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 June 30, 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 of    (IRS Employer Identification No)
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 August 11, 1997, 4,695,264 shares of 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)

<TABLE>
<CAPTION>
                                              June 30,    December 31,
                                                1997          1996   
                                             (Unaudited) 

                                    ASSETS
<C>                                           <S>         <S>
Current assets:
    Cash and cash equivalents                 $    211    $  2,771 
    Short-term investments                       1,256       2,786
    Accounts receivable: 
        Oil and gas sales                        1,129       1,879
        Joint interest participants, net of 
          allowance of $8 and $8, respectively   1,603         827
        Related parties                             46          20
        Other                                       34          45
    Inventories                                    281         251
    Other                                           81         104
            Total current assets                 4,641       8,683

Property and equipment: 
    Oil and gas properties, full cost method    53,093      46,175
    Mining properties and equipment             11,012      10,114
    Other equipment                                698         559
                                                64,803      56,848
    Less accumulated depreciation, depletion 
       and amortization                        (25,567)    (24,406)
                                                39,236      32,442

Notes receivable-related parties                    17          17

Other, net                                         325         258

Total Assets                                  $ 44,219    $ 41,400
                                              ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities: 
    Trade accounts payable                    $  2,905    $  1,614
    Undistributed revenue                          268       1,502
    Drilling advances                              166         100
    Accrued taxes and expenses                     247          77
    Current portion of capital lease obligation     25          25
    Current portion of installment obligation, 
       less unamortized discount of $11 and 
       $-0-, respectively                          389          --
            Total current liabilities            4,000       3,318

Long-term bank debt                              6,069       3,269
Installment obligation, less unamortized 
    discount of $33 and $-0-, respectively         367          --
Notes payable                                      230         230
Capital lease obligation, net of current portion    --          12
Drilling advances                                  368         368
Accrued expenses                                    44          41
            Total non-current liabilities        7,078       3,920
Total liabilities                               11,078       7,238

Commitments and contingencies                       --          --

Minority interest                                8,032       8,358

Series B Mandatorily Redeemable Convertible 
    Preferred Stock, $0.01 par value, 500,000 
    shares authorized, 135,200 and 400,000
    shares issued and outstanding, respectively, 
    liquidation preference and mandatory 
    redemption of $1,352,000 and $4,000,000,
    respectively                                 1,311       3,900

Shareholders' equity: 
    Common Stock, $0.01 par value, 25,000,000 
        shares authorized; 4,694,264 and 
        4,384,562 shares issued and outstanding,
        respectively                                47          44
    Additional paid in capital                  59,085      56,707
    Accumulated deficit                        (35,334)     (34,847)
            Total shareholders' equity          23,798       21,904

Total Liabilities and Shareholders' Equity    $ 44,219     $ 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)
                                     (Unaudited)
<TABLE>
<CAPTION>

                                                  For the Three Months   For the Six Months
                                                     Ended June 30,        Ended June 30,   
                                                    1997        1996       1997       1996  
<C>                                               <S>         <S>        <S>        <S>
Revenues:
    Oil and gas sales                             $ 1,839     $ 1,477    $ 3,811    $ 2,834
    Interest and other                                 28          15         87         30
                                                    1,867       1,492      3,898      2,864

Costs and expenses: 
    Oil and gas production                            623         548      1,320        973
    Mining project expenses                           353         265        680        359
    Depreciation, depletion and amortization          544         592      1,124      1,170
    Impairment of oil and gas properties              (24)         --         55         --
    General and administrative                        657         409      1,295        876
    Interest and other                                117         252        208        465
                                                    2,270       2,066      4,682      3,843

Minority interest in loss of consolidated 
    subsidiary                                        164          54        315         54

Loss before extraordinary item                       (239)       (520)      (469)      (925)

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

Net loss                                             (239)       (520)      (469)    (1,085)

Dividends on preferred stock and accretion            (30)        (96)      (125)      (186)

Preferred stock conversion inducement                (403)         --       (403)        --

Net loss attributable to common shareholders      $  (672)    $  (616)   $  (997)   $(1,271)
                                                  =======     =======    =======    =======

Per share: 
    Net loss attributable to common shareholders 
       before extraordinary item                  $ (0.14)    $ (0.30)   $ (0.22)   $ (0.55)

    Extraordinary loss                                 --          --         --      (0.08)

    Net loss attributable to common shareholders  $ (0.14)    $ (0.30)   $ (0.22)   $ (0.63)
                                                  =======     =======    =======    =======

Weighted average shares outstanding                 4,642       2,039      4,515      2,005
                                                  =======     =======    =======    ======= 
</TABLE>
The accompanying notes are an integral part of these consolidated 
financial statements.


                         MALLON RESOURCES CORPORATION

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                 For the Six Months
                                                   Ended June 30,  
                                                  1997       1996  
<C>                                             <S>        <S>     
Cash flows from operating activities: 
    Net loss                                    $  (469)   $(1,085)
    Adjustments to reconcile net loss to net 
      cash provided by operating activities:
        Depreciation, depletion and amortization  1,124      1,170
        Impairment of oil and gas properties         55         --
        Amortization of discount on notes payable    22         --
        Minority interest in loss of consolidated 
          subsidiary                               (315)       (54)
        Stock compensation expense                   47        272
        Non-cash portion of extraordinary loss       --        160
        Changes in operating assets and liabilities: 
            (Increase) decrease in: 
                Accounts receivable                 (41)       185
                Inventory and other assets          (89)       (91)
            Increase (decrease) in: 
                Trade accounts payable and 
                   undistributed revenue             57         24
                Accrued taxes and expenses          173        189
                Drilling advances                    66        (56)
Net cash provided by operating activities           630        714

Cash flows from investing activities: 
    Decrease in short-term investments            1,530         --
    Increase in funds held in escrow                 --     (3,750)
    Additions to property and equipment          (7,224)    (1,719)
    Purchase of subsidiary stock                    (55)        --
    Increase (decrease) in notes receivable-
      related parties                                (1)        15
Net cash used in investing activities            (5,750)    (5,454)

Cash flows from financing activities: 
    Proceeds from long-term debt                  2,800     10,231
    Payment of long-term debt                       (12)   (10,011)
    Debt issue costs paid                            --        (82)
    Net proceeds from sale of subsidiary 
       special warrants                              --      4,325
    Payment of preferred dividends                 (107)      (160)
    Redemption of preferred stock                  (121)        --
Net cash provided by financing activities         2,560      4,303

Net decrease in cash and cash equivalents        (2,560)      (437)

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

Cash and cash equivalents, end of period        $   211    $   832
                                                =======    =======

Supplemental cash flow information: 

    Cash paid for interest                      $   141    $   383

    Non-cash transactions: 
        Issuance of common stock in exchange 
           for consultants' accounts payable    $    --    $   791

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

        Acquisition of Red Rock Ventures, Inc. 
           for subsidiary common stock and 
           notes payable                        $    --    $ 2,230
</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 June 30, 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.

    A reclassification from operating service revenue to oil and 
gas production expense was made to the statements of operations for 
the three and six months ended June 30, 1996 to conform to the 
June 30, 1997 presentation.  In addition, certain reclassifications 
were made to the June 30, 1996 statement of cash flows to conform 
to the June 30, 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 June 30, 1997, the amount 
outstanding under the facility was $6,069,000, leaving the amount 
available under the facility at $3,931,000.

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 then 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.  The excess of 
the fair value of the common stock issued at the $9.00 conversion 
price over the fair value of the common stock that would have been 
issued at the $11.31 conversion price, totaling $403,000, has been 
reflected on the statements of operations for the three and six 
months ended June 30, 1997 as an increase to the net loss 
attributable to common shareholders for preferred stock conversion 
inducement.  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 three and six months ended June 30, 1997 and 1996, 
earnings per share would have been the same as what was reported on 
the consolidated statements of operations.

Note 6.  SHAREHOLDER RIGHTS PLAN

    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.

Note 7.  LAGUNA

    In June 1997, pending an improvement in the financial markets, 
Laguna started a program to conserve capital by curtailing its 
mining operations in Costa Rica.  As a result, a reduction in the 
work force has been required.  Under Costa Rican Labor Law, Laguna 
is obligated to make certain payments to Costa Rican employees who 
are dismissed.  The Company has estimated this amount at $134,000, 
and has included it on the Company's statements of operations in 
mining project expenses for the three and six months ended June 30, 
1997.  Laguna made payments of approximately $46,000 and $34,000 
during July and August 1997, respectively, related to this 
liability.

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 June 30, 1997 and 
December 31, 1996, results of operations for the three and six 
months ended June 30, 1997 and 1996 and cash flows for the six 
months ended June 30, 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 
$641,000 and $5,365,000 at June 30, 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 August 11, 1997, the borrowing base 
under the facility was $9,860,000, and the principal amount 
outstanding was $6,669,000, leaving the amount remaining available 
under the Facility at $3,191,000.  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 then 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 $5,684,000 during the first six months of 1997.  
The Company completed 12 of the 14 development wells it drilled.  
One well not completed was abandoned due to mechanical problems 
encountered while running casing, and one well is presently being 
evaluated in shallower uphole zones.  The Company recompleted 8 
wells during the first six months of 1997, all of which are on 
production in the third quarter.  In addition, the Company 
completed permitting and began construction of a gas sweetening 
plant in the San Juan Basin, which will go on production in the 
third quarter.  This will allow acceleration of the recompletion 
program for the balance of the year.  Currently, the Company is 
drilling 4 additional wells and is conducting work on 2 
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 20 wells and 
recomplete 16 wells during the remainder of 1997, and has a capital 
expenditure budget of approximately $11 million for the year.

Production for the first six months of 1997 averaged 1,348 BOE per 
day, up from the year 1996 average of 1,060 BOE per day.  
Currently, daily production is in excess of 1,800 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>
                          For the Three Months   For the Six Months
                             Ended June 30,        Ended June 30,  
                           1997          1996     1997       1996  
                            (In thousands, except per unit data)
<C>                       <S>           <S>      <S>       <S>     
Results of Operations, Consolidated:
    Revenues              $1,867        $1,492   $3,898    $ 2,864
    Costs and expenses     2,270         2,066    4,682      3,843
    Net loss                (239)         (520)    (469)    (1,085)
    Net loss attributable to
      common shareholders   (672)         (616)    (997)    (1,271)
    Net loss per share 
      attributable to 
      common shares        (0.14)        (0.30)   (0.22)     (0.63)
    EBITDA (1)               398           321      918        706
    Capital expenditures-
      cash basis (3)       3,085         1,058    7,224      1,719

Results of Operations from Oil and Gas Producing Activities: 
    Oil and gas sales      1,839         1,477    3,811      2,834
    Production tax and 
      marketing expense      195           167      458        323
    Lease operating expense  428           381      862        650
    Depletion                500           547    1,030      1,085
    Impairment of oil and 
      gas properties         (24)           --       55         --

Net Production: 
    Oil (MBbl)                44            46       81         91
    Natural gas (MMcf)       567           378      978        700
    MBOE                     139           109      244        208

Average Sales Price Realized: 
    Oil (per Bbl)         $19.32        $16.91   $20.81    $ 16.98
    Natural gas (per Mcf)   1.74          1.85     2.17       1.84
    Per BOE                13.23         13.55    15.62      13.63

Average production tax
   and marketing expense 
   (per BOE):               1.40          1.53     1.88       1.55

Average lease operating 
   expense (per BOE):       3.08          3.50     3.53       3.13

Average depletion (per BOE):3.60          5.02     4.22       5.22

Results of Operations, Excluding Laguna (2): 
    Revenues              $1,841        $1,489   $3,838    $ 2,847
    Costs and expenses     1,891         1,765    3,951      3,432
    Net loss                 (50)         (276)    (113)      (745)
    Net loss attributable 
     to common shareholders (483)         (372)    (641)      (931)
    Net loss per share 
      attributable to 
      common shares        (0.10)        (0.18)   (0.14)     (0.46)
    EBITDA (1)               561           542    1,223      1,011
    Capital expenditures-
       cash basis (3)      2,616           685    6,260        909
</TABLE>_________
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 and Six Months Ended June 30, 1997 Compared to June 30, 1996

Revenues.  Total revenues increased 25% to $1,867,000 for the three 
months ended June 30, 1997 from $1,492,000 for the three months 
ended June 30, 1996 and increased 36% to $3,898,000 for the six 
months ended June 30, 1997 from $2,864,000 for the six months ended 
June 30, 1996.  Oil and gas sales increased 25% to $1,839,000 for 
the 1997 quarter from $1,477,000 for the 1996 quarter due to higher 
gas production in the 1997 quarter.  Oil and gas sales increased 
34% to $3,811,000 for the six months ended June 30, 1997 from 
$2,834,000 for the six months ended June 30, 1996, due to higher 
oil and gas prices realized and higher gas production in the 1997 
period.  Average oil prices per barrel increased 14% to $19.32 in 
the fiscal 1997 quarter, from $16.91 for the fiscal 1996 quarter; 
however, average gas prices per Mcf decreased 6% to $1.74 in the 
1997 quarter from $1.85 in the 1996 quarter.  Average oil prices 
per barrel increased 23% to $20.81 for the six months ended 
June 30, 1997, from $16.98 for the comparable 1996 period, and 
average gas prices per Mcf increased 18% to $2.17 in the 1997 
period from $1.84 for the six months ended June 30, 1996.  Oil 
production decreased 4% to 44,000 barrels in the 1997 quarter from 
46,000 barrels in the 1996 quarter; however, gas production 
increased 50% to 567,000 Mcf in the 1997 quarter from 378,000 in 
the 1996 quarter.   Oil production decreased 11%, to 81,000 barrels 
for the six months ended June 30, 1997 from 91,000 barrels for the 
six months ended June 30, 1996; however, gas production increased 
40% to 978,000 Mcf for the six months ended June 30, 1997 from 
700,000 Mcf for the same period a year ago.  The oil production 
decreases are due to normal declines.  Oil production was also 
constrained by a delay in planned oil drilling during the first 
five months of fiscal 1997 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 June 30, 1997 increased 24% to 
$1,841,000 from $1,489,000 for the 1996 quarter, primarily due to 
higher gas production.  Excluding Laguna, total revenues for the 
six months ended June 30, 1997 increased 35% to $3,838,000 from 
$2,847,000 for the same period a year ago, primarily due to higher 
oil and gas prices and higher gas production in the 1997 period.  
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 14% to 
$623,000 for the three months ended June 30, 1997 from $548,000 for 
the 1996 quarter, and increased 36% to $1,320,000 for the six 
months ended June 30, 1997 from $973,000 for the comparable 1996 
period, due to new wells coming on line as a result of the 1997 
drilling program.  Per BOE, oil and gas production expense, 
including production tax and marketing expense, decreased $0.55, or 
11%,  to $4.48 for the 1997 quarter from $5.03 for the 1996 
quarter.  However, oil and gas production expenses per BOE 
increased $0.73, or 16%, to $5.41 for the six months ended June 30, 
1997 from $4.68 for the six months ended June 30, 1996.  Production 
tax and marketing expense increased $0.33 per BOE, or 21%, during 
the six months ended June 30, 1997 as a result of higher oil and 
gas prices.  LOE increased $0.40 per BOE, or 13%, during the six 
months ended June 30, 1997 primarily as a result of non-recurring 
repair and maintenance costs totaling approximately $275,000, or 
$1.13 per BOE, during the six months ended June 30, 1997, compared 
to non-recurring repair and maintenance costs of $177,000, or $0.85 
per BOE, for the comparable period in 1996.

Mining Project Expenses.  Mining project expenses for the three 
months ended June 30, 1997 increased 33% to $353,000 from $265,000 
for the three months ended June 30, 1996, and increased 89% to 
$680,000 for the six months ended June 30, 1997 from $359,000 for 
the comparable 1996 period.  In June 1997, pending an improvement 
in the financial markets, Laguna started a program to conserve 
capital by curtailing its mining operations in Costa Rica.  As a 
result, a reduction in the work force has been required.  Under 
Costa Rican Labor Law, Laguna is obligated to make certain payments 
to Costa Rican employees who are dismissed.  The Company has 
estimated this amount at $134,000, and has included it in mining 
project expenses for the three and six months ended June 30, 1997.  
Additionally, mining project expenses were higher during the six 
months ended June 30, 1997 compared to the same period in 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 for the three months ended June 30, 1997 decreased 
8% to $544,000 from $592,000 in the 1996 quarter, and decreased 4% 
to $1,124,000 for the six months ended June 30, 1997 from 
$1,170,000 for the six months ended June 30, 1996.  Depletion per 
BOE decreased 28% to $3.60 for the fiscal 1997 quarter from $5.02 
for the fiscal 1996 quarter and decreased 19% to $4.22 for the six 
months ended June 30, 1997 from $5.22 for the six months ended 
June 30, 1996, primarily due to an increase in proved reserves.

Impairment of Oil and Gas Properties.  Impairment of oil and gas 
properties was $(24,000) and $55,000 during the fiscal 1997 periods 
compared to $-0- for the fiscal 1996 periods.  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.  The credit 
in the second quarter is due to a refund of a cash advance paid in 
the first quarter which was in excess of the actual amounts spent 
in the second quarter.  During the three and six months ended 
June 30, 1996, 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 June 30, 1997 
increased 61% to $657,000 from $409,000 in the 1996 quarter, and 
increased 48% to $1,295,000 for the six months ended June 30, 1997 
from $876,000 for the same period in 1996, 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 June 30, 1997 decreased 54% to $117,000 from 
$252,000 for the three months ended June 30, 1996 and decreased 55% 
to $208,000 for the six months ended June 30, 1997 from $465,000 
for the six months ended June 30, 1996.  The decrease was primarily 
due to lower outstanding borrowings under the Company's credit 
facility in the 1997 periods.

Minority Interest.  Minority interest in loss of consolidated 
subsidiary represents the minority interest share in the Laguna 
loss and increased to $164,000 and $315,000 in the three and six 
months ended June 30, 1997 from $54,000 for the same periods in 
1996 primarily due to an increase in the minority interest in 
Laguna to approximately 44% in the 1997 periods from approximately 
12% in the 1996 periods.

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 and six months ended June 30, 1997 and 
1996.

Extraordinary Loss.  The Company incurred an extraordinary loss of 
$160,000 during the six months ended June 30, 1996, as a result of 
the refinancing of its credit facility with a new lender.

Net Loss.  Net loss for the three months ended June 30, 1997 
decreased 54% to $239,000 from $520,000 for the three months ended 
June 30, 1996, and decreased 57% to $469,000 for the six months 
ended June 30, 1997 from $1,085,000 for the same period a year ago, 
as a result of the factors discussed above.  The Company paid the 
8% dividend of $27,000 on its Series B Mandatorily Redeemable 
Convertible Preferred Stock ("Series B Preferred Stock") in the 
three months ended June 30, 1997, and realized accretion of $3,000, 
compared to dividends of $80,000 and accretion of $16,000 in the 
three months ended June 30, 1996.  The Company paid dividends of 
$107,000 and realized accretion of $18,000 during the six months 
ended June 30, 1997 compared to dividends of $160,000 and accretion 
of $26,000 during the six months ended June 30, 1996.  Beginning in 
April 1997, preferred dividend payments were reduced as a result of 
the conversion into common stock and redemption of Series B 
Preferred Stock, as discussed in Note 4 of the Consolidated 
Financial Statements.  The excess of the fair value of the common 
stock issued at the $9.00 conversion price over the fair value of 
the common stock that would have been issued at the $11.31 
conversion price, totaling $403,000, has been reflected on the 
statements of operations for the three and six months ended 
June 30, 1997 as an increase to the net loss attributable to common 
shareholders.  As a result, net loss attributable to common 
shareholders for the three months ended June 30, 1997 increased 9% 
to $672,000 from $616,000 for the three months ended June 30, 1996, 
and decreased 22% to $997,000 for the six months ended June 30, 
1997 from $1,271,000 for the six months ended June 30, 1996.  
Excluding Laguna, net loss attributable to common shareholders for 
the three months ended June 30, 1997 increased 30% to $483,000 from 
$372,000 in 1996 quarter, and decreased 31% to $641,000 for the six 
months ended June 30, 1997 from $931,000 during the comparable 1996 
period, 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 three and six months ended June 30, 1997 and 1996, 
earnings per share would have been the same as what was reported on 
the consolidated statements 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 2.  Changes in Securities

On April 22, 1997, a Form 8-K was filed related to the Company's 
adoption of a Shareholders' Rights Plan.

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

The Company held its annual meeting on June 6, 1997.  The six 
individuals listed below were elected as directors.  In addition, 
the shareholders ratified the adoption of the Company's 1997 Equity 
Participation Plan.  The votes cast were as follows:

With respect to the election of directors:

<TABLE>
<CAPTION>
                                                           BROKER
          NAME                 FOR      AGAINST  ABSTAIN  NON-VOTES
<C>                          <S>          <S>     <S>      <S>
   George O. Mallon, Jr.     3,301,443    2,452   67,705
   Kevin M. Fitzgerald       3,301,691    2,204   67,705
   Roy K. Ross               3,299,491    4,404   67,705
   Roger R. Mitchell         3,301,501    2,394   67,705
   Frank Douglass            3,301,691    2,204   67,705
   Francis J. Reinhardt, Jr. 3,301,691    2,204   67,705

With respect to the 
ratification of the adoption 
of the Company's 1997 
Equity Participation Plan:   1,084,375  518,951    9,857  1,738,474
</TABLE>

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits:

     None.

(b)  Reports on Form 8-K:

During second quarter 1997, the Company filed Periodic Reports of 
Form 8-K dated May 6, 1997, May 15, 1997 and June 25, 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:  August 14, 1997           By:  /s/ Roy K. Ross             
                                        Roy K. Ross
                                        Executive Vice President


Date:  August 14, 1997           By:  /s/ Alfonso R. Lopez       
                                        Alfonso R. Lopez
                                        Vice President, Finance
                                        Corporate Treasurer