________________________________________________________________________________
                              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 September 30, 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 September 30, 1997 there were 16,511,367 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
            September 30, 1997                                              3

            Restated Condensed Consolidated Statements of 
            Operations for the three months ended 
            September 30, 1997 and 1996                                     4

            Restated Condensed Consolidated Statements of Cash Flow
            For the three months ended September 30, 1997 and 1996          5

            Notes to Restated Condensed Consolidated 
            Financial Statements                                            6


Item 2.     Management's Discussion and Analysis of 
            Financial Condition and Results of Operations                   7


PART 11.    OTHER INFORMATION

Item 1.     Legal Proceedings                                               8

Item 5.     Other Information                                               8

            Signatures                                                      9



                                        -2-




PART I.  FINANCIAL INFORMATION

        ITEM 1.  RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

                       COTTON VALLEY RESOURCES CORPORATION

                   RESTATED CONDENSED CONSOLIDATED BALANCE SHEET
                                 September 30, 1997
                          (Expressed in U.S. Dollars)
                                  (Unaudited)

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

     Cash                                                 $     1,483,640
     Accounts receivable                                          399,199
     Materials and supplies inventory                              74,303
     Prepaid expenses                                              27,619
                                                          ---------------
Total Current Assets                                            1,984,761

PROVED OIL and GAS PROPERTIES (full cost method)
     Net of accumulated depletion of $94,851                   18,195,179

OFFICE FURNITURE and EQUIPMENT
     Net of accumulated depreciation of $14,813                    48,811

FINANCING COST and OTHER ASSETS                                    54,986
                                                          ---------------

Total Assets                                              $    20,283,737
                                                          ===============
</TABLE>
                   LIABILITIES AND STOCKHOLDERS' EQUITY

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

Accounts payable and accrued liabilities                  $      457,717
Current portion of long-term debt                                729,250
                                                          --------------
Total Current Liabilities                                      1,186,967

LONG TERM DEBT                                                   125,000

ADVANCES FROM RELATED PARTIES                                    119,710

DEFERRED INCOME TAXES                                          1,689,639



STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized-unlimited, 
     none issued                                                   -
Common Stock, no par value, authorized-unlimited,   
     16,511,367 issued (including 270,000 shares
     held in treasury)                                       19,649,124
Warrants                                                        344,533
Deficit accumulated in development stage                     (2,769,155)
Accumulated earnings (loss)                                     (62,081)
                                                          -------------
Total Stockholders' Equity                                   17,162,421


Total Liabilities and Stockholders' Equity                $  20,283,737
                                                          =============
</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
                                        September 30, 1997    September 30, 1996
                                          ----------------       --------------
<S>                                       <C>                     <C>  
REVENUE:
   Oil and gas sales                       $     299,169          $     19,484
   Equipment sales                               330,000                  -
                                         -----------------       --------------
            Total Revenue                        629,169                19,484


EXPENSES:
   Oil and gas production                        191,239                12,502
   Equipment purchase and rework                 183,190                  -
   Equipment operations                           39,600                  -
   General and administrative                    214,015               290,586
   Depreciation and depletion                     67,851                  -   
                                          -----------------       -------------
            Total Expenses                       695,895               302,788


LOSS FROM OPERATIONS                             (66,726)             (283,304)

OTHER INCOME (EXPENSES): 
    Interest and financing expense               (30,584)              (17,581)
    Interest income                                  309                  - 
                                          -----------------       --------------
                Total Other                      (30,275)              (17,581)


LOSS BEFORE INCOME TAXES                         (97,001)             (300,885)

INCOME TAX BENEFIT                                34,920                95,000
                                          -----------------       --------------
 
NET LOSS                                   $     (62,081)          $  (205,885)
                                          =================       ==============

NET LOSS PER SHARE                          $      (0.00)          $     (0.02)
                                          =================       ==============

WEIGHTED AVERAGE SHARES                       14,567,455             9,186,000
                                          =================       ==============
</TABLE>

See accompanying notes to these financial statements

                                         -4-   


 
                        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 September 30, 1997   to September 30, 1996
                                        -----------------     -----------------
<S>                                     <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:         
     Net loss                            $     (62,081)        $     (205,885)
     Adjustments to reconcile to net 
      cash used by operating activities:
     Deferred income tax benefit               (34,920)               (95,000)
     Depreciation and depletion                 67,851                  2,786
     Amortization                               10,000                   -
     Common stock issued for services             -                     7,207
     Change in accounts payable and accrued 
       liabilities                             (38,314)               (73,521)
     Change in materials and supplies 
       inventory                               (74,303)                  -
     Change in accounts receivable            (399,199)                  -
                                         -----------------      ----------------
     Net Cash Provided Used by Operating 
       Activities                             (530,966)              (267,676)


CASH FLOWS FROM FINANCING ACTIVITIES:
     Advances from related 
        parties                                (20,000)                  -    
     Sale of common stock and exercise of  
        warrants                             2,133,310                  4,015
     Issuance of notes payable                 425,000                   -
     Costs related to sale of stock and 
        notes                                  (60,000)                  -
     Repayment of notes payable               (349,750)                  - 
                                       ----------------        ---------------
     Net cash provided by financing  
        activities                           2,128,560                  4,015

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to oil and gas properties      (748,404)              (182,199)
     Additions to office furniture and 
        equipment                               (8,162)               (35,000)
                                        ----------------      ----------------
     Net cash used by investing activities    (756,566)              (217,199)


INCREASE (DECREASE) IN CASH                    841,028               (580,860)

CASH - Beginning of period                     642,612                803,070

CASH - End of period                    $    1,483,640         $      222,210
                                        ===============        ===============


SUPPLEMENTAL INFORMATION

Cash paid for interest                  $      20,584                 37,010
Debt incurred in acquisition of oil 
   and gas properties                   $     300,000                586,049
Conversion of debt to common stock               -                   426,474
Retirement of debenture upon merger 
   with Arjon                                    -                   146,300
Oil and gas properties acquired with 
   common stock                             4,700,000                   -
Issuance of common stock for stock offering 
   costs                                         -                    12,409

</TABLE>

See accompanying notes to these financial statements

                                       -5-

                  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 which 
was recorded at $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 1,117,430 shares of common 
stock on exercise of options and warrants for $1,679,310.


(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 
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.

                                   -6-

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


Results of Operations

First Three Months Fiscal 1998 and First Three Months Fiscal 1997

During the three months ended September 30, 1997, Cotton Valley 
incurred a net loss of $62,081 which compares to a loss of $205,885 
during the first three months 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 during 
August and September from the Aspen Energy Corporation properties, and 
continued production from the Company's Alden Field property.

Oil and gas sales increased 1435% from $19,484 for the three 
months ended September 30, 1996 to $299,169 for the three months ended 
September 30, 1997, reflecting the addition of the Aspen and Alden 
acquisitions.  Oil and gas production costs increased 1430% from 
$12,502 for the three months ended September 30, 1996 to $191,239 for 
the three months ended September 30, 1997, reflecting the addition of 
the acquisitions and continued remedial work required at the Alden 
Field.

Used equipment sales for the first quarter of fiscal 1997 were 
$330,000 as compared to no sales for the comparable quarter of fiscal 
1996.  Cost of goods sold for the first quarter of fiscal 1997 was 
$183,190, and general and operations expense for used equipment sales 
was $39,600.

General and administrative costs were $214,015 in the first 
quarter of fiscal 1998, a decrease of $88,773 or 29% less than the 
$302,788 incurred in the first quarter of fiscal 1997. 

The Company recognized an income tax benefit of $34,920 for the 
first quarter of fiscal 1998 as compared to recognition of an income 
tax benefit of $95,000 for the first quarter of fiscal 1997.  This is 
directly related to the size of the  loss before income taxes.

Liquidity and Capital Resources

As of September 30, 1997, Cotton Valley has a working capital of 
$797,794 calculated by subtracting accounts payable of $457,717 and the 
current portion of long-term debt of $729,250 from current assets of 
$1,984,761.  Management estimates that aggregate capital expenditures 
of approximately $15 million will be spent during the remainder of 
fiscal 1998 to acquire and develop oil and gas reserves.  Cotton Valley 
intends to finance its development activities 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.  

                                  -7-

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 small oil and gas 
companies.

                                     -8-

                               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 




                                    -9-





EX-27
Financial Data Schedule