________________________________________________________________________________
                              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 March 31, 1998

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 March 31, 1998 there were 17,073,248 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
            March 31, 1998 and June 30, 1997                            3

            Restated Condensed Consolidated Statements of 
            Operations and Comprehensive Income
            For the nine months ended March 31, 1998 and 1997           4

            Restated Condensed Consolidated Statements of 
            Operations and Comprehensive Income 
            For the three months ended March 31, 1998 and 1997          5

            Restated Condensed Consolidated Statements of Cash Flow
            For the nine months ended March 31, 1998 and 1997           6

            Notes to Restated Condensed Consolidated 
            Financial Statements                                        7


Item 2.     Management's Discussion and Analysis of 
            Financial Condition and Results of Operations              10


PART 11.    OTHER INFORMATION

Item 1.     Legal Proceedings                                          12
Item 2.     Changes in Securities and Uses of Proceeds                 12
Item 3.     Defaults upon Senior Securities                            12  
Item 4.     Submission of Matters to a Vote of Securities Holders      12
Item 5.     Other Information                                          12
Item 6.     Exhibits and Reports on Form 8K                            12

            Signatures                                                 13


                                        -2-




PART I.  FINANCIAL INFORMATION

        ITEM 1.  RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

                       COTTON VALLEY RESOURCES CORPORATION

                   RESTATED CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 1998
                          (Expressed in U.S. Dollars)
                                  (Unaudited)

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

     Cash                                                 $     1,536,875
     Accounts receivable                                          417,509
     Materials and supplies inventory                             528,305
     Prepaid expenses                                              77,191
                                                          ---------------
Total Current Assets                                            2,559,880


PROVED OIL AND GAS PROPERTIES (full cost method)
     Net of Accumulated depletion of $283,683                  23,037,206

OFFICE FURNITURE AND EQUIPMENT
     Net of Accumulated depreciation of $14,813                    80,226

DEBENTURE FINANCING COST AND OTHER ASSETS                         682,471
                                                          ---------------

Total Assets                                              $    26,359,783
                                                          ===============
</TABLE>
                   LIABILITIES AND STOCKHOLDERS' EQUITY

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

Accounts payable and accrued liabilities                  $    1,263,618
                                                          --------------
Total Current Liabilities                                      1,263,618

LONG TERM DEBT                                                 4,345,000

ADVANCES FROM RELATED PARTIES                                    119,710

DEFERRED INCOME TAXES                                          2,070,098



STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized-unlimited, 
     none issued                                                   -
Common Stock, no par value, authorized-unlimited,   
     17,073,248 issued                                       20,941,357
Warrants and beneficial conversion feature                      823,695
Deficit accumulated in development stage                     (2,769,155)
Accumulated earnings (loss)                                    (434,540)
                                                          -------------
Total Stockholders' Equity                                   17,737,662


Total Liabilities and Stockholders' Equity                $  26,359,783
                                                          =============
</TABLE>


See accompanying notes to these financial statements

                                        -3-

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

<TABLE>

                                            Period from           Period from
                                          July 1, 1997 to        July 1, 1996 to
                                          March 31, 1998         March 31, 1997
                                          ----------------       --------------
<S>                                       <C>                     <C>  
REVENUE:
   Oil and gas sales                       $     712,522          $    131,986
   Equipment Sales                               574,551                  -
   Other Income                                    2,357                  -
                                          -----------------       --------------
            Total Revenue                      1,289,430               131,986


EXPENSES:
   Oil and gas production                        540,248                  -
   Cost of equipment sold                        343,788                  -
   Operating expenses                             68,945                  -
   General and administrative                    922,678             1,462,532
   Depreciation and depletion                    256,683                80,757
   Other expenses                                    540                  -
                                           -----------------       -------------
            Total Expenses                     2,132,882             1,543,289


LOSS FROM OPERATIONS                            (843,452)           (1,411,303)

OTHER INCOME (EXPENSES): 
    Interest and financing expense              (511,152)                 -
    Gain on sale of assets                       636,881               (54,115)
    Interest income                               43,889                  - 
                                          -----------------       --------------
                Total Other                      169,618               (54,115)


LOSS BEFORE INCOME TAXES                        (673,834)           (1,465,618)

INCOME TAX BENEFIT                               242,580               500,000
                                          -----------------       --------------
 
NET AND COMPREHENSIVE LOSS                 $    (431,254)          $  (965,418)
                                          =================       ==============

NET AND COMPREHENSIVE LOSS
 PER SHARE (Basic and Diluted)             $       (0.03)          $     (0.07)
                                          =================       ==============

WEIGHTED AVERAGE SHARES                       16,263,265            13,390,524
                                          =================       ==============
</TABLE>

See accompanying notes to these financial statements

                                         -4-   

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


<TABLE>
                                            Period from          Period from
                                         January 1, 1998        January 1, 1997
                                         to March 31, 1998     to March 31, 1997
                                         -----------------     -----------------
<S>                                      <C>                   <C>
REVENUE:
   Oil and gas sales                      $      160,686        $       90,621
   Equipment sales                               152,929                  -
   Other Income                                    1,423                  -
                                         -----------------     -----------------
            Total Revenue                        315,038                90,621


EXPENSES:
   Oil and gas production                       203,275                  -
   Cost of equipment sold                        87,643                  -
   Operating expense                             18,350                  -
   General and administrative                   383,274               559,213
   Depreciation and depletion                    98,657                80,757
   Other expense                                    540                  -
                                         -----------------     -----------------
            Total Expenses                      791,739               639,970


LOSS FROM OPERATIONS                           (476,701)             (549,349)


OTHER INCOME (EXPENSE)
   Interest and financing expense              (434,204)              (18,953)
   Gain on sale of Assets                       636,881                  -
   Interest income                               27,609                  -
                                         -----------------     -----------------
             Total Other Income Expense         230,286               (18,953)


LOSS BEFORE INCOME TAX                         (246,415)             (568,302)


INCOME TAX BENEFIT (PROVISION)                   88,709               205,000


NET AND COMPREHENSIVE (LOSS)             $     (157,706)       $     (363,302)
                                         =================    =================
 
NET AND COMPREHENSIVE (LOSS) PER SHARE 
         (Basic and Diluted)             $        (0.01)       $        (0.03)
                                         =================    =================

WEIGHTED AVERAGE SHARES                      17,238,924            13,390,000
                                         =================    =================
</TABLE>

See accompanying notes to these financial statements
                                  
                                       -5-

 
                        COTTON VALLEY RESOURCES CORPORATION

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

<TABLE>
                                            Period from          Period from 
                                           July 1, 1997         July 1, 1996 
                                        to March 31, 1998     to March 31, 1997
                                        -----------------     -----------------
<S>                                     <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:         
     Net income (loss)                   $    (434,540)        $     (965,418)
     Adjustments to reconcile to net 
      cash used by operating activities:
     Deferred income tax benefit              (242,580)              (500,000)
     Depreciation and depletion                256,683                  9,216
     Amortization                              374,185                   -
     Common stock issued for services             -                   863,862
     Change in accounts payable and other 
       liabilities                             470,581                193,495
     Change in materials and supplies 
       inventory                              (533,108)                  -
     Change in accounts receivable            (331,907)                  -
     Other                                      84,325               (204,800)
                                       -----------------      ----------------
     Net cash provided (used) by operating 
       activities                             (356,361)              (603,645)


CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to oil and gas properties    (5,610,327)              (893,250)
     Additions to office furniture and 
        equipment                              (39,577)              (101,520)
                                        ----------------      ----------------
     Net cash used by investing activities  (5,649,904)              (994,770)


CASH FLOWS FROM FINANCING ACTIVITIES:
     Reduction in advances from related 
        parties                                (20,000)               (21,999)
     Sale of common stock and exercise of  
        warrants                             3,553,092                889,089
     Issuance of convertible debenture       4,320,000                   -
     Costs related to sale of stock and 
        notes                                 (443,274)               (14,600)
     Issuance of notes payable                 489,710                   -
     Repayment of notes payable               (999,000)                  - 
                                       ----------------        ---------------
     Net cash provided by financing  
        activities                           6,900,528                852,490

INCREASE (DECREASE) IN CASH                    894,263               (745,925)

CASH - Beginning of period                     642,612                803,070

CASH - End of period                    $    1,536,875         $       57,145
                                        ===============        ===============


SUPPLEMENTAL INFORMATION

Debt incurred in acquisition of oil 
   and gas properties                   $     300,000                355,000
Oil and gas properties acquired with 
   common stock                             4,530,000                   -
Conversion of debt to common stock            100,000                   -
Issuance of common stock for stock offering 
   costs                                         -                    12,409
Cash paid for interest                        107,407                 35,162
Prepaid expense acquired with common stock     48,525                   -
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 nine months ended March 31, 1998, 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, issued additional shares for the acquisition of an oil and gas 
well, and for the conversion of $100,000 of a note payable to common 
stock, and issued approximately 1,677,000 shares of common stock on 
exercise of options and warrants for approximately $2,920,000.  Also 
270,000 shares were retired, which were received in payment of $425,000 of 
indebtedness.
 
(3) Acquisition of Aspen Energy Corporation

During the period, Cotton Valley acquired Aspen for $4,995,000, 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 was accounted for as a purchase and 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 100% 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 the 100% 
subsidiary, Mustang Well Servicing Company to operate the rigs and provide 
well servicing. 

(7) Secured Convertible Debentures

During the period, Cotton Valley sold $4,320,000 of 7% Secured Convertible 
Debentures to a group of private investors.  Portions of the proceeds were 
used to complete the acquisition of the well service rigs and related 
equipment.

The amount of the beneficial conversion feature related to the secured 
convertible debentures in the amount of $479,162 is being amortized over a 
ten month period using an accelerated amortization method.  For the three 
month and nine month periods ended March 31, 1998, $301,245 of this amount 
was amortized and is included in financing expenses in the accompanying 
financial statements.  As the conversion price of the debentures is at a 
discount of the trading price of the common stock, the amount of the 
conversion feature that was "in the money" at the date of issue is being 
amortized to increase the effective interest rate of the debentures.


(8) Zama Lake Acquisition and Sale

During the period Cotton Valley completed the acquisition of substantially 
all of the oil and gas interests in the Zama Lake area in Alberta, Canada 
owned by a Canadian independent producer.  The purchase price was $6.9 
million.  Immediately following the purchase, the Company sold all of its 
interests to Phillips Petroleum Resources, Ltd. and certain of its 
affiliates for $7.5 million.  The company recognized a gain on sale of 
assets of approximately $636,881 from the transactions.

                                      -8-

(9) Means-(Queen) Waterflood Development Financing

During the period Cotton Valley has entered into a letter of intent for a 
$10,000,000 mezzanine financing facility with Cambrian Capital 
Corporation.  The funds are to be used primarily for the development of 
the Means-(Queen)  waterflood and in-fill development project in Andrews 
County, Texas.
 

(10)Contingent Liability

On February 9, 1998, the Company continued from Ontario to Yukon 
Territory, Canada  (the "Continuance") in accordance with applicable 
Canadian law.  The Continuance was approved by the shareholders of the 
Company at a meeting held on December 10, 1996, for which proxies were 
solicited in accordance with applicable Canadian laws, but the transaction 
was not registered under the Securities Act of 1933, as amended (the 
"Act"), which may have been a violation of Section 5 of the Act.  As a 
result, the Company may have a contingent liability to certain of its 
shareholders, which the Company is presently unable to quantify.

                                      -9-
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

Results of Operations

First Nine Months Fiscal 1998 and First Nine Months Fiscal 1997

     During the first nine months ended March 31, 1998, Cotton Valley 
incurred a net loss of $431,254, which compares to a net loss of $965,418 
during the first nine months of 1997. The improvement results from a $636,881 
gain on the sale of a Canadian property, the first used equipment sales by 
Cotton Valley's subsidiary, Mustang Oilfield Equipment Company and 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, offset by $511,152 financing and interest expense in 
the first nine months of fiscal 1998 as compared with $54,115 interest 
expense during the first nine months of fiscal 1997.

     Oil and gas sales increased 440% from $131,986 for the nine months 
ended March 31, 1997 to $712,522 for the nine months ended March 31, 1998, 
reflecting the addition of the Aspen, Alden and Sears Ranch acquisitions.  
Oil and gas production costs increased to $540,248 for the nine months ended 
March 31, 1998, reflecting the addition of the acquisitions and continued 
remedial work required at the Alden Field.

     Used equipment sales for the first nine months of fiscal 1998 were 
$574,551 as compared to no sales for the comparable nine months of fiscal 
1997.  Cost of goods sold for the first nine months of fiscal 1998 was 
$343,788.

     General and administrative costs were $922,678 in the first nine months 
of fiscal 1998, a decrease of $539,854 or 37% less than the $1,462,532 
incurred in the first nine months of fiscal 1997.  Much of the decrease was 
due to lower executive compensation and investor relations costs.  In 
addition, the Company allocated approximately $300,000 of general and 
administrative expenses that were directly associated with oil and gas 
acquisition and development activities during the nine months ended March 31, 
1998 to oil and gas properties.

      The Company has recognized an income tax benefit of $242,580 for the 
first nine months of fiscal 1998 as compared to recognition of an income tax 
benefit of $500,000 for the first nine months of fiscal 1997.  This is 
directly related to the size of the profit or loss before income taxes.

3rd Quarter Fiscal 1998 and 3rd Quarter Fiscal 1997

      During the three months ended March 31, 1998, Cotton Valley incurred a 
net loss of $157,706, which compares to a net loss of $363,302 during the 
third Quarter of 1997. The improvement results from a $636,881 gain on sale 
of a Canadian property, used equipment sales by Cotton Valley's subsidiary, 
Mustang Oilfield Equipment Company, and increased oil and gas production from 
the Aspen Energy Corporation properties, oil and gas production from the 
Sears Ranch Prospect, and continued production from the Company's Alden Field 

                                   -10-

and Cheneyboro properties, offset by $434,204 of financing and interest costs 
in third quarter of fiscal 1998 as compared with $18,953 of interest expense 
in third quarter of fiscal 1997.

      Oil and gas sales increased 77% from $90,621 for the three months ended 
March 31, 1997 to $160,686 for the three months ended March 31, 1998, 
reflecting the addition of the Aspen, Alden and Sears Ranch acquisitions.  
Oil and gas production costs increased to $203,275 for the three months ended 
March 31, 1998, reflecting the addition of the acquisitions and continued 
remedial work required at the Alden Field.

      Used equipment sales for the 3rd quarter of fiscal 1998 were $152,929 
as compared to no sales for the comparable quarter of fiscal 1997.  Cost of 
goods sold for the 3rd quarter of fiscal 1998 was $87,643. 

      General and administrative costs were $383,274 in the third quarter of 
fiscal 1998, a decrease of $175,939 or 32% less than the $559,213 incurred in 
the third quarter of fiscal 1997.  Much of the decrease was due to reductions 
in investor relations costs.  In addition, the Company allocated 
approximately $100,000 of general and administrative expenses that were 
directly associated with oil and gas acquisition and development activities 
during the three months ended March 31, 1998 to oil and gas properties.

     The Company has an income tax benefit of $88,709 for the 3rd quarter of 
fiscal 1998 as compared to an income tax benefit of $205,000 for the 3rd 
quarter of fiscal 1997.  This is directly related to the profit or loss 
before income taxes.

Liquidity and Capital Resources

      As of March 31, 1998, Cotton Valley has working capital of $1,296,262.  
Management estimates that aggregate capital expenditures of approximately 
$3.5 million will be spent during the remainder of fiscal 1998 to acquire and 
develop oil and gas reserves.  The majority of this capital will be derived 
from a mezzanine financing facility from Cambrian Capital, which management 
expects to close by June 15, 1998. No assurance can be given that the Company 
will be successful in these efforts.  

                                       -11-


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

As of March 31, 1998, there are no legal proceedings pending against Cotton 
Valley.

Item 2.  Changes in Securities and uses of Proceeds
None

Item 3.  Defaults upon Senior Securities
None

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

Item 5.  Other Information
None

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.

Item 6.  Exhibits and Reports on Form 8K

In a Form 8-K filed on February 26, 1998, "Effective June 30, 1997, Cotton 
Valley Resources Corporation (the "Registrant") acquired Aspen Energy 
Corporation, a New Mexico corporation ("Old Aspen"), by merger with a 
wholly-owned Nevada subsidiary corporation. The acquisition closed on July 
31, 1997 and has been accounted for as purchase. The purchase price for the 
acquisition consisted of $500,000 cash and short-term notes and 2,511,317 
shares of the Registrant's common stock, no par value, of which 270,000 
shares were returned to the Registrant by two Old Aspen shareholders in 
settlement of notes payable to Old Aspen in the amount of $425,000. The 
principal asset acquired was an interest in the Means (Queen Sand) Unit in 
Andrews County, Texas. The acquisition also included an interest, having less 
than $500,000 in value, in two wells in Utah, which have been sold for 
$200,000, two wells in Latimer County, Oklahoma, one well in Harrison County, 
Texas and several shallow wells in Gregg County, Texas.
                           
     On February 18, 1998, Leon A. Romero, former president of Old Aspen, was 
elected to the Registrant's Board of Directors to serve until the next 
meeting of shareholders at which directors are elected or his sooner death, 
resignation or removal.


                                    -12-

                           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 




          





EX-27
Financial Data Schedule