UNITED  STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q/A
                                 Amendment No. 2



            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998




                             FORELAND CORPORATION
            (Exact name of registrant as specified in its charter)


               NEVADA                                  87-0422812
  (State or other jurisdiction of                     (I.R.S. Employer
   incorporation or organization)                     Identification No.)


        143 UNION BOULEVARD
   SUITE 210, LAKEWOOD, COLORADO                         80228
(Address of principal executive offices)               (Zip Code)


                               (303)  988-3122
             (Registrant's Telephone number, including area code)


                                NOT APPLICABLE
                (Former name, former address and former fiscal
                     year, if changed since last report)




      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  [ ]

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:  As of November 12, 1998, the
Company had outstanding 9,423,191 shares of its common stock, par value $0.001
per share.

<PAGE>



                                     PART I
                             FINANCIAL INFORMATION


------------------------------------------------------------------------------

                         ITEM 1.  FINANCIAL STATEMENTS

------------------------------------------------------------------------------

      The consolidated condensed financial statements included herein have been
prepared by Foreland Corporation (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted.  However, in the opinion of management, all adjustments
(which include only normal recurring accruals) necessary to present fairly the
financial position and results of operations for the periods presented have been
made.  These consolidated condensed financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the period ended December 31, 1997



                     FORELAND CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

                                                SEPT. 30, 1998  DEC. 31, 1997
                                                --------------  -------------
      ASSETS

Current assets:
   Cash and cash equivalents...................$  1,435,060            40,631
   Accounts receivable - trade.................   4,140,273           245,041
   Inventory...................................   1,260,957            61,108
   Stock subscriptions receivable..............   2,000,000                 0
   Prepaid expenses and other..................     328,374            11,998
                                               -------------    -------------

         Total current assets..................   9,164,664           358,778

Property and equipment, at cost:
   Oil and gas properties, under
     the successful efforts method.............  13,684,636        11,878,336
   Refining and transportation plant,
   property and equipment......................   5,875,401                 0
   Other property and equipment................     443,197           362,171
                                               -------------    -------------
                                                 20,003,234        12,240,507
   Less accumulated depreciation,
   amortization, depletion, and impairment....   (6,327,704)       (5,346,333)
                                               -------------    -------------

             Total property and equipment .....   13,675,530        6,894,174

Other assets:
   Option to acquire Petro Source
     Refining Corporation......................           0           520,000
   Deposits and other..........................   1,338,781           180,220
                                               -------------    -------------

Total assets................................... $24,178,975      $  7,953,172
                                               =============    =============


    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses....... $ 3,557,127         $ 424,769
   Officers' salaries payable..................     418,430           364,276
   Oil and gas sales payable...................      99,855            39,587
   Current portion of long-term debt, net
    of discount of $1,434,315..................  10,940,964            25,301
                                               -------------    -------------

         Total current liabilities.............  15,016,374           853,933

Long-term debt.................................      14,169           642,951

Stockholders' Equity:
   Preferred Stock, $0.001 par value,
      5,000,000 shares authorized.
      1991 Convertible Preferred Stock, 20,000
        and 40,000 shares issued and outstanding,
        respectively, liquidation preference
        $1.25 per share........................          20                40
      1994 Convertible Preferred Stock, 153,140
        and 165,140 shares issued and 
        outstanding, respectively, liquidation 
        preference $2.00 per share.............         153               165
      1995 Convertible Preferred Stock, 361,103 
        and 556,667 shares issued and 
        outstanding, respectively, liquidation 
        preference $1.50 per share.............         361               557
      1998 Convertible Preferred Stock, 2,000 
        and 0 shares issued and outstanding, 
        respectively, liquidation preference  
        $1,000 per share.......................           2                 0
   Common Stock, $0.001 par value, 50,000,000
        shares authorized; 9,419,023 and
        8,467,703  shares issued and outstanding,
        respectively...........................       9,419             8,468
   Additional paid-in capital..................  39,196,900        32,486,345
   Less note and stock subscriptions
      receivable...............................    (331,410)         (311,758)
   Accumulated deficit......................... (29,727,015)      (25,727,529)
                                               -------------    -------------

         Total stockholders' equity............   9,148,430         6,456,288
                                               -------------    -------------

Total liabilities and stockholders' equity.....$ 24,178,975       $ 7,953,172
                                               =============    =============



       See accompanying notes to these consolidated financial statements.
<PAGE>

                     FORELAND CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                       THREE MONTHS ENDED              NINE MONTHS ENDED
                                           SEPT. 30,                       SEPT. 30,
                                  ---------------------------     ----------------------------
                                       1998           1997            1998             1997
                                  -----------    ------------     ------------   -------------
<S>                              <C>            <C>              <C>            <C> 
REVENUES:
    Oil and gas sales...........   $ 346,906      $  484,558       $1,077,212     $1,781,356
    Refining and transportation
      sales.....................   4,204,027               0        4,204,027              0
    Operator and well service
      income....................           0          21,827                0         48,733
    Other income, net...........         393             730            1,497          3,985
                                  -----------    ------------     ------------   -------------

           Total revenues.......   4,551,326         507,115        5,282,736      1,834,074

EXPENSES:
    Oil and gas production......     186,369         249,766          704,030        748,601
    Enhanced oil recovery
      project...................     151,610               0          525,573              0
    Refinery/transport cost
      of goods..................   3,054,757               0        3,054,757              0
    Well service cost...........         437             138            2,902          1,049
    Oil and gas exploration.....     238,912         278,086          715,179        695,670
    Refinery/transport
      operating exp.............     557,960               0          557,960              0
    Dry hole and abandonment and
       impairment costs.........     672,805           2,360        1,163,270         11,718
    General and administrative..     312,668         170,151          682,562        579,581
    Shareholder-investor services     33,811          32,536          104,790        162,183
    Compensation - below market
         options................       6,180           9,589           18,524         42,537
    Depreciation, depletion, and
       amortization.............     416,113         187,369          795,393        548,597
                                  -----------    ------------     ------------   -------------
           Total expenses.......   5,631,622         929,995        8,324,940      2,789,936
                                  -----------    ------------     ------------   -------------
OPERATING LOSS.................. $(1,080,296)     $ (422,880)     $(3,042,204)     $(955,862)

OTHER INCOME (EXPENSE)
    Gain (Loss) on sale of asset      11,723               0           15,183         (7,474)
    Interest income.............      18,037          27,261          100,025         99,886
    Interest expense............    (421,970)        (54,236)      (1,072,491)      (115,097)
                                  -----------    ------------     ------------   -------------

NET  LOSS ......................$ (1,472,506)    $  (449,855)     $(3,999,487)     $(978,547)
                                  -----------    ------------     ------------   -------------

Preferred stock dividends:
    Declared....................           0        (137,174)               0       (164,029)
    Accrued ....................           0          78,921                0              0
    Imputed ....................           0         (16,823)               0       (215,611)
                                  -----------    ------------     ------------   -------------
    Total preferred stock
      dividend..................           0         (75,076)               0       (379,640)
                                  -----------    ------------     ------------   -------------

Net loss applicable to common
    shareholders................ $(1,472,506)     $ (524,932)     $(3,999,487)   $(1,358,187)
                                  ===========    ============     ============   =============


NET LOSS PER COMMON
    SHARE.......................   $    (0.16)    $     (0.07)     $    (0.46)     $   (0.18)
                                  ===========    ============     ============   =============

WEIGHTED AVERAGE NUMBER
     OF COMMON SHARES
     OUTSTANDING................    9,019,000       7,648,500        8,680,700     7,414,900
                                  ===========    ============     ============   =============  
</TABLE>




       See accompanying notes to these consolidated financial statements.
<PAGE>
                     FORELAND CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                                     NINE MONTHS ENDED SEPT. 30,
                                                     ---------------------------
                                                       1998            1997
                                                     ---------      ---------

Cash flow from operating activities:

   Net loss...................................... $ (3,999,487)     $(978,547)

   Adjustments to reconcile net loss to net cash
     used in operating activities:
   Depreciation, depletion, and amortization......     795,393        548,598
   Dry hole, abandonment and impairment costs.....   1,163,270         11,718
   Issuance of stock for services.................      18,150          7,031
   Accrued note receivable interest income........     (19,652)       (58,011)
   Amortization of loan origination fee...........     477,603          2,937
   Compensation - Below market options............      18,524         42,537
   Loss on sale of other properties...............     (15,183)         7,474
      Changes in operating assets and liabilities:
      (Increase) decrease in:
         Accounts receivable......................    (488,608)       544,190
         Inventory................................     414,398         18,026
         Prepaids and other.......................    (457,018)        (3,470)
      Increase (decrease) in:
         Accounts payable and accrued expenses....     757,138       (308,208)
         Salaries payable.........................      54,155         22,157
                                                   ------------    ------------
            Net cash used in operating
              activities..........................  (1,281,317)      (143,568)


Cash flows from investing activities:
   Additions to oil and gas properties............  (3,983,013)    (1,083,282)
   Purchase of other property.....................     (92,386)       (68,019)
   Proceeds from the sale of other property.......      23,250          2,050
                                                   ------------    ------------
         Net cash (used in) provided by investing
           activities.............................  (4,052,149)    (1,149,251)

Cash flows from financing activities:
   Proceeds from exercise of warrants and options.      32,000             --
   Proceeds from borrowing long-term debt.........   7,375,279             --
   Receipt of note receivable for stock...........          --          2,323
   Payment of long-term debt......................    (679,384)      (354,078)
                                                   ------------    ------------
            Net cash provided by financing
              activities..........................   6,727,895       (351,755)
                                                   ------------    ------------

Increase (decrease) in cash and cash equivalents..   1,394,429     (1,644,574)
Cash and cash equivalents, beginning of year......      40,631      2,325,079
                                                   ------------    ------------

Cash and cash equivalents, end of period.......... $ 1,435,060      $ 680,505
                                                   ============    ============

Supplemental disclosures of cash flow information:

   Cash paid for interest......................... $   306,804      $  57,086
                                                   ============    ============

   Non-cash investing and financing activities.... $    12,912      $  34,588
                                                   ============    ============

   Debt incurred for purchase of  refinery ....... $ 5,150,000      $      --
                                                   ============    ============

   Issuance of common stock for refinery assets... $ 3,522,607      $      --
                                                   ============    ============
   Fair value of warrants granted for debt........ $ 1,520,000      $      --


       See accompanying notes to these consolidated financial statements.

                                 
<PAGE>
                     FORELAND CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1.    OIL AND GAS PROPERTIES:

      With the Company's continuous leasing program since 1986, it has
established what management believes is one of the best property positions in
Nevada.  The Company's leasing program is coordinated with prospect generation
and explorations results.  As areas of interest are identified, the Company
attempts to acquire leases or other exploration rights on what preliminarily
appears to be the most promising prospect areas in order to establish a
preemptive lease position prior to generating a specific drilling prospect.  As
specific prospect evaluation advances, the Company may seek leases on additional
areas or relinquish leases on areas that appear less promising, thereby reducing
leasehold costs.  The Company currently has approximately 145,400 gross acres
under lease.

       During the first nine months of 1998 the Company purchased a working and
royalty interest in the Kate Springs 12-2 well from unaffiliated third parties.
This well is located approximately one half mile south of the Company's Ghost
Ranch field.

2.    PURCHASE OF REFINING AND TRANSPORTATION ASSETS:

      On August 12, 1998, the Company completed the purchase from an unrelated
firm of a crude oil processing refinery in Eagle Springs Nevada, a hydrocarbon
processing facility in Tonopah, Nevada, and trucks and related equipment used to
gather crude oil and distribute products. In addition to the $520,000 in Common
Stock paid by the Company in December 1997 to acquire the option, the Company
paid $5,000,000 in cash (See Note 4) and $2,676,322 in Common Stock and issued
100,000 additional shares of Common Stock.  For accounting purposes, the
purchase of the refinery and transportation assets and related operations was
effective as of June 1, 1998.  The earnings from the acquired assets and
operations for the months of June and July 1998 were $378,000.  For accounting
purposes these earnings were applied as a reduction in the purchase price.


3.   ISSUANCE OF SECURITIES, COMMON STOCK OPTIONS, AND PURCHASE WARRANTS:

      During the first nine months of 1998 the Company issued 4,031 shares of
Common Stock for services.  The Company issued 2,531 shares for research
consulting services associated with the Company's enhanced oil recovery project
at Eagle Springs, and 1,500 shares for services of investor information
dissemination.

      In the first nine months of 1998, two employees paid $32,000 to exercise
their employee options for 8,000 shares of Foreland Common Stock.

      During the nine month period ended September 30, 1998, the holders of
227,564 shares of the Company's 1991, 1994 and 1995 Preferred Stocks converted
such preferred shares into an aggregate of 75,855 shares of Common Stock.


4.    LONG-TERM DEBT:

      In January 1998, the Company completed a $16.9 million debt financing with
Energy Income Fund ("EIF") for use in the enhanced oil recovery program and
development drilling in the Eagle Springs field,  3D seismic acquisition, the
drilling of 3D defined exploration targets, the acquisition of producing
properties, and to retire existing bank debt.  In January 1998, the Company
borrowed $3,585,000 of its new available debt financing to fund the
implementation of a high pressure air injection program, including  workover
cost to convert two producing wells into air injection wells, and fund the cost
of rental air compression equipment during the pilot program, a 3D seismic
program on the Company's Pine Creek property, the retirement of existing bank
debt and the payment of closing costs. An additional $1,846,000 was placed into
an escrow account at closing.  Funds have been withdrawn from the escrow account
to fund the drilling of two Eagle Springs wells and the Sand Dune well.  The
escrow account had a balance of $534,200 as of September 30, 1998.

      In August, the arrangement with EIF was revised to draw $5,000,000 to fund
the purchase of the Eagle Springs and Tonopah asphalt refinery and
transportation assets and operations and to enable the Company to draw
additional funds for refinery working capital and revised enhanced oil recovery,
development, and other corporate expenditures.

      Pursuant to the terms of the financing arrangement, the Company is
required to make payments of interest only to November 1998, after which
payments of principal and interest are required to amortize the indebtedness
generally over a 48-month period; provided, however, that the final payment of
all accrued but unpaid interest and the remaining principal balance is due on
January 1, 2002 (See "Note 7.  Subsequent Events").  The Company also agreed to
transfer to EIF a 3% overriding royalty in the Company's interest in the
Company's proved oil and gas properties and a 1% overriding royalty interest in
certain unproved properties.

      Amounts due under the financing arrangement are collateralized by oil and
gas properties and the Company is required to maintain certain financial ratios
and comply with other terms and conditions while any balance of indebtedness
remains outstanding.

      In connection with the establishment of the financing arrangement, the
Company issued to EIF five-year warrants to purchase 750,000 shares of common
stock at $6.00 per share and 250,000 shares at $10.00 per share and granted EIF
the right to designate a representative for appointment to the board of
directors of the Company.  In connection with the modification of the financing
arrangement in August, the Company increased the outstanding warrant to purchase
250,000 shares at $10.00 per share to 750,000 shares and reduced the exercise
price to $6.00 per share.  In addition, the Company sold to EIF for $2,000,000 a
total of 2,000 shares of 1998 Series Preferred Stock convertible into an
aggregate of 333,333 shares of Common Stock at a conversion price of $6.00 per
share. The estimated fair value of the foregoing warrants of $1,520,000 is 
treated as a discount, therefore reducing the amount of th eliability on the
financial statements for reporting purposes, and is being amortized using the
interest method.  At September 30, 1998, the unamortized value of such warrants 
was $1,434,315.

      In connection with modification of the financing arrangement in August, 
the Company sold to EIF for $2,000,000 a total of 2,000 shares of 1998 Series
Preferred Stock convertible into an aggregate of 333,333 shares of Common 
Stock at a conversion price of $6.00 per share.  As of the date of such 
revisions, the Common Stock traded at approximately $3.31 per share on the 
Nasdaq SmallCap Market.


      Robert Gershen, a manager of the general partner of EIF, is a director of
the Company; the disinterested members of the board of directors unanimously
approved the terms of this transaction and believe them to be fair to the
Company from a financial point of view.

5.    RELATED PARTY TRANSACTIONS:

      The Company owed $388,020 in salaries and interest to two current officers
and directors, and a former officer and director, at September 30, 1998.  The
Company also had outstanding loans to one current officer and director and two
former officers and directors in the amount of $309,203 as of such date.

6.    INCOME TAXES:

      The Company adopted the liability method of accounting for income taxes as
prescribed by Statement of Financial Accounting Standards No. 109 (SFAS 109)
effective January 1993.  Financial  statements of prior years have not been
restated to apply the new method retroactively.  The change in accounting method
had no effect on the net loss for 1993 or prior years.

      The Company has had no taxable income under federal and state tax laws due
to operating losses since its inception; therefore, no provision for income
taxes has been made.  At December 31, 1997, the Company has unused net operating
loss carry-forwards of approximately $31,500,000.  This carryforward expires in
varying amounts from 1999 to 2012.

7.    SUBSEQUENT EVENTS:

      CONVERSION OF PREFERRED STOCK.

      In October 1998, two individuals converted 12,000 shares of 1995 Preferred
Stock into 4,000 share of Common Stock.


      RECLASSIFICATION OF LONG TERM DEBT.
  
      Pursuant to the terms of the financing arrangement, the Company was
required to make payments of interest only through November 1998, after which 
payments of principal and interest required to amortize the indebtedness 
generally over a 48-month period were to commence.  Prior to such payment date, 
the Company recognized that it had insufficient cash to make these payments 
and would be unable to meet certain financial ratios and covenants under the
loan.  Therefore, the Company began seeking to renegotiate the term of the EIF
loan.  On October 4, 1998, EIF agreed in principle, subject to negotiation and
execution of definitive agreements, to defer all payments under the financing 
arrangement, other than monthly interest payments, until April 1999, extend 
certain financial covenants of the Company until such date, and waive its 
exercise of remedies upon default until such date.  In consideration of these
loan modifications, the Company agreed that it would issue shares of restricted 
Common Stock to EIF and extend the exercise period of and, in specified 
circumstances, adjust the exercise price of the Common Stock purchase warrants 
held by EIF.  Under the new terms being discussed, the Company would be 
permitted to draw approximately an additional $1,500,000 under the loan 
arrangement for certain specified purposes, and additional loan commitments 
would be canceled.  The Company is continuing to negotiate the definitive terms 
to restructure the loan agreement.  In anticipation of completing such ongoing 
ongoing negotiations, the Company did not pay principal of $228,104 due 
November 1 and December 1, 1998, or $1,300,000 due November 10, 1998, 
respecting certain inventory financing.  Further, the Company is not in 
compliance with certain financial ratios and other terms and conditions of the 
loan.  Accordingly, $10,941,000 of the outstanding balance under the loan 
arrangement, which represents the $12,375,279 borrowed less $1,434,275 treated
as the unamortized discount representing the value of warrants granted to EIF,
has been reclassified as a short term obligation for reporting purposes.


------------------------------------------------------------------------------

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

------------------------------------------------------------------------------

CAUTION RESPECTING FORWARD-LOOKING INFORMATION

      This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management.  When
used in the document,  the words "anticipate," "believe," "estimate," "expect,"
and "intend" and similar expressions, as they relate to the Company or its
management, are intended to identify forward-looking statements.  Such
statements reflect the current view of the Company respecting future events and
are subject to certain risks, uncertainties, and assumptions, including the
risks and uncertainties noted.  Should one or more of these risk or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.

OVERVIEW

      This discussion should be read in conjunction with Management's Discussion
and Analysis of Financial Conditions and Results of Operations in the Company's
annual report on Form 10-K for the year ended December 31, 1997.

      The Company was organized in June 1985 to advance an exploration project
in the Great Basin and Range geologic province in Nevada that had been initiated
by Gulf Oil Corporation.  To date, the Company has funded its exploration
program principally from debt and the sale of its equity securities.  The
Company also benefits from capital provided by oil industry participants for
drilling and other exploration of certain oil prospects through joint
arrangements typical in the oil industry.

      See below for a discussion of the Company's ability to continue.

      Capitalized terms used but not defined in this report are defined in the
Company's annual report on Form 10-K for the year ended December 31, 1997.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's operations during the first nine months of 1998 used cash of
$1,281,300 when the Company reported a net loss from operations of $3,999,500,
which resulted in part from non-cash charges against the Company's revenues,
including $795,400 in depreciation, depletion, and amortization and $477,600 in
amortization of long-term debt issuance cost. Changes in working capital
components (current assets and current liabilities) also used $280,100 in cash.
Operating activities used approximately $1,137,700 more cash than the
corresponding period in 1997.

     During the first three quarters of 1998, investing activities used net cash
of $4,052,100 due to $3,983,000 in additions to oil and gas properties, $92,400
for additions to other property, and $23,200 from the sale of property.  The
cash required for investing activities was provided from the issuance of long-
term debt.  During the corresponding period in 1997, investing activities used
net cash of $1,149,300, consisting primarily of $1,083,300 for additions to oil
and gas properties.

     Financing activities provided $6,727,895 during the first nine months of
1998, consisting primarily of borrowing under the newly established $16.9
million credit arrangement and refinancing of the existing bank debt.
Additionally, the Company received $32,000 from the exercise of options during
the first nine  months of 1998.  During the corresponding period in 1997, the
Company used $351,800 during the first three quarters of 1997, consisting
entirely of repayment of long-term debt.

     The Company has traditionally required cash for general and administrative
expenses, maintaining its properties, and for other items that are required in
order for the Company to continue, in addition to costs to advance its ongoing
exploration and development program in Nevada.  With the purchase of the asphalt
refinery and transportation assets and operations in August 1998, the Company's
requirements to fund planned capital improvements and refining and
transportation working capital have increased.  The Company intends to meet its
traditional needs as well as these new requirements with funds drawn under its
debt financing arrangement, the extension of additional borrowings, and 
the sale of additional equity securities.  The Company expects that, 
following an interim renovation and transition period, refinery and 
transportation operations and finished goods sales will provide funds for 
the Company's other requirements.

     Although the Company is continuing with its drilling program in Nevada in
an effort to increase total production, there can be no assurance current oil
production levels or prices will not decline, which would adversely affect
productin revenues.  The Company expects that the operation of the recently 
acquired refinery and transportation assets and the sale of finished goods 
will improve the effective financial return to the Company from oil produced 
from its Nevada properties.

     In early 1998, the Company arranged to borrow up to $16.9 million from
Energy Income Fund, L.P. ("EIF") for certain specified purposes.  As of
September 30, 1998, the Company had borrowed $12,375,279 from EIF under this
arrangement.  Pursuant to the terms of the financing arrangement, the Company
was required to make payments of interest only through November 1998, after
which payments of principal and interest required to amortize the indebtedness
generally over a 48-month period were to commence.  Prior to such payment date,
the Company recognized that it had insufficient cash to make these payments and
would be unable to meet certain financial ratios and covenants under the loan.
Therefore, the Company began seeking to renegotiate the terms of the EIF loan.
On October 4, 1998, EIF agreed in principle, subject to negotiation and
execution of definitive agreements, to defer all payments under the financing
arrangement, other than monthly interest payments, until April 1999, extend
certain financial covenants of the Company until such date, and waive its
exercise of remedies upon default until such date.  In consideration of these
loan modifications, the Company agreed that it would issue shares of restricted
Common Stock to EIF and extend the exercise period of and, in specified
circumstances, adjust the exercise price of the Common Stock purchase warrants
held by EIF.  Under the new terms being discussed, the Company would be
permitted to draw approximately an additional $1,500,000 under the loan
arrangement for certain specified purposes, and additional loan commitments
would be canceled.  The Company is  continuing to negotiate the definitive terms
to restructure the loan agreement.  In anticipation of completing such ongoing
negotiations, the Company did not pay principal of $228,104 due November 1 and
December 1, 1998, or $1,300,000 due November 10, 1998, respecting certain
inventory financing.  Further, the Company is not in compliance with certain
financial ratios and other terms and conditions of the loan.  Accordingly,
$10,941,000 of the outstanding balance under the loan arrangement, which
represents the $12,375,279 borrowed less $1,434,275 treated as the unamortized
discount representing the value of warrants granted to EIF, has been
reclassified as a short term obligation for financial reporting purposes.

     The Company had a working capital deficit of $5,851,700 as of September 30,
1998, as a result of the reclassification as a short-term liability of
$10,941,000 of the amount due EIF under its long-term debt arrangement.  The
Company and EIF have agreed in principle to certain measures discussed above
intended to enable the Company to obtain EIF's forbearance from exercising its
default remedies under the operative agreements.  However, if definitive
agreements are not timely negotiated and executed, EIF could determine to
exercise such remedies immediately, although it has not indicated its intent to
do so.  The Company expects that it will have to implement significant cost
cutting measures, restrict certain activities, and obtain additional equity
financing in order to be able to obtain EIF's continued voluntary cooperation
and forbearance.  There can be no assurance that the Company will be successful
in attaining any of these objectives.  If, in April, EIF were to elect to do so,
it may be able to foreclose on essentially all of the oil producing,
exploratory, refining, and transportation assets of the Company, which would
likely make it impossible for the Company to continue.       

RESULTS OF OPERATIONS

     Three Months Ended September 30, 1998 and 1997

     For the third quarter ended September 30, 1998, revenue from oil sales
decreased 28.4% to $346,900 as compared to $484,600 in the same period in 1997,
attributable principally to decreased oil prices.  The number of barrels of oil
sold by the Company in the third quarter of 1998, as compared to the third
quarter of 1997 would have decreased approximately 8,000 barrels; however, this
reduction was nullified by the Company's purchase of Plains Petroleum's interest
in the Ghost Ranch field. Operator, well service income decrease $21,800 for the
third quarter of 1998, when compared to the same period in 1997, primarily due
to a decrease of $19,500 in well service revenue due to a decrease in water
disposal income, and a decrease of  $2,300 in operator income.

     The Company purchased Petro Source's two refineries and the transportation
unit effective as of May 31, 1998, and closed the transaction on August 12,
1998. The refinery and transportation revenues for August and September of 1998
were $4,204,000. All revenues and expenses for June and July of 1998 were an
adjustment to the purchase price of the assets.


     The Company's production expenses for the third quarter of 1998 decreased
$63,400, or 25.4%, to $186,400.  Additionally Eagle Springs air injection cost
for the third quarter of 1998 was $151,600. Field production expenses for the
Ghost Ranch field decreased $22,600 and would have decreased more had it not
been for the  purchase of Plains Petroleum's 40% working interest in the Ghost
Ranch field, which added $16,500 to the Company's production expenses for the
field.  The Eagle Springs field and the Company's remaining properties
contributed $40,500 and $1,200, respectively, in increased production expenses
during the third quarter of 1998 when compared to the same period in 1997
     Refinery and transportation cost of goods sold for the months of August and
September 1998 were $3,054,800.  The cost of goods sold for June and July 1998
were an adjustment to the purchase price of the assets.

     Oil and gas exploration expenses decreased $39,200, or 14.1%, to $238,900
for the third quarter of 1998 when compared to the same period in 1997.  This is
primarily due to a decreased lease rental cost of $44,200.  Dry hole,
abandonment, and impairment cost were $670,500, primarily due to dry hole cost
associated with the Eagle Springs well #14-35 of $34,800, Ghost Ranch well #58-
35 re-entry of $439,000, and the Flat Top Federal well #27-15 of $197,700.

     Refinery and transportation operations expenses for the months of August
and September 1998 were $558,000.  The operating expense for June and July 1998
were an adjustment to the purchase price of the assets.

     General and administrative expenses increased $142,500 to $312,700 for the
third quarter of 1998, when compared to the same period in 1997.  The primary
contributors were decreased personnel cost of $5,700 within the exploration and
production segment and $151,000 of general and administrative cost associated
with the refining and transportation segments.  Shareholder and investor
services increased $1,300 due to maintaining Foreland's presence in the
financial public relations and information dissemination investment community.
Depreciation, depletion, and amortization increased for the three-month period
ended September 30, 1998, by $228,700 to $416,100.  The exploration and
production segment increased $85,500 primarily as a result of lower prices which
adversely effected reserves, while the refining and transportation segment
contributed $143,200 of such increase.

     Interest income decreased $9,200 to $18,000 for the third quarter of 1998,
when compared to the same period in 1997, primarily as a result of less cash
being invested in short-term liquid assets.  Interest expense increased $367,700
to $422,000 primarily due to interest expense on the debt financing with EIF.

     During the quarter ended September 30, 1997, the Company, in its earnings
per shares calculations of the consolidated statement of operations, declared a
preferred stock dividend of $137,200, of which $78,900 had previously been
accrued, on preferred stock shares that were converted to Common Stock, and had
an imputed preferred stock dividend of $16,800 as a result of convertibility of
its outstanding preferred stock into Common Stock at below-market prices.  (See
Note 3 to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.) The dividend amounts are
for earnings per share calculations, and the imputed stock dividends are not
recorded in the Company's financial statements.

     Nine Months Ended September 30, 1998 and 1997

     For the nine months ended September 30, 1998, oil sales decreased 39.5% to
$1,077,200 as compared to $1,781,400 in the same period in 1997, attributable to
decreased sales from the Ghost Ranch field (approximately $226,900) and Eagle
Springs field (approximately $458,900), while sales from the Company's remaining
properties decreased approximately $18,300.  Revenues associated with the
purchase Plains Petroleum's interest in the Ghost Ranch field contributed
increased revenue of $184,200.  Well service and well operator income decreased
$48,700 for the first three quarters of 1998, when compared to the same period
in 1997, primarily due to an decrease of $38,600 in well service revenue due to
decreased water disposal fees, and a decrease of $10,000 in operator income. The
Company purchased Petro Source's two refinery's and the transportation unit as
of May 31, 1998, and closed the transaction on August 12, 1998.

     The refinery and transportation revenues for August and September of 1998
were $4,204,000. All revenues and expenses for June and July of 1998 were an
adjustment to the purchase price of the assets, and are approximately
$4,600,000.

     The Company's production expenses for the first three quarters of 1998
decreased $44,600, or  6.0%, to $704,000. Additionally Eagle Springs air
injection cost for the third quarter of 1998 was $525,600. The Eagle Springs
field production expenses were decreased by $30,400, and Ghost Ranch production
expense increased $4,800.  The Ghost Ranch increase related to the purchase of
Plains Petroleum's 40% interest was approximately $60,500, and production
expenses related to the Company's remaining properties decreased $18,900 when
compared to the same period in 1997.

     Refinery and transportation operations cost of goods sold for the months of
August and September 1998 were $3,054,800.  The cost of goods sold for June and
July 1998 were an adjustment to the purchase price of the assets, and are
approximately $3,584,000.

     Oil and gas exploration expenses increased $19,500, or 2.8%, to $715,200
for the first three quarters of 1998 when compared to the same period in 1997.
This is primarily due to increased personnel cost of approximately $8,800,
increased lease rental cost of $78,500, increased vehicle cost of $3,300, and
decreased geological and geophysical cost of $71,700 attributable to a $75,000
payment received from Hugoton/Maxwell as a result of its election not to
complete a 3D seismic study. Dry hole, abandonment, and impairment cost were
$1,163,300, primarily due to dry hole cost associated with the Deadman Creek
well #44-36 of $36,100, Eagle Springs well #14-35 of $452,700, Ghost Ranch well
#58-35 well re-entry of $439,000, and the Flat Top Federal well #27-15 of
$197,700.

     Refinery and transportation operations expenses for the months of August
and September 1998 were $558,000.  The operating expenses for June and July 1998
were an adjustment to the purchase price of the assets and were approximately
$652,000.

     General and administrative expenses increased $103,000 to $682,600 for the
nine-month period ended September 30, 1998, when compared to the same period in
1997. The primary contributors were decreased personnel cost of $3,000,
decreased professional fees of $52,500 within the exploration and production
segment.  Shareholder and investor services decreased $57,400 due to a reduction
of services in the financial public relations and information dissemination
investment community.  Depreciation, depletion, and amortization increased for
the nine-month period ended September 30, 1998, by $246,800 to $795,400.  The
exploration and production segment increased $103,600  primarily as a result of
lower prices which adversely effect reserves, while the refining and
transportation segment contributed $143,200 of such increase.

     Refinery and transportation general and administrative expenses for the
months of August and September 1998 were $151,000.  The general and
administrative expenses for June and July 1998 were an adjustment to the
purchase price of the assets and were approximately $109,000.

     Interest income remained virtually unchanged for the first three quarters
1998, when compared to the same period in 1997.  Interest expense increased
$957,400 to $1,072,500 primarily due to interest expense on the debt financing
with EIF.

     During the nine months ended September 30, 1997, the Company, in its
earnings per shares calculations of the consolidated statement of operations,
declared and accrued a preferred stock dividend of $164,000 on preferred stock
shares that were converted to Common Stock and had an imputed stock dividend of
$215,600 as a result of convertibility of its outstanding preferred stock into
Common Stock at below-market prices. (See Note 3 to NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.) The dividend amounts are for earnings per share
calculations, and the imputed stock dividends are not recorded in the Company's
financial statements.

     Accounting Treatment of Certain Capitalized Costs

      The Company follows the "successful efforts" method of accounting for oil
and gas producing activities.  Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells that find proved reserves, and
to drill and equip development wells are capitalized.  Costs to drill wells that
do not find proved reserves, geological and geophysical costs, and costs of
carrying and retaining unproved properties are expensed.

      Included in oil and gas properties on the Company's balance sheets are
costs of wells in progress.  Such costs are capitalized until a decision is made
to plug and abandon or, if the well is still being evaluated, until one year
after reaching total depth, at which time such costs are charged to expense,
even though the well may subsequently be placed into production.

      The Company assesses the carrying cost of long-lived assets whenever
events or changes of circumstances indicate that the carrying value of long
lived assets may not be recoverable.  When as assessment for impairment of oil
and gas properties is performed, the Company is required to compare the net
carrying value of proved oil and gas properties on a lease by lease basis (the
lowest level at which cash flows can be determined on a consistent basis) to the
related estimates of undiscounted future net cash flows for such properties.  If
the carrying value exceeds the net cash flows, then impairment is recognized to
reduce the carrying value to the estimated fair value.  As a result of the
foregoing policy, the Company expects that from time to time capitalized costs
will be charged to expense based on management's evaluation of specific wells or
properties or the disposition, through sales or conveyances of fractional
interests in connection with industry sharing arrangements, of property
interests.

      As part of the Company's evaluation of its oil and gas reserves in
connection with the preparation of the Company's annual financial statements,
the Company completes an engineering evaluation of its properties based on
current engineering information, oil and gas prices, and production costs, which
may result in material changes in the total undiscounted net present value of
the Company's oil and gas reserves and may, therefore, result in an impairment
allowance as discussed above.

      Operating Costs

      Overall operating costs are a combination of costs associated with each
well and costs associated with operation of the entire field.  As additional
wells are added to the production system, the field operating costs will be
spread among additional wells, lowering the impact of such costs on each well
and per barrel produced.  Because of the foregoing, the Company expects that
production costs per barrel will continue to be higher than industry standards,
unless and until the amount of production increases sufficiently to obtain
economies of scale and dilute the impact of high fixed operating costs.  In
addition, operating costs may continue to vary materially due to the costs of
ongoing treatment or reworking of existing wells and other factors.


------------------------------------------------------------------------------

                          PART II.  OTHER INFORMATION


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ITEM 2.  CHANGES IN SECURITIES

     (c)  ITEM 701--UNREGISTERED SALES

     During the quarter ended September 30, 1998, the Company sold securities
without registration under the Securities Act of 1933 (the "Securities Act") in
the following transactions:

     1.   Individual converted 20,000 shares of 1991 Preferred Stock into 6,667
shares of Common Stock.  The shares of Common Stock issued in such conversions
were issued without registration in reliance on the exemption from registration
requirements of the Securities Act provided in Section 3(a)(9) thereof.

     2.   The Company issued 863,602 shares of Common Stock to Petro Source
Corporation in partial consideration of the purchase of Petro Source's refining
assets in the Railroad Valley and Tonopah, Nevada and its crude oil
transportation corporation assets.

     The securities issued in the transactions described above were issued in
reliance on the exemption from the registration and prospectus delivery
requirements of the Securities Act provided in Section 4(s) thereof.

     Each of the persons acquiring such securities acknowledged in writing that
such person was obtaining "restricted securities" as defined in rule 144 under
the Securities Act; that such shares could not be transferred without
registration or an available exemption therefrom; that such person must bear the
economic risk of the investment for an indefinite period; and that the Company
would restrict the transfer of the securities in accordance with such
representations.  Such persons also agreed that any certificates representing
such shares would be stamped with a restrictive legend covering the transfer of
such shares.  The certificates representing the foregoing shares bear an
appropriate restrictive legend conspicuously on their face, and stop transfer
instructions are noted on the Company's stock transfer records.



------------------------------------------------------------------------------

                   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

------------------------------------------------------------------------------

(a)   Exhibits.

     The following exhibits are included as part of this report:

           SEC
EXHIBIT REFERENCE
 NUMBER   NUMBER                TITLE OF DOCUMENT                  LOCATION
------- --------- --------------------------------------------- ----------------

                   Plan of Acquisition, Reorganization,
 Item 2             Arrangement, Liquidation, or Succession
---------------------------------------------------------------
  2.01       2     Amendment to Option and Purchase Agreement   Original filing 
                    between Foreland Corporation, Petro Source      (1)
                    Corporation, Foreland Refining Corporation,
                    and Petrosource Transportation dated August
                    11, 1998
 Item 4            Instruments Defining the Rights of Security
                    Holders

  4.01       3     Designation of Rights, Privileges and        Incorporated by
                    Preferences for 1998 Series Convertible      Reference (2)
                    Preferred Stock
  4.02       3     Registration Rights Agreement between Energy Incorporated by
                    Income Fund, L.P., and Foreland              Reference (2)
                    Corporation, dated as of August 10, 1998


Item 10   Material Contracts
---------------------------------------------------------------
 10.01      10     First Amendment to Financing Agreement       Incorporated by
                    between Foreland Corporation, Eagle Springs  Reference (2)
                    Production Limited Liability Company,
                    Foreland Refining Corporation, Foreland
                    Asset Corporation, Petrosource
                    Transportation, and Energy Income Fund,
                    L.P., dated August 10, 1998*
 10.02      10     Common Stock Purchase Warrant to purchase    Incorporated by
                    750,000 shares of common stock of Foreland   Reference (2)
                    Corporation at $6.00 per share
 10.03      10     Stock Purchase Agreement dated August 10,    Incorporated by
                    1998, between Energy Income Fund, L.P., and  Reference (2)
                    Foreland Corporation
 10.04      10     First Allonge to Acquisition Note in the     Incorporated by
                    original principal amount of $2,327,000,     Reference (2)
                    dated as of August 10, 1998
 10.05      10     First Allonge to Development Note in the     Incorporated by
                    original principal amount of $13,893,000,    Reference (2)
                    dated as of August 10, 1998
 10.06      10     First Allonge to Refinancing Note in the     Incorporated by
                    original principal amount of $680,000,       Reference (2)
                    dated as of August 10, 1998
 10.07      10     Environmental Indemnity Agreement between    Incorporated by
                    Petro Source Corporation, Petrosource        Reference (2)
                    Investments, Inc., Foreland Corporation,
                    Foreland Refining Corporation, Foreland
                    Asset Corporation, and Petrosource
                    Transportation dated August 11, 1998
 10.08      10     Second Amendment to Deed of Trust, Security  Incorporated by
                    Agreement, Assignment of Production and      Reference (2)
                    Proceeds, Financing Statement and Fixture
                    Filing dated as of August 11, 1998, by and
                    among Foreland Corporation, Eagle Springs
                    Production Limited Liability Company,
                    First American Title Company of Nevada,
                    and Energy Income Fund, L.P. 
 10.09      10     Deed of Trust, Security Agreement,           Incorporated by
                    Assignment of Rents, Profits and Proceeds,   Reference (2)
                    Financing Statement, and  Fixture Filing
                    from Foreland Corporation, Foreland
                    Refining Corporation, and Foreland Asset
                    Corporation

Item 27.  Financial Data Schedule
---------------------------------------------------------------
 27.01      27     Financial Data Schedule                      This Filing


(1)  This exhibit was filed with th eoriginal filing report of this report on
     Form 10-Q.
(2)  Incorporated by reference from the Company's interim report on Form 8-K
     dated August 12, 1998 as amended on Form 8-K/A filed October 26, 1998.


(b)       Reports on Form 8-K.

      During the quarter ended on September 30, 1998 the Company filed the
following reports on form 8-K.

      DATE EVENT REPORTED                       ITEM REPORTED
      -------------------              ----------------------

      July 8, 1998                     Item 5.   Other Events

      July 13, 1998                    Item 5.    Other Events

      July 23, 1998                    Item 5.    Other Events

      August 12, 1998                  Item 2.    Acquisition or Disposition of
                                                  Assets
                                       Item 5.    Other Events

------------------------------------------------------------------------------

                                   SIGNATURES

------------------------------------------------------------------------------

      Pursuant to the requirements 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.


                                       FORELAND CORPORATION




Dated: December 18, 1998              By:      /s/ N. Thomas Steele
                                         --------------------------------------
                                             N. Thomas Steele, President





Dated:  December 18, 1998              By:      /s/Don W. Treece
                                         -------------------------------------
                                             Don W. Treece, Controller ( Chief
                                             Financial  Officer)