SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

     [X] Quarterly  report under Section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the quarterly period ended June 30, 2000.

     [ ] Transition report under Section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the transition period from  ------------to--------------


         Commission file number:000-09419
                                ---------


                             POWER EXPLORATION, INC.

        (Exact name of small business issuer as specified in its charter)





               NEVADA                                   84-0811647
              --------                                 -----------
  (State or other jurisdiction of          (I.R.S. Employer Identification No.)
   incorporation or organization)





                   5416 Birchman Ave., Fort Worth, Texas 76107
                   -------------------------------------------
               (Address of principal executive office) (Zip Code)


                                 (817) 377-4464
                           (Issuer's telephone number)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 XX                    No
                                        --


         The number of outstanding  shares of the issuer's  common stock,  $0.02
par value (the only class of voting stock), as of June 30, 2000 was 21,095,533


<PAGE>




                                TABLE OF CONTENTS

                                     PART I

ITEM 1.  FINANCIAL STATEMENTS..................................................3

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4


                                     PART II

ITEM 1. LEGAL PROCEEDINGS                                                      5

ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES................................5

ITEM 5.  OTHER INFORMATION.....................................................6

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K......................................7


SIGNATURES.....................................................................8

INDEX TO EXHIBITS..............................................................9











                 [THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]


                                                         2


<PAGE>



PART I- FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

As used herein, the term "Company" refers to Power  Exploration,  Inc., a Nevada
corporation,  and its subsidiaries and predecessors unless otherwise  indicated.
Consolidated,  unaudited,  condensed  interim financial  statements  including a
balance  sheet  for the  Company  as of the  quarter  ended  June  30,  2000 and
statements of operations, and statements of cash flows for the interim period up
to the date of such balance  sheet and the  comparable  period of the  preceding
year are attached hereto as Pages F-1 through F-14 and are  incorporated  herein
by this reference.

                                        3


<TABLE>

                        POWER EXPLORATION & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

<CAPTION>

                                                               June 30, 2000          Sept 30,1999
                                                                Unaudited               Audited
                                                          ---------------------   ----------------------
                        ASSETS
<S>                                                          <C>                 <C>
CURRENT ASSETS
Cash                                                         $        4,155      $           1,083
Accounts Receivable                                                   8,586                  8,563
Accounts Receivable - Related Party                                  10,576                 84,570
Inventory                                                           400,968                323,486
Prepaid Expenses                                                        680                    230
                                                            --------------------   -----------------
Total Current Assets                                                424,965                417,932
                                                            -----------------      -----------------

OIL & GAS PROPERTIES, FULL COST METHOD
Properties being amortized                                        8,134,423              7,134,910
Properties not subject to amortization                                    -                      -
                                                            -----------------      -----------------

Less:  Accumulated depreciation, depletion & amortization           (11,328)               (10,491)
                                                            -------------------    -----------------
Net Oil and Gas Properties                                        8,123,095              7,124,419
                                                            ------------------     ----------------

PROPERTY AND EQUIPMENT
Property and Equipment                                              229,842                370,124
Accumulated Depreciation                                           (131,270)              (139,618)
                                                            ------------------     -----------------
Total Property and Equipment                                         98,572                230,506
                                                            -------------------    -----------------

OTHER ASSETS                                                          7,155                  6,037
INVESTMENT IN LAND                                                  300,000                      -
                                                            ------------------      ---------------

TOTAL ASSETS                                                 $    8,953,787         $    7,778,894
                                                            ================        ==============
         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable-Trade                                       $      353,677        $       825,466
Accounts Payable-Related Parties                                     66,483                389,154
Payroll and Sales Taxes Payable                                      24,926                      -
Accrued Expenses                                                          -                      -
Accrued Interest                                                     38,052                      -
Accrued Wages and Payroll Taxes Payable                              26,880                      -
Customer Deposits                                                    55,000                 30,000
Advances Payable                                                          -                 25,000
Advances Payable-Related Parties                                          -                140,000
Notes Payable                                                       325,000                500,000
Notes payable -- Related Parties                                     41,160                101,313
                                                            ------------------     ----------------
Total Current Liabilities                                           931,178              2,010,933
                                                            -----------------      ----------------
LONG TERM LIABILITIES                                                     -                     -
                                                            ------------------     ----------------
Total Liabilities                                                   931,178              2,010,933
                                                            -----------------      ----------------

STOCKHOLDERS' EQUITY
Common Stock ($.02 par value; 50,000,000 shares
authorized, 21,095,533 shares issued & outstanding)                 421,910                  3,553
Additional Paid-In Capital                                       32,520,824             13,650,157
Accumulated Deficit                                             (24,920,126)            (7,885,749)
                                                            ----------------       -----------------
Total Stockholders' Equity                                        8,022,608              5,767,961
                                                            -----------------      ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $    8,953,787         $    7,778,894
                                                            ===============        ===============

</TABLE>




                                                      F-1


<PAGE>



<TABLE>

                        POWER EXPLORATION & SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

<CAPTION>

                                                         9 Months Ending                9 Months Ending
                                                          June 30, 2000                   June 30, 1999
                                                            Unaudited                       Unaudited
                                                      -------------------           ---------------------
REVENUE
<S>                                                  <C>                        <C>

Oil and Gas Sales                                       $      112,575            $           13,422
Rig Sales                                                        5,041                       264,797
Drilling Revenue                                                25,806                             -
Total Revenue                                                  143,422                       278,219
                                                      ----------------           -------------------

COST OF REVENUE
Lease Operating                                                199,008                       165,182
Production Taxes                                                 5,202                            36
Depreciation, Depletion & Amortization                          38,526                           837
Cost of Rig Sales & Drilling Revenue                           (1,637)                       144,014
Total Cost of Revenue                                          241,099                       310,069
                                                      ----------------           -------------------

GROSS LOSS                                                    (97,677)                       (31,850)
                                                      ----------------           -------------------

EXPENSES

General and Administrative                                  13,683,644                     2,609,688
Interest Expense                                                95,868                        34,734
Asset Impairment Expense                                     3,168,000                             -
Total Expenses                                              16,947,512                     2,644,422
                                                      ----------------           -------------------

PROFIT (LOSS) BEFORE OTHER INCOME

AND PROVISION FOR INCOME TAXES                             (17,045,189)                   (2,676,272)

RECOVERY OF BAD DEBT                                               177                             -
OTHER INCOME/(LOSS)                                                  -                       (75,858)
                                                      ----------------           -------------------

LOSS BEFORE PROVISION

FOR INCOME TAXES                                           (17,045,012)                   (2,752,130)

PROVISION FOR INCOME TAXES                                           -                            -
                                                      ----------------           -------------------

NET PROFIT (LOSS)                                      $   (17,045,012)          $        (2,752,130)
                                                      ==================         ========================
PROFIT (LOSS) PER SHARE                                $         (1.84)          $           (159.72)
                                                      ==================         ====================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                                           9,256,784                       172,312
                                                      ================           ==================

</TABLE>



                                       F-2


<PAGE>


<TABLE>

                                          POWER EXPLORATION & SUBSIDIARIES
                                      CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>

                                                 3 Months Ending            3 Months Ending
                                                  June 30, 2000              June 30, 1999
                                                    Unaudited                  Unaudited

                                             -----------------             -----------------------
REVENUE
<S>                                         <C>                           <C>

Oil and Gas Sales                            $         50,321             $          1,785
Rig Sales                                                   -                      189,398
Drilling Revenue                                        1,429                            -
Total Revenue                                          51,750                      191,183
                                            -----------------            ------------------

COST OF REVENUE
Lease Operating                                        61,835                       28,055
Production Taxes                                        2,325                            -
Depreciation, Depletion & Amortization                 12,842                          279
Cost of Rig Sales & Drilling Revenue                        -                      142,080
Total Cost of Revenue                                  77,002                      170,414
                                            -----------------            ------------------
GROSS PROFIT                                          (25,252)                      20,769
                                            -----------------            ------------------

EXPENSES

General and Administrative                          4,104,165                    2,018,547
Interest Expense                                       76,142                        8,648
Total Expenses                                      4,180,307                    2,027,195
                                            -----------------            ------------------


PROFIT (LOSS) BEFORE PROVISION

FOR INCOME TAXES                                   (4,205,559)                  (2,006,426)

PROVISION FOR INCOME TAXES                                  -                            -
                                            -----------------            ------------------

NET PROFIT (LOSS)                            $     (4,205,559)             $    (2,006,426)
                                             ================            ==================

PROFIT (LOSS) PER SHARE                      $           (0.35)          $         (166.65)
                                            ===================          ==================

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                                12,150,827                       120,404
                                            ==================           ==================
</TABLE>











                                       F-3


<PAGE>


<TABLE>

                        POWER EXPLORATION & SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS


<CAPTION>

                                                                9 Months Ending            9 Months Ending
                                                                 June 30, 2000              June 30, 1999
                                                                   Unaudited                  Unaudited
<S>                                                       <C>                          <C>

Loss After Taxes                                           $        (17,045,012)         $       (287,800)
Depreciation and Amortization                                            37,689                    12,842
Non-Cash Compensation                                                13,225,713                         -
Impairment Expense                                                    3,168,000                         -
Accounts Receivable                Decrease (Increase)                   73,971                    76,983
Inventory                          Decrease (Increase)                  (77,482)                   (7,566)
Other Assets                       Decrease (Increase)                   (1,118)                        -
Prepaid & Deferred Exp             Decrease (Increase)                     (450)                   29,377
Current Liabilities                Increase (Decrease)                  802,543                         -

Cash Flow from Operating Activities                                     183,854                    12,403
                                                           --------------------          -----------------


Fixed Assets                       Decrease (Increase)                        0                         -
Net Oil & Gas Prop                 Decrease (Increase)                        0                    15,796
Other Investments                  Decrease (Increase)                        0                     1,655

Cash Flow from Investing Activities                                           0                    17,451
                                                           --------------------          -----------------


Repayments                         Decrease (Increase)                 (110,782)                        -
Short Term Debt                    Increase (Decrease)                 (160,000)                        -
Common Stock                       Increase (Decrease)                   90,000                         -

Cash Flow from Financing Activities                                    (180,782)                        -
                                                           --------------------          -----------------


NET INCREASE (DECREASE) IN CASH                                           3,072                    29,854

BEGINNING CASH                                                            1,083                    (1,411)
                                                           =======================       =================

ENDING CASH                                                               4,155                    28,443
                                                           =======================       =================

</TABLE>








                                       F-4


<
                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               Nature of  Operations  The  Company is engaged  primarily  in the
               fields of acquisition,  development,  exploration for and sale of
               oil  and  gas,  and  the  construction  and  sale  of oil and gas
               extraction equipment.

               Basis of  Consolidation  The  consolidated  financial  statements
               include the accounts of Power Exploration, Inc. ("Power") and its
               100% owned subsidiaries, Oil Retrieval Systems, Inc. ("ORS"), and
               Oil Seeps,  Inc. ("OSI").  Accordingly,  all references herein to
               Power or the "Company"  include the  consolidated  results of its
               subsidiaries.   All   significant   inter-company   accounts  and
               transactions have been eliminated in consolidation.

               Unaudited   Interim   Information  The   accompanying   unaudited
               financial  statements  have been prepared in accordance  with the
               instructions to Form 10QSB and,  therefore do not include all the
               information  necessary  for  a  fair  presentation  of  financial
               position,  results of operation and cash flows in conformity with
               generally accepted accounting principles.

               In the opinion of  management,  all  adjustments  (consisting  of
               normal  recurring  accruals)  considered  necessary  for  a  fair
               presentation  have been included.  Operating results for the nine
               months ending June 30, 2000 are not necessarily indicative of the
               results  that may be expected for the year ending  September  30,
               2000. The unaudited condensed  consolidated  financial statements
               and footnotes should be read in conjunction with the consolidated
               financial  statements  and  footnotes  included in the  Company's
               September 30, 1999 annual report.

NOTE 2 - INVENTORY

               Inventory at 9-30-99 & 06-30-00 consists of th following:

                                              9-30-99              06-30-00
                                              --------              --------
               Raw Materia                    $220,069           $  285,946
               Work in Process                 103,417              115,022
                                             -----------         -----------
                                             $ 323,486           $ 400,968
                                             ==========           ==========




                                       F-5


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000


NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment at 9-30-99 & 06-30-00 consist of the following:

                                                  9-30-99             06-30-00
                                                  -------             --------
              Shop Equipment                   $   30,952              49,002
              Furniture and Office Equipment       24,068              24,067
              Machinery                           269,167             156,773
                                               ----------         ------------
                                                  324,067             229,842
             Less Accumulated Depreciation        (93,581)           (131,270)
                                               ----------         ------------
             Property and Equipment - Net      $  230,506              98,572
                                               ==========         =============

               Depreciation  expense for the three months and nine months ending
               June  30,   2000  were   $12,563   and   $37,689,   respectively.
               Depreciation expenses for the three months and nine months ending
               June 30, 1999 were $13,342 and $36,150, respectively.

NOTE 4 - NOTES PAYABLE

                Notes payable at June 30, 2000 consist of the following:

                                                         09-30-99      06-30-00

                a) Note Payable - Trident III, LLC     $  250,000           -
                b) Note Payable - BEI, Inc.               250,000        250,000
                c) Note Payable - Related Party           101,313             -
                d) Note Payable - Landmark Bank               -           75,000
                                                        ---------     ----------
                                                        $ 601,313    $   325,000
                                                       ==========     ==========

          a)   The Company was indebted to Trident III, L.L.C.  under terms of a
               promissory note dated October 21, 1998 in the amount of $250,000.
               Terms  of the  note  provide  for  interest  at a rate of 10% per
               annum,  with an original  maturity  date of April 20,  1999.  The
               Company  issued  1,000 shares of its common stock to Trident III,
               L.L.C.  in connection  with this loan. The loan has been extended
               at various  times  with a current  maturity  date of October  30,
               1999.  The Company  issued a total of 2,600  shares of its common
               stock in  consideration  of these  extensions.  When the note was
               extended to September  30, 1999,  the Company  agreed that if the
               note was not paid on or before  September 30, 1999, then it would
               issue  50,000  shares  per day for  each  day  that  the  note is
               outstanding subsequent to September 30, 1999. Concurrent with the
               extension  to October  30, 1999 the  provision  was added that if
               payment of  outstanding  principal and interest were made by that
               date,  the lender would not seek to receive the 50,000 shares per
               day due under the previous extension.  The lender has waived this
               provision of the contract. A settlement has been reached with the
               lender that consists of the

                                       F-6


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000


NOTE 4 - NOTES PAYABLE (continued)

               company  issuing  279,861  common  stock  shares to Trident  III,
               L.L.C. in exchange for a full release from the debt and indemnity
               against any and all current and future  claims.  The  issuance of
               the Company's common stock shares on February 9, 2000, eliminated
               the debt and satisfied the agreement in full.

          b)   The Company is indebted to  Business  Exchange  Investment,  Inc.
               under terms of a promissory note dated September 15, 1998.  Terms
               of the note  provide for interest at a rate of 10% per annum with
               a maturity date of September 30, 2000. The note is collateralized
               by 100% of the shares of OSI.  The Company  hopes to satisfy this
               debt by issuing shares of its common stock. No agreement has been
               reached  at this  date,  however,  the  Company  is active in its
               attempt to resolve this debt.

          c)   The Company  was  indebted  to the M.O.  Rife III,  Trust A under
               terms of a  promissory  note date March 31, 1999 in the amount of
               $101,313.  This note was eliminated according to the terms of the
               December 7, 1999 Acquisition  Agreement of certain assets of Rife
               Oil Properties, Inc. and the extinguishment of this debt.

          d)   As of June 30,  2000,  the Company was  indebted t Landmark  Bank
               under terms of a promissory note dated October 13,1999.  Terms of
               the note  provided for interest at a rate of 10% per annum with a
               maturity date of September 15, 2000. The note was  collateralized
               by 100% of the assets of Oil  Retrieval  Systems,  Inc. The funds
               were used as working capital for Oil Retrieval  Systems,  Inc. On
               July 26, 2000, this note was paid in full plus interest.

NOTE 5 - RELATED PARTY TRANSACTIONS

                During the nine-months ending June 30, 2000:

          a)   The Company occupies space in facilities leased by M.O. Rife III.
               The Company pays rent to the  stockholder in the amount of $2,000
               per month. The space is rented on a monthly basis.

          b)   The Company was  indebted to officers  for wages  accrued in year
               2000 in the  amount  of  $254,820,  which  incurred  payroll  tax
               accrual  of  $19,869.  A  settlement  has been  reached  with the
               officers  consisting of the Company  issuing  90,000 shares total
               (30,000  shares each to the three  officers)  of common  stock to
               extinguish debt, which would reduce the corresponding  liability.
               These shares were issued on February  29, 2000.  On June 7, 2000,
               the Company issued an additional 90,000 shares of common stock to
               the  officers  of the  Company  (30,000  shares  each) in lieu of
               compensation owed for wages

                                      F-7


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000

NOTE 5 - RELATED PARTY TRANSACTIONS    (continued)

               accrued  during the current  year and  resulted in a reduction to
               the  Accrued  Wages  Liability  of  $82,800.  The  Company  has a
               remaining liability for wages due officers of $18,864.

          c)   On January 23rd, 2000, the Board of Directors o the Company voted
               to  issue  100,000  shares  of its  common  stock  to each of the
               directors as compensation for services  rendered and issued every
               quarter during the year. On February 9th, 2000 the Company issued
               25,000 shares of its  restricted  common stock to the six members
               of the Board of  Directors.  The  remaining  shares  owed will be
               issued on a pro-rata basis during the remainder of the year. This
               issuance resulted in a G&A charge to the Company in the amount of
               $867,000  for the three month period  ending  March 31, 2000.  On
               June  1st,   2000,  the  Company  issued  25,000  shares  of  its
               restricted  common  stock  to the six  members  of the  Board  of
               Directors.  This issuance resulted in a G&A charge to the Company
               in the amount of $528,876 for the three month period  ending June
               30, 2000.



NOTE 6 - ADVISORY & CONSULTING AGREEMENTS

               For the period ending 12-31-99,  the Company entered into various
               cancelable advisory  agreements with third parties.  Compensation
               for  services  provided  under these  agreements  will be paid in
               either  Common  Shares or Common  Share  Purchase  options of the
               Company.  During the nine months ended June 30, 2000, the Company
               issued  1,500,000  shares of common  stock under  these  advisory
               agreements,  to  Ronald  Welborn  and  Alan  Wolfson,  valued  at
               $6,403,100.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

          a)   The Company has entered into various  non-  cancelable  operating
               lease agreements for office and warehouse space and equipment.

               1)   Warehouse facilities located in Fort Worth, Texas. The lease
                    term expires on September 30, 2001.

               2)   Various office equipment leases expiring through March 2004.





                                                      F-8


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000

NOTE 7 -   COMMITMENTS AND CONTINGENCIES (continued)

                Future  minimum lease  payments  under the lease  agreements for
                each of the years ended September 30 are as follows:

                2000                                       $  109,319
                2001                                           77,790
                2002                                           11,639
                2003                                            8,731
                2004                                            2,368
                                                           -------------
               Total minimum lease payments                 $ 209,847

                Rent expense included in the financial  statements for the three
                and nine  months  ending  June 30,  2000,  totaled  $18,742  and
                $59,672.  Rent expense included in the financial  statements for
                the three and nine months ending June 30, 1999,  totaled $14,674
                and $51,465.

               b)   The  Company  has  pledged  100% of the shares of Oil Seeps,
                    Inc.,  a  wholly  owned  subsidiary,  as  collateral  for  a
                    $250,000 promissory note due on September 30, 2000.

               c)   A  former  employee  had  filed a  claim  against  ORS.  The
                    employee  had  demanded  $75,000 in exchange  for a full and
                    final  release.  The claim had been  settled  as  previously
                    disclosed,  however the terms of the settlement have changed
                    from cash  payment to payment  of the  Company's  restricted
                    stock.  The amounts of shares issued under the terms of this
                    settlement  are 13,660,  which occurred on June 20, 2000 and
                    valued  at  $22,112.  The  Company  had  previously  accrued
                    $20,000  for  this  contingent  liability,   therefore,   an
                    additional  $2,112  was  charged  against  G&A for the three
                    months ending June 30, 2000.

               d)   A suit has been filed against the Company alleging breach of
                    contract and seeking damages of approximately $120,000. This
                    relates  to an alleged  agreement  to  repurchase  equipment
                    previously  sold  by the  Company.  A  settlement  has  been
                    reached in this  matter  requiring  the  issuance of 125,000
                    shares  of the  Company's  restricted  common  stock.  These
                    shares were issued on July 26, 2000.

                                       F-9


<PAGE>




                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000

NOTE 8 - SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES

               During the nine-months ended June 30, 2000:

          a)   The Company issued 90,000 shares under a advisory agreement.  The
               shares  of the  Issuer's  common  stock  were  issued to Allen Z.
               Wolfson,  under an agreement  dated December 14, 1999 whereby the
               recipient is entitled to receiv  750,000 for  consultin  services
               provided to the Issuer.  This  transaction  is valued at $236,250
               and charged to G & A for the quarter ending 12-31-99.

          b)   The Company  issued  9,000,000  shares to Rif Oil  Properties for
               certain oil leases and the relinquishment of certain debt owed by
               the issuer to Rife Oil Properties, Inc.

          c)   The Company issued 300,000 shares of its common stock in order to
               secure a loan by Global Universal,  Inc. in the amount o $25,000.
               The loan was  subsequently  forgiven and the shares were returned
               to the Company's treasury during the second quarter of its fiscal
               year.

          d)   The Company cancelled 1,000,000 shares (10,000 post-split shares)
               issued to Mark S. Zouvas on October 21,  1999.  These  shares had
               been issued to satisfy accrued  salaries  incurred by the Company
               for his services.

          e)   On January 23rd, 2000, the Board of Directors o the Company voted
               to  issue  100,000  shares  of its  common  stock  to each of the
               directors as compensation for services rendered. On February 9th,
               2000, the Company  issued 25,000 shares of its restricted  common
               stock  to the  six  members  of the  Board  of  Directors;  James
               McGowan,  Charles Barnhill,  Reginald Davis, Richard Surber, M.O.
               Rife III and Joe B. Bennett.  The  remaining  shares owed will be
               issued on a pro-rata basis during the remainder of the year. This
               issuance resulted in a G&A charge to the Company in the amount of
               $867,000 for the period ending March 31, 2000.

          f)   On January 23rd, 2000, the Board of Directors o the Company voted
               to issue 600,000  shares of its common stock for the  acquisition
               of certain real estate from  Genesis  Capital  Corp.  On February
               9th,  2000,  the Company  issued 600,000 shares of its restricted
               common  stock for said real estate and  recorded the asset on its
               balance sheet at the price of its common stock  multiplied by the
               number of shares  issued.  A discount  of 30% was  applied to the
               real estate asset to reflect the  restriction  of the  securities
               issued. This resulted in an addition to Net Assets of the Company
               of  $3.456  million.  The  Company  is  currently  negotiating  a
               contract for the sale of this real estate to a qualified buyer in
               the amount of $300,000.  In accordance  with  generally  accepted
               accounting   principals,   the  Company  has  recorded  an  asset
               impairment expense in the amount of $3.156 million for the period
               ending  March  31,  2000,  while   concurrently   establishing  a
               contra-asset  account to  appropriately  reflect the value of the
               asset recorded.

                                                      F-10


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000

NOTE 8 -    SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES (continued)

          g)   On January 23rd, 2000, the Board of Directors o the Company voted
               to issue 20,000  shares of its common stock to Fauniel D. Rowland
               and 50,000 shares of its common stock to Simon,  Warner & Doby as
               compensation for legal services  rendered.  On February 9th, 2000
               the Company issued 70,000 shares of its  restricted  common stock
               as described above. This issuance resulted in a G&A charge to the
               Company in the amount of $404,600 for the period ending March 31,
               2000.

          h)   The Company was  indebted to officers  for wages  accrued in year
               2000 in the  amount  of  $254,820,  which  incurred  payroll  tax
               accrual  of  $19,869.  A  settlement  has been  reached  with the
               officers  consisting of the Company  issuing  90,000 shares total
               (30,000  shares each to the three  officers)  of common  stock to
               extinguish debt, which would reduce the corresponding  liability.
               These share were issued on February  29,  2000.  On June 7, 2000,
               the Company issued an additional 90,000 shares of common stock to
               the  officers  of the  Company  (30,000  shares  each) in lieu of
               compensation  owed for wages accrued  during the current year and
               resulted  in a  reduction  to  the  Accrued  Wages  Liability  of
               $82,800.  The  Company has a  remaining  liability  for wages due
               officers of $18,864.

          i)   A settlement  has been reached  with  Trident  III,  L.L.C.  that
               consists of the company  issuing  279,188  common stock shares to
               Trident III,  L.L.C. in exchange for a full release from the debt
               and indemnity against any and all current and future claims.  The
               issuance of the  Company's  common  stock  shares for this matter
               occurred in the 2nd quarter of this fiscal year.  This settlement
               was ratified at a meeting of the Company's Board of Director's on
               January 23, 2000.  This issuance  resulted in a G&A charge to the
               Company in the amount of  $2,890,000  for the period ending March
               31, 2000.  This amount was based on seventy  percent (70%) of the
               value of the  stock  issued  on that day less the  amount  of the
               liability on the Company's books.

          j)   On January 23rd, 2000, the Board of Directors o the Company voted
               to issue 500,000  shares of its common stock to Benchmark  Equity
               Group  as  compensation  for  consulting  services  rendered.  On
               February  9th,  2000 the  Company  issued  500,000  shares of its
               restricted   common  stock  as  described  above.  This  issuance
               resulted  in a G&A  charge  to  the  Company  in  the  amount  of
               $2,890,000 for the period ending March 31, 2000.

          k)   The  Company  issued   420,000  shares  under  certain   advisory
               agreements.  The shares of the Issuer's  common stock were issued
               to Allen Z. Wolfson (20,000  shares) and Ronald Welborn  (400,000
               shares),  under  agreements  dated  December 14, 1999 whereby the
               recipients  are entitled to receive  750,000 each for  consulting
               services provided to the

                                      F-11


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 200O

NOTE 8 - SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES (continued)

     Issuer. This  transaction  is valued at $2.385 million and charged to G & A
          for the quarter ending March 31, 2000.

     l)   The Company was indebted to Steve Wooten, Sr. for consulting  services
          rendered in the amount of $85,000.  An agreement has been reached with
          Mr. Wooten  consisting of the Company  issuing 10,000 shares of common
          stock.  The issuance of the Company's  common stock shares occurred on
          February 29,2000. This transaction is valued at $85,000 and charged to
          G & A for the quarter ending March 31, 2000.

     m)   The Company  issued  30,000 shares of common stoc shares of its common
          stock to Henry Simon for legal services. The issuance of the Company's
          common stock shares occurred on February 29,2000. This transaction

                is valued  at  $172,500  and  charged  to G & A for the  quarter
                ending March 31, 2000.

     n)   The Company  issued 100,000  shares under an advisory  agreement.  The
          shares of the Issuer's  common stock were issued to Allen Z.  Wolfson,
          under an agreement  dated  December 14, 1999 whereby the  recipient is
          entitled to receive  750,000 for consulting  services  provided to the
          Issuer.  This  transaction  is valued at $538,000 and charged to G & A
          for the quarter  ending  March 31, 2000.  Total  shares  issued to Mr.
          Wolfson under this agreement,  including this issuance, number 210,000
          at this date.

     o)   The Company issued 150,000 shares under an advisory agreement on April
          26, 2000. The shares of the Issuer's common stock were issued to Allen
          Z.  Wolfson,  under an agreement  dated  December 14, 1999 whereby the
          recipient  is entitled  to receive  750,000  for  consulting  services
          provided to the Issuer.  This  transaction  is valued at $564,375  and
          charged to G & A for the quarter  ending June 30,  2000.  Total shares
          issued to Mr. Wolfson under this  agreement,  including this issuance,
          number 360,000 at this date.

     p)   The Company issued 350,000 shares under an advisory agreement on April
          26,  2000.  The shares of the  Issuer's  common  stock were  issued to
          Ronald Welborn, under an agreement dated December 14, 1999 whereby the
          recipient  is entitled  to receive  750,000  for  consulting  services
          provided to the Issuer.  This  transaction is valued at $1,316,875 and
          charged to G & A for the quarter  ending June 30,  2000.  Total shares
          issued to Mr. Welborn under this  agreement,  including this issuance,
          number 750,000 at this date.

     q)   The Company  issued  shares of its common  stock t Richard  Surber for
          legal services.

                An agreement  has been reached with Mr.  Surber to provide legal
                and advisory  services,  which  resulted in the Company  issuing
                30,000  shares of common  stock.  The issuance of the  Company's
                common stock shares occurred on May 2, 2000. This transaction is
                valued at $150,000  and  charged to G & A for the quarter  ended
                June 30, 2000.

                                      F-12


<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000

NOTE 8 -  SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES  (continued)


     r)   The  Company  entered  into an  agreement  to acquir 100% of Pepin Oil
          Company,  an Oklahoma oil and gas Exploration  Company in exchange for
          3.358 million shares of its  restricted  common stock issued on May 2,
          2000.  Pepin  has  a  working  interest  in a 500  well  developmental
          drilling  program located in Oklahoma.  This  transaction has not been
          consummated  as of the  date of this  filing,  and  management  of the
          Company believes it will consummate this  transaction.  The shares are
          currently  held in an escrow  account.  The Company  does not consider
          these shares to be validly outstanding as of the date of this filing.

     s)   The Company  entered  into an agreement  to arrang  financing  for its
          operations through the sale of restricted stock. The Company agreed to
          issue 5 million shares to Hardin County Investments in exchange for $4
          million. The shares are in an escrow account and are being returned to
          the Company to be cancelled  within the next 30 days. The Company does
          not consider these shares to be validly  outstanding as of the date of
          this filing.

     t)   The Company issued 150,000 shares and 240,000 shares under an advisory
          agreement on May 25th and June 5th of 2000,  respectively.  The shares
          of the Issuer's common stock were issued to Allen Z. Wolfson, under an
          agreement dated December 14, 1999 whereby the recipient is entitled to
          receive 750,000 for consulting services provided to the Issuer.  These
          transactions  are valued at  $1,365,000  and  charged to G & A for the
          quarter ending June 30, 2000. Total shares issued to Mr. Wolfson under
          this agreement, including this issuance, number 750,000 at this date.

     u)   On January 23rd,  2000,  the Board of Directors o the Company voted to
          issue  100,000  shares of its common stock to each of the directors as
          compensation  for  services  rendered.  On June 1st,  2000 the Company
          issued 25,000 shares of its restricted common stock to the six members
          of the Board of Directors;  James McGowan, Charles Barnhill,  Reginald
          Davis, Richard Surber, M.O. Rife III and Joe B. Bennett. The remaining
          shares owed will be issued on a pro-rata basis during the remainder of
          the year. This issuance resulted in a G&A charge to the Company in the
          amount of $528,876 for the three month period ending June 30, 2000.

     v)   A former  employee  had filed a claim  against  ORS The  employee  had
          demanded  $75,000 in exchange for a full and final release.  The claim
          had been  settled as  previously  disclosed,  however the terms of the
          settlement  have changed from cash payment to payment of the Company's
          restricted stock. The amounts of shares issued under the terms of this
          settlement  are 13,660,  which occurred on June 20, 2000 and valued at
          $22,112.   The  Company  had  previously   accrued  $20,000  for  this
          contingent  liability,  therefore,  an  additional  $2,112 was charged
          against G&A for the three months ending June 30,2000.

                                      F-13


<PAGE>


                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000

NOTE 9 -            SUBSEQUENT EVENTS

     Subsequent to June 30, 2000, the Company

     a)   The  Company  is  seeking to resolve  debt  payable  burdens  with the
          issuance  of shares in its  common  stock.  Under this  scenario,  the
          Company is seeking to negotiate a settlement  with Business  Exchange,
          Inc. for its debt of $250,000.

     b)   The Company entered into two advisory agreement covering financial and
          investment  services to be  provided to the Company on a best  efforts
          basis. The agreements provide for the Company to issue an aggregate of
          1,500,000 shares of common stock plus options to purchase an aggregate
          of 1,500,000  shares of post reverse split common stock at an exercise
          price of $0.66667 per share for a period of one year,  the term of the
          agreements.  As of the end of the fiscal quarter ending June 30, 2000,
          the Company has issued  1,500,000 shares of its common stock under the
          aforementioned  agreements.  On July 26, 2000, the advisory  agreement
          between Allen Z. Wolfson and Power Exploration, Inc. dated December 8,
          1999,  was  amended  by  an  addendum  effective  February  15,  2000,
          canceling the option to purchase 750,000 shares of common stock.

NOTE 10 - GOING CONCERN

          The accompanying  consolidated financial statements have been prepared
          assuming the Company will continue as a going concern.  As of June 30,
          2000,  the Company has a working  capital  deficit of $457,425  and an
          accumulated  deficit of  $24,871,338.  Based on the Company's  plan of
          operation,  the Company  estimates that existing  resources,  together
          with funds  generated from  operations  will not be sufficient to fund
          the  Company's  working  capital.  The  Company  is  actively  seeking
          additional  equity   financing.   There  can  be  no  assurances  that
          sufficient  financing  will be  available on terms  acceptable  to the
          Company or at all. If the Company is unable to obtain such  financing,
          the Company will be forced to scale back operations,  which would have
          an adverse effect on the Company's  financial condition and results of
          operations.

                                      F-14


<PAGE>



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

Forward Looking Statements

The information  herein contains certain forward looking  statements  within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the  Securities  Exchange Act of 1934,  as amended,  which are intended to be
covered by the safe harbors  created  thereby.  Investors are cautioned that all
forward looking  statements  involve risks and uncertainty,  including,  without
limitation,  the ability of Power  Exploration,  Inc.  ("Power") to continue its
expansion  strategy,  changes in the real  estate  markets,  labor and  employee
benefits,  as well as  general  market  conditions,  competition,  and  pricing.
Although Power  believes that the  assumptions  underlying  the forward  looking
statements  contained  herein are reasonable,  any of the  assumptions  could be
inaccurate,  and therefore,  there can be no assurance that the forward  looking
statements included in the Form 10QSB will prove to be accurate.  In view of the
significant  uncertainties  inherent in the forward looking statements  included
herein,  the  inclusion  of  such  information  should  not  be  regarded  as  a
representation  by Power or any other  person that the  objectives  and plans of
Power will be achieved.

General

During the third quarter of 2000, Power  Exploration,  Inc. and its subsidiaries
(hereinafter "Power" unless the context indicates otherwise) continued to pursue
capital  financing  alternatives  and possible  acquisition  targets in order to
generate greater revenue and increase shareholder value.

The following discussion of the consolidated  financial condition and results of
operations  of  Power  should  be  read in  conjunction  with  the  consolidated
financial statements of Power and the notes thereto included in Item 1 of Part I
of this Report.

Results of Operations

Revenues

Gross  revenues for the three and nine months ended June 30, 2000,  were $51,750
and  $143,422  compared to $191,183 and $278,219 for the same periods in 1999, a
73% and 49% decrease in revenues from the respective  periods in 1999. The gross
revenues for three months  ended June 30, 2000,  were lower than the  comparable
quarter in 1999 due to no  equipment  sales  during this period and offset by an
increase in oil and gas sales, reflecting the higher spot commodity prices.

Costs and Expenses

Costs of  revenues  for the three and nine  months  ended  June 30,  2000,  were
$77,002 and  $241,099  compared to $170,414 and $310,069 for the same periods in
1999. The decrease in the costs of revenues is primarily due to decreases in the
cost of rig sales.

Interest and general,  and  administrative  and asset  reduction  expenses  were
$4,180,307  and  $16,947,512  for the three and nine months  ended June 30, 2000
compared to $2,027,195,  and $2,644,422 for the same period in 1999. The primary
reason for the increases was a significant  increase in consulting  fees paid by
the Company  through the  issuance  of its common  stock,  which were valued and
recorded at prevailing market share prices.

                                        4


<PAGE>



Gross Loss

Gross  loss for the three and nine  months  ended  June 30,  2000,  was  $25,252
(profit)  and $97,677  compared to a gross profit of $20,769 and a gross loss of
$31,850 for the same  periods in 1999.  The losses were a result of the issuance
of stock for consultants that were valued at prevailing market prices

Liquidity and Capital Resources

At June 30, 2000, the Company had current assets of $424,965 and total assets of
$8,953,787 as compared to $417,932 and $7,778,894, respectively at September 30,
1999.  The  Company's  working  capital  deficit of  $457,425  at June 30,  2000
compared to a working  capital deficit of $1,593,061 at September 30, 1999 shows
an  improvement  of $1,135,636 for the year to date from the figure for the year
ended September 30, 1999.

Net  stockholders'  equity in the Company was  $8,022,608  as of June 30,  2000,
compared to  $5,767,961  at year-end on  September  30, 1999.  This  significant
increase is due to the increase in consulting  fees paid by the Company  through
the issuance of its common  stock,  which were valued and recorded at prevailing
market share prices.

Year 2000 Compliance

As of July 10, 2000, Power has experienced no significant year 2000 problems.

Power  currently uses Year 2000 compliant  engineering  evaluation  software for
acquisition  analysis,  as well as internal  engineering  applications.  Power's
spreadsheet and word processing software is also Year 2000 compliant.

Power  currently has limited  information  concerning  the Year 2000  compliance
status of its clients and associates.  However,  even if Power's clients are not
Year 2000 complaint Power does not anticipate that such  noncompliance will have
a material adverse effect on Power's business,  financial condition,  results of
operations or cash flows.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the third quarter ending June 30, 2000, no material developments occurred
regarding  Power's legal  proceedings.  For more information  please see Power's
Form 10KSB for the year ended September 30, 1999 which is incorporated herein by
reference.

ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES

The  following  is a list of all  securities  sold by Power  within  the  period
covered by this report, including,  where applicable, the identity of the person
who purchased the securities, title of the securities, and the date sold.

On June 1, 2000,  the Company  issued  25,000 shares of common stock to Joe Bill
Bennett, Reginald Davis, Charles Barnhill,  Richard D. Surber, James McGowan and
M. O. Rife III at a value of $3.5258  per share for  services  as  Officers  and
Directors of the Company. All of the shares were issued for services pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company  which did not  involve a public  offering.  The  Company  made this
offering  based on the  following  factors:  (1) The  issuance  was an  isolated
private transaction by the Company which did not involve a public offering;  (2)
there were only six  offerees who were issued stock for services as officers and
directors of the Company; (3) the

                                        5


<PAGE>



offerees  did not resell the stock but have  continued to hold it since the date
of issue;  (4) there were no subsequent or  contemporaneous  public offerings of
the stock; (5) the stock was not broken down into smaller denominations; and (6)
the  negotiations  for the sale of the stock took  place  directly  between  the
offerees and the Company.

On June 20, 2000, the Company issued 8,126 shares of its common stock to Roberta
Stacy and 5,534 shares of its common stock to Fielding,  Parker,  Jones & Posey,
LLP. for a full and final  release of claims  pursuant to a  previously  entered
into  settlement  agreement.  The shares were valued at a total of $22,112.  The
shares  were  issued in  settlement  of debt  pursuant  to  section  4(2) of the
Securities Act of 1933 in an isolated  private  transaction by the Company which
did not involve a public  offering.  The Company made this offering based on the
following factors:  (1) The issuance was an isolated private  transaction by the
Company  which  did not  involve  a public  offering;  (2)  there  were only two
offerees who were issued  stock to settle debt;  (3) the offerees did not resell
the stock but have continued to hold it since the date of issue;  (4) there were
no subsequent or  contemporaneous  public  offerings of the stock; (5) the stock
was not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offerees and the Company.

During the quarter  ended June 30, 2000 the Company  issued a total of 1,010,000
shares of stock to officers,  employees and consultants of the Company  pursuant
to the  Company's  1999 Stock  Benefit  Plan as set out below.  The shares  were
issued  pursuant to an S-8  Registration  filed with the Securities and Exchange
Commission on December 15, 1999

Date                         Name                               Number of Shares
April 26, 2000               Allen Z. Wolfson                        150,000
April 28, 2000               Ronald Welborn                          350,000
May 2, 2000                  Richard D. Surber                       30,000
May 25, 2000                 Allen Z. Wolfson                        150,000
June 5, 2000                 Allen Z. Wolfson                        240,000
June 7, 2000                 M. O. Rife III                          30,000
June 7, 2000                 Joe Bill Bennett                        30,000
June 7, 2000                 Mark S. Zouvas                          30,000

ITEM 3. OTHER INFORMATION

On May 2, 2000, the Board of Directors of the Company  approved the acquisition,
by the  Company,  of 100% of the  issued  and  outstanding  shares  of Pepin Oil
Company,  Inc., an Oklahoma  corporation,  in exchange for  2,500,000  shares of
restricted  common shares of the Company.  Pepin has a working interest in a 500
well  developmental  drilling program in Oklahoma.  The transaction has not been
finalized  and the shares are being held in escrow  pending  the  closing of the
transaction.  ( See  note 8q to  financial  statements.)  The  Company  does not
consider these shares to be outstanding.

ITEM 4. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits  Exhibits required to be attached by Item 601 of Regulation S-B are
listed  in the  Index  to  Exhibits  on  page 9 of  this  Form  10-QSB,  and are
incorporated herein by this reference.

                                        6


<PAGE>



(b)      Reports on Form 8-K.  None.
         -------------------














                                       [THIS SPACE INTENTIONALLY LEFT BLANK]









                                        7


<PAGE>



                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                         Power Exploration, Inc.
                                          (Registrant)

Date      August 14, 2000               /s/ Joe B. Bennett
                                        -------------------------
                                         Joe B. Bennett, Chief Executive Officer
                                        (Duly Authorized Officer)

                                                         8


<PAGE>


                                INDEX TO EXHIBITS

EXHIBIT   PAGE

NO.        NO.      DESCRIPTION

2.1        *

               Plan of Reorganization  and Change of Situs by which Titan Energy
               Corp.,  and  Power   Exploration,   Inc.  Changes  Its  Place  of
               Incorporation.

2.2        *

               Agreement  and Plan of Merger  Between  Power  Exploration,  Inc.
               (Nevada) and Power Exploration, Inc. (Colorado). August 1, 1998

2.3        *

               Articles of Merger Between Power  Exploration,  Inc. (Nevada) and
               Power Exploration, Inc. (Colorado). August 1, 1998

3.1        *

               Articles of  Incorporation  of Imperial  Energy dated October 31,
               1979.

3.2        *

               Amendment to Articles of Incorporation dated June 26, 1984

3.3        *

               Amendment to Articles of Incorporation dated September 25, 1996

3.4        *

               Amendment  to  Articles  of  Incorporation  dated June 15,  1997,
               Changing Name to Oil Retrieval Systems, Inc.

3.5        *


               By Laws of the Corporation

3.6        *

               Articles of Incorporation  of Power  Exploration,  Inc.  (Nevada)
               dated May 14, 1998

3.7        *

               By Laws of Power Exploration, Inc. (Nevada) Dated June 1, 1998

23               Consent Letter of Auditor

27           __         Financial Data Schedule "CE"

* Previously  filed and  incorporated  herein by reference  from the Form 10-KSB
filed January 14, 2000 by the Company.





                                        9