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, 1998.

- 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 April 30, 1998, 6,996,200 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,
                                                                     1998          1997 
                                                                        (Unaudited)
<S>                                                                <C>         <C>
Current assets:
    Cash and cash equivalents                                      $  1,235    $  6,741 
    Accounts receivable:
       Oil and gas sales                                              1,151       1,464
       Joint interest participants, net of allowance of
         $8 and $8, respectively                                      2,358       2,406
       Related parties                                                   77          72
       Other                                                             --           7
    Inventories                                                         401         327
    Other                                                               182          46
          Total current assets                                        5,404      11,063

Property and equipment:
    Oil and gas properties, full cost method                         70,787      63,148
    Natural gas processing plant                                      3,019       2,760
    Other equipment                                                     701         665
                                                                     74,507      66,573
    Less accumulated depreciation, depletion and amortization       (27,538)    (26,393)
                                                                     46,969      40,180

Notes receivable-related parties                                         18          18

Other, net                                                              158         165

Total Assets                                                       $ 52,549    $ 51,426


                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Trade accounts payable                                         $  7,414    $  6,797
    Undistributed revenue                                             1,292         813
    Current portion of installment obligation, less unamortized
       discount of $17 and $22, respectively                            383         378
    Drilling advances                                                    41         135
    Accrued taxes and expenses                                           12           4
    Current portion of lease obligation                               1,697       1,746
          Total current liabilities                                  10,839       9,873

Long-term bank debt                                                       1           1
Accrued expenses                                                         39          39
          Total non-current liabilities                                  40          40

Total liabilities                                                    10,879       9,913

Commitments and contingencies

Series B Mandatorily Redeemable Convertible Preferred Stock,
    $0.01 par value, 500,000 shares authorized, 135,200 shares
    issued and outstanding, respectively, liquidation preference 
    and mandatory redemption of $1,352,000                            1,320       1,317

Shareholders' equity: 
    Common Stock, $0.01 par value, 25,000,000 shares
       authorized; 6,996,200 and 6,995,264 shares issued
       and outstanding, respectively                                     70          70
    Additional paid-in capital                                       74,050      73,937
    Accumulated deficit                                             (33,770)    (33,811)
          Total shareholders' equity                                 40,350      40,196

Total Liabilities and Shareholders' Equity                         $ 52,549    $ 51,426
</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,
                                                                       1998          1997
                                                                         (Unaudited)
<S>                                                                    <C>         <C>
Revenues:
    Oil and gas sales                                                  $3,069      $1,972 
    Interest and other                                                     56          25
                                                                        3,125       1,997

Costs and expenses:
    Oil and gas production                                              1,163         697
    Depreciation, depletion and amortization                            1,153         555
    Impairment of oil and gas properties                                   --          79
    General and administrative                                            656         638
    Interest and other                                                    109          91
                                                                        3,081       2,060

Equity in loss of affiliate                                                --        (167)

Net income (loss)                                                          44        (230)

Dividends on preferred stock and accretion                                (30)        (95)

Net income (loss) attributable to common shareholders                  $   14      $ (325)


Basic:
    Net income (loss) per share attributable to common shareholders    $   --      $(0.07)

    Weighted average common shares outstanding                          6,996       4,386 

Diluted:
    Net income (loss) per share attributable to common shareholders    $   --      $(0.07)

    Weighted average common shares outstanding                          7,088       4,386 
</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,
                                                                       1998          1997
                                                                         (Unaudited)
<S>                                                                    <C>         <C>
Cash flows from operating activities:
    Net income (loss)                                                  $    44     $  (230)
    Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:
        Depreciation, depletion and amortization                         1,153         555
        Impairment of oil and gas properties                                --          79
        Amortization of discount on installment obligation                   6          11
        Equity in loss of affiliate                                         --         167
        Stock compensation expense                                         115          11
        Changes in operating assets and liabilities:
            (Increase) decrease in:
                  Accounts receivable                                      363         315
                  Inventory and other assets                              (211)       (204)
            Increase (decrease) in:
                  Trade accounts payable and undistributed revenue       1,096       1,929
                   Accrued taxes and expenses                                6         (31)
                  Drilling advances                                        (94)        (34)
Net cash provided by operating activities                                2,478       2,568

Cash flows from investing activities:
    Additions to property and equipment                                 (7,907)     (3,644)
    Purchase of subsidiary stock                                            --         (55)
    Other                                                                   --         (47)
Net cash used in investing activities                                   (7,907)     (3,746)

Cash flows from financing activities:
    Lease obligation payments                                              (50)         (6)
    Payment of preferred dividends                                         (27)        (80)
Net cash used in financing activities                                      (77)        (86)

Net decrease in cash and cash equivalents                               (5,506)     (1,264)

Cash and cash equivalents, beginning of period                           6,741       2,771

Cash and cash equivalents, end of period                               $ 1,235     $ 1,507

Supplemental cash flow information:
    Cash paid for interest                                             $   110     $   113

    Non-cash transactions: 
        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

    Mallon Resources Corporation ("the Company") engages in oil 
and gas exploration and production through its wholly-owned 
subsidiary, Mallon Oil Company ("Mallon Oil"), whose oil and gas 
operations are conducted primarily in the State of New Mexico.  
The Company also has an interest in Laguna Gold Company 
("Laguna").  All significant intercompany balances and 
transactions have been eliminated from the consolidated financial 
statements.

    At March 31, 1998, the Company owned approximately 49% of 
Laguna.  As discussed in the Company's annual report on Form 10-K 
for the year ended December 31, 1997 (the "1997 Form 10-K"), the 
Company's share of Laguna's net losses exceeded the carrying value 
of its investment in and advances to Laguna because of Laguna's 
decision to write-down its mining assets.  Accordingly, the 
Company no longer reflects its share of Laguna's net losses and 
may only reflect its share of Laguna's future earnings to the 
extent that they exceed the Company's share of Laguna's current 
and future net losses not recognized.

    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 1997 Form 10-K.

    Certain prior year amounts in the consolidated financial 
statements have been reclassified to conform to the presentation 
used in 1998.

Note 2. LONG-TERM BANK DEBT

    Effective March 1998, the borrowing base under the Company's 
revolving credit facility was increased to $21,250,000, and the 
amount of the monthly reduction to the borrowing base was reduced 
to zero, until redetermined in connection with the next borrowing 
base review.  Previously, the amount of the reduction was $170,000 
per month.  At March 31, 1998, the amount outstanding under the 
facility was $1,000, leaving the amount available under the 
facility at $21,249,000.

Note 3. EARNINGS (LOSS) PER SHARE

    In fourth quarter 1997, the Company adopted Statement of 
Financial Accounting Standards ("SFAS") No. 128, "Earnings per 
Share."  Under the provisions of SFAS No. 128, basic earnings per 
share is computed by dividing income available to common 
shareholders by the weighted average number of common shares 
outstanding for the period. Diluted earnings per share reflects 
the potential dilution that could occur if the Company's 
outstanding stock options and warrants were exercised (calculated 
using the treasury stock method) or if the Company's Series B 
Convertible Preferred Stock were converted to common stock.  SFAS 
No. 128 requires a restatement of all periods presented.

    The following table reconciles the net income (loss) and 
common shares outstanding used in the calculations of basic and 
diluted net income (loss) per share for the three months ended 
March 31, 1998 and 1997, respectively.

<TABLE>
<CAPTION>
                               Three Months Ended March 31,
                                 1998                 1997
                        Net     Common        Net    Common    
(In thousands)          Income  Shares   EPS  Loss   Shares   EPS
<S>                       <C>    <C>     <C>  <C>     <C>     <C>
Net income (loss)         $ 44                $(230)

Dividends on preferred 
  stock and accretion      (30)                 (95)

Basic income (loss) 
  per share                 14   6,996   $--   (325)  4,386 $(.07)

Warrants                    --      16           --      --

Stock options               --      76           --      --

Diluted income (loss) 
  per share                $14   7,088   $--  $(325)  4,386 $(.07)
</TABLE>

    Options to purchase 479,000 shares of common stock and Series 
B Convertible Preferred Stock convertible into 131,000 shares of 
common stock were excluded from the calculation for the first 
quarter of 1998 because they were antidilutive.  All options, 
warrants, and Series B Convertible Preferred Stock were excluded 
from the calculation for the first quarter of 1997 because they 
were antidilutive as a result of the Company's net loss in that 
period.

Note 4. COMPREHENSIVE INCOME:

    The Company adopted SFAS No. 130, "Comprehensive Income," 
beginning with the first quarter of 1998.  There are no components 
of comprehensive income which have been excluded from net income 
and, therefore no separate statement of comprehensive income has 
been presented.


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, 1998 
and December 31, 1997, and results of operations and cash flows 
for the three months ended March 31, 1998 and 1997.  The Company's 
Consolidated Financial Statements and notes thereto should be 
referred to in conjunction with the following discussion.

Overview

The Company's revenues, profitability and future rate of growth 
will be substantially dependent upon its drilling success in the 
San Juan and Delaware Basins, and prevailing prices for oil and 
gas, which are in turn dependent upon numerous factors that are 
beyond the Company's control, such as economic, political and 
regulatory developments and competition from other sources of 
energy.  The energy markets have historically been volatile, and 
there can be no assurance that oil and gas prices will not be 
subject to wide fluctuations in the future.   A substantial or 
extended decline in oil or gas prices could have a material 
adverse effect on the Company's financial position, results of 
operations and access to capital, as well as the quantities of oil 
and gas reserves that the Company may economically produce.

Liquidity and Capital Resources

The Company has a revolving credit facility (the "Facility") with 
Bank One, Texas, N.A. (the "Bank").  The borrowing base under the 
Facility 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.  Effective March 1998, the borrowing base under the 
Facility was increased to $21,250,000 and the term extended to 
April 30, 2001.  At May 11, 1998, the principal amount outstanding 
was $3,250,000, leaving the amount remaining available under the 
Facility at $18,000,000.  The Company is currently in compliance 
with the covenants of the Facility.

Capital expenditures related to the Company's drilling and 
development programs totaled $7,667,000 for first quarter 1998 and 
$3,073,000 for first quarter 1997.  The Company's current budget 
for drilling and development capital expenditures in 1998 is 
approximately $25,341,000.  During first quarter 1998, the Company 
completed all of the 15 wells drilled and recompleted 6 wells.  
Nine of the wells completed were shut-in awaiting the completion 
of gas plant expansion, which is expected to occur toward the end 
of the second quarter.  During first quarter 1997, the Company 
completed 6 of the 7 development wells it drilled and recompleted 
4 wells.  In addition, the Company participated in the drilling of 
an exploratory well in first quarter 1997 which was abandoned as a 
dry hole.  The Company currently plans to drill or recomplete more 
than 60 wells during fiscal 1998.

The Company believes that, with the net proceeds of the December 
1997 common stock sale, borrowings available under the Facility, 
and the operating cash flows that are expected to be generated by 
the application of such funds to the Company's drilling program, 
the Company will have sufficient capital to fund the continued 
development of its current properties and to meet the Company's 
liquidity requirements through 1998.

Results of Operations

<TABLE>
<CAPTION>
                                                Three Months
                                                Ended March 31,  
                                                1998      1997 
                                               (In thousands, 
                                            except per unit data)
<S>                                             <C>       <C>
Operating Results from Oil and Gas Operations: 
   Oil and gas sales                            $ 3,069   $ 1,972
   Production tax and marketing expense             479       263
   Lease operating expense                          684       434
   Depletion                                      1,100       530
   Depreciation                                      30        --

Net Production: 
   Oil (MBbl)                                        68        37
   Natural gas (MMcf)                             1,086       411
   MBOE                                             249       106
   MMcfe                                          1,494       633

Average Sales Price Realized (1):
   Oil (per Bbl)                                $ 14.26   $ 22.59
   Natural gas (per Mcf)                           1.93      2.76
   Per BOE                                        12.33     18.60
   Per Mcfe                                        2.05      3.12

Average Cost Data (per BOE):
   Production tax and marketing expense         $  1.92   $  2.48
   Lease operating expense                         2.75      4.09
   Depletion                                       4.42      5.00
   Depreciation                                     .12        --

Average Cost Data (per Mcfe): 
   Production tax and marketing expense         $   .32   $   .42
   Lease operating expense                          .46       .69
   Depletion                                        .74       .84
   Depreciation                                     .02        --
</TABLE>_________________
(1)   Includes effects of hedging.

Three Months Ended March 31, 1998 Compared to March 31, 1997

Revenues.  Total revenues for first quarter 1998 increased 56% to 
$3,125,000 from $1,997,000 for first quarter 1997.  Oil and gas 
sales for first quarter 1998 increased 56% to $3,069,000 from 
$1,972,000 for first quarter 1997 primarily due to higher oil and 
gas production.  Oil production for first quarter 1998 increased 
84% to 68,000 barrels from 37,000 barrels for first quarter 1997 
and gas production for first quarter 1998 increased 164% to 
1,086,000 Mcf from 411,000 Mcf for first quarter 1997, due to the 
Company's successful drilling and recompletion program in 1998 and 
the latter part of 1997.  Lower oil and gas prices in first 
quarter 1998 partially offset the gains in production.  Average 
oil prices per barrel for first quarter 1998 decreased 37% to 
$14.26 from $22.59 for first quarter 1997.  Average gas prices per 
Mcf for first quarter 1998 decreased 30% to $1.93 from $2.76 for 
first quarter 1997.

Oil and Gas Production Expenses.  Oil and gas production expenses, 
including production tax and marketing expenses, increased 67% to 
$1,163,000 from $697,000 in 1997.  The increase was primarily due 
to new wells drilled in 1998 and the latter part of 1997.  Total 
oil and gas production expenses per BOE decreased $1.90 per BOE, 
or 29%, to $4.67 for the 1998 quarter from $6.57 for the 1997 
quarter.  Production tax and marketing expense per BOE decreased 
23% to $1.92 from $2.48 due to lower oil and gas prices in the 
1998 quarter.  Lease operating expense per BOE decreased $1.34, or 
33%, to $2.75 in the 1998 quarter from $4.09 in the 1997 quarter 
due to more efficient operations and a higher proportion of gas 
production in 1998, which is generally less costly to produce than 
oil.

Depreciation, Depletion and Amortization.  First quarter 1998 
depreciation, depletion and amortization increased 108% to 
$1,153,000 from $555,000 in first quarter 1997 due to higher oil 
and gas production.  Depletion per BOE decreased 12% to $4.42 from 
$5.00, primarily due to an increase in oil and gas reserves.

Impairment of Oil and Gas Properties.  Impairment of oil and gas 
properties was $-0- for first quarter 1998 compared to $79,000 for 
first quarter 1997.  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 
first quarter 1997.  Accordingly, the Company reduced the carrying 
amount of its capitalized costs.

General and Administrative Expenses.  Total general and 
administrative expenses for first quarter 1998 increased 3% to 
$656,000 from $638,000 in first quarter 1997 due to the hiring of 
additional personnel because of expanded operations.  During first 
quarter 1998, the Company capitalized approximately $200,000 more 
of general and administrative expenses directly related to its 
drilling program than was capitalized during first quarter 1997.

Interest and Other Expenses.  Interest and other expenses for 
first quarter 1998 increased 20% to $109,000 from $91,000 for 
first quarter 1997.  The increase was primarily due to interest 
paid on the Company's lease obligations in the 1998 quarter.

Equity in Loss of Affiliate.   Equity in loss of affiliate of 
$167,000 in 1997 represents the equity in the Laguna loss.

Income Taxes.  The Company incurred net operating losses ("NOLs") 
for U.S. Federal income tax purposes in 1998 and 1997, 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 expense or benefit in the consolidated 
statements of operations for the first quarters of 1998 and 1997.

Net Income (Loss).  The Company had net income of $44,000 for 
first quarter 1998 compared to a net loss of $230,000 for first 
quarter 1997 as a result of the factors discussed above.  The 
Company paid the 8% dividend of $27,000 and $80,000 on its 
$1,352,000 and $4,000,000 face amount Series B Mandatorily 
Redeemable Convertible Preferred Stock ("Series B Preferred 
Stock") in each of the quarters ended March 31, 1998 and 1997, 
respectively, and realized accretion of $3,000 and $15,000, 
respectively.  Preferred dividend payments in the 1998 quarter 
were reduced as a result of the conversion into common stock and 
redemption in April 1997 of approximately 265,000 shares of Series 
B Preferred Stock.  Approximately 135,000 shares remain 
outstanding.  Net income attributable to common shareholders for 
the quarter ended March 31, 1998 was $14,000 compared to a net 
loss attributable to common shareholders of $325,000 for the 
quarter ended March 31, 1997.

Miscellaneous

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 product 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 by limiting the Company's 
exposure to future oil and gas price declines.  However, such 
hedging arrangements also limit the benefits the Company would 
realize if prices increase.  The Company recognized a hedging gain 
of $79,000 in first quarter 1998 compared to a hedging loss of 
$109,000 in first quarter 1997.  These amounts are included in oil 
and gas sales in the Company's consolidated statements of 
operations.

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.

The preceding information contains forward-looking statements, the 
realization of which cannot be assured.  Actual results may differ 
significantly from those forecast.  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 business generally (including operating risks and hazards 
and the regulations imposed thereon), risks and uncertainties 
related to the volatility of the prices of oil and gas, 
uncertainties related to the estimation of reserves of oil and gas 
and the value of such reserves, uncertainties relating to geologic 
models and evaluations, the effects of competition and extensive 
environmental regulation, and other factors, many of which are 
necessarily beyond the Company's control.  These and other risk 
factors that affect the Company's business are discussed in the 
Company's 1997 Form 10-K.


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 1998, the Company filed three Periodic 
Reports on Form 8-K dated: January 9, 1998, January 15, 1998 and 
March 16, 1998.  Each Report related to an "Item 5. Other Events" 
matter.


                           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, 1998        By:  /s/ Roy K. Ross            
                                Roy K. Ross
                                Executive Vice President


Date:  May 15, 1998        By:  /s/ Alfonso R. Lopez   
                                Alfonso R. Lopez
                                Vice President, Finance/Treasurer