=======================================================================


                       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 December31, 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 Avenue, 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  December  31,  2000 was
13,977,781.
         =======================================================================




<PAGE>



                                        2


                               TABLE OF CONTENTS



                         PART I - FINANCIAL INFORMATION

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

    Condensed Balance Sheets as of September 30, 2000 and December 31, 2000..F-1

    Condensed Statements of Operations
       for the Three Month Periods Ended December 31, 2000 and 1999..........F-2

    Condensed Statements of Cash Flows
             for the Three Month Periods Ended December 31, 2000 and 1999....F-3

    Notes to Unaudited Condensed Financial Statements........................F-5

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

                          PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS.......................................................5

ITEM 2 CHANGES IN SECURITIES...................................................5

ITEM 6 EXHIBITS AND REPORTS OF FORM 8-K........................................6

INDEX TO EXHIBITS..............................................................8




<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  December 31,
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.





                                       2


<PAGE>



<TABLE>

                                              POWER EXPLORATION AND SUBSIDIARIES
                                                  CONSOLIDATED BALANCE SHEET

<CAPTION>

                                                                            Dec. 31, 2000                 Sept. 31, 2000
                                                                               Unaudited                      Audited
<S>                                                                       <C>                         <C>
                                 ASSETS
         CURRENT ASSETS
         Cash                                                              $       4,597               $             -
         Accounts Receivable                                                      17,829                             -
         Accounts Receivable - Related Party                                           -                        22,806
                                                                            ------------               ---------------
         Total Current Assets                                                     22,426                        22,806
                                                                            ------------              ----------------
         OIL & GAS PROPERTIES, FULL COST METHOD
         Properties being amortized                                            8,856,890                     8,856,890
                                                                            ------------              ----------------
         Less:  Accumulated depreciation, depletion &                            (27,846)                      (27,567)
                  amortization
                                                                            ------------              ----------------
         Net Oil and Gas Properties                                            8,828,044                     8,829,323
                                                                            ------------              ----------------
         PROPERTY AND EQUIPMENT
         Property and Equipment                                                    1,374                         1,374
         Accumulated Depreciation                                                   (687)                         (618)
                                                                            ------------              ----------------
         Total Property and Equipment                                                687                           756
                                                                            ------------              ----------------
         OTHER ASSETS
         Net Assets of Discontinued Operations                                    52,452                        37,990
         Other                                                                     7,155                         6,037
                                                                            ------------              ----------------
         Total Other Assets                                                       59,607                        44,027

         TOTAL ASSETS                                                       $  8,911,764               $     8,896,912
                                                                            ============              ================
         LIABILITIES AND STOCKHOLDERS'
                    EQUITY

         CURRENT LIABILITIES
         Cash Overdraft                                                     $          -                         7,960
          Accounts Payable and Accrued Expenses                             $    355,877               $       267,188
         Accounts Payable - Related Parties                                      280,435                       165,113
         Notes Payable                                                           250,000                       250,000
         Notes Payable -- Related Parties                                         30,000                        30,000
                                                                            ------------              ----------------
         Total Current Liabilities                                          $    916,312               $       720,261
                                                                            ------------              ----------------

         LONG TERM LIABILITIES
                                                                            ------------              ----------------
         Total Liabilities                                                  $    916,312               $       720,261
                                                                            ------------              ---------------

         STOCKHOLDERS' EQUITY
         Common Stock ($.02 par value; 50,000,000 shares
         authorized, 13,977,781 shares issued & outstanding)                     279,555                       278,023
         Additional Paid-In Capital                                           33,430,072                    33,396,290
         Accumulated Deficit                                                 (25,714,175)                  (25,497,662)
                                                                            ------------              ----------------
         Total Stockholders' Equity                                         $  7,995,452              $      8,176,651
                                                                            ------------              ----------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  8,911,764              $      8,896,912
                                                                            ============              ================

</TABLE>



                                                         F-1

<PAGE>



---------------------------------------------------------------- ---------------
<TABLE>

                       POWER EXPLORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

<CAPTION>

                                                             3 Months Ending         3 Months Ending
                                                              Dec. 31, 2000            Dec 31, 1999
                                                               Unaudited                Unaudited
<S>                                                     <C>                        <C>
REVENUE

Oil and Gas Sales                                         $         40,807           $       15,144
Rig Sales                                                                -                    5,041
Drilling Revenue                                                       447                    6,327
                                                          -----------------         ----------------
Total Revenue                                                       41,254                   26,512
                                                          -----------------         ----------------

COST OF REVENUE
Lease Operating                                                      37,265                  69,011
Production Taxes                                                      1,884                     700
Depreciation, Depletion & Amortization                                  348                  12,842
                                                          -----------------         ----------------
Total Cost of Revenue                                                39,497                  82,553
                                                          -----------------         ---------------
GROSS PROFIT                                                          1,757                 (56,041)
                                                          -----------------         ---------------

EXPENSES

General and Administrative                                          198,841                 480,093
Interest Expense                                                      6,980                  10,214
                                                          -----------------         ---------------
Total Expenses                                                      205,821                 490,307
                                                          -----------------         ---------------

PROFIT (LOSS) BEFORE DISCONTINUED OPERATIONS
AND PROVISION FOR INCOME TAXES                                    (204,064)                (546,348)
                                                         ------------------         ---------------
INCOME TAXES                                                             -                        -
Net Loss from Continuing Operations                               (204,064)                (546,348)
                                                          -----------------         ---------------

Operating Loss - Discontinued Operations                          (112,448)                       -
Loss on Disposal of Discontinued Operations                              -                        -
                                                          -----------------         ---------------
NET PROFIT (LOSS)                                                  (216,512)               (546,348)
                                                          ==================        ===============
PROFIT (LOSS) PER SHARE                                    $          (0.01)        $         (0.06)
                                                          ==================        ===============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                                              18,150,531                9,569,260
                                                          ==================        ==============
</TABLE>




                                       F-2

<PAGE>





<TABLE>

                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                             STATEMENT OF CASH FLOWS

        FOR THE PERIODS ENDING DECEMBER 31, 2000 AND SEPTEMBER 30,2000


<CAPTION>


                                                                          Dec.31,2000          Sept. 30, 2000
        CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                     <C>               <C>
                  Net(Loss)                                              $   (216,512)     $       (17,611,913)
                  Adjustments to Reconcile Net (Loss) to Net Cash
                  From Operating Activities
                      Interest Expense                                   $          -      $         1,341,707
                      Depreciation, Depletion and Amortization           $        348      $            19,058
                      Amortization of Loan Fees                          $          -                        -
                      Amortization of Discount on Bonds Payable          $          -      $                 -
                      Issuance of Shares and Warrants for Services,      $                                   -
                       Employee Compensation and Liability
                       Settlements                                       $          -      $        12,479,515
                      Loss on Disposal of Assets                         $          -      $         3,308,459
                  Changes in Operating Assets and Liabililties:
                    Decrease in Receivables                              $          -      $                 -
                    (increase) Decrease in Receivable-Related Party      $      4,977      $           (14,587)
                    (Increase) Decrease in Prepaid and Other Assets      $    (15,580)     $                 -
                    Increase in Accounts Payable and
                       Accrued Expenses                                  $    196,051      $                 -
                    Cash Overdraft                                       $          -      $             7,960

                             NET CASH (USED) IN
                              CONTINUING OPERATIONS                      $    (30,716)     $          (469,801)
                                                                          ------------          --------------
                           NET CASH PROVIDED (USED) BY
                              DISCONTINUED OPERATIONS                    $          -      $           176,818
                                                                          ------------          --------------
                           NET CASH (USED) IN
                              OPERATING ACTIVITIES                       $          -      $          (292,983)
                                                                          ------------          --------------
      CASH FLOW FROM INVESTING ACTIVITIES
                    Cost of Oil and Gas Properties
                    Purchase of Office Equipment
                    Proceeds from Sale of Real Estate                    $          -      $           163,808
                                                                          ------------          --------------
                           NET CASH PROVIDED (USED) IN
                              INVESTING ACTIVITIES                       $          -      $           163,808
                                                                          ------------          --------------
</TABLE>


                                      F-3

<PAGE>

<TABLE>

                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                             STATEMENT OF CASH FLOWS
                                   (Continued)

         FOR THE PERIOD ENDED DECEMBER 31, 2000 AND SEPTEMBER 30,2000

<CAPTION>

                                                                  Dec.31,2000        Sept 30, 2000
<S>                                                              <C>               <C>
        CASH FLOW FROM FINANCING ACTIVITIES
                 Proceeds from Borrowings                        $                  $      130,000
                 Repayment fo Borrowings                         $                  $     (100,000)
                 Proceeds from Sale of Stock                     $                  $       90,000
                 Increase in Common Stock                        $   1,532          $            -
                 Increase in Addtl Paid In Capital               $  33,782          $            -
                                                                 ------------        --------------
                   NET CASH PROVIDED (USED) IN
                      FINANCING ACTIVITIES.                      $  35,314          $      120,000
                                                                 ------------        --------------
       NET DECREASE IN CASH                                      $   4,598          $       (9,175)

       CASH AT BEGINNING OF PERIOD                               $                  $        9,175
                                                                 ------------        --------------
       CASH AT END OF YEAR                                       $   4,598          $            -
                                                                 ===========         ==============
       SUPPLEMENTAL SCHEDULE OF CASH FLOW
        INFORMATION
                 Cash Paid During the Period For:
                   Interest                                      $       -          $            -
                                                                 ===========         ==============
                   Income Taxes                                  $       -          $            -
                                                                 ===========         ==============
       SUPPLEMENTAL SCHEDULE OF NONCASH
        INVESTING AND FINANCING ACTIVITIES:
               Purchase of Oil and Gas Properties                $       -          $    1,721,980
               Purchase of Real Estate                           $       -          $    3,468,000
               Reduction in Accounts Payable and
                 Accrued Expenses                                $       -          $    5,680,888
               Notes Payable Settlements                         $       -          $      351,313
               Settlements of Debenture Liability                $       -          $            -
               Issuance of Shares                                $       -          $   (6,109,381)
                                                                 ----------        ---------------
                                                                 $       -          $            -
                                                                 ==========        ===============
</TABLE>

                                      F-4




<PAGE>


                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 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",   formerly  Titan  Energy  Corp.,  Inc.)  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 intercompany accounts
and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company  considers all highly  liquid  investments  purchased  with original
maturities of three months or less to be cash equivalents.

Oil and Gas Properties

The Company  follows the full cost method of accounting for oil and gas property
acquisition, exploration, development, and production.

Capitalization Policies: All oil and gas property acquisition,  exploration, and
development  costs are  capitalized  as incurred.  There were no internal  costs
directly  attributable to such  activities.  Net  capitalized  costs of unproved
property and exploration well costs are reclassified as proved property and well
costs when  related  proved  reserves  are found.  Costs to operate and maintain
wells and field equipment are expensed as incurred.

Amortization Policies:  Except for cost of (1) unevaluated,  unproved properties
and (2) major  development  projects in progress,  all  capitalized  oil and gas
property costs, net of prior accumulated amortization,  are amortized by country
using the  unit-of-production  method based on proved reserves. The amortization
base includes  estimated  future costs to develop proved  reserves and estimated
future  dismantlement,  reclamation,  and  abandonment  costs,  net of equipment
salvage values.

Impairment  Policies:  Costs not being amortized are  periodically  assessed for
impairment.  Any impairment is added to the  amortization  base. Net capitalized
costs of oil and gas properties, less related deferred income taxes are limited,
by country, to the sum of (1)

                                      F-5

<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Oil and Gas Properties (Continued)

future net revenues  (using  prices and cost rates as of the balance sheet date)
from proved reserves and discounted at ten percent per annum, plus (2) costs not
being amortized,  less (3) related income tax effects.  Excess costs are charged
to proved property impairment expense.

Sales and Retirements Policies: No gain or loss is recognized on the sale of oil
and  gas  properties  unless  non  recognition  would  significantly  alter  the
relationship  between  capitalized  costs and remaining  proved reserves for the
affected   amortization  base.  When  gain  or  loss  in  not  recognized,   the
amortization base is reduced by the amount of sales proceeds.

Revenue Recognition

Revenues  from the sale of oil and gas  production  are  recognized  when  title
passes,  net of  royalties.  Use  of  Estimates  The  preparation  of  financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions  that affect the reported amount of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the  reporting  date.  Actual  results  could differ from those
estimates.

Depreciation and Amortization

Office  equipment is stated at cost and is depreciated  using the  straight-line
method over its estimated useful lives of five (5) years.

The costs of maintenance and repairs are charged to expense when incurred; costs
of renewals and  betterments  are  capitalized.  Upon the sales or retirement of
property  and  equipment,  the cost and  related  accumulated  depreciation  are
eliminated  from  the  respective  accounts  and the  resulting  gain or loss is
included in operations.

                                      F-6

<PAGE>


                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

The  Company's  financial  instruments  consist  of cash,  accounts  receivable,
accounts  payable and short-term  debt. The carrying  amounts of cash,  accounts
receivable,  accounts  payable and short-term debt approximate fair value due to
the relatively short maturity of these instruments.

Long - Lived Assets

Long - lived  assets to be held and used are reviewed  for  impairment  whenever
events or changes in circumstances indicate that the related carrying amount may
not be recoverable.  When required,  impairment  losses on assets to be held and
used are recognized  based on the fair value of the assets and long lived assets
to be  disposed of are  reported  at the lower of carrying  amount of fair value
less cost to sell.

Income Taxes

Provisions  for income taxes are based on taxes  payable or  refundable  for the
current year and deferred taxes on temporary  differences  between the amount of
taxable income and pretax  financial  income and between the tax bases of assets
and liabilities and their reported amounts in the financial statements. Deferred
tax assets and liabilities are included in the financial statements at currently
enacted  income tax rates  applicable  to the period in which the  deferred  tax
assets and  liabilities  are expected to be realized or settled as prescribed in
FASB Statement No. 109,  Accounting for Income Taxes.  As changes in tax laws or
rates are enacted,  deferred tax assets and liabilities are adjusted through the
provision for income taxes.

Concentration of Credit Risk

The Company  places its cash in what it believes to be  credit-worthy  financial
institutions.  However,  cash balances may exceed FDIC insured levels at various
times during the year.

Stock-Based Compensation

The Company has adopted the intrinsic value method of accounting for stock-based
compensation in accordance with Accounting  Principles Board Opinion ("APB") No.
25, "Accounting for Stock Issued to Employees" and related interpretations.


                                      F-7

<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income

In June 1997, SFAS No. 130, "Reporting  Comprehensive  Income", was issued. This
statement  establishes  standards for the reporting and display of comprehensive
income and its components in the financial statements.  As of September 30, 2000
and 1999, the Company had no items that  represent  other  comprehensive  income
and,  therefore,  has not  included a schedule  of  comprehensive  income in the
financial statements.

Per Share of Common Stock

Per share  amounts  have been  computed  based on the  average  number of common
shares outstanding during the period.

Potential  common stock has been excluded from the  computation  of earnings per
share since the inclusion of options and warrants would be antidilutive.


NOTE 2: NOTES PAYABLE

Notes payable at December 31, 2000 and 1999 consist of the following:

                                                   2000               1999
                                                ---------        ------------

    a) Note Payable - Trident III, L.L.C.       $        -         $250,000
    b) Note Payable - Business Exchange
         Investments, Inc.                         250,000          250,000
    c) Note Payable - Related Party                      -
                                                                    101,313
    d) Note Payable - Related Party                 30,000                -
                                                 ----------        ----------
                                                  $280,000         $601,313
                                                  =========        ==========

     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.  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,


                                      F-8

<PAGE>


                           POWER EXPLORATION, INC. AND
                                  SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


         NOTE 2: NOTES PAYABLE (Continued

          1999,  then it will 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 was made by that date,
          the  lender  would not seek to receive  the 50,000  shares per day due
          under the  previous  extension.  If payment  was not made on or before
          October 30, then the full 50,000  shares per day from  October 1, 1999
          would be due. In January 2000,  the Company  issued  279,861 shares of
          its common stock with an aggregate fair value of $1,617,597 to Trident
          III,  L.L.C.  in  settlement of the $250,000 note payable plus accrued
          interest  of  $25,890.  The  difference  between the fair value of the
          share  issued  and  the  note  balance,   plus  accrued  interest  was
          $1,341,707,  which was recognized as interest expense in the September
          30, 2000 statement of operations.

     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 an  extended
          maturity  date of March 15,  2000.  At  December  31,  2000,  the note
          remains  outstanding,  therefore,  the  Company  is in default on this
          note. The note is collateralized by 100% of the shares of OSI.

     c)   The Company was indebted to the M.O. Rife III,  Trust A under terms of
          a  promissory  note dated  March 31,  1999 in the amount of  $101,313.
          Terms of the note  provide for  interest at a rate of 8.75% per annum,
          and the note is due upon demand.  In December 1999, the Company issued
          1,000,000 shares of its common shares in settlement of the

         $101,313 note payable plus $7,140 of accrued  interest and $802,179 of
          accounts payable to Rife Oil Properties, Inc.

     d)   The Company was indebted to M.O. Rife III,  Trust A under the terms of
          promissory  notes dated  September 14, 2000 and September 20, 2000, in
          an  aggregate  amount  of  $30,000.  Terms of the  notes  provide  for
          interest at the rate of I 1 % per annum,  with original maturity dates
          of February 14, 2001 and February 20, 2001.



                                      F-9

<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 3: WARRANTS

At December  31,  2000,  the Company had the  following  common  stock  purchase
warrants outstanding:

     a)   1,000 warrants,  each of which entitles the registered  holder thereof
          to purchase one share of common stock,  exercisable  at any time on or
          before  August  31,  2002 at an  exercise  price  of $2.50  per  share
          (subject to customary anti-dilution  adjustments).  The exercise price
          exceeded the market price of the  underlying  common stock on the date
          of issuance. The warrants were issued in connection with the placement
          of the debt issued in 1999.

     b)   800 warrants,  each of which entitles the registered holder thereof to
          purchase  one share of  common  stock,  exercisable  at any time on or
          before  August  31,  2003 at an  exercise  price  of $1.00  per  share
          (subject to customary  anti-dilution  adjustments).  The warrants were
          issued in connection with the debt issued in 1999.

     c)   750 warrants,  each of which entitles the registered holder thereof to
          purchase  one share of  common  stock,  exercisable  at any time on or
          before  August  20,  2003 at an  exercise  price  of $2.50  per  share
          (subject to customary  anti-dilution  adjustments).  The warrants were
          issued as a fee in connection with the debt issued in 1999.

     d)   200 warrants,  each of which entitles the registered holder thereof to
          purchase  one share of  common  stock,  exercisable  at any time on or
          before June 1, 2003 at an exercise  price of $2.50 per share  (subject
          to customary anti-dilution adjustments). The warrants were issued as a
          payment for a consulting  agreement and have been valued at $27,620 in
          1999.

          The warrants  issued do not confer upon the holders thereof any voting
          or other rights of a stockholder of the Company.

          The warrants described in items (b) through (d) above are subject to a
          "cashless exercise" provision (the "warrant exchange"),


                                      F-10

<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 3: WARRANTS (Continued)

In connection with any Warrant Exchange,  the Holder's Warrant certificate shall
represent the right to subscribe for or acquire (1) the number of Warrant Shares
(rounded to the next highest  integer) equal to (A) the number of Warrant Shares
specified  by the Holder in its Notice of Exchange  (the "Total  Share  Number")
less (B) the number of Warrant Shares equal to the quotient obtained by dividing
(i) the product of the Total Share  Number and the existing  Exercise  Price (as
Defined)  per Share by (ii) the Market  Price (as  defined) of a share of Common
Stock.

As of December 31, 2000,  the Company issued 3,588 shares of its common stock in
a cashless exercise of 7,250 warrants. No warrants were exercised as of December
31, 2000.

NOTE 4: RELATED PARTY TRANSACTIONS

During the year ended September 30, 1999:

     a)   The Company  issued a  promissory  note to M.O.  Rife III Trust A (the
          "Rife  Trust"),  which is a  principal  stockholder  in the  amount of
          $101,313.  The  proceeds  of the note were used to repay a loan to the
          Company  from  the  Bank  of  Commerce,   which  the  stockholder  had
          guaranteed.

     b)   The  Company was  advanced a net of  $140,000 by Rife Oil  Properties,
          Inc., a company owned by the beneficiary to the Rife Trust.

     c)   The Company  incurred a net accounts  payable to Rife Oil  Properties,
          Inc. of $389,154.

     d)   The Company is owed an aggregate of $84,570 in accounts  receivable by
          Rife Oil Properties, Inc.

     e)   The  Company  leases its  office  space  from the Rife  Trust,  with a
          monthly rental of $3,325.

During the year ended September 30, 2000:

     a)   The Company  issued  300,000  shares of its common stock to Members of
          the Board of Directors  as  compensation  with an  aggregate  value of
          $1,395,867.

     b)   The  Company  purchased  additional  oil and gas  leases  of a company
          controlled  by a director  by issuing  8,540,000  shares of its common
          stock with an aggregate value of $1,721,980.

     c)   The Company  issued  1,000,000  shares of its common stock to Rife Oil
          Properties,  Inc.  in  settlement  of a  note  payable,  plus  accrued
          interest and an account payable balance  applicable to lease operating
          expense. These shares were valued at $910,631.

                                      F-11

<PAGE>



                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 4: RELATED PARTY TRANSACTIONS (Continued)

     d)   In February 2000, the Company  purchased all of the outstanding  stock
          of The Lincoln Health Fund, Inc. ("Lincoln") from a stockholder of the
          Company.  Lincoln's  only  asset was a parcel of land  located in Fort
          Worth,  Texas,  which  was  subsequently  sold  in  August  2000.  The
          transaction is summarized as follows:

                  Fair Value of 600,000 Shares Issued for
                           Real Estate in February 2000              $3,468,000
                  Net Proceeds from Sale of
                           Real Estate in August 2000                   163,808
                                                                     -----------
                  Loss on Disposal of Asset                          $3,304,192
                                                                     ==========

     e)   Rife Oil Properties,  Inc. ("Rife"),  a Company owned by a director is
          the operator of all oil and gas leases  owned by the Company.  For the
          quarter ended December 31, 2000,  Rife charged the Company $53,536 for
          operating the Company's oil and gas wells.

     f)   The Company borrowed money from the M.O. Rife III, Trust A as follows:

                                                Interest             Due
                   Date             Amount        Rate               Date
                   ----             ------      --------    --------------------

            May 3, 2000             $15,000        11%        October 3, 2000
            September 14, 2000       10,000        11%        February 14, 2000
            September 20, 2000        5,000        11%        February 20, 2000
                                  ---------
                                    $30,000

     Interest expense on these notes for the quarter ended December 31, 2000 was
     $830.76.

     g)   In June 2000, the Company's chief financial officer paid the Company's
          auditor $12,547 for services rendered. The funds advanced by the chief
          financial  officer are  reflected in the  December  31, 2000,  balance
          sheet as accounts payable to related party.

     h)   The  Company  issued  180,000  shares  of its  common  stock  with  an
          aggregate  value of  $370,956  to its  executive  officers as employee
          compensation.

     i)   The  Company  leases its  office  space  from the Rife  Trust,  with a
          monthly rental of $3,325.

     During the quarter ended December 31, 2000:

     a)   The Company's  chief  financial  officer paid  International  Business
          Travel  $2,615.80 for business  related travel.  The funds advanced by
          the chief  financial  officer are reflected in the December 3 1, 2000,
          balance sheet as accounts payable to related party.


                                      F-12

<PAGE>


                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 5: CONSULTING AGREEMENTS

During the quarter ended December 31, 2000, the Company issued 125,000 shares of
common  stock to Peter  Kristensen  with a value of  $54,687.50  under  Advisory
Agreement dated October 16, 2000, for consulting services.

 NOTE 6: SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES

         a)       The Company  issued  125,000  shares of common  stock to Peter
                  Kristensen pursuant to an Advisory Agreement dated October 16,
                  2000, for consulting services.

         b)       On November 22, 2000,  the Company  canceled  50,000 shares of
                  common stock  previously  issued to Simon,  Warner & Doby, LLP
                  for legal services.

         c)       On November 22, 2000, the Company canceled 3,358,000 shares of
                  common  stock  previously  issued  to J. Paul  Pepin,  Trustee
                  pursuant to an agreement to acquire 100% of Pepin Oil Company.
                  The transaction was never consummated.

         d)       On November 22, 2000, the Company canceled 5,000,000 shares of
                  common stock previously  issued to Hardin County  Investment &
                  Development  de  Mexico  pursuant  to an  agreement  to obtain
                  financing  for its  operations  through the sale of restricted
                  stock . The transaction did not close and has been canceled.

NOTE 7:    COMMITMENTS AND CONTINGENCIES

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

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

                           2001                                        $18,827
                           2002                                         15,799
                           2003                                          9,423
                           2004                                             947
                                                                      ---------
               Total minimum lease payments                             $44,996
                                                                      =========

               Rent expense included in the financial statements for the quarter
               ended December 31, 2000, totaled $9,975.00.

         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 March 15, 2000.

                                      F-13

<PAGE>


                    POWER EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 8: GOING CONCERN

The accompanying  consolidated  financial statements have been prepared assuming
the company will  continue as a going  concern.  As of December  31,  2000,  the
Company has a working capital deficit of $893,886 and an accumulated  deficit of
$25,714,172.  Based upon 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  deficit.  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 operation.















                                      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" or the "Company") 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 first quarter of 2001, Power  Exploration,  Inc. and its subsidiaries
(hereinafter the "Company" unless the context indicates  otherwise) continued to
improve  its  financial  condition.  Power  decreased  its net  losses  over the
comparable  quarter in 2000. As a direct result of slightly  increased  revenues
and  decreased  general and  administration  expenses for the three months ended
December 31, 2000, Power"s overall financial health has somewhat improved.

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.

Financial Results

Revenues

Oil and gas sales  increased  $25,633,  or 59%, to $40,807 for the three  months
ended  December 31, 2000 from  $15,144 for the three  months ended  December 31,
1999. The increase in sales was due to increased prices the Company has received
for its oil and gas products.  Equipment  sales  decreased  $5,041,  or 100%, to
$0.00 for the three  months  ended  December  31, 2000 from $5,041 for the three
months  ended  December  31,  1999.  This  decrease  is due to the  discontinued
operations  of the  Company"s  ORS,  Inc.  subsidiary.  To date,  Power has been
putting the necessary  components in place to create ongoing  income,  and these
efforts  should  begin to be realized  during the second half of the 2001 fiscal
year.



                                       4

<PAGE>



Costs and Expenses

Power's  general and  administrative  expenses  decreased  $281,180,  or 42%, to
$198,913  for the three months  ended  December  31, 2000 from  $480,093 for the
three months ended December 31, 1999. The change in the dollar amount of general
and  administrative  expenses  was due  primarily  to a decrease  in  consulting
expenses for the quarter that were  recorded at the fair market value of time of
issuance. Other major components of general and administrative expenses included
a reduction in legal fees and a cutback in office staff.

Net Loss

Net loss for the three months ended December 31, 2000 was $216,510,  or $.01 per
share,  compared to a loss of $546,348,  or $.06 per share, for the three months
ended  December  31,  1999.  The  Company  used cash in the amount of $30,716 to
support its operating  activities  during the three months  ending  December 31,
2000, versus 1,114,065 for the three months ended December 31, 1999. The Company
increased  its cash  position  by  $4,600  from  the  previous  period,  through
operating and financing activities.

Liquidity and Capital Resources

The Company's working capital deficit on December 31, 2000 was $893,886 compared
to a deficit of $697,455 on September 30, 2000. The Company's  current ratio was
 .02 versus a current ratio of .31 for the previous period.

Cash and cash equivalents  totaled $22,426 at December 31, 2000, a $380 decrease
from  September  30, 2000 The  Company's  debt totaled  $916,312 at December 31,
2000, from  $1,286,250 at December 31, 1999,  down 25% for the same period.  The
decrease was due to the conversion of some short-term debt to common stock.

Long Term Debt

On December  31,  2000,  Power had no  long-term  debt.  Although 89% of Power"s
assets are comprised of oil and gas properties that are not a current asset, all
of  Power"s  borrowings  have been short  term in  nature.  This has  aggravated
Power's cash position and produced lower measures of financial  performance than
would otherwise be possible.

                           PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

During the first  quarter  ending  December 31, 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, 2000 which is  incorporated
herein by reference.

ITEM 2. Changes in Securities and Use of Proceeds

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.


                                       5

<PAGE>



Pursuant to an Advisory  Agreement  dated October 18, 2000,  the Company  issued
125,000  shares  of its $0.02 par value  common  stock to Peter  Kristensen  for
consulting  services.  The shares were valued at $54,000. The shares were issued
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 was only one  offeree  who was  issued  stock for  services
rendered to the Company;  (3) the offeree  stated an intention not to resell the
stock and has  continued to hold the stock since the issue date;  (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 offeree and the Company.  (See
Exhibit 10.1, p.9)

ITEM 6.  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 _ of this Form 10-QSB,
          and are incorporated herein by this reference.

     (b)  Reports on Form 8-K. Power filed a Form 8-K on October 4, 2000,  which
          is incorporated  herein by this reference.  In the filing, the Company
          reported that:

On September 27, 2000, the registrant engaged Killman,  Murrell, & Company, P.C.
as its independent auditors to replace Merdinger, Frutcher, Rosen, & Corso, P.C.
(the "Accountant"). The Company has asked that the Accountant submit a letter to
the  Securities  & Exchange  Commission  to the effect  that it has no  material
disagreements  with the  statements  made in this  Item 4,  confirming  that the
Accountant  had no  disagreements  with  management  of the  Company  related to
matters that are material to the Company's 1999 financial statements.






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                                       6

<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      February 19, 2000         /s/ Joe B. Bennett
                                    --------------------------------
                                    Joe B. Bennett, Chief Executive Officer
                                    (Duly Authorized Officer)







                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]







                                       7



<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

2.4         *  Action by  Incorporator.  Election of Officers  and  Directors of
               Power Exploration, Inc. (Nevada). May 31, 1998

2.5         *  Special Action by the Executive  Committee of Power  Exploration,
               Inc.  dated  January 11, 1999  (Incorporated  herein by reference
               from Exhibits to the Company"s Form 8-K filed January 19, 1999).

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         *  Minutes  of Special  Shareholders  Meeting  Changing  Name to Oil
               Retrieval Systems, Inc. dated May 14, 1997

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

3.6         *  By Laws of the Corporation

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

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

10.1        9  Advisory   Agreement   dated   October  16,  2000  between  Power
               Exploration, Inc. and Peter Kristensen.

21.1        *  Subsidiaries of the Issuer


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


                                       8