of the prospects in the Gulf
Coast are currently  operated by another  party,  we may not be in a position to
control costs,  safety and timeliness of work as well as other critical  factors
affecting  a producing  well or  exploration  and  development  activities.  All
written and oral  forward-looking  statements  attributable  to Pease or persons
acting  on our  behalf  subsequent  to the  date of this  report  are  expressly
qualified in their entirety by this disclosure.


                                      -11-
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We may from time to time be involved in various claims,  lawsuits  disputes with
third parties,  actions involving  allegations of  discrimination,  or breach of
contract  incidental to the operation to the operation of its business.  At June
30,  2000  and as of the  date  of this  report,  we were  not  involved  in any
litigation  which we  believe  could  have a  materially  adverse  effect on our
financial condition or results of operations.

Item 2. Recent  Sales  of  Unregistered  Securities

We have not  issued or sold any  unregistered  securities  during the six months
ended June 30, 2000 or through the date of this report.

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  stock during the period covered by this report.  However,  on
    June 30, 2000 there were 105,828  outstanding shares of Series B Preferred
    Stock held by 10 holders.  The Series B Preferred Stock is convertible into
    common stock at a 25% discount from the reported closing market price at the
    time of conversion. Based on a recent  price of $.4375,  the  outstanding
    Series B Preferred  Stock would have been convertible into  approximately
    16.6 million common shares. Our Articles of Incorporation  authorize a total
    of up to 4,000,000 shares of common stock, of which 1,731,398 are currently
    issued and outstanding. We are obligated to take appropriated action and
    seek stockholder approval to increase the number of authorized  common stock
    at the next meeting of  stockholders  to provide for this contingency. In
    connection with the contemplated merger with Carpatsky, all of the
    preferred  stockholders  have agreed that as long as the merger is being
    pursued that they will:  a.) not convert any preferred  shares into common:
    b.) not receive any dividends subsequent to September 1, 1999; and c.) will
    exchange all the outstanding preferred stock for 8,865,665 shares of common
    if the merger is ultimately consummated.

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

No matter was  submitted  to a vote of our  security  holders  during the period
covered by this report.

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 exhibits are filed with this report:

           (1) Exhibit 27,  "Financial  Data  Schedule" - for the quarter  ended
June 30, 2000.

(b)      Reports on Form 8-K: - No reports on Form 8-K were filed for the period
         April 1, 2000 through the date of this report:



                                      -12-

<PAGE>




                                   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, thereunto duly
authorized.

                                   PEASE OIL AND GAS COMPANY

Date: August 16, 2000              By: /s/ Patrick J. Duncan
                                   Patrick J. Duncan
                                   President, Chief Financial Officer
                                   and Principal Accounting Officer

                                      -13-