FORM 10-QSB

                U.S. Securities And Exchange Commission
                       Washington, D.C. 20549

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

For the quarterly period ended September 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. 0-20760

         PETRO UNION, INC. d/b/a HORIZONTAL VENTURES, INC.
 (Exact name of small business issuer as specified in its charter)

        COLORADO                             84-1091986
(State or other jurisdiction              (I.R.S. Employer
of incorporation of organization)        Identification No.)

575 Madison Avenue, Suite 1006
                              New York, NY 10022                  10022
(Address of principal                        (Zip Code)
executive offices)

Issuer's telephone number, including area code: (212) 605-0470

                            Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)

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

                    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                    PROCEEDING DURING THE PRECEDING FIVE YEARS

     Check whether the registrant filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the
Exchange Act after the distribution of securities under a plan
confirmed by court.  Yes   X     No      

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

Title of Each Class                 Outstanding at November 19, 1997
    Common Stock, no par value          1,482,018 shares

     Transitional Small Business Disclosure Format (check one):
Yes          No   X  


                TABLE OF CONTENTS

             PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                                                             
Consolidated Balance Sheet as of September 30, 1997
               (Unaudited)                                                     

Consolidated Statements of Operations for the 
Nine Months and Three Months Ended September 30,
1997 and 1996 (Unaudited)                                      

Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1997 and 1996 (Unaudited)         

Notes to Unaudited Consolidated Financial Statements,
September 30, 1997 and 1996 (Unaudited)       

Item 2.  Management's Discussion and Analysis.                

                    PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Changes in Securities and Use of Proceeds

Item 3.  Defaults Upon Senior Securities

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

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURE


                     PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

           PETRO UNION, INC. D/B/A HORIZONTAL VENTURES, INC.
                       CONSOLIDATED BALANCE SHEET
                    September 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>

                               ASSETS
<S>                           <C>
CURRENT ASSETS:
  CASH                        $  362,021
  RESTRICTED CASH                 30,747
  ACCOUNTS RECEIVABLE, TRADE,
    NET OF ALLOWANCE FOR
    DOUBTFUL ACCOUNTS OF
    $34,747                       56,333
  TOTAL CURRENT ASSETS           449,101
PROPERTIES AND EQUIPMENT,
  AT COST, NET OF ACCUMULATED
  DEPRECIATION OF $515,782     4,832,470
  OTHER ASSETS                    48,523

       TOTAL ASSETS           $5,330,094

                   LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

CURRENT LIABILITIES:
  SHORT TERM NOTES PAYABLE AND
    CURRENT MATURITIES OF
    LONG TERM NOTES           $  12,355
  ACCOUNTS PAYABLE AND
    ACCRUED EXPENSES             81,960
  OTHER ACCRUED EXPENSES         17,280
TOTAL CURRENT LIABILITIES       111,595

LONG TERM NOTES PAYABLE, NET
  OF CURRENT MATURITIES          90,916

TOTAL LIABILITIES               202,511

STOCKHOLDERS' EQUITY:
  COMMON STOCK, NO PAR VALUE,
  50,000,000 SHARES AUTHORIZED,
  1,000,018 SHARES ISSUED AND
  OUTSTANDING                 6,273,070

  ACCUMULATED DEFICIT        (1,145,487)

  TOTAL STOCKHOLDERS'
    EQUITY                    5,127,583

  TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY      $5,330,094

</TABLE>

The accompanying notes are an integral part of these statements.


           PETRO UNION, INC. D/B/A HORIZONTAL VENTURES, INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30,1997 AND
1996
                         (UNAUDITED)
<TABLE>
<CAPTION>
                            NINE MONTHS          THREE MONTHS
                         ENDED SEPTEMBER 30   ENDED SEPTEMBER 30
                           1997      1996      1997      1996

<S>                     <C>       <C>        <C>       <C>
REVENUES                $160,824  $411,601   $ 31,659  $199,787

COST OF REVENUES         133,029   230,073     19,165    88,858

   GROSS PROFIT           27,795   181,528     12,494   110,929

GENERAL AND
 ADMINISTRATIVE
 EXPENSES                296,509   351,930    124,423   103,312

INCOME (LOSS) FROM
 OPERATIONS             (268,714) (170,402)  (111,929)    7,167

OTHER INCOME 
(EXPENSE)                (45,025)  (20,131)    (8,660)   (1,360)

INCOME (LOSS) 
 BEFORE TAXES ON
 INCOME                 (313,739) (190,533)  (120,589)    6,257

PROVISION FOR INCOME
 TAXES                        0         0          0         0

NET INCOME 
 (LOSS)               ($313,739) ($190,533) ($120,589) $  6,257

NET EARNINGS 
 (LOSS) PER
 COMMON SHARE           $(0.31)    $(0.19)    $(0.12)     $0.01

AVERAGE SHARES
 OUTSTANDING USED
 FOR COMPUTATION OF 
 EARNINGS (LOSS)
 PER SHARE 
 (NOTE 2)            1,000,018  1,000,018  1,000,018  1,000,018


</TABLE>

The accompanying notes are an integral part of these statements.


           PETRO UNION, INC. D/B/A HORIZONTAL VENTURES, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                             (UNAUDITED)
<TABLE>
<CAPTION>

                                     NINE MONTHS ENDED
                                       SEPTEMBER 30,
                                    ____________________    
                                    1997            1996

CASH FLOWS FROM OPERATING 
 <S>                            <C>               <C>
 ACTIVITIES:
  NET (LOSS)                     $(313,739)       $(190,533)

ADJUSTMENTS TO RECONCILE NET
  LOSS TO CASH PROVIDED (USED)
  BY OPERATIONS:
    DEPRECIATION AND
      AMORTIZATION                 132,784          76,430
    (GAIN) LOSS ON SALE OF ASSETS   21,062           4,287
    STOCK AND PARTNERS'
      CAPITAL INTERESTS ISSUED
      FOR SERVICES                     300               0
    CHANGE IN ACCOUNTS RECEIVABLE:
      TRADE                         26,888         (41,212)
      EMPLOYEES                      3,953         (36,420)
      RELATED PARTIES                9,170           1,200
    AMORTIZATION OF DEPOSITS AND
      PREPAYMENTS                   11,489               0
    CHANGE IN ACCOUNTS PAYABLE
      AND ACCRUED EXPENSES         (62,589)         26,463

    NET CASH (USED) BY
      OPERATING ACTIVITIES        (170,682)       (159,785)

CASH FLOWS FROM INVESTING ACTIVITIES:
  (INCREASE) IN ACCOUNTS
    RECEIVABLE, PETRO UNION, INC.   (9,170)              0
  (INCREASE) IN PROPERTY AND
    EQUIPMENT                     (122,488)        (83,110)
  PROCEEDS FROM SALE OF
    PROPERTY AND EQUIPMENT          55,181               0
  INCREASE IN DEPOSITS                   0         (12,018)

    NET CASH (USED) BY
      INVESTING ACTIVITIES         (76,477)        (95,128)

CASH FLOWS FROM FINANCING ACTIVITIES:
  INCREASE (DECREASE) IN DUE TO
    RELATED PARTIES                 60,478         199,515
  PROCEEDS FROM NOTES PAYABLE            0          93,680
  REPAYMENTS OF NOTES PAYABLE     (182,614)        (63,752)
  CHANGE IN CUSTOMER PAYMENTS
    RECEIVED IN ADVANCE            (30,000)              0
  PROCEEDS FROM SALE OF STOCK      600,000               0
  STOCK ISSUED FOR NET ASSETS
    OF LIMITED PARTNERSHIP         972,858               0
  LESS, PARTNERS' PRIOR
    CAPITAL CONTRIBUTIONS         (818,000)              0


    NET CASH PROVIDED BY
      FINANCING ACTIVITIES         602,722         229,443

    NET INCREASE (DECREASE)
      IN CASH AND CASH
      EQUIVALENTS                  355,563         (25,470)

CASH AND CASH EQUIVALENTS:
  BEGINNING OF PERIOD                6,458           9,988

  END OF PERIOD                   $362,021       ($ 15,482)

NON-CASH FINANCING AND INVESTING ACTIVITIES:

  STOCK ISSUED FOR SERVICES       $ 40,300       $       0
  STOCK ISSUED FOR
    SUBORDINATED CONVERTIBLE
    DEBENTURES                     433,231               0
  STOCK ISSUED FOR NET ASSETS
    OF PARTNERSHIP                 972,858               0
  STOCK ISSUED IN CONNECTION
    WITH MERGER AND
    REORGANIZATION               4,132,469               0

SUPPLEMENTARY CASH FLOW DATA:
  INTEREST PAID                     23,601          18,784
  INCOME TAXES PAID                      0               0


</TABLE>

The accompanying notes are an integral part of these statements.


         PETRO UNION, INC. dba HORIZONTAL VENTURES, INC.
       Notes to Unaudited Consolidated Financial Statements
                   September 30, 1997 and 1996
                           (Unaudited)



NOTE 1 - THE COMPANY:
Petro Union, Inc., dba Horizontal Ventures, Inc., is engaged in the
development of oil and gas properties for its own account
and the contract drilling of oil and gas wells.  The Company intends 
to officially change its name to Horizontal Ventures, Inc. when 
approved by shareholders at its next shareholders meeting.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

Basis of presentation - The consolidated financial statements 
include the accounts of Petro Union, Inc., and its wholly owned 
subsidiaries, Horizontal Ventures, Inc. and Calox, Inc.  All 
significant intercompany accounts and transactions have been 
eliminated. 

The results for the interim periods are not
indicative of the results of operations that may be expected for 
the fiscal year.  In the opinion of management, the information 
furnished reflects all adjustments which are of a normal recurring 
nature and are necessary for a fair presentation of the Company's 
financial position as of September 30, 1997, and the results of 
its operations for the periods ended September 30, 1997 and 1996, 
and its cash flows for the periods ended September 30, 1997 and 
1996.  

The financial statements for the interim periods have been 
prepared pursuant to the rules and regulations of the Securities 
and Exchange Commission.  Certain information and footnote 
disclosures normally included in financial statements prepared in 
accordance with generally accepted accounting principles have 
been condensed or omitted pursuant to such rules and regulations, 
although the Company believes that the disclosures are adequate 
to make the information not misleading.  

The Company, Petro Union, Inc. ("PUI") was a debtor in possession 
under Chapter 11 of the U.S. Bankruptcy Code until August 28, 
1997, at which time the Bankruptcy Court approved its plan of 
reorganization.  As a part of its plan of reorganization, PUI 
agreed to acquire all the outstanding stock of Horizontal 
Ventures, Inc. ("HVI").  The acquisition of HVI was completed on 
September 9, 1997, and after the acquisition, HVI shareholders 
owned more than 50% of the outstanding shares of PUI.  All contingencies
related to the September 9, 1997 closing have been waived by the parties and
the acquisition is now final.  Therefore, pursuant to the rules of the
Securities and Exchange Commission, the transaction has been accounted
for as a "reverse merger."  Accordingly, the accompanying consolidated
statements of operations and consolidated statements of cash flows reflect
the historical operations and cash flows of HVI (including those of 
PUI after September 9, 1997, the effective date of the merger), 
whereas previous quarterly reports filed by the Company reflected 
operations and cash flows of PUI.  

Certain reclassifications have been made to the 1996 amounts to 
conform to the 1997 presentation.  

Earnings per share - Earnings per share have been calculated 
assuming that 1,000,018 shares - the number of shares outstanding 
following the completion of PUI's plan of reorganization and 
merger with HVI - were outstanding for the entire period. 

NOTE 3 - MERGER WITH HORIZONTAL VENTURES, INC.

On June 13, 1997, the Company entered into an agreement with HVI 
under which all of the outstanding common and preferred shares of 
HVI would be acquired by Petro Union. HVI is also engaged in 
performing contract drilling services using the licensed Amoco 
technology, and its stock was privately-held. Petro Union was 
subject to supervision in the U.S. Bankruptcy Court for the 
Southern District of Indiana under Chapter 11 of the U.S. 
Bankruptcy Code, and the agreement with HVI was part of Petro 
Union's Plan of Reorganization.  On August 28, 1997, the 
Bankruptcy Court approved the Plan, the principal points of which 
are as follows: 

- The par value of Petro Union stock was converted from $.125 par 
value to no par value. 

- All secured debt was paid according to the terms previously 
contracted for. 

- Unsecured creditors in class C-1 received 20,000 shares of new 
Petro Union no par value stock in satisfaction of their claims, 
and unsecured creditors in class C-2 received 80,000 shares of 
new Petro Union no par value stock in satisfaction of their 
claims. 

- The priority post-petition promissory note of Pembrooke Holding 
Co., in the amount of $150,000 was settled with $100,000 in cash and 
the issuance of 49,999 shares of new Petro Union at no par value. 

- Existing shareholders received new Petro Union no par value 
stock in the ratio of 1 new share for each 220 shares of old 
stock. 

- Randeep S. Grewal, CEO of Horizontal Ventures, Inc. and Richard 
D. Wedel, President of Petro Union received 70,000 shares each of 
new Petro Union no par value stock valued at $20,000 each, or 
$40,000 in total. 

- International Publishing Holding, SA ("IPH"), the principal 
shareholder of HVI, agreed to loan $200,000 to Petro Union 
secured by 50% interest in the nonproducing limestone reserves 
owned by PUI's subsidiary, Calox Corp.;  the loan was then  
converted into 40,000 shares of new Petro Union no par value 
stock. 

- Petro Union issued 590,000 shares of new no par value stock for 
all the outstanding common and preferred stock of Horizontal 
Ventures, Inc. 

After the Plan was implemented, Horizontal Ventures' shareholders 
owned approximately 63% of the new Petro Union no par value 
stock. 

NOTE 4 - PRO-FORMA FINANCIAL INFORMATION:

Following are certain pro-forma amounts assuming the acquisition 
of HVI had occurred on January 1, 1996:

<TABLE>
<CAPTION>
                           Quarter Ended     Nine Months Ended
                            September 30,       September 30, 
                           1997      1996      1997      1996                
                         --------  --------  --------  --------

<S>                      <C>       <C>       <C>       <C>
Revenues                 $141,398  $236,478  $460,481  $541,141
                         ========  ========  ========  ========

Income (loss) from
  continuing opera-
  tions and net
  income (loss)         ($141,836)($279,645)($367,067)($611,653)
                         ========  ========  ========  ========

Net (loss) per
  common share          ($    .14)($    .28)($    .37)($   .61)
                         ========  ========  ========  ========

</TABLE>

NOTE 5 - SUBSEQUENT EVENTS:

On October 10, 1997, the Company completed an offering to non-
U.S. investors of units consisting of two shares of no par value 
common stock and one common stock purchase warrant entitling the 
holder to purchase one share of common stock at an exercise price 
of $15.00 per share exercisable any time between January 2, 1998 
and December 31, 1999.  The Company sold 127,750 such units at 
$20.00 per unit for gross proceeds of $2,550,000 cash.  

On November 18, 1997, the Company completed an offering to non-U.S. investors
of its no par value common stock at a price of $10.00 per share.  The Company
sold 226,500 shares for aggregate gross proceeds of $2,265,000 cash. 

The above offerings were completed pursuant to the exemption from 
registration contained in Regulation S promulgated under the 
Securities Act of 1933, as amended.  The offerings were managed by Grupo De
Creacion Ltd., which received a commission of seven percent of the gross
proceeds from the offerings. 
  
In October 1997, the Company through its wholly owned subsidiary, 
HVI Cat Canyon, Inc., a Colorado corporation ("HVI Cat Canyon"), purchased for
$900,000 certain working interests in two oil and gas leases, along with
certain production equipment and facilities, commonly known as the
Dominion/UCB Lease located in Santa Barbara County, State of California.  In
addition, HVI Cat Canyon deposited into escrow $750,000 for the possible
acquisition of additional working interest rights in another oil and gas
formation covered by the Dominion/UCB Lease, which acquisition if consummated
by HVI Cat Canyon will be paid for from the escrowed amount in three $250,000
installments at six month intervals from October 1997 (or at intervals based
upon the development of the formation, if such development occurs first). 

During 1997, the Company reacquired the shallow drilling rights to Hayes 
Field, a shallow reservoir located in the Illinois Basin in both Douglas 
and Champagne counties of the State of Indiana.  The Company entered 
into two standard Oil and Gas leases (the "Leases") which contained a 
covenant to develop and commence drilling by January 5, 1998 with the two 
fifty percent owners of the property for the shallow drilling rights.  
The first lease was entered in April 1997 with Gullickson Farms and 
the second lease in September 1997 with Panhandle Eastern. The Leases 
are self-perpetuating as long as oil and gas are being recovered from 
the property and the Company continues to drill one well on the property 
every six months.  The consideration under both leases is the commitment 
by the Company to develop the property continuously.

During November 1997, the Company commenced development and drilling
activities with respect to the Dominion/UCB Lease and the Leases related to
the Hayes Field.

NOTE 6 - CONTINGENCIES:

At September 30, 1997, the Company was the plaintiff in a lawsuit 
against David J. LaPrade, a shareholder, former officer and 
director, and an organizer of the Company, and Mr. LaPrade's 
current employer.  The Company seeks to recover losses from 
alleged breach of fiduciary duty, misappropriating confidential 
information and property of the Company, using it in unfair 
competition with the Company, interfering with the Company's 
existing and prospective relationships with its customers, 
interfering with the Company's relationships with its employees, 
and conversion of Company property.   Mr. LaPrade has made 
counterclaims against the Company for breach of his employment 
agreement, libel and slander, and intentional infliction of 
emotional distress; he seeks actual damages in excess of $10,000 
and punitive damages in an unspecified amount.  Management 
believes that its claims against Mr. LaPrade will be successful 
and that it will recover damages; moreover, management believes 
that Mr. LaPrade's counterclaim will not result in a material 
liability to the company.   The accompanying financial statements 
do not include provision for any loss which might result from Mr. 
LaPrade's counterclaim, nor do they include any asset that might 
result from the Company's claims against Mr. LaPrade. 

Also at September 30, 1997, the Company was a defendant in a 
lawsuit by Dr. Warren G. Gwartney to collect for sums due on a 
promissory note in the original principal amount of $50,000 
entered into individually by Mr. LaPrade and another former 
officer and employee, A.B.C. Paulsen.  The lawsuit seeks 
repayment of the $25,000 balance due on the note, plus interest 
at 9-3/4% from October 28, 1996, costs and attorney fees.  On 
September 16, 1997, the Court granted Dr. Gwartney a summary 
judgment against Messrs. LaPrade and Paulsen, but denied summary 
judgment against the Company.  The Company plans to request the 
Court to grant summary judgment in its favor on the basis that 
there is no written agreement between the parties to obligate the 
Company.  Management believes it will be successful in its 
arguments.  Accordingly, the accompanying financial statements do 
not include provision for any loss which might result from Dr. 
Gwartney's lawsuit.
<PAGE>
 
                       PART I (CONTINUED)

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

                          OVERVIEW

As a result of material changes during the most recent quarter, management 
believes that the revenue and results of operations reported herein are not 
indicative of future operations and the results thereof. During the period 
ended September 30, 1997 the Registrant emerged from Chapter 11 bankruptcy, 
acquired Horizontal Ventures, Inc. ("HVI"), and changed its operating 
strategy from acting as a horizontal drilling service company to
utilizing its license technology to exploit and expand production on oil and
gas properties acquired by the Company for its own benefit.  The Registrant's
mission is to be a leader in exploiting declining production wells by applying
its low cost horizontal drilling technology, developed by Amoco, to
significantly boost oil and gas production rates.  By targeting mature
producing wells the company minimizes the risk of dry holes utilizing the
comprehensive geological information which relies on actual reservoir
performance rather than on speculation.  In furtherance of this strategy which
utilizes the existing production tools and equipment owned by the Registrant,
the Company recently acquired the two fields discussed below which management
believes are prime candidates to prove up this new strategy.  Additionally,
during the second and third quarters of 1997 HVI effectively cutoff drilling
operations while it was reorganizing.  In future periods management expects
revenues from two sources, production revenues and drilling services revenues. 
Management expects revenues from its drilling service sector to improve
significantly as a result of HVI returning to full operational status and at
the same time estimates that this revenue source will account for only
approximately 45% of revenue during 1998 and declining to an estimated 40%
during 1999.  

The acquisition of HVI, which is now final since all contingencies have been
waived by the parties, was treated for accounting purposes as a
recapitalization of the former Petro Union, Inc. with HVI considered to be the
acquiror (a reverse merger).  Accordingly, the financial statements presented
herein reflect such reverse merger and are not directly comparable with
previous financial statements of the Company.  In addition, the financial
statements presented herein reflect the financial condition and results of
operations of HVI emanating from its prior business operations consisting
primarily of providing horizontal drilling services on behalf of oil and gas
properties owned by third parties.  As discussed below the Company has
recently raised through the sale of its common stock and common stock warrants
an aggregate of $4,815,000 which it intends to use to expand its business
operations to acquire interests in oil and gas properties which the Company
can develop using its horizontal drilling technology.

This Quarterly Report on Form 10-QSB includes certain statements that may be
deemed to be "forward-looking statements" within the meaning of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended.  All statements, other than statements of historical facts,
included in this Form 10-QSB that address activities, events or developments
that the Company expects, believes or anticipates will or may occur in the
future, including such matters as future capital, development and exploration
expenditures (including the amount and nature thereof), drilling of wells,
future production of oil and gas, repayment of debt, business strategies,
expansion and growth of the Company's operations and other such matters are
forward-looking statements.  These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions, expected future developments and
other factors it believes are appropriate in the circumstances.  Such
statements are subject to a number of assumptions, risks and uncertainties,
general economic and business conditions, the business opportunities (or lack
thereof) that may be presented to and pursued by the Company, changes in laws
or regulations and other factors, many of which are beyond the control of the
Company.  Readers are cautioned that any such statements are not guarantees of
future performance and that actual results or developments may differ
materially from those projected in the forward-looking statements.


                     RESULTS OF OPERATIONS

        COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1997
           TO THE THREE MONTHS ENDED SEPTEMBER 30, 1996

Revenues decreased for the three months ended September 30, 1997 compared with
the 1996 period as a result of the change in management of HVI in the spring
of 1997, which change resulted in a substantial decrease from the prior levels
of horizontal drilling service activity in order to focus on the completion of
the reverse merger with Petro Union, Inc. to facilitate the expansion of
business operations into the acquisition of interests in oil and gas
properties which can be developed using horizontal drilling technology.

Costs of revenues and general and administrative expenses decreased for the
three months ended September 30, 1997 compared with the 1996 period due to the
decrease in horizontal drilling activities discussed above, which decrease
with respect to general and administrative expenses was partially offset by
professional fees related to the reverse merger of Petro Union, Inc. and the
fixed nature of depreciation and amortization expense. 
 

       COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997
           TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996


The changes in revenues, costs of revenues and general and administrative
expenses for the nine months ended September 30, 1997 compared with the 1996
period in general resulted from the same factors discussed above for the three
month periods.



                LIQUIDITY AND CAPITAL RESOURCES

Petro Union, Inc. emerged from bankruptcy pursuant to the approval of a Plan
of Reorganization effective August 28, 1997.  Under the Plan of
Reorganization, working capital for future operations will be funded by the
Company's newly acquired subsidiary, Horizontal Ventures, Inc. and from
expanded operations (see "Legal Proceedings").

On October 10, 1997, the Company completed an offering to non-U.S.
investors of units consisting of two shares of its common
stock and one common stock purchase warrant
entitling the holder to purchase one share of common stock at an
exercise price of $15.00 per share exercisable any time between
January 2, 1998 and December 31, 1999.  The Company sold 127,750
such units at $20.00 per unit for gross proceeds of $2,550,000 cash.  

On November 18, 1997, the Company completed an offering to non-U.S. 
investors of shares of no par value common stock at 
a price of $10.00 per share.  The Company sold 226,500 shares for 
gross proceeds of $2,265,000 cash. 

The above offerings were managed by Group De Creacion Ltd.,which received a
commission of seven percent of the gross proceeds from the offerings. The
Company intends to use the proceeds of the above offerings to acquire
interests in oil and gas properties which can benefit from the Company's
horizontal drilling technology.

In October 1997, the Company through its wholly owned subsidiary, 
HVI Cat Canyon, Inc., a Colorado corporation ("HVI Cat Canyon"), purchased for
$900,000 certain working interests in two oil and gas leases, along with
certain production equipment and facilities, commonly known as the
Dominion/UCB Lease located in Santa Barbara County, State of California.  In
addition, HVI Cat Canyon deposited into escrow $750,000 for the possible
acquisition of additional working interest rights in another oil and gas
formation covered by the Dominion/UCB Lease, which acquisition if consummated
by HVI Cat Canyon will be paid for from the escrowed amount in three $250,000
installments at six month intervals from October 1997 (or at intervals based
upon the development of the formation, if such development occurs first). 

During 1997, the Company reacquired the shallow drilling rights to Hayes 
Field, a shallow reservoir located in the Illinois Basin in both Douglas 
and Champagne counties of the State of Indiana.  The Company entered 
into two standard Oil and Gas leases (the "Leases") which contained a 
covenant to develop and commence drilling by January 5, 1998 with the two 
fifty percent owners of the property for the shallow drilling rights.  
The first lease was entered in April 1997 with Gullickson Farms and 
the second lease in September 1997 with Panhandle Eastern. The Leases 
are self-perpetuating as long as oil and gas are being recovered from 
the property and the Company continues to drill one well on the property 
every six months.  The consideration under both leases is the commitment 
by the Company to develop the property continuously.

During November 1997, the Company commenced development and drilling
activities with respect to the Dominion/UCB Lease and the Leases related to
the Hayes Field.  

                  PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

1.       Location:       United States Bankruptcy Court
                         Southern District of Indiana
         Case:           96-70559-BHL-11
         Description:    Petro Union, Inc. Chapter 11 Reorganization
         Date:           May 13, 1996


On August 28, 1997, the Bankruptcy Court for the Southern
District of Indiana (the "Court") issued an order confirming the First Amended
Plan of Reorganization (the "Plan") of Petro Union, Inc. ("Petro").
The material features of the Plan are as follows.

Petro paid all of its administrative and priority claims in full using the
working capital of Horizontal Ventures, Inc. ("HVI"). The reorganized Company
assumed the loans entered into with its two secured creditors, Ford Motor
Credit Company and National City Bank of Evansville. The unsecured creditors
of Petro received an aggregate of 100,000 shares of a new class of no par
value common stock of the Company ("New Common Stock"). The stockholders of
Petro at August 28, 1997 received one share of New Common Stock for each 220
shares of $.125 par value common stock of the Registrant ("Old Common Stock")
then held.  Fractional shares were rounded up.  Accordingly, 17,537,945
outstanding shares of Old Common Stock were converted into approximately
80,000 shares of New Common Stock.  The Plan further provided for the
acquisition of HVI by the reorganized Registrant upon terms described in the
Registrant's Form 8-K for the event dated August 11, 1997.

The Registrant satisfied the claims of its two debtor-in-possession
financiers, Pembrooke Holding Corporation ("Pembrooke") and International
Publishing Holdings, S.A. ("IPH") as follows.  Pembrooke received $100,000 in
cash and 49,999 shares of New Common Stock.  IPH received 40,000 shares of New
Common Stock and a call option exercisable for a period of 36 months to
acquire ninety percent of the Company's wholly-owned subsidiary, Calox
Corporation, which holds as its only asset a  limestone quarry in
Monroe County, Indiana.  The purchase price for such ninety percent interest
will be the book value of the interest at the time of exercise.

The Plan further provided for the amendment and restatement of the
Registrant's Articles of Incorporation (i) to cancel the existing authorized
series of Old Common Stock and $.0001 par value preferred stock and to
authorize the New Common Stock as the sole class of voting stock; (ii) to fix
the number of directors at five and (iii) to eliminate the liability of
officers and directors to the extent allowed by Colorado law.  Accordingly,
the reorganized Registrant now has authorized 50,000,000 shares of New Common
Stock, approximately 1,482,018 of which are currently issued and outstanding. 
The initial Board of Directors consists of Randeep S. Grewal, Chairman of the
Board, Richard D. Wedel, Vice-Chairman of the Board, Dr. Jan F. Holtrop, Dirk
Van Keulen and Donald Christensen.


2.   On March 11, 1997, HVI commenced a lawsuit in the District Court for 
Tulsa County, Oklahoma against David J. LaPrade, a shareholder, former officer
and director, and an organizer of the HVI, and Mr. LaPrade's 
current employer. HVI seeks to recover losses from alleged breach of
fiduciary duty, misappropriating confidential information and property
of HVI, using it in unfair competition with HVI, interfering with HVI's 
existing and prospective relationships with its customers, interfering
with HVI's relationships with its employees, and conversion of HVI property.  
Mr. LaPrade has made counterclaims against HVI for breach of his employment 
agreement, libel and slander, and intentional infliction of emotional
distress; he seeks actual damages in excess of $10,000 and punitive 
damages in an unspecified amount.

3.   On March 24, 1997, Dr. Warren G. Gwartney commenced a lawsuit in the
District Court for Tulsa County, Oklahoma against, among others, HVI
to collect sums allegedly due on a promissory note in the original
principal amount of $50,000 entered into individually by Mr. LaPrade and
another former officer and employee, A.B.C. Paulsen. The lawsuit seeks
repayment of the $25,000 balance due on the note, plus interest 
at 9-3/4% from October 28, 1996, costs and attorney fees. On 
September 16, 1997, the Court granted Dr. Gwartney a summary judgment
against Messrs. LaPrade and Paulsen, but denied summary judgment
against HVI.  HVI plans to request the Court to grant summary judgment
in its favor on the basis that there is no written agreement between the
parties to obligate HVI.


Item 2.  Changes in Securities and Use of Proceeds

         None

Item 3.  Defaults upon Senior Securities

         None

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

         None

Item 5.  Other Information

     (a)   The following information is presented in place of a Current
Report on Form 8-K:

Sales of Equity Securities Pursuant to Regulation S.

On November 18, 1997, the Company completed an offering to non-U.S. investors
of 226,500 shares of common stock at $10.00 per share for gross proceeds of
$2,265,000 cash.  The offering was completed pursuant to the exemption from
registration contained in Regulation S promulgated under the Securities Act of
1933, as amended.  The offering was managed by Grupo De Creacion Ltd., which
received a commission of seven percent of the gross proceeds from the
offering.

The Company intends to use the proceeds of this offering to acquire interests
in oil and gas properties which can benefit from the Company's horizontal
drilling technology.

          Item 6.   Exhibits and Reports on Form 8-K

            (a)    Exhibits

            Exhibit No.      Description

              3A             Articles of Incorporation and Bylaws
                             (Incorporated by reference to Exhibit
                             No. 3 to the Registrant's Registration
                             Statement (#33-24265-LA))

              3B             Amended Articles of Incorporation
                             (Incorporated by reference to Exhibit
                             No. 2B of Registrant's Form 8-A
                             Registration Statement (File #0-20760))

              4              Specimen of Securities (Incorporated
                             by reference to Exhibit Nos. 1A and 1B
                             of Registrant's Form 8-A Registration
                             Statement (File #0-20760))

              10A            Agreement and Plan of Reorganization
                             (Incorporated by reference to Exhibit
                             10 to Form 10-KSB for the period ended
                             December 31, 1992))

              10B            Acquisition Agreement for Green Coal
                             Company, Inc. (Incorporated by 
                             reference to Exhibit 10 to Form 10-KSB
                             for the period ended December 31, 1992)

              10C            United States Bankruptcy Court Voluntary
                             Petition for Green Coal Company, Inc.
                             Dated July 11, 1994 (Incorporated by
                             reference to Form 10-KSB dated December 31,
                             1994)

              10D            United States Bankruptcy Court Transcript
                             of Ruling Returning Ownership of Green
                             Coal Company, Inc. to Thomas Green and
                             Family (Incorporated by reference to
                             Form 10-KSB dated December 31, 1994)

              10E            Post-Petition Loan Agreement (Incorporated
                             by reference to Exhibit 10E of the
                             Registrant's Annual Report on Form 10-KSB
                             for the fiscal year ended December 31, 1996)

              10F            Amended Post-Petition Loan Agreement
                             (Incorporated by reference to Exhibit
                             10E of the Registrant's Annual Report
                             on Form 10-KSB for the fiscal year ended
                             December 31, 1996)

              10G            Horizontal Drilling Services Letter
                             Agreement (Incorporated by reference to
                             Exhibit 10E of the Registrant's Annual
                             Report on Form 10-KSB for the fiscal year
                             ended December 31, 1996)

              2.1            First Amended Plan of Reorganization
                             (Incorporated by reference to Exhibit 2.1
                             to the Registrant's Current Report on
                             Form 8-K dated August 28, 1997)

              10.1           Agreement and Plan of Acquisition
                             (Incorporated by reference to Exhibit
                             10.1 to the Registrant's Current Report
                             on Form 8-K dated August 11, 1997)

              10.2           Randeep S. Grewal Employment Agreement
                             (Incorporated by reference to Exhibit
                             10.1 to the Registrant's Current Report
                             on Form 8-K dated August 28, 1997)

              10.3           Richard D. Wedel Employment Agreement
                            (Incorporated by reference to Exhibit
                             10.2 to the Registrant's Current Report
                            on Form 8-K dated August 28, 1997)

              10.4           Post-Petition Loan Agreement (Incorporated
                             by reference to Exhibit 10.3 to the
                             Registrant's Current Report on Form 8-K
                             dated August 28, 1997)

              10.5           Agreement to Close (Incorporated by
                             reference to Exhibit 10.4 to the Registrant's
                             Current Report on Form 8-K dated August 28,
                             1997)

            (b)     Reports on Form 8-K

          During the quarter for which this report is filed,
          the Company filed the following reports on Form 8-K:

               Current Report on Form 8-K dated August 11,
               1997 filed on August 12, 1997 which reported
               events under Items 1 and 2, Changes in Control
               of Registrant and Acquisition or Disposition
               of Assets, and Item 7, Financial Statements
               and Exhibits, which contained pro forma
               financial information, as amended by a Current
               Report on Form 8-K/A dated August 11, 1997
               and filed on October 16, 1997, which contained
               certain financial statements and pro forma
               financial information reported under Item 7,
               Financial Statements and Exhibits.

               Current Report on Form 8-K dated August 28,
               1997 and filed on September 9, 1997, which
               reported events under Items 1, 2, 3 and 7.

                            SIGNATURE

    Pursuant to the requirements of Section 13 or 15(d) 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.

                    PETRO UNION, INC. D/B/A HORIZONTAL VENTURES, INC.

Date: November 19, 1997     /S/ RANDEEP S. GREWAL
                            Randeep S. Grewal, Chief Executive Officer