________________________________________________________________________________
                              UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
          
                             AMENDMENT NO. 1
                                   TO
                              FORM 10-QSB 
(Mark One)

X   Quarterly report pursuant to Section 13 or 15(d) of the Securities 
    Exchange Act of 1934

For the quarterly period ended December 31, 1997

OR

__   Transition report pursuant to Section 13 or 15(d) of the Securities 
      Exchange Act of 1934

                          Commission File Number: 0-28814

                         COTTON VALLEY RESOURCES CORPORATION
              (Exact name of registrant as specified in its charter)

Yukon, Canada                                                   98-0164357
(State or other jurisdiction of                             (I.R.S. Employer 
incorporation or organization)                               Identification No.)

                                 6510 Abrams Road
                                    Suite 300
                               Dallas, Texas 75231
                     (Address of principal executive offices)

                          Telephone Number (214) 221-6500
              (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 preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

          Yes   X                          No __
     
As of December 31, 1997 there were 17,283,248 shares of the Registrant's 
Common Stock outstanding.
________________________________________________________________________________

                        COTTON VALLEY RESOURCES CORPORATION

                                        INDEX

                         

              PART I.  FINANCIAL INFORMATION                        Page No.

Item 1.     Restated Condensed Consolidated Financial Statements:

            Restated Condensed Consolidated Balance Sheets as of
            December 31, 1997                                              3

            Restated Condensed Consolidated Statements of Operations 
            For the six months ended December 31, 1997 and 1996            4

            Restated Condensed Consolidated Statements of Operations  
            For the three months ended December 31, 1997 and 1996          5

            Restated Condensed Consolidated Statements of Cash Flow
            For the six months ended December 31, 1997 and 1996            6

            Notes to Restated Condensed Consolidated 
            Financial Statements                                           7


Item 2.     Management's Discussion and Analysis of 
            Financial Condition and Results of Operations                  9


PART 11.    OTHER INFORMATION

Item 1.     Legal Proceedings                                             11

Item 5.     Other Information                                             11

            Signatures                                                    12



                                        -2-




PART I.  FINANCIAL INFORMATION

        ITEM 1.  RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

                       COTTON VALLEY RESOURCES CORPORATION

                   RESTATED CONDENSED CONSOLIDATED BALANCE SHEET
                                 December 31, 1997
                          (Expressed in U.S. Dollars)
                                  (Unaudited)

                                     ASSETS
<TABLE>
<S>                                                       <C>
CURRENT ASSETS:

     Cash                                                 $       405,430
     Accounts receivable                                          321,699
     Materials and supplies inventory                             452,733
     Prepaid expenses                                              96,562
     Cash deposits                                                329,750
                                                          ---------------
Total Current Assets                                            1,606,174

RESTRICTED CASH                                                 2,570,280

PROVED OIL AND GAS PROPERTIES (full cost method)
     Net of accumulated depletion of $185,026                  21,914,960

OFFICE FURNITURE AND EQUIPMENT
     Net of accumulated depreciation of $14,813                    71,742

DEBENTURE FINANCING COSTS AND OTHER ASSETS                        524,148
                                                          ---------------

Total Assets                                              $    26,687,304
                                                          ===============
</TABLE>
                   LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<S>                                                      <C>
CURRENT LIABILITIES:

Accounts payable and accrued liabilities                  $    1,210,688
Current portion of long-term debt                                150,250
                                                          --------------
Total Current Liabilities                                      1,360,938

LONG TERM DEBT                                                 4,345,000

ADVANCES FROM RELATED PARTIES                                    119,710

DEFERRED INCOME TAXES                                          2,314,808


STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized-unlimited, 
     none issued                                                   -
Common Stock, no par value, authorized-unlimited,   
     17,283,248 issued                                       21,910,857
Warrants and Beneficial Conversion Feature                      823,695
Deficit accumulated in development stage                     (2,769,155)
Treasury Stock (270,000 shares)                                (425,000)
Accumulated earnings (loss)                                    (273,548)
                                                          -------------
Total Stockholders' Equity                                   18,546,849


Total Liabilities and Stockholders' Equity                $  26,687,304
                                                          =============
</TABLE>


See accompanying notes to these financial statements

                                        -3-

                        COTTON VALLEY RESOURCES CORPORATION 
                       CONDENSED CONSOLIDATED STATEMENTS OF 
                                   OPERATIONS 
                           (Expressed in U.S. Dollars)
                                   (Unaudited)

<TABLE>

                                            Period from           Period from
                                          July 1, 1997 to        July 1, 1996 to
                                          December 31, 1997    December 31, 1996
                                          ----------------       --------------
<S>                                       <C>                     <C>  
REVENUE:
   Oil and gas sales                       $     551,836          $     41,365
   Equipment sales                               421,622                  -
   Other Income                                      934                  -
                                          -----------------       --------------
            Total Revenue                        974,392                41,365


EXPENSES:
   Oil and gas production                        336,973                  -
   Equipment purchase and rework                 256,145                  -
   Equipment operations                           50,595                  -
   General and administrative                    539,404               903,319
   Depreciation and Depletion                    158,026                  -   
                                          -----------------       -------------
            Total Expenses                     1,341,143               903,319


LOSS FROM OPERATIONS                            (366,751)             (861,954)

OTHER INCOME (EXPENSES): 
    Interest and financing expense               (76,948)              (35,162)
    Interest income                               16,280                  - 
                                          -----------------       --------------
                Total Other                      (60,668)              (35,162)


LOSS BEFORE INCOME TAXES                        (427,419)             (897,116)

INCOME TAX BENEFIT                               153,871               295,000
                                          -----------------       --------------
 
NET LOSS                                   $    (273,548)          $  (602,116)
                                          =================       ==============

NET LOSS PER SHARE (Basic and Diluted)     $       (0.02)          $     (0.05)
                                          =================       ==============

WEIGHTED AVERAGE SHARES                       15,457,000            13,390,524
                                          =================       ==============
</TABLE>

See accompanying notes to these financial statements

                                         -4-   

                            COTTON VALLEY RESOURCES CORPORATION 
               RESTATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
                             (Expressed in U.S. Dollars)
                                     (Unaudited)


<TABLE>
                                            Period from          Period from
                                         October 1, 1997        October 1, 1996
                                       to December 31, 1997  to December 31,1996
                                         -----------------     -----------------
<S>                                      <C>                   <C>
REVENUE:
   Oil and gas sales                      $      252,667        $       21,881
   Equipment sales                                91,622                  -
   Other Income                                      934                  -
                                         -----------------     -----------------
            Total Revenue                        345,223                21,881


EXPENSES:
   Oil and gas production                       145,734                  -
   Equipment purchase and rework                 72,955                  -
   Equipment operations                          10,995                  -
   General and administrative                   325,389               591,881
   Depreciation and Depletion                    90,175                  -   
                                         -----------------     -----------------
            Total Expenses                      645,248               591,881


LOSS FROM OPERATIONS                           (300,025)             (570,000)


OTHER INCOME (EXPENSE)
   Interest and financing expenses              (46,364)              (35,162)
   Interest income                               15,971                  -
                                         -----------------     -----------------
             Total Other Income Expense         (30,393)              (35,162)


LOSS BEFORE INCOME TAX                         (330,418)             (605,162)


INCOME TAX BENEFIT                              118,950               151,291
                                         ----------------      -----------------

NET LOSS                                 $     (211,468)       $     (453,871)
                                         =================    =================
 
NET LOSS PER SHARE 
         (Basic and Diluted)             $        (0.01)       $        (0.03)
                                         =================    =================

WEIGHTED AVERAGE SHARES                      16,620,000            13,390,000
                                         =================    =================
</TABLE>

See accompanying notes to these financial statements
                                  
                                       -5-

 
                        COTTON VALLEY RESOURCES CORPORATION

              RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                          (Expressed in U.S. Dollars)
                                   (Unaudited)

<TABLE>
                                            Period from          Period from 
                                           July 1, 1997         July 1, 1996 
                                     to December 31, 1997   to December 31, 1996
                                        -----------------     -----------------
<S>                                     <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:         
     Net profit (loss)                   $    (273,548)        $     (602,116)
     Adjustments to reconcile to net 
      cash used by operating activities:
     Deferred income tax (benefit)            (153,871)              (295,000)
     Depreciation and depletion                158,026                  5,572
     Amortization                               20,000                   -
     Common stock issued for services             -                   322,932
     Change in accounts payable and other 
       liabilities                             417,651                (85,674)
     Change in materials and supplies 
       inventory                              (457,536)                  -
     Change in accounts receivable            (236,097)                  -
     Increase in deposits                     (329,750)
     Other                                     (27,527)                (3,263)
                                       -----------------      ----------------
     Net Cash Used by Operating 
       Activities                              882,652               (267,676)


CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to oil and gas properties    (3,823,621)              (303,134)
     Increase in restricted cash            (2,570,820)                  -
     Additions to office furniture and 
        equipment                              (31,093)               (43,831)
                                        ----------------      ----------------
     Net cash used by investing activities  (6,425,534)              (346,965)


CASH FLOWS FROM FINANCING ACTIVITIES:
     Reduction in advances from related 
        parties                                (20,000)                  -    
     Sale of common stock and exercise of  
        warrants                             3,306,044                455,949
     Issuance of convertible debenture       4,220,000                   -
     Costs related to sale of stock and 
        notes                                 (400,000)               (14,600)
     Issuance of notes payable                 469,710                   -    
     Repayment of notes payable               (504,750)                  - 
                                       ----------------        ---------------
     Net cash provided by financing  
        activities                           7,071,004                441,349

DECREASE IN CASH                              (237,209)              (563,165)

CASH - Beginning of period                     642,612                803,070

CASH - End of period                    $      405,430         $      239,905
                                        ===============        ===============


SUPPLEMENTAL INFORMATION

Cash paid for interest                  $      27,388                   -
Conversion of debt to common stock            100,000                   -
Debt incurred in acquisition of oil 
   and gas properties                   $     300,000                355,000
Oil and gas properties acquired with 
   common stock                             4,530,000                   -
Issuance of common stock for stock offering 
   costs                                         -                    12,409
Beneficial conversion feature on 
   convertible debentures                     479,162                   -

</TABLE>

See accompanying notes to these financial statements

                                       -6-

                  NOTES TO RESTATED CONDENSED FINANCIAL STATEMENTS
                        (Expressed in U.S. Dollars)
                                   (Unaudited)

(1) Nature of Business and Basis of Preparation and Presentation
 
Cotton Valley Resources Corporation (the "Company") has its primary 
business focus in the acquisition of ownership interests in, and the 
production of oil and gas from, existing oil and gas fields that indicate 
a potential for increased production through rehabilitation.  The Company 
purchases, repairs, rehabilitates and sells used oilfield production 
equipment.  Also, beginning in February 1998, the Company provides well 
servicing and horizontal drilling services on its own properties and for 
other operators.
 
 The condensed consolidated financial statements of Cotton Valley Resources 
Corporation and subsidiaries (collectively "Cotton Valley") included 
herein have been prepared by Cotton Valley without audit.  Certain 
information and footnote disclosures normally included in financial 
statements prepared in accordance with generally accepted accounting 
principles have been condensed or omitted, since Cotton Valley believes 
that the disclosures included are adequate to make the information 
presented not misleading.  In the opinion of management, the condensed 
consolidated financial statements include all adjustments consisting of 
normal recurring adjustments necessary to present fairly the financial 
position, results of operations, and cash flows as of the dates and for 
the periods presented.  These condensed consolidated financial statements 
should be read in conjunction with the consolidated financial statements 
and the notes thereto included for the fiscal year ended June 30, 1997.
 
(2) Common Stock
 
During the six months ended December 31, 1997, Cotton Valley issued 
2,511,317 shares of common stock to four individuals to purchase Aspen 
Energy Corporation ("Aspen") which was recorded at $4,700,000, issued 
272,700 shares of common stock in a private placement for proceeds of 
$454,000 (before deducting costs of $45,400), issued 9,447 shares of 
common stock for acquisition of an oil and gas well which was recorded at 
$35,000, and issued 1,716,296 shares of common stock on exercise of 
options and warrants for $2,877,042.
 
(3) Acquisition of Aspen Energy Corporation

During the period, Cotton Valley acquired Aspen for $5,200,000, consisting 
of $500,000 cash and notes and 2,511,317 shares of common stock, of which 
270,000 shares were returned to Cotton Valley by two (2) Aspen 
shareholders in settlement of notes payable to Aspen in the amount of 
$425,000.  The acquisition closed on July 31, 1997 and was accounted for 
as a purchase.  The operations of Aspen are consolidated with the Company 
beginning on August 1, 1997.


                                       -7-

(4) Acquisition of Sears Ranch Prospect

During the period, Cotton Valley acquired the 6,600 acre Sears Ranch Prospect 
in Nolan and Fisher Counties, Texas, for $400,000.

(5) Acquisition of Horizontal Drilling Equipment

During the period, Cotton Valley acquired substantially all the business and 
equipment of M&M Directional Services Consultants for $550,000, through a 
newly formed subsidiary, Mustang Horizontal Services, Inc.

(6) Acquisition of Well Service Rigs and Equipment

During the period, Cotton Valley acquired two (2) well service rigs and 
related well service equipment for $1,220,000, and formed Mustang Well 
Servicing Company to operate the rigs and provide well servicing.

(7) Secured Convertible Debenture

During the period, Cotton Valley sold $4,320,000 of 7% Secured Convertible 
Debentures to a group of private investors.  $4,220,000 was received at 
closing on December 30, 1997; the remaining $100,000 was received during 
January 1998.  Portions of the proceeds were used to complete the 
acquisition of the well service rigs and related equipment.

                                      -8-


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

Results of Operations

First Six Months Fiscal 1998 and First Six Months Fiscal 1997

     During the six months ended December 31, 1997, Cotton Valley incurred a 
loss of $273,548, which compares to a loss of $602,116 during the first six 
months of fiscal 1997. The improvement results from the first used equipment 
sales by Cotton Valley's wholly-owned subsidiary, Mustang Oilfield Equipment 
Company, oil and gas production beginning August, 1997, from the Aspen Energy 
Corporation properties, oil and gas production beginning November, 1997, from 
the Sears Ranch Prospect, and continued production from the Company's Alden 
Field and Cheneyboro properties.

     Oil and gas sales increased 1234% from $41,365 for the six months ended 
December 31, 1996 to $551,836 for the six months ended December 31, 1997, 
reflecting the addition of the Aspen, Alden and Sears Ranch acquisitions.  
Oil and gas production costs increased to $336,973 for the six months ended 
December 31, 1997, reflecting the addition of the acquisitions and continued 
remedial work required at the Alden Field.

     Used equipment sales for the first half of fiscal 1998 were $421,622 as 
compared to no sales for the comparable quarter of fiscal 1997.  Cost of 
goods sold for the first half of fiscal 1998 was $256,145.

     General and administrative costs were $539,404 in the first half of 
fiscal 1998, a decrease of $363,915 or 40% less than the $903,319 incurred in 
the first half of fiscal 1997.  The decrease was due, in part, to lower costs 
of investor relations consultants and resignation of two senior executives 
who were replaced by lower management personnel.

     The Company has recognized an income tax benefit of $153,871 for the 
first half of fiscal 1998 as compared to recognition of an income tax benefit 
of $295,000 for the first half of fiscal 1997.  This is directly related to 
the size of the profit or loss before income taxes.

2nd Quarter Fiscal 1998 and 2nd Quarter Fiscal 1997

     During the three months ended December 31, 1997, Cotton Valley incurred 
a net loss of $252,667, which compares to a loss of $453,871 during the 2nd 
Quarter of 1996. The improvement results from the first used equipment sales 
by Cotton Valley's wholly-owned subsidiary, Mustang Oilfield Equipment 
Company, oil and gas production beginning August, 1997, from the Aspen Energy 
Corporation properties, oil and gas production beginning November, 1997, from 
the Sears Ranch Prospect, and continued production from the Company's Alden 
Field and Cheneyboro properties.

     Oil and gas sales increased 1055% from $21,881 for the three months 
ended December 31, 1996 to $252,667 for the three months ended December 31, 
1997, reflecting the addition of the Aspen, Alden and Sears Ranch 
acquisitions.  Oil and gas production costs increased to $145,734 for the 
three months ended December 31, 1997, reflecting the addition of the 
acquisitions and continued remedial work required at the Alden Field.

     Used equipment sales for the 2nd quarter of fiscal 1998 were $91,622 as 
compared to no sales for the comparable quarter of fiscal 1997.  Cost of 
goods sold for the 2nd quarter of fiscal 1998 was $72,955.  The used 
equipment subsidiary also, during the period, acquired, refurbished, and 
sold, at cost, to its production affiliates approximately $150,000 of 
additional equipment.

                                      -9-

     General and administrative costs were $325,389 in the 2nd quarter of 
fiscal 1998, a decrease of $266,492 or 45% less than the $591,881 incurred in 
the 2nd quarter of fiscal 1997. 

     The Company has an income tax benefit of $118,950 for the 2nd quarter 
of fiscal 1998 as compared to an income tax benefit of $151,291 for the 2nd 
quarter of fiscal 1997.  This is directly related to the size of the profit 
or loss before income taxes.

Liquidity and Capital Resources

     As of December 31, 1997, Cotton Valley has working capital of $245,236. 
In addition Cotton Valley has $2,570,280 of restricted cash which may be used 
for acquisition and development of additional assets.  Management estimates 
that aggregate capital expenditures of approximately $5 million will be spent 
during the remainder of fiscal 1998 to acquire and develop oil and gas 
reserves.  Cotton Valley intends to finance this acquisition and development 
with the proceeds from private placements, exercise of warrants, traditional 
bank debt and institutional mezzanine reserves based financing.  No assurance 
can be given that the Company will be successful in these efforts.  

                                    -10-


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

As of the date of this filing, there are no legal proceedings pending against 
Cotton Valley, which would have a material adverse effect.

Item 5.  Other Information

Safe Harbor Statement under the Private Securities Litigation Reform Act of 
1995:

Certain statements in this filing, and elsewhere (such as in other filings by 
Cotton Valley with the Commission, press releases, presentations by Cotton 
Valley or its management and oral statements) constitute "forward-looking 
statements" within the meaning of the Private Securities Litigation Reform 
Act of 1995.  Such forward-looking statements involve known and unknown 
risks, uncertainties and other factors which may cause the actual results, 
performance or achievements of Cotton Valley to be materially different from 
any future results, performance or achievements expressed or implied by such 
forward-looking statements.  Such factors include, among other things, (i) 
significant variability in Cotton Valley's quarterly revenues and results of 
operations as a result of variations in the Cotton Valley's production in a 
particular quarter while a significant percentage of its operating expenses 
are fixed in advance,  (ii) changes in the prices of oil and gas,  (iii) 
Cotton Valley's ability to obtain capital, (iv) other risk factors commonly 
faced by development stage oil and gas companies.

                                     -11-

                               SIGNATURES

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

Dated:  November 5, 1998


                       COTTON VALLEY RESOURCES CORPORATION
                       (Registrant)


                         /s/ Eugene A. Soltero
                         Eugene A. Soltero
                         Chief Executive Officer 




                                    -12-





EX-27
Financial Data Schedule