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

                                   FORM 10-QSB
                                   -----------

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                       For the Quarter Ended June 30, 2001

                                       OR

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                        For the transition period from          to
                                                       ------      ------

                         Commission File Number 0-23530

                               TRANS ENERGY, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

               Nevada                                      93-0997412
     -------------------------------                    -------------------
     (State or other jurisdiction of                     I.R.S. Employer
     incorporation or organization)                     Identification No.)

         210 Second Street, P.O. Box 393, St. Marys, West Virginia 26170
         ---------------------------------------------------------------
                    (Address of principal executive offices)

Registrant's telephone no., including area code:  (304)  684-7053

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
Yes   X   No
     ---      ---
                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

             Class                          Outstanding as of June 30, 2001
   -----------------------------            -------------------------------
   Common Stock, $.001 par value                     175,683,189

                                       -1-

<PAGE>


<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                -----------------

Heading                                                                                                   Page
                       PART I. FINANCIAL INFORMATION                                                      ----

<S>                                                                                                    <C>
Item 1.      Financial Statements....................................................................       3

                  Consolidated Balance Sheets -- June 30, 2001 and December 31, 2000.................       4

                  Consolidated Statements of Operations -- three and six months ended
                    June 30, 2001and 2000............................................................       6

                  Consolidated Statements of Stockholders' Equity (Deficit)..........................       7

                  Consolidated Statements of Cash Flows - three and six months ended
                    June 30, 2001 and 2000...........................................................       8

                  Notes to Consolidated Financial Statements ........................................       9

Item 2.      Management's Discussion and Analysis and Results of Operations..........................      12

                                            PART II. OTHER INFORMATION

Item 1.      Legal Proceedings.......................................................................      14

Item 2.      Changes In Securities and Use of Proceeds...............................................      15

Item 3.      Defaults Upon Senior Securities.........................................................      15

Item 4.      Submission of Matters to a Vote of Securities Holders...................................      16

Item 5.      Other Information.......................................................................      16

Item 6.      Exhibits and Reports on Form 8-K........................................................      16

             SIGNATURES..............................................................................      16
</TABLE>


                                       -2-

<PAGE>



                                     PART I

Item 1.           Financial Statements

         The  following  unaudited  Consolidated  Financial  Statements  for the
period ended June 30, 2001 have been prepared by the Company.


                               TRANS ENERGY, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                       June 30, 2001 and December 31, 2000

                                       -3-

<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets


                                     ASSETS
                                     ------

                                              June 30,        December 31,
                                                2001             2000
                                            -----------       -----------
                                              (Unaudited)
CURRENT ASSETS

  Accounts receivable, net                  $   176,364       $    71,006
                                            -----------       -----------
     Total Current Assets                       176,364            71,006
                                            -----------       -----------
PROPERTY AND EQUIPMENT

  Vehicles                                       59,013            59,013
  Machinery and equipment                        10,092            10,092
  Pipelines                                   2,254,908         2,254,908
  Well equipment                                 49,155            49,155
  Wells                                       3,407,493         3,315,019
  Leasehold acreage                             180,000           180,000
  Accumulated depreciation                   (1,837,541)       (1,706,648)
                                            -----------       -----------
     Total Fixed Assets                       4,123,120         4,161,539
                                            -----------       -----------

OTHER ASSETS

  Loan acquisition costs                         13,742              --
  Restricted cash                                65,689            65,689
  Deposits                                        1,420             1,420
                                            -----------       -----------
     Total Other Assets                          80,851            67,109
                                            -----------       -----------
     TOTAL ASSETS                           $ 4,380,335       $ 4,299,654
                                            ===========       ===========

                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       -4-

<PAGE>

<TABLE>
<CAPTION>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                     Consolidated Balance Sheets (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

                                                                         June 30,                December 31,
                                                                           2001                      2000
                                                                       ------------              ------------
                                                                       (Unaudited)
<S>                                                                    <C>                       <C>
CURRENT LIABILITIES

   Cash overdraft                                                      $     51,311              $     11,608
   Accounts payable - trade                                               1,685,239                 1,444,692
   Accrued expenses                                                         774,024                   638,466
   Salaries payable                                                         427,998                   367,998
   Notes payable - current portion                                        1,313,994                 1,538,855
   Related party payables                                                   426,683                   288,042
   Debentures payable                                                       331,462                   331,462
                                                                       ------------              ------------
     Total Current Liabilities                                            5,010,711                 4,621,123
                                                                       ------------              ------------
NET LIABILITIES IN EXCESS OF THE ASSETS OF
 DISCONTINUED OPERATIONS                                                       --                       5,400
                                                                       ------------              ------------
LONG-TERM LIABILITIES

   Notes payable                                                            658,766                   658,766
                                                                       ------------              ------------
     Total Long-Term Liabilities                                            658,766                   658,766
                                                                       ------------              ------------
     Total Liabilities                                                    5,669,477                 5,285,289
                                                                       ------------              ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock; 10,000,000 shares authorized at $0.001
    par value; 300 shares issued and outstanding                               --                        --
   Common stock; 300,000,000 shares authorized at $0.001
    par value; 175,683,189 shares issued and outstanding                    175,682                   172,027
   Capital in excess of par value                                        22,751,278                22,608,733
   Accumulated deficit                                                  (24,216,102)              (23,766,395)
                                                                       ------------              ------------
     Total Stockholders' Equity (Deficit)                                (1,289,142)                 (985,635)

     TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)                                                 $  4,380,335              $  4,299,654
                                                                       ============              ============
</TABLE>


                 The accompanying notes are an integral part of
                     these consolidated financial statements




                                       -5-

<PAGE>

<TABLE>
<CAPTION>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)


                                                         For the                         For the
                                                    Six Months Ended               Three Months Ended
                                                         June 30,                        June 30,
                                                  2001             2000            2001             2000
                                             -------------    -------------    -------------    -------------
<S>                                          <C>              <C>              <C>              <C>
REVENUES                                     $     956,256    $     543,974    $     661,831    $     356,267
                                             -------------    -------------    -------------    -------------
COSTS AND EXPENSES

  Cost of oil and gas                              602,263          335,319          413,818          230,619
  Salaries and wages                                50,586           44,078           33,967           22,886
  Depreciation, depletion and amortization         191,776          155,367          130,893           77,684
  Selling, general and administrative              391,187        1,086,967          250,503          570,004
                                             -------------    -------------    -------------    -------------
     Total Costs and Expenses                    1,235,812        1,621,731          829,181          901,193
                                             -------------    -------------    -------------    -------------
LOSS FROM OPERATIONS                              (279,556)      (1,077,757)        (167,350)        (544,926)
                                             -------------    -------------    -------------    -------------
OTHER INCOME (EXPENSE)

  Other income                                       1,879            4,453            1,158            1,781
  Interest expense                                (172,030)        (233,923)        (110,941)         (99,295)
                                             -------------    -------------    -------------    -------------
     Total Other Income (Expense)                 (170,151)        (229,470)        (109,783)         (97,514)
                                             -------------    -------------    -------------    -------------
LOSS FROM OPERATIONS BEFORE
 INCOME TAXES, EXTRAORDINARY ITEMS
 AND MINORITY INTERESTS                           (449,707)      (1,307,227)        (277,133)        (642,440)
                                             -------------    -------------    -------------    -------------
INCOME TAXES                                          --               --               --               --

MINORITY INTERESTS                                    --               --               --               --

NET LOSS                                     $    (449,707)   $  (1,307,227)   $     (277,13)   $    (642,440)
                                             =============    =============    =============    =============
BASIC LOSS PER SHARE                         $       (0.00)   $       (0.06)   $       (0.00)   $       (0.02)
                                             =============    =============    =============    =============

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                            173,239,791       20,465,521      174,438,079       27,198,892
                                             =============    =============    =============    =============
</TABLE>

                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       -6-

<PAGE>


<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
            Consolidated Statements of Stockholders' Equity (Deficit)


                                                                                                 Capital in
                                             Preferred Stock              Common Stock            Excess of     Accumulated
                                          Shares        Amount      Shares           Amount       Par Value       Deficit
                                         ----------   ---------- -----------      ----------      ----------     ----------
<S>                                      <C>          <C>        <C>            <C>             <C>            <C>
Balance, December 31, 1999                     --     $  --        7,107,746    $      7,107    $ 15,250,242   $(19,887,784)

Common stock issued for cash
 at $0.05 per share                            --        --        1,691,287           1,691          81,309           --

Common stock issued for services
 and conversion of debt to equity
 at $0.12 per share                            --        --       11,722,383          11,722       1,411,201           --

Common stock issued for conversion
 of debentures, penalty and interest
 at $0.04 per share                            --        --      151,930,606         151,931       5,502,060           --

Cancellation of common stock                   --        --         (423,833)           (424)            424           --

Preferred stock issued for
 acquisition                                    300      --             --              --           300,000           --

Discount for beneficial conversion
 feature of preferred stock                    --        --             --              --            60,000           --

Warrants granted below
 market value                                  --        --             --              --             3,497           --

Net loss for the year ended
 December 31, 2000                             --        --             --              --              --       (3,878,611)
                                         ----------   ---------- -----------      ----------      ----------     ----------
Balance, December 31, 2000                      300      --      172,028,189         172,027      22,608,733    (23,766,395)

Common stock issued for
 services at $0.04 per share
 (unaudited)                                   --        --        3,655,000           3,655         142,545           --

Net loss for the six months
 ended June 30, 2001
 (unaudited)                                   --        --             --              --              --         (449,707)
                                         ----------   ---------- -----------      ----------      ----------     ----------
Balance, June 30, 2001
 (unaudited)                                    300   $  --      175,683,189    $    175,682   $   22751,278   $(24,216,102)
                                         ==========   ========== ==========       ==========      ==========     ==========
</TABLE>
                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       -7-

<PAGE>


<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)


                                                                          For the Six Months Ended
                                                                                 June 30,
                                                                         2001                  2000
                                                                     -----------           -----------

<S>                                                                  <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                                                           $  (449,707)          $(1,307,227)
  Adjustments to reconcile net loss to net cash (used) by
   operating activities:
    Depreciation, depletion and amortization                             130,893               155,367
    Common stock issued for services                                     146,200               363,225
  Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable                          (105,358)               (3,749)
    (Increase) decrease in restricted cash                                  --                 135,699
    Decrease (increase) in prepaid and other current assets              (13,742)                2,284
    Increase in accounts payable and accrued expenses                    193,005               560,201
                                                                     -----------           -----------
       Net Cash (Used) by Operating Activities                           (98,709)              (94,200)
                                                                     -----------           -----------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Expenditures for property and equipment                                (92,475)                 --
                                                                     -----------           -----------
       Net Cash Provided (Used) by Investing Activities                  (92,475)                 --
                                                                     -----------           -----------
CASH FLOWS FROM FINANCING ACTIVITIES:

  Increase in cash overdraft                                              39,703                  --
  Proceeds from related party notes                                      101,359               115,958
  Proceeds from notes payable                                            122,943                  --
  Principal payments on notes payable                                    (54,395)              (22,308)
  Principal payments on related party notes                              (18,426)              (11,502)
                                                                     -----------           -----------
      Net Cash Provided by Financing Activities                          191,184                82,148

NET INCREASE (DECREASE) IN CASH                                             --                 (12,052)

CASH AND CASH EQUIVALENTS,  BEGINNING OF YEAR                               --                  13,477
                                                                     ===========            ===========
CASH AND CASH EQUIVALENTS,  END OF YEAR                              $      --             $     1,425
                                                                     ===========            ===========
CASH PAID FOR:

  Interest                                                           $    63,970           $    46,397
  Income taxes                                                       $      --             $      --

NON-CASH FINANCING ACTIVITIES:

  Common stock issued for debt                                       $      --             $ 1,381,779
  Common stock issued for services                                   $   146,200           $   363,225

</TABLE>
                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       -8-

<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       June 30, 2001 and December 31, 2000


NOTE 1 -      BASIS OF FINANCIAL STATEMENT PRESENTATION

              The  accompanying   unaudited  condensed   consolidated  financial
              statements have been prepared by the Company 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 in
              accordance  with  such  rules  and  regulations.  The  information
              furnished  in  the  interim   condensed   consolidated   financial
              statements  include normal recurring  adjustments and reflects all
              adjustments,  which,  in the opinion of management,  are necessary
              for a fair  presentation  of such financial  statements.  Although
              management believes the disclosures and information  presented are
              adequate to make the information  not misleading,  it is suggested
              that these interim condensed  consolidated financial statements be
              read  in  conjunction  with  the  Company's  most  recent  audited
              financial  statements  and notes thereto  included in its December
              31, 2000 Annual Report on Form 10-KSB.  Operating  results for the
              six months ended June 30, 2001 are not  necessarily  indicative of
              the results that may be expected for the year ending  December 31,
              2001.

NOTE 2 -      GOING CONCERN

              The Company's consolidated financial statements are prepared using
              generally  accepted  accounting  principles  applicable to a going
              concern  which   contemplates   the   realization  of  assets  and
              liquidation of  liabilities in the normal course of business.  The
              Company has incurred cumulative  operating losses through June 30,
              2001, and has a working capital deficit at June 30, 2001. Revenues
              have not been sufficient to cover its operating costs and to allow
              it to continue as a going concern. The potential proceeds from the
              sale  of  common  stock,   other   contemplated  debt  and  equity
              financing,   and   increases  in  operating   revenues   from  new
              development  would  enable  the  Company  to  continue  as a going
              concern. There can be no assurance that the Company can or will be
              able to complete  any debt or equity  financing.  If these are not
              successful,  management  is committed  to meeting the  operational
              cash flow needs of the Company.

NOTE 3 -      COMMITMENTS AND CONTINGENCIES

              On March 12, 1997, a complaint entitled F. Worthy Walker vs. Loren
              Bagley,  William Woodburn,  Mark Woodburn,  Trans Energy, Inc. and
              Vulcan  Energy  Corporation,  was filed in the  District  Court of
              Dallas, Texas (# 9702304C). The complaint alleges that the Company
              breached certain contracts related to Mr. Walker's employment with
              Vulcan  Energy  Corporation,  and  seeks  punitive  and  exemplary
              damages.  The  Company  denies  all  allegations  and  intends  to
              vigorously  defend  its  position.  Management  believes  that the
              results of the proceedings will not have a material adverse effect
              on the Company.  On February  17, 1998,  the Company and the above
              named  defendants  filed a  countersuit  against F. Worthy  Walker
              alleging  breach of  contract,  fraud and  fraudulent  inducement,
              conversion,  and  breach  of  fiduciary  duty and  seeks  punitive
              damages.  This  action  was  subsequently  settled  with a  former
              officer of the Company  delivering  100,000 shares of common stock
              which were valued at $5,400 as settlement in full.


                                       -9-

<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       June 30, 2001 and December 31, 2000


NOTE 3 -      COMMITMENTS AND CONTINGENCIES (Continued)

              A foreign  judgement  has been  filed  with the  circuit  court in
              Pleasants County, West Virginia for a judgment against the Company
              rendered  by the  District  Court in  Harris  County,  Texas.  The
              judgment is for $41,142 plus  prejudgment  interest and attorney's
              fees of  $13,500.  No action  has been  taken to  collect  on this
              judgment.

              On February 7, 2001, the United States Bankruptcy Court,  Southern
              District  of Texas,  entered an Order  Granting  Motion to Dismiss
              Chapter 7 Case in the action  entitled In Re: Trans Energy,  Inc.,
              Case  No.  00-39496-H4-7.  The  Order  dismissed  the  involuntary
              bankruptcy  action  instituted  against the Company on October 16,
              2000.  The sole  petitioning  creditor  named  in the  Involuntary
              Petition was Western Atlas  International,  Inc.  ("Western").  An
              Order  for  Relief  Under  Chapter 7 was  entered  by the Court on
              November 22, 2000.

              On April 23,  2000,  the 189th  District  Court of Harris  County,
              Texas entered an Agreed Final Judgment in favor of Western against
              the Company in the amount of $600,665, together with post judgment
              interest at 10% per annum. Following the judgment, Western and the
              Company  entered  into  settlement   negotiations  concerning  the
              Company's  satisfaction  of the judgment  through  payments over a
              four to five month period  together  with the pledge of collateral
              on certain  unencumbered assets.  Previously,  on or about July 9,
              1998, a judgment had been entered in the 152nd  District  Court of
              Harris County,  Texas against the Company in favor of Baker Hughes
              Oilfield  Operations,  Inc.  d/b/a/  Baker Hughes  Inteq.  Western
              Geophysical  ("Baker"), a division of Western Atlas International,
              Inc.,  in the  amount  of  $41,142,  together  with  interest  and
              attorney  fees.  This judgment was  outstanding at the time of the
              filing of the Involuntary Petition.

              During  its  negotiations  with  Western  for  settlement  of  the
              Judgment,  the Company  made a $200,000  "good  faith  payment" to
              Western's  counsel on October 23, 2000. On December 12, 2000,  Joe
              Hill was named as the Chapter 7 Trustee.  Subsequently,  Western's
              counsel delivered the $200,000 to the Trustee.

              On January 19, 2001, the Company filed with the  Bankruptcy  Court
              the Motion to Dismiss  Chapter 7 Case.  The  reasons  cited by the
              Company in support of its Motion to Dismiss included, but were not
              limited to, (i) the Texas  Court  being an improper  venue for the
              action,  and (ii) the  Company  never  receiving  the  Involuntary
              Petition and Summons  notifying it of the action.  In anticipation
              of the Bankruptcy  Court dismissing the Involuntary  Petition,  on
              February 2, 2001, the Company entered into a Settlement  Agreement
              with Baker Hughes  Oilfield  Operations,  Inc. d/b/a/ Baker Hughes
              Inteq.   Western   Geophysical,   a  division  of  Western   Atlas
              International,  Inc. (the "Baker Entities"). In entering its order
              on February 7, 2001 to dismiss the action,  the Court  ordered the
              Trustee to retain $17,695 for satisfaction of administrative  fees
              and expenses, and to pay to Western and Baker the sum of $182,737,
              on  behalf  of  the  Company  and  pursuant  to the  terms  of the
              Settlement Agreement.

              The Settlement Agreement provided that, subject to the approval of
              the  Bankruptcy  Court,  the  Company  agreed  to pay to the Baker
              Entities $759,664, plus interest at 10%.


                                      -10-

<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       June 30, 2001 and December 31, 2000


NOTE 3 -      COMMITMENTS AND CONTINGENCIES (Continued)

              In addition to the $200,000  payable from the escrow,  the Company
              agreed to pay to the Baker Entities an initial payment of $117,261
              within  fifteen  days from the date of the  Dismissal  Order  (due
              February 21,  2001).  The Company  also agreed to make  additional
              payments  of $100,000  every  thirty  days  following  the initial
              payment,  with the first payment due beginning no later than March
              23, 2001,  continuing  until the total obligation plus interest is
              paid in full.  Further,  the Company pledged as collateral certain
              properties,  personal property and fixtures and two directors each
              pledged  750,000  shares of the Company's  common stock which they
              personally  own. The Company has only paid $50,000  subsequent  to
              the settlement.

              The  Company  has been  advised  by the  Securities  and  Exchange
              Commission (the "Commission") that the Commission is investigating
              certain  activities by the Company (In the Matter of Trans Energy,
              Inc.,  C-3481).   The  Company  believes  that  the  investigation
              concerns disclosure  requirements by the Company regarding certain
              press releases and the involuntary  bankruptcy  action  instituted
              against the Company in October  2000.  The Company is  voluntarily
              cooperating with the investigation and certain officers have given
              their  depositions.  As of  the  date  hereof,  the  investigation
              remains open.

              On September  22,  2000, a company  obtained a judgment of $46,300
              plus  interest  against Tyler  Construction  Company for breach of
              contract.  The Company has  accrued  $47,741  which is included in
              accounts payable at June 30, 2001.

              On April 10,  2000,  a company  recorded and served its Notice and
              Statement of Lien again the Company for  non-payment  of services.
              The Company has recorded a liability of $78,651  which is included
              in accounts payable at June 30, 2001.  Subsequent to year end, the
              Company  entered into a settlement  agreement  wherein the Company
              will  transfer  a portion  of the  Powder  River  Basin  leasehold
              acreage for settlement of the liability.

              On February 13, 2001,  Ross Forbus obtained a judgment of $428,018
              against  the  Company  to  satisfy a  promissory  note  previously
              entered into by the Company with Mr. Forbus on April 8, 1996.  The
              Company  has  recorded  the  balance in notes  payable at June 30,
              2001.

                                      -11-

<PAGE>



Item 2.           Management's Discussion and Analysis or Plan of Operations

         The following  table sets forth the  percentage  relationship  to total
revenues of principal items contained in the Company's  Consolidated  Statements
of Operations  for the three and six month periods ended June 30, 2001 and 2000.
It should be noted that  percentages  discussed  throughout  this  analysis  are
stated on an approximate basis.

                                 Three Months Ended        Six Months Ended
                                       June 30,                June 30,
                                       --------                --------
                                  2001         2000        2000         2001
                                  ----         ----        ----         ----
                                      (Unaudited)              (Unaudited)
Total revenues................... 100%          100%       100%         100%
Total costs and expenses......... 125           253        129          298
Loss from operations............. (25)         (153)       (29)        (198)
Other income (expense)........... (17)          (27)       (18)         (42)
Net loss......................... (42)         (180)       (47)        (240)


         Total revenues for the three months  ("second  quarter") ended June 30,
2001  increased 86% when compared with the second  quarter of 2000.  For the six
months ("first half") ended June 30, 2001, total revenues increased 76% compared
to the first half of 2000. The increase during the 2001 periods is primarily due
to higher gas sales and higher oil and gas  prices.  Cost of oil and gas for the
second quarter and first half of 2001 increased 179% and 80%, respectively, from
the second  quarter and first half of 2000 due to  increased  sales,  land lease
expenses  and  increased  gas  prices  to  the  Company.  Selling,  general  and
administrative  expenses for the second  quarter and first half of 2001 declined
56% and 64%, respectively, when compared to the second quarter and first half of
2000 primarily  attributed to a decrease in staff and fewer stock  issuances for
services.

         Depreciation  for the second  quarter and first half of 2001  increased
68% and 23%,  respectively,  compared to the same 2000 periods. This increase is
attributed  to the increase in oil and gas  revenues.  Also,  salaries and wages
increased  48%  and  15%  for  the  first  half  and  second  quarter  of  2001,
respectively,  compared to the 2000 period  primarily due to issuances of common
stock for services.

         Total costs and expenses as a percentage  of total  revenues  decreased
from 253% in the second  quarter of 2000 to 125% for the second quarter of 2001,
and from  298% for the first  half of 2000 to 129% for the  first  half of 2001.
Actual total costs and expenses  decreased 8% and 24% for the second quarter and
first half of 2001,  respectively.  This decrease is primarily attributed to the
decreases in selling, general and administrative expenses.

         The  Company's  net loss for the second  quarter and first half of 2001
was $277,133 and $449,707, respectively, compared to $642,440 and $1,307,227 for
the  same  2000  period.  This  decrease  in the  Company's  net  loss  for  the
2001periods  is  primarily  attributed  to the  increase  in  revenues  and  the
decreases in selling, general and administrative expenses.

         For the  remainder  of fiscal year 2001,  management  expects  selling,
general and administrative  expenses to remain at approximately the same rate as
the second  quarter of 2001.  The cost of oil and gas  produced  is  expected to
fluctuate  with  the  amount  produced  and  with  prices  of oil and  gas,  and
management anticipates that revenues are likely to increase during the remainder
of 2001.

         The Company has included a footnote to its financial statements for the
periods  ended June 30, 2001  stating that  because of the  Company's  continued
losses,  working  capital  deficit  and need for  additional  funding,  there is
substantial doubt as to whether the Company can continue as a going concern. See
Note 2 to the consolidated financial statements.




                                      -12-

<PAGE>



Net Operating Losses

         The Company has accumulated  approximately $16,000,000 of net operating
loss  carryforwards  as of December 31, 2000, which may be offset against future
taxable income through the year 2020 when the carryforwards  expire.  The use of
these  losses to reduce  future  income taxes will depend on the  generation  of
sufficient  taxable  income prior to the  expiration of the net  operating  loss
carryforwards.

         In the event of certain  changes in control of the Company,  there will
be an annual limitation on the amount of net operating loss carryforwards  which
can be used. No tax benefit has been reported in the  financial  statements  for
the year ended  December  31, 2000 or the six month  period  ended June 30, 2001
because  the  potential  tax  benefits  of the loss  carryforward  is  offset by
valuation allowance of the same amount.

Liquidity and Capital Resources

         Historically,  the Company's  working capital needs have been satisfied
through its operating  revenues and from borrowed  funds.  At June 30, 2001, the
Company had a working  capital  deficit of  $4,834,347  compared to a deficit of
$4,550,117 at December 31, 2000. This 6% decline in working capital is primarily
attributed to the increases in trade accounts  payable (17%),  accrued  expenses
(21%),  and related party payables (48%),  and was partially  offset by the 148%
increase in accounts  receivable and the 15% decrease in the current  portion of
notes payable.

         During the first half of 2001, the Company's operating  activities used
net cash of $98,709 compared to $94,200 net cash used in the first half of 2000.
The Company's  decrease in net loss for the first half of 2001 was mostly offset
by the decrease in common  stock  issued for  services  and smaller  increase in
accounts payable during the 2001 period.

         The Company also reported $92,475 net cash used by investing activities
in the first half of 2001 due to  expenditures  for property and equipment,  and
$191,184 net cash provided by financing  activities compared to $82,148 in 2000,
primarily from proceeds from notes payable.

         The Company  anticipates  meeting its working  capital needs during the
remainder of the current fiscal year with revenues from operations, particularly
from its Powder  River Basin  interests  in Wyoming and its New Benson gas wells
drilled in West  Virginia.  In the event revenues are not sufficient to meet the
Company's  working  capital needs, it will explore the possibility of additional
funding  from  either  the sale of debt or  equity  securities.  There can be no
assurance  such funding will be  available to the Company or, if  available,  it
will be on acceptable or favorable terms to the Company.

         As of June 30,  2001,  the Company had total assets of  $4,380,335  and
total  stockholders'  deficit  of  $1,289,142,   compared  to  total  assets  of
$4,299,654 and total stockholders' deficit of $985,635 at December 31, 2000.

         In 1998,  the  Company  issued  $4,625,400  face  value  of 8%  Secured
Convertible Debentures Due June 30, 1999. A portion of the proceeds were used to
acquire the oil and gas properties and interest in Wyoming. During 2000, all but
one of the remaining  outstanding  debentures were converted into commons stock.
At June 30, 2001,  the Company owed $331,462 in connection  with the  debentures
consisting of $50,000 for one debenture  holder that the Company has been unable
to contact and $281,462 in penalties and interest.

Inflation

         In the opinion of management,  inflation has not had a material  effect
on the operations of the Company.

                                      -13-

<PAGE>



Risk Factors and Cautionary Statements

         Forward-looking  statements  in this  report are made  pursuant  to the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995.  The  Company  wishes to advise  readers  that  actual  results may differ
substantially from such forward-looking  statements.  Forward-looking statements
involve  risks and  uncertainties  that  could  cause  actual  results to differ
materially from those expressed in or implied by the statements,  including, but
not limited to, the following:  the ability of the Company to secure  additional
financing,  the  possibility  of success in the  Company's  drilling  endeavors,
competitive  factors,  and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission.

                                     PART II

Item 1.   Legal Proceedings

         There are no material pending legal proceedings to which the Company is
a party or to which any of its property is subject except as set forth below.

         On March 12,  1997,  a complaint  entitled F. Worthy  Walker vs.  Loren
Bagley,  William Woodburn,  Mark Woodburn,  Trans Energy, Inc. and Vulcan Energy
Corporation,  was filed in the District Court of Dallas, Texas (# 9702304C). The
complaint  alleges that the Company  breached certain  contracts  related to Mr.
Walker's  employment  with Vulcan  Energy  Corporation,  and seeks  punitive and
exemplary damages.  The Company denies all allegations and intends to vigorously
defend its position.  Management  believes  that the results of the  proceedings
will not have a material adverse effect on the Company. On February 17, 1998 the
Company and the above named  defendants  filed a  countersuit  against F. Worthy
Walker alleging breach of contract, fraud and fraudulent inducement, conversion,
and breach of fiduciary duty and seeks punitive damages. The Company settled the
action in January 2000 for 100,000 shares of the Company's common stock.

         On February  7, 2001,  the United  States  Bankruptcy  Court,  Southern
District of Texas, entered an Order Granting Motion to Dismiss Chapter 7 Case in
the action entitled In Re: Trans Energy, Inc., Case No. 00-39496-H4-7. The Order
dismissed the involuntary  bankruptcy action  instituted  against the Company on
October  16,  2000.  The sole  petitioning  creditor  named  in the  Involuntary
Petition was Western Atlas International,  Inc. ("Western"). An Order for Relief
Under Chapter 7 was entered by the Court on November 22, 2000.

         On April 23, 2000, the 189th  District  Court of Harris  County,  Texas
entered an Agreed Final Judgment in favor of Western  against the Company in the
amount of  $600,665.36,  together with post judgment  interest at 10% per annum.
Following  the  judgment,  Western  and  the  Company  entered  into  settlement
negotiations  concerning  the  Company's  satisfaction  of the judgment  through
payments over a four to five month period together with the pledge of collateral
on certain unencumbered assets. Previously, on or about July 9, 1998, a judgment
had been entered in the 152nd District Court of Harris County, Texas against the
Company in favor of Baker Hughes Oilfield  Operations,  Inc. d/b/a/ Baker Hughes
Inteq. Western Geophysical ("Baker"), a division of Western Atlas International,
Inc., in the amount of  $41,142.00,  together  with interest and attorney  fees.
This  judgment  was  outstanding  at the time of the  filing of the  Involuntary
Petition.

         During its  negotiations  with Western for  settlement of the Judgment,
the Company made a $200,000 "good faith payment" to Western's counsel on October
23, 2000.  On December  12,  2000,  Joe Hill was named as the Chapter 7 Trustee.
Subsequently, Western's counsel delivered the $200,000 to the Trustee.

         On January 19, 2001,  the Company filed with the  Bankruptcy  Court the
Motion to Dismiss Chapter 7 Case. The reasons cited by the Company in support of
its Motion to Dismiss  included,  but were not  limited  to, (i) the Texas Court
being an improper venue for the action, and (ii) the Company never receiving the
Involuntary  Petition and Summons notifying it of the action. In anticipation of

                                      -14-

<PAGE>


the Bankruptcy Court dismissing the Involuntary  Petition,  on February 2, 2001,
the Company  entered into a  Settlement  Agreement  with Baker  Hughes  Oilfield
Operation,  Inc., d/b/a/ Baker Hughes Inteq. Western Geophysical,  a division of
Western Atlas International,  Inc. (the "Baker Entities"). In entering its order
on  February 7, 2001 to dismiss  the  action,  the Court  ordered the Trustee to
retain $17,694.80 for satisfaction of administrative  fees and expenses,  and to
pay to Western  and Baker the sum of  $182,736.66,  on behalf of the Company and
pursuant to the terms of the Settlement Agreement.

         The Settlement  Agreement provided that, subject to the approval of the
Bankruptcy  Court, the Company agreed to pay to the Baker Entities  $759,664.31,
plus interest at 10%. In addition to the $200,000  payable from the escrow,  the
Company  agreed to pay to the Baker  Entities an initial  payment of $117,260.71
within  fifteen  days from the date of the  Dismissal  Order (due  February  21,
2001).  The Company also agreed to make  additional  payments of $100,000  every
thirty days following the initial payment,  with the first payment due beginning
no later  than  March 23,  2001,  continuing  until the  total  obligation  plus
interest is paid in full.  Further,  the Company  pledged as collateral  certain
properties,  personal  property  and  fixtures  and two  directors  each pledged
750,000 shares of the Company's common stock which they personally own.

         A  foreign  judgment  was filed  with the  Circuit  Court in  Pleasants
County,  West  Virginia  for a judgment  against  the  Company  rendered  by the
District  Court in Harris  County,  Texas.  The  judgment  was for $41,142  plus
prejudgment  interest and attorney's  fees of $13,500.  The Company  settled the
action in February 2000.

         The Company has been advised by the Securities and Exchange  Commission
(the  "Commission")  that the Commission is investigating  certain activities by
the Company (In the Matter of Trans Energy,  Inc., C-3481). The Company believes
that the investigation concerns disclosure requirements by the Company regarding
certain press releases and the involuntary  bankruptcy action instituted against
the Company in October 2000. The Company is cooperating  with the  investigation
and certain officers have given their  depositions.  As of the date hereof,  the
investigation remains open.

         On April 10, 2000, a Bellevue  resources,  Inc. recorded and served its
Notice and Statement of Lien in the Sixth Judicial  District,  Campbell  County,
Wyoming,  against the  Company  for  non-payment  of  services.  The Company has
recorded a liability  of $78,651  which is included in the  Company's  financial
statements for the year ended December 31, 2000 under accounts payable.

         On September  22, 2000,  Tioga  Lumber  Company  obtained a judgment of
$43,300 plus  interest in the Circuit Court of Pleasants  County,  West Virgina,
against  Tyler  Construction  Company  for breach of  contract.  The Company has
accrued $47,741 which is included in the Company's financial  statements for the
year ended December 31, 2000 under accounts payable.

         On  February  13,  2001,  Ross  Forbus  obtained a judgment of $428,018
against the Company to satisfy a promissory note previously  entered into by the
Company  with Mr.  Forbus on April 8, 1996.  The  Company  has agreed to payment
terms and  recorded  the balance in notes  payable at  December  31,  2000.  For
additional information, see Note 3 to the attached financial statements.

Item 2.   Changes In Securities and Use of Proceeds

         During the second quarter of 2001 the Company issued  3,655,000  shares
of its common stock to five persons in exchange for services  valued at $.04 per
share,  or an  aggregate  of  $146,200.  The  shares  were  issued  pursuant  to
registration statements on Form S-8.

Item 3.           Defaults Upon Senior Securities

         In 1998,  the  Company  issued  $4,625,400  face  value  of 8%  Secured
Convertible  Debentures  due March 31, 1999 (the  "Debentures")  Interest on the
Debentures  accrued  upon  the date of  issuance  until  payment  in full of the
principal sum was been made or duly provided for. Holders of the Debentures have
the option,  at any time,  until  maturity,  to convert the principal  amount of

                                      -15-

<PAGE>


their  Debenture,  or any  portion  of the  principal  amount  which is at least
$10,000 into shares of the Company's Common Stock at a conversion price for each
share equal to the lower of (a) seventy percent (70%) of the market price of the
Company's  Common Stock averaged over the five trading days prior to the date of
conversion, or (b) the market price on the issuance date of the Debentures.  Any
accrued and unpaid interest shall be payable,  at the option of the Company,  in
cash or in shares of the  Company's  Common Stock  valued at the then  effective
conversion  price.  During  2000,  all  but  one  of the  remaining  outstanding
debentures were converted into commons stock. At June 30, 2001, the Company owed
$331,462 in connection  with the debentures  consisting of $50,000 one debenture
holder and $281,462 in penalties and interest.

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

         This Item is not applicable

Item 5.           Other Information

         This Item is not applicable

Item 6.           Exhibits and Reports on Form 8-K

         (b)      Reports on Form 8-K

                  On July 13, 2001,  the Company filed a Current  Report on Form
                  8-K reporting  under Item 5 that on July 29, 2001, Gary Lawyer
                  had resigned as a director of the Company.
                                      -16-
<PAGE>

                                   SIGNATURES
                                   ----------


         In accordance with the  requirements of the Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.

                                                    TRANS ENERGY, INC.



Date:  August 20, 2001                     By  /s/ Loren E. Bagley
                                               -------------------
                                                   LOREN E. BAGLEY, President
                                                   and Chief Executive Officer




Date:  August 20, 2001                     By  /s/ William F. Woodburn
                                               -----------------------
                                                   WILLIAM F. WOODBURN
                                                   Vice President and Director
                                                  (Principal Accounting Officer)


                                      -16-

<PAGE>