SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C.  20549

                                    Form 10-Q

(Mark One)
[X]   Quarterly report pursuant to Section 13 or 15(d) of the 
      Securities Exchange Act of 1934 for the quarterly period 
      ended March 31, 1997.

- 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 No. 0-17267

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

        COLORADO                               84-1095959
(State or other jurisdiction         (IRS Employer Identification No.)
of incorporation or organization) 

999 18th Street, Suite 1700
Denver, Colorado  80202
(Address of principal executive offices)

(303) 293-2333
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months (or 
such shorter period of time registrant was required to file such 
reports), and (2) has been subject to such filing requirements for 
the past 90 days.

               YES [X]                    NO [  ]

As of May 12, 1997, 4,693,864 shares of the registrant's common 
stock, par value $0.01 per share, were outstanding.


PART I -  FINANCIAL INFORMATION

Item 1 -- Financial Statements

MALLON RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS
 (In thousands)

ASSETS
______


<TABLE>
<CAPTION>
                                                                  March 31,     December 31,
                                                                    1997           1996    
                                                                 (Unaudited)
<S>                                                               <C>             <C>
Current assets:
    Cash and cash equivalents                                     $  1,607        $  2,771
    Short-term investments                                           2,153           2,786
    Accounts receivable:
       Oil and gas sales                                             1,162           1,879
       Joint interest participants, net of allowance
          of $8 and $8, respectively                                 1,119             827
       Related parties                                                  51              20
       Other                                                            66              45
    Inventories                                                        454             251
    Other                                                               87             104
          Total current assets                                       6,699           8,683

Property and equipment:
    Oil and gas properties, full cost method                        50,481          46,175
    Mining properties and equipment                                 10,547          10,114
    Other equipment                                                    692             559
                                                                    61,720          56,848
    Less accumulated depreciation, depletion and amortization      (25,058)        (24,406)
                                                                    36,662          32,442

Notes receivable-related parties                                        17              17

Other, net                                                             246             258

Total Assets                                                      $ 43,624        $ 41,400
                                                                  ========        ========

LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________

Current liabilities:
    Trade accounts payable                                        $  3,336        $  1,614
    Undistributed revenue                                            1,824           1,502
    Drilling advances                                                   66             100
    Accrued taxes and expenses                                          55              77
    Current portion of capital lease obligation                         25              25
    Current portion of installment obligation, less unamortized
       discount of $17 and $-0-, respectively                          383              --
          Total current liabilities                                  5,689           3,318

Long-term bank debt                                                  3,269           3,269
Installment obligation, less unamortized discount of $39 and
     $-0-, respectively                                                361              --
Notes payable                                                          230             230
Capital lease obligation, net of current portion                         6              12
Drilling advances                                                      368             368
Accrued expenses                                                        42              41
          Total non-current liabilities                              4,276           3,920

Total liabilities                                                    9,965           7,238

Commitments and contingencies                                           --              --

Minority interest                                                    8,195           8,358

Series B Mandatorily Redeemable Convertible Preferred Stock,
    $0.01 par value, 500,000 shares authorized, 400,000 shares
    issued and outstanding, respectively, liquidation 
    preference and mandatory redemption of $4,000,000                3,915           3,900

Shareholders' equity: 
    Common Stock, $0.01 par value, 25,000,000 shares
       authorized; 4,388,117 and 4,384,562 shares issued
       and outstanding, respectively                                    44              44
    Additional paid-in capital                                      56,597          56,707
    Accumulated deficit                                            (35,092)        (34,847)
          Total shareholders' equity                                21,549          21,904

Total Liabilities and Shareholders' Equity                        $ 43,624        $ 41,400
                                                                  ========        ========
</TABLE>

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

MALLON RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                     For the Three Months
                                                                        Ended March 31,   
                                                                       1997       __1996  
                                                                    (Unaudited)
<S>                                                                   <C>         <C>
Revenues:
    Oil and gas sales                                                 $ 1,972     $ 1,357
    Interest and other                                                     59          12
                                                                        2,031       1,369

Costs and expenses:
    Oil and gas production                                                697         422
    Mining project expenses                                               327          95
    Depreciation, depletion and amortization                              580         578
    Impairment of oil and gas properties                                   79          --
    General and administrative                                            638         467
    Interest and other                                                     91         212
                                                                        2,412       1,774

Minority interest in loss of consolidated subsidiary                      151          --

Loss before extraordinary item                                           (230)       (405)

Extraordinary loss on early retirement of debt                             --        (160)

Net loss                                                                 (230)       (565)

Dividends on preferred stock and accretion                                (95)        (90)

Net loss attributable to common shareholders                          $  (325)    $  (655)
                                                                      =======     =======

Per share:
    Loss attributable to shareholders before extraordinary item       $ (0.07)    $ (0.26)

    Extraordinary loss                                                     --       (0.08)

    Net loss attributable to common shareholders                      $ (0.07)    $ (0.34)
                                                                      =======     =======

Weighted average common shares outstanding                              4,386       1,955 
</TABLE>

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

MALLON RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)

<TABLE>
<CAPTION>
                                                                    For the Three Months
                                                                        Ended March 31,   
                                                                       1997       __1996  
                                                                    (Unaudited)
<S>                                                                   <C>         <C>
Cash flows from operating activities:
    Net loss                                                          $  (230)    $  (565)
    Adjustments to reconcile net loss to net cash provided by operating activities:
       Depreciation, depletion and amortization                           580         578
       Impairment of oil and gas properties                                79          --
       Amortization of discount on notes payable                           11          --
       Minority interest in loss of consolidated subsidiary              (151)         --
       Stock compensation expense                                          13          64
       Non-cash portion of extraordinary loss                              --         160
       Other                                                               --         (13)
       Changes in operating assets and liabilities:
         (Increase) decrease in:
            Accounts receivable                                           373         115
            Inventory and other assets                                   (181)         11
         Increase (decrease) in:
            Trade accounts payable and undistributed revenue            2,045        (435)
            Accrued taxes and expenses                                    (22)        156
            Drilling advances                                             (34)        (58)
Net cash provided by operating activities                               2,483          13

Cash flows from investing activities:
    Decrease in short-term investments                                    633          --
    Additions to property and equipment                                (4,139)       (661)
    Purchase of subsidiary stock                                          (55)         --
Net cash used in investing activities                                  (3,561)       (661)

Cash flows from financing activities:
    Proceeds from long-term debt                                           --         231
    Payments of long-term debt                                             (6)        (10)
    Debt issue costs paid                                                  --         (50)
    Payment of preferred dividends                                        (80)        (80)
Net cash provided by (used in) financing activities                       (86)         91

Net decrease in cash and cash equivalents                              (1,164)       (557)

Cash and cash equivalents, beginning of period                          2,771       1,269

Cash and cash equivalents, end of period                              $ 1,607     $   712
                                                                      =======     =======

Supplemental cash flow information: 
    Cash paid for interest                                            $   113     $   150

    Non-cash transactions: 
       Issuance of common stock in exchange for consultants' 
          accounts payable                                            $    --     $   345

       Installment obligation (less unamortized discount) in
          exchange for property and equipment                         $   733     $    --

</TABLE>



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

MALLON RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
___________


Note 1.  GENERAL

    The Company engages in oil and gas exploration and production 
through its wholly-owned subsidiary, Mallon Oil Company ("Mallon 
Oil").  The Company also has interests in gold and silver 
exploration through its majority-owned subsidiary, Laguna Gold 
Company ("Laguna").  At March 31, 1997, the Company owned 
approximately 56% of Laguna.  The significant majority of the 
Company's assets and revenues are utilized in its oil and gas 
operations, which are conducted primarily in the State of New 
Mexico.  Mining operations, conducted through Laguna in Costa 
Rica, are in the pre-production stage.  All significant 
intercompany balances and transactions have been eliminated from 
the consolidated financial statements.

     These unaudited consolidated financial statements have been 
prepared in accordance with generally accepted accounting 
principles for interim financial information and with the 
instructions to Form 10-Q and Article 10 of Regulation S-X.  
Accordingly, they do not include all of the information and 
footnotes required by generally accepted accounting principles for 
complete financial statements.  In the opinion of management, such 
interim statements reflect all adjustments (consisting of normal 
recurring adjustments) necessary to present fairly the financial 
position and the results of operations and cash flows for the 
interim periods presented.  The results of operations for these 
interim periods are not necessarily indicative of the results to 
be expected for the full year.  These interim statements should be 
read in conjunction with the consolidated financial statements and 
notes thereto included in the Company's Annual Report on Form 10-K 
for the year ended December 31, 1996.

     Reclassifications from operating service revenue to oil and 
gas production and general and administrative expense were made to 
the March 31, 1996 statement of operations to conform to the 
March 31, 1997 presentation.

Note 2. LONG-TERM BANK DEBT

     Effective January 1997, the borrowing base under the 
Company's revolving credit facility was increased to $10,000,000.  
Beginning July 31, 1997, the borrowing base will decrease by 
$140,000 per month.  The Company is not required to make debt 
service payments unless the outstanding balance under the facility 
exceeds the borrowing base, as adjusted.  At March 31, 1997, the 
amount outstanding under the facility was $3,269,000, leaving the 
amount available under the facility at $6,731,000.

Note 3.  OIL AND GAS PROPERTIES

     In January 1997, the Company acquired certain oil and gas 
properties for consideration of $1,300,000 in cash and conveyance 
of its interest in certain other oil and gas properties.  Cash 
consideration of $500,000 was paid at closing in January 1997 and 
installment obligations of $400,000 will be paid on each of 
January 1, 1998 and January 1, 1999.  The installment obligations 
include an imputed interest rate of 6%.  There was no gain or loss 
relative to the conveyance of the interest in the oil and gas 
properties.

Note 4.  MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

     Mandatory redemption of the Company's Series B Preferred 
Stock (the "Series B Stock") was to begin in April 1997, when 20% 
of the outstanding shares, or 80,000 shares, were to be redeemed 
for $800,000.  The Company extended an offer to all holders of the 
Series B Stock to convert their shares into shares of the 
Company's common stock at a conversion price of $9.00, rather than 
the $11.31 conversion price otherwise in effect.  In April 1997, 
holders of 252,675 shares of Series B Stock elected to convert 
their shares into 280,747 shares of the Company's common stock.  
In addition, the Company redeemed 12,125 shares of Series B Stock 
at $10.00 per share.  After these transactions, 135,200 shares of 
Series B Stock remain outstanding and the Company has no further 
obligation to redeem any shares until April 2000.

Note 5.  EARNINGS PER SHARE

     In February 1997, the Financial Accounting Standards Board 
issued Statement of Financial Accounting Standards (SFAS) No. 128, 
"Earnings per Share," which establishes new standards for 
computing and presenting earnings per share.  The new Statement is 
intended to simplify the standard for computing earnings per share 
and will require the presentation of basic and diluted earnings 
per share on the face of the income statement, including all prior 
periods presented.  The Statement is effective for financial 
statements issued for periods ending after December 15, 1997, and 
earlier adoption is not permitted.  Had the calculation of 
earnings per share been prepared in accordance with the provisions 
of SFAS No. 128 for the quarters ended March 31, 1997 and 1996, 
earnings per share would have been the same as what was reported 
on the consolidated statement of operations.

Note 6.  SUBSEQUENT EVENTS

     In April 1997, the Company's Board of Directors declared a 
dividend on its shares of Common Stock (the "Common Shares") of 
preferred share purchase rights (the "Rights") as part of a 
Shareholder Rights Plan (the "Plan").  The Plan is designed to 
insure that all shareholders of the Company receive fair value for 
their Common Shares in the event of a proposed takeover of the 
Company and to guard against the use of partial tender offers or 
other coercive tactics to gain control of the Company without 
offering fair value to the Company's shareholders.  At the present 
time, the Company knows of no proposed or threatened takeover, 
tender offer or other effort to gain control of the Company.  
Under the terms of the Plan, the Rights will be distributed as a 
dividend at the rate of one Right for each Common Share held.  
Shareholders will not actually receive certificates for the Rights 
at this time, but the Rights will become part of each Common 
Share.  All Rights expire on April 22, 2001.

     Each Right will entitle the holder to buy shares of Common 
Stock at an exercise price of $40.00.  The Rights will be 
exercisable and will trade separately from the Common Shares only 
if a person or group acquires beneficial ownership of 20% or more 
of the Company's Common Shares or commences a tender or exchange 
offer that would result in such a person or group owning 20% or 
more of the Common Shares.  Only when one or more of these events 
occur will shareholders receive certificates for the Rights.

     If any person actually acquires 20% or more of Common Shares 
-- other than through a tender or exchange offer for all Common 
Shares that provides a fair price and other terms for such shares 
-- or if a 20%-or-more shareholder engages in certain "self-
dealing" transactions or engages in a merger or other business 
combination in which the Company survives and its Common Shares 
remain outstanding, the other shareholders will be able to 
exercise the Rights and buy Common Shares of the Company having 
twice the value of the exercise price of the Rights.  In other 
words, payment of the $40.00 per Right exercise price will entitle 
the holder to acquire $80.00 worth of Common shares.  
Additionally, if the Company is involved in certain other mergers 
where its shares are exchanged, or certain major sales of assets 
occur, shareholders will be able to purchase the other party's 
common shares in an amount equal to twice the value of the 
exercise price of the Rights.

     The Company will be entitled to redeem the Rights at $.01 per 
Right at any time until the tenth day following public 
announcement that a person has acquired a 20% ownership position 
in Common Shares of the Company.  The Company in its discretion 
may extend the period during which it can redeem the Rights.


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

The following discussion is intended to assist in understanding 
the Company's consolidated financial position at March 31, 1997 
and December 31, 1996, and results of operations and cash flows 
for the three months ended March 31, 1997 and 1996.  The Company's 
Consolidated Financial Statements and notes thereto should be 
referred to in conjunction with the following discussion.  Except 
as noted, the financial information discussed below is 
consolidated information, which includes the accounts of Laguna 
Gold Company ("Laguna").

Overview

Historically, the Company has engaged in two separate and distinct 
facets of the natural resources business.  Through Mallon Oil 
Company, the Company has pursued its core oil and gas business.  
Through Laguna, the Company has engaged in mining activities.  By 
early 1996, the Company concluded that the level of capital and 
management resources required to fully develop each of these 
businesses made it inadvisable for the Company to continue to 
pursue both.  Accordingly, the Company separated the businesses by 
establishing the financial independence of Laguna and having the 
Company focus its efforts on the oil and gas business.  Laguna's 
1996 Canadian financing, and listing on The Toronto Stock 
Exchange, were the key steps toward the accomplishment of that 
goal and should permit Laguna to operate independently without 
further reliance on the Company for financial support.  The 
Company does not have any obligation or intention to finance 
Laguna's future operations.

In light of the recent implementation of this fundamental change 
in the manner in which the Company will henceforth pursue its 
business, the Company's past financial performance is not 
necessarily indicative of its future operations.

Liquidity and Capital Resources

Until its October 1996 equity offering, the Company had, since 
inception, been significantly constrained by a continued shortage 
of capital.  The October 1996 financing remedied that problem, at 
least for the foreseeable future.  For the first time in the 
Company's history, the Company has funds available to develop and 
exploit the Company's substantial inventory of oil and gas 
properties.  Management is of the view that the Company's chronic 
liquidity problem can now be solved, on a long term basis, by the 
Company's development of its oil and gas properties.  Management 
believes that such operations will increase cash flow and improve 
liquidity, and thereby allow the Company to avoid future working 
capital short-falls.  The Company had working capital surpluses of 
$1,010,000 and $5,365,000 at March 31, 1997 and December 31, 1996, 
respectively.

The Company has a revolving credit facility (the "Facility") with 
Bank One, Texas, N.A. (the "Bank').  The borrowing base under the 
revolver is subject to redetermination every six months, or at 
such other times as the Bank may determine.  The Company is 
obligated to maintain certain financial and other covenants, 
including a minimum current ratio, minimum net equity, a debt 
coverage ratio and a total bank debt ceiling.  The Facility is 
collateralized by substantially all of the Company's oil and gas 
properties and expires March 31, 1999.  At May 9, 1997, the 
borrowing base under the facility was $10,000,000, and the 
principal amount outstanding was $4,669,000, leaving the amount 
remaining available under the Facility at $5,331,000.  The Company 
is currently in compliance with the covenants of the Facility.

Mandatory redemption of the Company's Series B Mandatorily 
Redeemable Convertible Preferred Stock (the "Series B Stock") was 
to begin in April 1997, when 20% of the outstanding shares, or 
80,000 shares, were to be redeemed for $800,000.  The Company 
extended an offer to all holders of the Series B Stock to convert 
their shares into shares of the Company's common stock at a 
conversion price of $9.00, rather than the $11.31 conversion price 
otherwise in effect.  In April 1997, holders of 252,675 shares of 
Series B Stock elected to convert their shares into 280,747 shares 
of the Company's common stock.  In addition, the Company redeemed 
12,125 shares of Series B Stock at $10.00 per share.  After these 
transactions, 135,200 shares of Series B Stock remain outstanding 
and the Company has no further obligation to redeem any shares 
until April 2000.

Historically, the Company's involvement in both oil and gas and 
mining activities has hampered its ability to raise capital due to 
the complexity of the Company's financial structure and apparent 
market perceptions that the Company was too small to effectively 
pursue two such disparate businesses.  By establishing independent 
financing arrangements for Laguna, management hopes to overcome 
these problems, and place the Company in a position to exploit its 
oil and gas acreage.  The elimination of the Company's commitment 
to fund Laguna's operations should assist the Company in these 
efforts.

To implement its planned drilling and development programs, the 
Company expended $3,073,000 during first quarter 1997.  The 
Company completed 5 of the 6 development wells it drilled.  The 
one well not completed was abandoned due to mechanical problems 
encountered while running casing.  The Company expects to re-drill 
this well.  The Company recompleted 5 wells during first quarter 
1997, all of which are on production in the second quarter.  In 
addition, the Company spudded three development wells in first 
quarter 1997 that are presently being completed.  Currently, the 
Company is drilling two additional wells and is conducting work on 
three recompletions.

During the first quarter 1997, the Company participated in one 
exploratory well in Belize, which was abandoned as a dry hole.

The Company currently plans to drill approximately 25 wells and 
recomplete 19 wells during the remainder of 1997, and has a 
capital expenditure budget of approximately $11 million for the 
year.

Production for first quarter 1997 averaged 1,172 BOE per day, up 
from the year 1996 average of 1,060 BOE per day.  Currently, daily 
production is in excess of 1,500 BOE per day.

With the net proceeds of the equity offering, the Company's 
working capital and credit facility and the operating cash flows 
that are expected to be generated by the application of such funds 
to the Company's drilling program, management anticipates that the 
Company will have sufficient capital to fund the continued 
development of its current properties and to meet the Company's 
liquidity requirements for the next twelve months.

Results of Operations



<TABLE>
<CAPTION>
                                                           Three Months Ended March 31,  
                                                          1997                     1996  
                                                       (In thousands, except per unit data)
<S>                                                     <C>                      <C>
Results of Operations, Consolidated:
    Revenues                                            $  2,031                 $  1,369
    Costs and expenses                                     2,412                    1,774
    Net loss                                                (230)                    (565)
    Net loss attributable to common shareholders            (325)                    (655)
    Net loss per share attributable to common shares       (0.07)                   (0.34)
    EBITDA (1)                                               520                      385
    Capital expenditures (3)                               4,872                      661

Results of Operations from Oil and Gas Producing Activities: 
    Oil and gas sales                                      1,972                    1,357
    Production tax and marketing expense                     263                      156
    Lease operating expense                                  434                      266
    Depletion                                                530                      538
    Impairment of oil and gas properties                      79                       --

Net Production: 
    Oil (MBbl)                                                37                       45
    Natural gas (MMcf)                                       411                      322
    BOE                                                      106                       99

Average Sales Price Realized: 
    Oil (per Bbl)                                        $ 22.59                  $ 17.04
    Natural gas (per Mcf)                                   2.76                     1.83
    Per BOE                                                18.60                    13.71

Average production tax and marketing expense (per BOE):     2.48                     1.58

Average lease operating expense (per BOE):                  4.09                     2.69

Average depletion (per BOE):                                5.00                     5.43

Results of Operations, Excluding Laguna (2): 
    Revenues                                             $ 1,997                  $ 1,358
    Costs and expenses                                     2,060                    1,667
    Net loss                                                 (63)                    (469)
    Net loss attributable to common shareholders            (158)                    (559)
    Net loss per share attributable to common shares       (0.04)                   (0.29)
    EBITDA (1)                                               662                      469
    Capital expenditures (3)                               4,377                      224
</TABLE>_________________
1) 

1) EBITDA is income before income taxes, interest expense, 
depreciation, depletion and amortization, impairment, and 
extraordinary loss.  EBITDA is a financial measure commonly used 
in the Company's industry and should not be considered in 
isolation or as a substitute for net income, cash flow provided by 
operating activities or other income or cash flow data prepared in 
accordance with generally accepted accounting principles or as a 
measure of a company's profitability or liquidity.
 
2) Reflects oil and gas operations.
 
3) Includes expenditures for drilling, acquisitions, and furniture 
and equipment.

Three Months Ended March 31, 1997 Compared to March 31, 1996
 
Revenues.  Total revenues for the three months ended March 31, 
1997 increased 48% to $2,031,000 from $1,369,000 in 1996.  Oil and 
gas sales in the 1997 quarter increased 45% to $1,972,000 from 
$1,357,000 in the 1996 quarter primarily due to higher oil and gas 
prices.  Average oil prices per barrel for the three months ended 
March 31, 1997 increased 33% to $22.59, from $17.04 for the three 
months ended March 31, 1996.  Average gas prices per Mcf for the 
three months ended March 31, 1997 increased 51% to $2.76 from 
$1.83 for the fiscal 1996 quarter.  In addition, oil production 
for the three months ended March 31, 1997 decreased 18% to 37,000 
barrels from 45,000 barrels in the same period a year ago and gas 
production for the 1997 quarter increased 28% to 411,000 Mcf from 
322,000 Mcf in the 1996 quarter.  The oil production decreases are 
due to normal declines and the shutting-in of deeper zones to 
allow recompletions in shallower zones.  Oil production was also 
constrained by a delay in planned oil drilling while additional 
land acquisitions were made.  The gas production increases are due 
to the Company's successful drilling program in 1997.  Excluding 
Laguna, total revenues for the three months ended March 31, 1997 
increased 47% to $1,997,000 from $1,358,000 in the 1996 quarter, 
primarily due to higher oil and gas prices.  There were no sales 
of gold and silver in 1997 or 1996, and no sales are expected in 
the immediate future.

Oil and Gas Production Expenses.  Oil and gas production expenses, 
including production tax and marketing expenses, increased 65% to 
$697,000 from $422,000 in 1996.  The increase was primarily due to 
non-recurring repair and maintenance costs totaling approximately 
$137,000, or $1.29 per BOE, during the 1997 quarter, compared to 
non-recurring repair and maintenance costs totaling approximately 
$44,000, or $.44 per BOE, during the fiscal 1996 quarter.  
Production tax and marketing expense per BOE increased 57% to 
$2.48 from $1.58 due to higher oil and gas prices in the fiscal 
1997 quarter.

Mining Project Expenses.  Mining project expenses for the three 
months ended March 31, 1997 increased 244% to $327,000 from 
$95,000 for the three months ended March 31, 1996 due to Laguna's 
drilling program in new exploration areas and business development 
expenses related to reviewing other mineral concessions.

Depreciation, Depletion and Amortization.  Depreciation, depletion 
and amortization increased slightly to $580,000 from $578,000.  
Depletion per BOE decreased 8% to $5.00 from $5.43, primarily due 
to an increase in oil and gas reserves.

Impairment of Oil and Gas Properties.  Impairment of oil and gas 
properties was $79,000 during the fiscal 1997 quarter compared to 
$-0- for the fiscal 1996 quarter.  In 1996, the Company acquired a 
2.25% working interest in an exploration venture to drill one or 
more wells offshore Belize.  The joint venture drilled a dry hole 
during the 1997 quarter.  Accordingly, the Company reduced the 
carrying amount of its capitalized costs.  During the fiscal 1996 
quarter, the Company's oil and gas activities were conducted 
entirely in the United States.

General and Administrative Expenses.  Total general and 
administrative expenses for the three months ended March 31, 1997 
increased 37% to $638,000 from $467,000 in the 1996 quarter due to 
the hiring of additional personnel because of expanded operations 
and less sharing of expenses with Laguna now that Laguna is 
operating independently.  Laguna's general and administrative 
expenses are included in mining project expenses on the 
consolidated statements of operations.

Interest and Other Expenses.  Interest and other expenses for the 
three months ended March 31, 1997 decreased 57% to $91,000 from 
$212,000 for the three months ended March 31, 1996.  The decrease 
was primarily due to higher outstanding borrowings under the 
Company's credit facility in the 1996 quarter.

Minority Interest.  Minority interest in loss of consolidated 
subsidiary of $151,000 represents the minority interest share in 
the Laguna loss.

Income Taxes.  The Company incurred net operating losses ("NOLs") 
for U.S. Federal income tax purposes in 1997 and 1996, which can 
be carried forward to offset future taxable income.  Statement of 
Financial Accounting Standards No. 109 requires that a valuation 
allowance be provided if it is more likely than not that some 
portion or all of a deferred tax asset will not be realized.  The 
Company's ability to realize the benefit of its deferred tax asset 
will depend on the generation of future taxable income through 
profitable operations and the expansion of the Company's oil and 
gas producing activities.  The market and capital risks associated 
with achieving the above requirement are considerable, resulting 
in the Company's decision to provide a valuation allowance equal 
to the net deferred tax asset.  Accordingly, the Company did not 
recognize any tax benefit in the consolidated statements of 
operations for the three months ended March 31, 1997 and 1996.

Extraordinary Loss.  The Company incurred an extraordinary loss of 
$160,000 during the three months ended March 31, 1996, as a result 
of the refinancing of its credit facility with a new lender.

Net Loss.  Net loss for the three months ended March 31, 1997 
decreased 59% to $230,000 from $565,000 for the three months ended 
March 31, 1996 as a result of the factors discussed above.  The 
Company paid the 8% dividend of $80,000 on its $4,000,000 face 
amount Series B Mandatorily Redeemable Convertible Preferred Stock 
("Series B Preferred Stock") in each of the quarters ended 
March 31, 1997 and 1996, and realized accretion of $15,000 and 
$10,000, respectively.  Preferred dividend payments in the future 
will be reduced as a result of the conversion into common stock 
and redemption in April 1997 of Series B Preferred Stock, as 
discussed in Note 4 of the Consolidated Financial Statements.  Net 
loss attributable to common shareholders for the quarter ended 
March 31, 1997 decreased 50% to $325,000 from $655,000 for the 
quarter ended March 31, 1996.  Excluding Laguna, net loss 
attributable to common shareholders for the quarter ended 
March 31, 1997 decreased 72% to $158,000 from $559,000 due 
primarily to the factors discussed above.

Miscellaneous

In February 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards (SFAS) No. 128, 
"Earnings per Share," which establishes new standards for 
computing and presenting earnings per share.  The new Statement is 
intended to simplify the standard for computing earnings per share 
and will require the presentation of basic and diluted earnings 
per share on the face of the income statement, including all prior 
periods presented.  The Statement is effective for financial 
statements issued for periods ending after December 15, 1997, and 
earlier adoption is not permitted.  Had the calculation of 
earnings per share been prepared in accordance with the provisions 
of SFAS No. 128 for the quarters ended March 31, 1997 and 1996, 
earnings per share would have been the same as what was reported 
on the consolidated statement of operations.

The Company's oil and gas operations are significantly affected by 
certain provisions of the Internal Revenue Code of 1986, as 
amended, applicable to the oil and gas industry.  Current law 
permits the Company to deduct currently, rather than capitalize, 
intangible drilling and development costs incurred or borne by it.  
The Company, as an independent producer, is also entitled to a 
deduction for percentage depletion with respect to the first 1,000 
barrels per day of domestic crude oil (and/or equivalent units of 
domestic natural gas) produced (if such percentage depletion 
exceeds cost depletion).  Generally, this deduction is 15% of 
gross income from an oil and gas property, without reference to 
the taxpayer's basis in the property.  The percentage depletion 
deduction may not exceed 100% of the taxable income from a given 
property.  Further, percentage depletion is limited in the 
aggregate to 65% of the Company's taxable income.  Any depletion 
disallowed under the 65% limitation, however, may be carried over 
indefinitely.

The Company uses hedging instruments to manage commodity price 
risks.  The Company has used energy swaps and other financial 
arrangements to hedge against the effects of fluctuations in the 
sales prices for oil and natural gas.  Gains and losses on such 
transactions are matched to produce sales and charged or credited 
to oil and gas sales when that product is sold.  Management 
believes that the use of various hedging arrangements can be a 
prudent means of protecting the Company's financial interests from 
the volatility of oil and gas prices.

Inflation has not historically had a material impact on the 
Company's financial statements, and management does not believe 
that the Company will be materially more or less sensitive to the 
effects of inflation than other companies in the oil and gas 
business.

When evaluating the Company, its operations, or its expectations, 
the reader should bear in mind that the Company and its operations 
are subject to numerous risks and uncertainties.  Among these are 
risks related to the oil and gas and the mining businesses 
(including operating risks and hazards and the regulations imposed 
thereon), risks and uncertainties related to the volatility of the 
prices of oil and gas and minerals, uncertainties related to the 
estimation of reserves of oil and gas and minerals and the value 
of such reserves, the effects of competition and extensive 
environmental regulation, the uncertainties related to foreign 
operations, and other factors, many of which are necessarily 
beyond the Company's control.


PART II - OTHER INFORMATION

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

(a)  Exhibits:

     None.

(b)  Reports on Form 8-K:

During first quarter 1997, the Company filed four Periodic Reports 
on Form 8-K dated: January 15, 1997, February 27, 1997, March 18, 
1997, and May 6, 1997.  Each Report related to an "Item 5. Other 
Events" matter.  On April 22, 1997, two separate Forms 8-K were 
filed, each due to an "Item 5. Other Events" matter with related 
"Item 7. Exhibits" attached thereto.


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.

                            MALLON RESOURCES CORPORATION
                            Registrant



Date:  May 15, 1997         By: _/s/ Roy K. Ross            
                                Roy K. Ross
                                Executive Vice President


Date:  May 15, 1997         By: _/s/ Alfonso R. Lopez   
                                Alfonso R. Lopez
                                Vice President, Finance/Treasurer