U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                           FORM 10-QSB
                                
                                
   [X] Quarterly Report Pursuant to Section 13 OR 15(d) of the
                 Securities Exchange Act of 1934
            For the Quarter Ended September 30, 1997
                               or
  [  ] Transition Report Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934
                                
                 Commission file number 0-18995
                                
                                
                 INTERLINE RESOURCES CORPORATION
(Exact name of small business issuer as specified in its charter)


          Utah                                    87-0461653
(State or other jurisdiction of                      (I.R.S.
 incorporation or organization)              employer identification No.)
                                
                                
          160 West Canyon Crest Road, Alpine, UT  84004
            (Address of principal executive offices)
                                
 Registrant's telephone number, including area code:  (801) 756-3031

 Securities registered pursuant to Section 12(b) of the Exchange
                            Act: None
                                
 Securities registered pursuant to Section 12(g) of the Exchange
                            Act: None


Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the 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____.

Common stock outstanding at December 11, 1997 - 14,074,167 shares
of $.005 par value Common stock.


            DOCUMENTS INCORPORATED BY REFERENCE: NONE

<PAGE>

                         FORM 10-QSB
               INTERLINE RESOURCES CORPORATION

                      TABLE OF CONTENTS


PART I. - FINANCIAL INFORMATION

Item 1    Financial Statements

          Condensed Consolidated Balance Sheet at September 30, 1997

          Condensed Consolidated Statement of Operations for the three
          and nine months ended September 30, 1997 and 1996

          Condensed Consolidated Statements of Cash Flows for
          nine months ended September 30, 1997 and 1996

          Notes to Condensed Consolidated Financial Statements

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


PART II. - OTHER INFORMATION

Item 1         Legal Proceedings

Item 2         Changes in the Securities

Item 3         Defaults Upon Senior Securities

Item 4         Submission of Matters to a Vote of Security Holders

Item 5         Other Information

Item 6(a)      Exhibits

Item 6(b)      Reports on Form 8-K

               Signatures
<PAGE>

        FORWARD LOOKING INFORMATION AND RISK FACTORS


     Interline Resources Corporation (the "Company") or its
representatives may make forward looking statements, oral or
written, including statements in this report's Management's
Discussion and Analysis of Financial Condition and Results
of Operation, press release and filings with the Securities
and Exchange Commission, regarding estimated future net
revenues from operations, planned capital expenditures
(including the amount and nature thereof), the effects of
the Company's Bankruptcy proceeding, the Company's projected
financial position, results of operations, business strategy
and other plans and objectives for future operations.  These
statements are forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1993 and
Section 21E of the Securities Exchange Act, which reflect
Management's current views with respect to future events and
financial performance.

     Although the Company believes that the expectations
reflected in these forward looking statements are
reasonable, there can be no assurance that the actual
results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will
have the expected effects on its business or results of
operations.  Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements.  Such factors include but are
not limited to the outcome of the Company's current
Bankruptcy Proceeding, the timing and extent of changes in
commodity prices, unforeseen engineering and mechanical or
technological difficulties in connection with the Company's
business operations and other risks.

     Theses  forward-looking statements are subject to
certain risks and uncertainties including, but not limited
to, future financial performance and future events,
competitive pricing for services, costs of obtaining capital
as well as national, regional and local economic conditions.
Actual results could differ materially from those addressed
in the forward-looking statements.  Due to such
uncertainties and risks, readers are cautioned not to place
undue reliance on such forward-looking statements, which
speak only as of the date whereof.

     All subsequent oral and written forward-looking
statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by
these factors.  The Company assumes no obligation to update
any of these statements.


<PAGE>



                     INTERLINE RESOURCES
                         CORPORATION
                      AND SUBSIDIARIES


                       PART I - ITEM 1

                    FINANCIAL STATEMENTS
                         (UNAUDITED)

                     September 30, 1997








The condensed financial statements included have been
prepared by the Company, without audit, 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 presented
not misleading.  The Company presumes that the user of this
interim financial information has read or has access to the
audited financial statements for the preceding fiscal year--
--and in that context, this disclosure is adequate for a
fair presentation of the Company's financial position.

In the opinion of the Company, all adjustments consisting of
only normal recurring adjustments as of September 30, 1997,
have been made.  The results of operations for the interim
period are not necessarily indicative of the results to be
expected for the entire year.

<PAGE>

                 INTERLINE RESOURCES CORPORATION
                        AND SUBSIDIARIES

              Condensed Consolidated Balance Sheet
                           (Unaudited)

                             Sept 30,
                              1997



Assets

Current assets:
  Cash and cash equivalents            $1,256,707
  Accounts receivable - trade             691,602
  Inventories                              13,201
  Note receivable - current portion        40,000
  Net assets of discontinued operations     6,312
  Other current assets                     66,219

     Total current assets               2,074,041

Property, plant and equipment           6,602,364
Accumulated depreciation and depletion (1,847,054)

     Net property, plant & equipment    4,755,310

Note receivable                            99,048
Technology and marketing rights         1,743,111

        Total assets                   $8,671,510


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

<PAGE>

                 INTERLINE RESOURCES CORPORATION
                        AND SUBSIDIARIES

              Condensed Consolidated Balance Sheet
                           (Unaudited)


                            Sept 30,
                              1997

Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                       $365,655
  Accrued liabilities                     282,954
  Accrued interest, related party         795,334
  Note payable, related party           2,680,089
  Current portion of long-term debt       283,065

     Total current liabilities          4,407,097

Long-term debt less current maturities    608,004
Deferred income                            65,980

     Total liabilities                  5,081,081

Stockholders' equity:
  Preferred stock - $.01 par value.
  25,000,000 shares authorized;
  1,000,000 series A shares authorized;
  0 series A shares issued and o/s           -

  Common stock - $.005 par value.
  100,000,000 shares authorized;
  14,074,167 shares issued and
  outstanding at September 30, 1997        70,371

  Additional paid-in capital            9,185,017
  Retained earnings                    (5,664,959)

       Total stockholders' equity       3,590,429

       Total liabilities &
         stockholders equity           $8,671,510




The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>

<TABLE>
                 INTERLINE RESOURCES CORPORATION
                        AND SUBSIDIARIES

         Condensed Consolidated Statement of Operations
                           (Unaudited)
<CAPTION>

                                           Three months ended              Nine months ended
                                                   Sept 30,                     Sept 30,
                                          1997           1996             1997           1996
<S>                                   <C>             <C>            <C>             <C>

Revenue                                  $956,156      $1,945,888     $3,697,744      $5,187,326

Direct costs                              779,925       1,335,876      2,830,224       4,138,482

Gross margin                              176,231         610,012        867,520       1,048,844

Selling, general and
   administrative expenses                335,161         412,644        935,472       1,294,802
Research and development                    5,786          27,798        122,942         372,325
Depreciation, depletion and
  amortization                            191,137         193,489        578,541         582,754

 (Loss) from operations                  (355,853)        (23,919)      (769,435)     (1,201,037)

Other income (expense) net
  Interest income (expense), net           (9,394)        (25,285)       (33,645)        (72,394)
  Interest expense, related party         (66,437)       (108,790)      (390,020)       (185,355)
  Gain (loss) from sale of assets          16,109            (477)       789,229          25,242

(Loss) before discontinued operations    (415,575)       (158,471)      (403,871)     (1,433,544)

Discontinued operations
  Income (loss) from discontinued 
    operations                             14,734        (531,773)      (508,502)     (1,020,743)
  Gain (loss) on disposal
    of discontinued operations         (1,567,459)           -           520,258            -

  Total discontinued operations        (1,552,725)       (531,773)        11,756      (1,020,743)


Net (loss)                            ($1,968,300)      ($690,244)     ($392,115)    ($2,454,287)

Earning per share
  (Loss) from continuing operations        ($0.03)         ($0.01)        ($0.03)         ($0.10)
  Income (loss) from discontinued
    operations                             ($0.11)         ($0.04)         $0.00          ($0.07)

   (Loss) per common share                 ($0.14)         ($0.05)        ($0.03)         ($0.17)

Weighted average shares outstanding    14,074,167      14,063,167     14,074,167      13,991,090
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.

<PAGE>

<TABLE>
                 INTERLINE RESOURCES CORPORATION
                        AND SUBSIDIARIES

              Consolidated Statement of Cash Flows
                           (Unaudited)
<CAPTION>

                                                         Nine months ended

                                                                Sept 30,
                                                       1997             1996
<S>                                                <C>            <C>
Cash flows from operating activities:
  Net  (loss)                                        ($392,115)     ($2,454,293)*
  Adjustment to reconcile net income (loss) to net
    cash (used in) provided by operating activities:
  Depreciation, depletion and amortization             578,541          899,610
  Gain on disposal of asset                           (760,258)         (37,051)
  Common Stock issued for services
4,000
  (Increase) decrease in:
     Accounts receivable                              (226,886)        (255,693)
     Inventories                                       (12,529)           3,938
     Net assets of discontinued operations             346,799         (387,504)
     Other current assets                              (32,296)         (31,483)
     Note receivable                                    38,742           34,905
  Increase (decrease) in:
     Accounts payable                                 (343,662)        (832,692)
     Accrued liabilities                                55,269         (337,592)
     Accrued interest, related party                   390,020          185,355
     Deferred income                                  (111,159)         175,164

      Net cash (used) by operating activities         (469,534)      (3,033,336)

Cash flows from investing activities:
  Proceeds from sale of equipment                      531,768           69,827
  Proceeds from sale of joint venture                  500,000             -
  (Increase) decrease in general partnership                -          (136,427)
  Purchase of intangible assets                        (23,869)         (56,924)
  Net assets of discontinued operations              2,600,517       (1,556,331)
  Purchase of property, plant & equipment             (361,589)        (994,568)

  Net cash provided (used in) investing activiti     3,246,827       (2,674,423)
</TABLE>


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

<PAGE>
<TABLE>
               INTERLINE RESOURCES CORPORATION
                        AND SUBSIDIARIES

              Consolidated Statement of Cash Flows
                           (Unaudited)

<CAPTION>
                                                           Nine months ended
                                                               Sept 30,
                                                       1997              1996
<S>                                                <C>            <C>
Cash flows from financing activities:
  Proceeds from debt obligations                          -           4,870,952
  Payment on long-term debt                         (2,428,255)        (702,580)

  Net cash provided (used) by financing activities  (2,428,255)       4,168,372

Net increase (decrease) in cash                        349,038       (1,539,387)

Cash, beginning of year                                907,669        1,705,219

Cash,  end of  quarter                              $1,256,707         $165,832


</TABLE>


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

<PAGE>

        INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
           Notes to Consolidated Financial Statements


Oil and Gas Accounting
The Company uses the "successful efforts" method to account for
oil and gas operations. The use of this method results in the
capitalization of costs related to acquisition, exploration and
development of revenue producing oil and gas properties. The
costs of unsuccessful exploration efforts are expensed in the
period in which they are determined unrecoverable by future
revenues. Provision for depreciation and depletion of oil and gas
properties is based on the units of production method, based on
proven oil and gas reserves.

Segment information concerning oil and gas reserves and related
disclosures are not presented since they are not significant in
relation to the financial statements taken as a whole.


Construction Accounting
Construction revenues are recognized on the percentage-of-
completion method of accounting. Profits on contracts are
recorded on the basis of "cost-to-cost" determination of
percentage of completion on individual contracts, commencing when
progress reaches a point where cost and estimate analysis and
other evidence of trend are sufficient to estimate final results
with reasonable accuracy. That portion of the total contract
price which is allocable to contract expenditure incurred and
work performed is accrued as earned income. At the time a loss on
a contract becomes known, the entire amount of the estimated
ultimate loss is accrued. Claims for additional revenue are
recognized when settled. The aggregate of cost incurred and
income recognized on uncompleted contracts in excess of related
billings is shown as a current asset, and the aggregate of
billings on uncompleted contracts in excess of related costs
incurred and income recognized is shown as a current liability.


Cash Equivalents
For purposes of the consolidated statement of cash flows, cash
includes all cash and investments with original maturities to the
Company of three months or less.


Inventories
Inventories consisting of supplies and miscellaneous material are
recorded in the financial statements at their aggregate lower of
cost (first-in, first-out) or market.


<PAGE>


                                
        INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
           Notes to Consolidated Financial Statements


Investments
Investments in less than majority owned entities are accounted
for using the equity method. Investments are included in the
financial statements under the caption of "Other Assets."


Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation
is computed using straight-line and accelerated methods. When
assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any
resulting gain or loss is
recognized as income for the period. The cost of maintenance and
repairs is charged to income as incurred; significant renewals
and betterments are capitalized. Deductions are made for
retirements resulting from renewals or betterments. The estimated
useful lives are as follows:

     Building and equipment   15-25 years
     Equipment and vehicles   3-10 years


Amortization
The Company has amortized its marketing and technology rights for
the used oil refining process over seventeen years. This period
approximates the assets' useful lives.


Contingencies
During 1996, the Company entered into an agreement to sell
certain assets of the Company. As part of this agreement, the
Company also agreed to guarantee a note payable between the
purchaser and a third party.  At September 30, 1997, the
remaining liability on the note was approximately $101,000.

The Company is involved in litigation with Genesis Petroleum,
Inc. ("GPI") for breach of sale and purchase agreement (refer to
Part II, Item 1 - Legal proceedings). The Court granted GPI a
judgment in the litigation and awarded GPI damages for breach of
contract. The Court awarded GPI damages in the amount of
$2,320,836, less an offset of the value of the plant assets which
the Company had agreed to purchase from GPI under the agreement.
The Company is to present evidence to the Court as to the value
of the plant and the amount of the offset.  The Company has
included in the financial statements an amount it anticipates it
will incur to settle all claims with GPI.  There is no assurance
that the amount will be the final outcome.


<PAGE>

        INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
           Notes to Consolidated Financial Statements


Contingencies (cont.)
The Company's used oil refinery technology was acquired by it
under the terms of an agreement between the Company as purchaser
and Petroleum Systems, Inc. ("PSI") as seller. The agreement
provided for the payment of royalties to PSI pursuant to the
terms of the Agreement. The Company and PSI became involved in a
dispute as to the certain royalty matters, and in connection
therewith, the Company and PSI were involved in an arbitration
proceeding. On July 29, 1997, PSI filed a lawsuit against the
Company in the Third Judicial District Court of the State of Utah
seeking to reacquire all of the technology rights it had
previously assigned to the Company. The Company intends to
vigorously defend this litigation. The financial statements
present  an amount that management believes would be payable
should the litigation rule in favor of the plaintiff. There is no
assurance that the amount will be the final outcome.

The Company was a partner in several joint ventures. The joint
ventures have incurred debt related to the development of the
project. The Company is continently liable for the
debt. The debt totals approximately $1,400,000 at September 30,
1997.


Common Stock
During the year ended December 31, 1994, as a condition for a
private placement of the Company's restricted common stock, the
Company entered into an agreement which contains
certain restrictive covenants.  The Company may not sell its
restricted common stock for a price less than $4.50 or issue
options or warrants of equal effect.  The Company also may
not repay any related party debt during this period.  These
covenants may be waived upon obtaining written consent of the
other party in the agreement.


Profit Sharing Plan
During 1995, the Company commenced a defined contribution
retirement plan, which qualifies under code section 401(k), for
all eligible employees.  Employees who work at least 1,000 hours
during a year and are over age 21 are eligible to participate.
Employees may contribute up to fifteen percent of their annual
compensation subject to regulatory limitations.  The Company also
contributes a discretionary amount on behalf of the participating
employees.  The Company made contributions of $459 and $1,292 for
the three months ended September 30, 1997 and 1996, respectively.


<PAGE>




        INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
           Notes to Consolidated Financial Statements


Reclassification
Certain amounts in the prior years financial statements have been
reclassified to conform to the 1997 presentation.


Discontinued Operations
The financial statements for all periods presented reflect the
revenues and expenses generated from the assets of the Utah oil
and gas operations, Gagon Mechanical construction and
manufacturing operations and the Salt Lake City refinery
operations  under the caption "Income (loss) from discontinued
operations."  The related assets and liabilities of the Utah oil
and gas operations and  Salt Lake City refinery operations have
been presented on the statement of operations for all periods
under caption "Gain (loss) on disposal of discontinued
operations."
The related assets and liabilities of Gagon Mechanical have been
presented on the balance sheet under caption  "net assets of
discontinued operations."

<PAGE>
                         PART 1 - ITEM 2

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General

     Interline Resources Corporation (the "Company"), a Utah
corporation, is engaged through its wholly-owned subsidiaries, in
commercializing a patented used oil refining technology, and in
operating oil and gas properties and businesses.  On September
26, 1997, the Company filed a Petition for Reorganization under
Chapter 11 (the "Petition") of the United States Bankruptcy Code.
The Company is continuing with its operations as a debtor-in-
possession under the Bankruptcy Code.  The Company's subsidiaries
did not join the Company in the Petition and are not directly
involved in the Bankruptcy Reorganization Proceeding.

     The Company's operating subsidiaries are (1) Interline
Hydrocarbons, Inc. a Wyoming corporation which owns and operates
the Company's patented used oil refining technology; and (2)
Interline Energy Services, Inc. a Wyoming corporation which
manages the Company's oil and gas operations located in Wyoming.

     During 1997, the Company terminated operations of its Gagon
Mechanical subsidiary and sold its Utah Monument Butte oil and
gas operations.

     The Company's management intends to continue with the
Company's current operations, with the Company as the debtor-in
possession, and develop a plan of reorganization which provides
for the payment of creditors and the preservation of the interest
of the Company's shareholders.  During the time the Company is in
the Bankruptcy Proceeding, it will be subject to the jurisdiction
of the U.S. Bankruptcy Court.

     Interline Energy Services - Oil and Gas Operations.  The
Company has been engaged in the oil and gas industry since 1990.
Its oil and gas operations primarily involve natural gas
gathering, natural gas processing, a crude oil pipeline
operation, and oil well production. The Company's main oil and
gas operations are located in east-central Wyoming.  Wyoming
operations, located near Douglas, include the Well Draw Gas
Plant, Interline Crude Gathering Company, a 20.4% interest in the
Hatcreek Partnership and various producing oil and gas wells.

     On May 1, 1997, Interline sold its Utah oil and gas
operations to Questar Gas Management Company, a subsidiary of
Questar Corporation, for $4 million. The Company's Utah oil and
gas operations were located near Roosevelt, Utah, and included
the Monument Butte Gathering System and the Roseland Wells.

          Gagon Mechanical - Construction and Manufacturing.
Prior to May 1997, the Company was actively involved in
construction projects (primarily the construction of the
Company's used oil refineries) through Gagon Mechanical, Inc., a
wholly-owned subsidiary of the Company.  In an attempt to reduce
overhead, the Company's management terminated the operations of
Gagon Mechanical in May 1997.  The former president of Gagon
Mechanical formed his own company (G-EPIC, Inc.) to continue with
the projects initiated by Gagon Mechanical.  The Company has
contracted with G-EPIC, Inc. to finish construction on a refinery
for Transpacific Group of Companies of Australia. The refinery is
scheduled to be completed and shipped by the end of the fourth
quarter. The Company intends to attempt to sell the Gagon
Mechanical  building, located in Sandy, Utah, and equipment
associated with the construction industry.  For any future used
oil refinery projects, the Company intends to seek bids from G-
EPIC and other companies.

     Interline Hydrocarbon - Used Oil Refining. In January, 1993,
the Company acquired the exclusive license to a patented
reprocessing technology with the right to exclusively
manufacture, market, use, license, sub-license, and fully
commercialize the patented technology as it relates to all areas
and facets of the field of hydrocarbons. The Company subsequently
acquired the patent rights relating to the technology.  As of
December 11, 1997, the Company had three plants in production
trial stage: a refinery located in Salt Lake City, a refinery in
Stoke-on-Trent, England and a refinery in Seoul, South Korea.

     The Company is subcontracting construction of a refinery for
Transpacific Industries of Australia.  On July 18, 1997
Transpacific Industries, Shell Australia Ltd. and Mobile Oil
Australia Ltd. have announced the formation of a new Australian
national used oil collection, recycling and refining company
called Nationwide Oil Pty. Ltd.  It is the Company's
understanding that Transpacific Industries will own 50 percent of
Nationwide Oil, and Shell and Mobil each will hold a 25 percent
share of the joint venture.

     On June 21, 1996, Interline announced it had reacquired the
rights to the United States, Canada, and Mexico from Genesis
Petroleum, Inc., a subsidiary of Quaker State Corporation.  As a
result, Interline agreed to purchase GPI interest in the joint
venture for $2,027,977.  According
to the agreement announced on June 21, 1996, the Company was
required to make payment by October 17, 1996.  As of November 14,
1997, the Company has not made the payment (and associated
interest).  GPI has instituted suit against the Company for the
payment and received a judgment of $2,230,836 (See Legal
Proceedings; Part II, Item 1 and Liquidity and Capital Resources).


Results of Operations

     The following analysis of the financial condition and
results of operations should be read in conjunction with the
Financial Statements and Notes thereto, included elsewhere in
this report.

     As disclosed in previous SEC filings, the Company recorded a
liability for the repurchase of a used oil refinery located in
Salt Lake City, Utah from Genesis Petroleum, the original
purchaser. This liability is a result of Genesis exercising the
option, provided in the sales agreement, to require the Company
to repurchase the refinery.  Prior to the option being exercised,
the Company was a 26% owner of the joint venture which operated
the used oil refinery and accounted for its investment on the
equity method through June 19, 1996. The original purchaser owned
the remaining 74% of the joint venture and operated the plant.
The Company had consolidated the operations of the refinery and
joint venture since June 19, 1996 the date the option was
executed.

     Effective September 30, 1997, and the period then ended, the
Company has reclassified the operations of the Genesis Refinery
and joint venture into "discontinued operations".  The change in
accounting treatment is due to the belief of Company's management
that it will not retain the refinery and ownership in the joint
venture.  The condensed consolidated statement of operations
presented for three and nine months ended September 30, 1997 and
September 30, 1996 reflect the revenue and expense relating to
these assets under caption "Income (loss) from discontinued
operations".  The condensed consolidated statement of operations
for three and nine months ended September 30, 1997 reflect all
assets and liabilities relating to the operations of the refinery
under caption "Gain (loss) on disposal of discontinued
operations".  The Company has also included in this caption an
amount it anticipates it will incur to settle all claims with
Genesis Petroleum, Inc.  There is no assurance that  the amount
the Company has allowed will be the final outcome.

     As disclosed in the Company's June 30, 1997, 10-Q filing,
the Company sold all assets of its Utah oil and gas operations
and discontinued its Gagon Mechanical operations. The condensed
consolidated statement of operations presented for three and nine
months ended for September 30, 1997, and September 30, 1996,
reflect the revenue and expense relating to these assets under
caption "Income (loss) from discontinued operations." The
condensed consolidated statement of operations for three and nine
months ended September 30, 1997 reflect all assets and
liabilities relating to the Utah oil and gas operations  under
caption "Gain (loss) on disposal of discontinued operations".
The condensed consolidated balance sheet presented for September
30, 1997, reflect all assets and liabilities relating to Gagon
Mechanical  under caption "Net assets of discontinued
operations".


Comparison of nine months ending September 30, 1997 and 1996

Total Revenues
     Revenues decreased $1,489,582 or 28.72%, to $3,697,744 for
the nine months ended September 30, 1997 as compared to
$5,187,326 for the nine months ended September 30, 1996.  This
revenue decrease included a $1,653,021 or 34.30%, decrease in oil
and gas revenues; and an $163,439, or 44.38%, decrease in used
oil refining revenues. The oil and gas revenue decrease was
attributed to several liquid purchase contracts that expired. The
Company tried to negotiate new terms for these liquids, but after
considering the very low margins and the risk on the structure of
the pricing, the Company did not except the new terms.  The
Company's total revenues, on a segment basis, for nine months
ended September 30, 1997 and 1996 were as follows:

     The following table excludes any revenues generated from the
assets of the Utah oil and gas operations, Gagon Mechanical
construction and manufacturing operations, and any revenues
attributed to the Salt Lake City refinery operation.  The assets
of the Utah oil and gas operations were sold May 1, 1997.  Gagon
Mechanical operations were discontinued in May 1997, although the
Company is subcontracting to G-EPIC, Inc. the construction of the
Australia plant. The assets of the Salt Lake City refinery were
discontinued due to the Company's inability to pay approximately
$2,027,911 note plus associated interest due to Genesis
Petroleum. The results of these operations are reflected in the
condensed consolidated statement of operations under caption
"Income (loss) from discontinued operations".


      Nine Month Revenues Ended September 30, 1997 and 1996

                               
                 1997            %     1996             %
                                                
Oil and Gas    $3,166,001   85.62%   $4,819,022   92.90%
Construction            0       0%            0       0%
Manufacturing           0       0%            0       0%
Used oil          531,743   14.38%      368,304    7.10%
refining                       
                                                      
Total          $3,697,744     100%   $5,187,326     100%
Revenue
                                                


Comparison of three months ending September 30, 1997 and 1996


Total Revenues
     Revenues decreased $989,732, or 50.86%, to $956,156 for the
three months ended September 30, 1997 as compared to $1,945,888
for the three months ended September 30, 1996.  This revenue
decrease included a $774,245, or 44.87%, decrease in oil and gas
revenues; a $215,487, or 97.77%, decrease in used oil refining
revenues. The Company's total revenues, on a segment basis, for
three months ended September 30, 1997 and 1996 were as follows:
     
     The following table excludes any revenues generated from the
assets of the Utah oil and gas operations, Gagon Mechanical
construction and manufacturing operations and any revenues
attributed to the Salt Lake City refinery.  The assets of the
Utah oil and gas operations were sold May 1, 1997.  Gagon
Mechanical operations were discontinued in May, 1997, although
the Company is subcontracting the construction of the Australia
plant. The assets of the Salt Lake City refinery were
discontinued due to the Company's inability to pay approximately
$2,027,911 note plus associated interest due to Genesis
Petroleum. The results of these operations are reflected in the
condensed consolidated statement of operations under caption
"Income (loss) from discontinued operations".

     Three Month Revenues Ended September 30, 1997 and 1996
                                
                                
                     1997        %     1996            %
                                                
Oil and gas       $951,237  99.49%   $1,725,482   88.67%
Construction             0      0%            0       0%
Manufacturing            0      0%            0       0%
Used Oil             4,919    .51%      220,406    2.47%
Refining
                                                      
Total Revenue     $956,156    100%   $1,945,888     100%
                                                
                                
                      Oil and Gas Revenues
       Oil and gas revenues contributed approximately 99.49% of
total revenues for the three months ended September 30, 1997, as
compared to approximately 88.67% for the three months ended
September 30, 1996.  Revenues decreased $774,245 or 44.87% to
$951,237 for the three months ended September 30, 1997 as
compared to $1,725,482 for three months ended September 30, 1996.
                                
      The revenues presented in the above table are solely from
the Company's Wyoming operations. This revenue decrease of
$774,245, or 44.87% is mainly attributed to several liquid
purchase contracts that expired. The Company tried to negotiate
new terms for these liquids, but after considering the very low
margins and the risk on the structure of the pricing, the Company
did not except the new terms.
                                
                   Used Oil Refining Revenues
        Since it commenced operations in the used oil refining
business, the Company has primarily derived revenues attributed
to fees for engineering, plant design, license, exclusively or
other services associated with the Company's used oil refining
technology.  The revenue attributed to the used oil refining
business varies significantly from quarter to quarter reflecting
the status of the Company's fees and plant design services.
                                
      Used oil refining revenues contributed .51% of total
revenues for the three month quarter ended September 30, 1997
compared to 11.33% for the three months ended September 30, 1996.
These revenues decreased $215,487, or 97.77%, to $4,919 for the
three months ended September 30, 1997 compared to $220,406 for
the three months ended September 30, 1996.  The decrease of
$215,487 in used oil refining revenue is attributed to the
Company  receiving revenue for the three months ended September
30, 1996 for the engineering and design of the Austrailia
refinery.
                                
      The results of the Salt Lake City refinery operations are
reflected in the condensed consolidated statement of operations
under the caption "Income (loss) from discontinued operations".
                                
                                
                          Direct Costs
        Direct costs decreased $555,951, or 41.62%, to $779,925 for
the three months ended September 30, 1997 compared to $1,335,876
for the three months ended September 30, 1996. The decrease of
$555,951 for the three months ended September 30, 1997 was mainly
attributed to a decrease in the Company's total revenues.  As a
percent of revenues, direct costs increased to 81.57% for the
three months ended September 30, 1997 compared to 68.65% for the
three months ended September 30, 1996.  This percent of revenue
increase is mainly attributed to a decrease in revenue associated
with the used oil refining operations and the oil and gas
operations.
                                
                                
               Selling, General and Administrative
        Selling, general and administrative expenses decreased
$77,483, or 18.78%, to $335,161 for three months ended September
30, 1997 compared to $412,644 for three months ended September
30, 1996. As a percent of revenues, selling, general and
administrative expenses were 35.05% for the three months ended
September 30, 1997 compared to 21.21% for the three months ended
September 30, 1996.  These expenses consisted principally of
salaries and benefits, travel expenses, legal, information
technical services and administrative personnel of the Company.
Also included are outside legal and accounting fees, and expenses
associated with computer equipment and software used in the
administration of the business.
                                
                                
                    Research and Development
        Research and development expenses decreased $22,012, or
79.19%, to $5,786 for three months ended September 30, 1997
compared to $27,798 for the three months ended September 30,
1996. As a percent of revenues, research and development expenses
decreased to .61% for the three months ended September 30, 1997
compared to 1.43% for the three months ended September 30, 1996.
        Research and development expenses for the nine months ended
September 30, 1997 were $122,942. These expenses were mainly
attributable to development and enhancement of the Company's
hydrocarbon refining technology.
                                
                                
                  Depreciation and Amortization
        Depreciation and amortization expenses increased $2,352, or
1.22%, to $191,137 for the three months ended September 30, 1997
compared to $193,489 for the three months ended September 30,
1996. As a percent of revenues, depreciation and amortization
expenses increased to 19.99% for the three months ended September
30, 1997 compared to 9.94% for the three months ended September
30, 1996.
                                
                                
                     (Loss) from operations
        Loss from operations increased $331,934  to $355,853 for the
three months ended September 30, 1997 compared to a $23,919 loss
for the three months ended September 30, 1996. The $331,934
increase was mainly attributed to a decrease in the Company's
revenues.  Revenues attributed to the oil and gas operations
decreased $774,245 and used oil refining revenues decrease by
$215,487. A portion of the Company's direct costs are considered
fixed and do not change in proportion to revenue changes. As 
revenues decreased for the three months ended September 30, 1997,
the Company's gross margin as a percent of revenues also decrease
which increased the Company's operating loss for the period. 
                                
                                
        Income (loss) from discontinued operations.
        Income  from discontinued operations was $14,734 for the
three months ended September 30, 1997 compared to $531,773 loss
for the three months ended September 30, 1996.  This change is
mainly attributed to a the Company losses incurred in Gagon
Mechanical during the three month ended September 30, 1996.
                                
                                
          (Loss) on disposal of discontinued operations
        (Loss) on disposal of discontinued operations increased
$1,567,459 for the three months ended September 30, 1997 compared
to $0 for the three months ended September 30, 1996.  The
increase of $1,567,459 is mainly attributed to the assets of the
Salt Lake City refinery being classified as discontinued.
                                
                                
                                
                                
                 Liquidity and Capital Resources
                                
      Sources of liquidity for the Company include revenues from
oil and gas operations  and revenues from the sale of hydrocarbon
refining technology and rights. Management believes that the
company's cash from operating activities is not adequate to meet
its operating, capital and current debt obligation needs for the
foreseeable future.  In the first and second quarter of 1997, the
Company's management developed a plan to increase cash flow and
reduce expenses.  The plan included the following:
                                
      The termination of the Gagon Mechanical operations and the
subcontracting of the work formerly done by Gagon;
                                
      The reduction of personnel, including both management and
operations personnel;
                                
       The sale of the Company's Monument Butte assets and the
reduction of approximately $3,000,000 in debt with the proceeds
from the sale of such assets;
                                
        The Company has also deemed its Salt Lake Refinery operation
to be a discontinued operation.  The Company is currently
negotiating a resolution of this matter which, if completed would
result in the Company's transfer of its rights to the Sale Lake
Refinery, the payment of $750,000 and the granting of a license
of the Company's technology for three additional sites with no
license fees to be paid to the Company.  The agreement would be
subject to approval by the United States Bankruptcy Court. The
agreement has not been completed and there can be no assurance
that it will be effected.
                                
        Some of the reduction of personnel changes have been
reflected in the current report. The full impact of these changes
will be reflected by the end of 1997. Also, the Company signed an
agreement with Transpacific Industries of Australia in September
1996, and has been sub-contracting construction of a $3.4 million
used oil refinery.  The cash flow from this contract will extend
into fourth quarter 1997.
                                
       On May 1, 1997, the Company sold its Monument Butte gas
pipeline system to Questar Gas Management Company, a subsidiary
of Questar Corporation, for $4 million.  The effective date of
the sale is May 1, 1997.  Of the $4 million proceeds from the
sale of the Monument Butte assets, approximately $800,000 was
used to pay off secured debt directly related to the assets sold
and $2.2 million was paid toward notes payable to a related
party.
                                
                                
      As disclosed in the June 30, 1997 10-Q, $450,000 of the $2.2
million paid to a related party was applied toward interest and
$1,750,000 paid off the balance of notes I and II.  (See below),
leaving a balance of $3,280,089 in principal and $128,899 in
interest on the two remaining notes.  Subsequent to the filing,
the Company was informed by the related party that all $2.2
million be applied to principal.  As of September 30, 1997 the
balance owed to the related party is $2,680,089 in principal and
$795,334 in interest.
                                
                                
                                
                      Initial       Interest      Current      Accrued
                      Balance         Rate         Balance    Interest
                                
          Note 1    $   250,000         12%      $  250,000      $82,452
          Note 2      1,500,000         12%       1,500,000      239,671
          Note 3        780,089         16%               0      389,147
          Note 4      2,500,000         16%         930,089       84,063
                     $5,030,089                  $2,680,089   $  795,334
                                
                                
        As disclosed in previous SEC filings, three of the following
Senior Secured notes to a shareholder totaled $2,530,089.  This
amount and the associated interest was due September 1, 1996.  As
a result of non payment by the Company, the notes are currently
in default.  (An event of default under another $2.5 million note
(see # IV) has occurred, which permits acceleration of the
Company's obligation to repay the principal and interest.)  The
lender has indicated to the Company that he does not currently
intend to take remedial action against the Company.
                                
I.   During 1994, the Company issued a $250,000 senior
convertible note payable to a related party.  The note bears
interest at 10% and was due on September 1, 1996. After
December 31, 1994, the note is convertible in full to 67,750
shares of the Company's restricted common stock at the
option of the note holder. As a result of the default, the
interest rate has changed to 12%.
                                
II.  On February 29, 1996 the Company obtained $1,500,000 in a 6%
senior secured note from the same related party.  The
obligation was due September 1, 1996. In the event of a
default on the note the principal can be converted to shares
of the Company's common stock at the price of the lesser of
$3.20 per share or 80 percent of the average closing price
for the Company's shares for the five consecutive trading
days preceding the date of conversion. The note was secured
by all of the issued and outstanding stock of two
subsidiaries, Interline Energy Services and Gagon Mechanical
Contractors. As a result of the default, the interest rate
has changed to 12%.
                                
                                
III. On July 19, 1996, the Company obtained $780,089 in a 9.5%
senior secured note from the same related party. The
obligation was due September 1, 1996. The note is secured by
the outstanding shares of Interline Energy Services, Gagon
Mechanical and Interline Hydrocarbon. As a result of the
default, the interest rate has changed to 16%.
                                
IV.  On May 15, 1996,  the Company obtained $2,500,000 in a 9.25%
senior secured note from the same related party as above.
The note is due January 15, 1998 and is secured by the
outstanding shares of Interline Energy Services and Gagon
Mechanical. Upon default, the loan may be converted into
shares of the Company's common stock at the lesser of $3.12
per share or 80 percent of the average closing price for
shares of the Company's common stock for five consecutive
trading days preceding the date of conversion. As additional
consideration for the shareholder making the Loan to the
Company, the Company has issued a Warrant to purchase up to
250,000 shares of common stock at $3.90 per share. As a
result of the default, the interest rate has changed to 16%.
                                
      As of  November 14, 1997 the Company was unable to pay the
approximately $2,027,911 note and associated interest that was
required to be paid to GPI on October 17, 1996, as required by a
June 19, 1996 agreement between the companies.  Under this
agreement, the Company was to make this payment in exchange for
GPI's interest in the Genesis refinery. GPI instituted suit
against the Company and has received a judgment of $2,320,826.
The Company is negotiating a resolution of this matter which, if
completed would result in the Company's transfer of its rights to
the Salt Lake Refinery, the payment of $750,000 and the granting of
a license of the Company's technology for three additional sites
with no license fees to be paid to the Company. This agreement is
subject to the approval of the United States Bankruptcy Court.
                                
                                
                                
                      Bankruptcy Proceeding
                                
        On July 29, 1997, Genesis Petroleum, Inc. ("GPI") and
Petroleum Systems, Inc. ("PSI") filed a Petition for an
involuntary Bankruptcy against the Company.  The Company filed a
Motion to Dismiss claiming that the Petition was improperly
filed.  The Bankruptcy Court ruled that the court did not have
jurisdiction because only two creditors had joined in the
Petition.  Another hearing was scheduled to consider the joiner
of additional creditors.  On September 26, 1997, the Company
filed its own Petition for Reorganization (Bankruptcy #97C-26571)
under Chapter 11 of the United States Bankruptcy Act.  The
Company will continue with its operations as a debtor-in-
possession.  The Company's management is continuing to operate
the Company and is working to prepare a plan of reorganization.
The Company's management believes that the Company has sufficient
assets to pay its creditors and continue its operations.
However, there can be no assurance that the Company will be able
to develop a reorganization plan which will be acceptable to its
creditors and which will leave the Company with sufficient assets
to continue in operations.  There can be no assurance that the
Company will not be required to liquidate and discontinue its
operations.
                                
                            Inflation
                                
      The Company's business and operations have not been
materially affected by inflation during the past three years and
the current calendar quarter.  The Company believes that
inflation will not materially nor adversely impact its business
plans for the future.
                                
<PAGE>                                
                                
                  PART II -- OTHER INFORMATION


Item 1:  Legal Proceedings


Genesis Petroleum Inc.
     The Company has previously reported a lawsuit that had been
filed against it in the Third Judicial District Court of Salt
Lake County, State of Utah, by Genesis Petroleum Inc. ("GPI") for
a breach of a Sale and Purchase Agreement. Under the Agreement,
the Company agreed to purchase GPI's interest in the Salt Lake
City used oil refinery that had been operated by a joint venture
owned by GPI and a subsidiary of the Company. In July 1997, the
Court granted GPI a judgment in the litigation and awarded GPI
damages for breach of contract. The Court awarded GPI damages
in the amount of $2,320,836, less an offset of the value of the
assets which the Company had agreed to purchase from GPI under the
Agreement, but as a result of the Company's default, these assets had
been retained by GPI. The Company was to present evidence to the Court
as to the value of the Plant and the amount of the offset (See
Liquidity and Capital Resources). Prior to the Company presenting the
Court with such evidence, GPI and another creditor filed a Petition for
Involuntary Bankruptcy against the Company (described further below).


Petroleum Systems Inc.
     The Company's used oil refinery technology was acquired by
it under the terms of an agreement between the Company as
purchaser and Petroleum Systems, Inc. ("PSI") as seller. The
agreement provided for the payment of royalties to PSI pursuant
to the terms of the Agreement. The Company and PSI became
involved in a dispute as to the certain royalty matters and in
connection therewith, the Company and PSI were involved in an
arbitration proceeding. On July 29, 1997, PSI filed a lawsuit
against the Company in the Third Judicial District Court of the
State of Utah seeking to reacquire all of the technology rights
it had previously assigned to the Company. The Company intends to
vigorously defend this litigation.  PSI was one of the two
creditors signing the Petition for Involuntary Bankruptcy.


Involuntary Bankruptcy Petition
     On July 29, 1997, PSI and GPI (described above) jointly
executed a Petition for Involuntary Bankruptcy ("Petition")
against the Company. As described above, both of such companies
were involved in commercial disputes and litigation against the
Company at the time the Petition was filed. Prior to the time the
Petition was filed, GPI informed the Company that if it did not
execute various documents relating to the purchase of the Salt
Lake City refinery prior to 4 p.m. on July 29, 1997, it would
file the Petition. The Company did not execute such documents by
4 p.m. on such date and GPI and PSI filed the Petition.

     After the Petition was filed, GPI and PSI filed a Motion to
have a Trustee appointed to manage the Company for the duration
of the Bankruptcy Petition.  On August 8, 1997, a hearing on the
Motion was held in U.S. Bankruptcy Court.  The Judge dismissed
the Motion on the basis that the bankruptcy law required three
creditors to sign the Petition for Involuntary Bankruptcy, but
only GPI and PSI had signed the Petition against the Company.
The Company filed a motion to dismiss the petition as being
improperly filed.  The court did not enter an order for relief
under Chapter 7 of the Bankruptcy Code based upon the motion to
dismiss.

     On September 26, 1997, at the request of Company, it became
a debtor in possession under Chapter 11 of the Bankruptcy Code.
Under Chapter 11, the Company may continue its full operation as
a debtor in possession.  The bankruptcy filing included Interline
Resources Corporation but did not include its two wholly owned
subsidiaries Interline Energy Services, Inc. and Interline
Hydrocarbon, Inc.  Management intends to continue with
operations, cooperate with its creditors, and file a plan with
the Bankruptcy Court that will permit it to reorganize and
provide for payment of creditors and preserve the interest of its
shareholders.



Item 2.  Changes in Securities:

          None

Item 3.  Defaults Upon Senior Securities:

     The Company is currently in default on notes due to a
related party, and a note due to Genesis Petroleum, Inc. (See
Liquidity and Capital Resources).
     

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

          None




Item 5.  Other Information:

     The Company announced on August 13, 1997 that the American
Stock Exchange (AMEX) has made a final determination to delist
the Company from the AMEX's Emerging Company marketplace.  After
a careful review of this matter and after discussions with the
AMEX, the Company has determined that it will not appeal the
AMEX's decision.

     As of December 11, 1997, a market is being made of the
Company's common stock on the NASD Bulletin Board under the
symbol "IRCE."

     Effective September 18, 1997, Stephen P. Yeoman resign his
positions as Director and Officer of the Company.  On November
20, 1997, Michael A. Megee who has served as President of the oil
and gas operations since November 1995 was elected as a Director
of the Company.



Item 6(a).  Exhibits

          None


Item 6(b).  Form 8-K

          None

<PAGE>

                           SIGNATURES


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


Dated:  December 11, 1997



                         INTERLINE RESOURCES CORPORATION
                         (Registrant)


                         By:/s/ Michael R. Williams
                         Michael R. Williams, President
                         and Chief Executive Officer
                         Principal Executive Officer
                         Director


                         By:/s/ Mark W. Holland
                         Mark W. Holland, Chief Financial Officer
                         Director