U.S. Securities And Exchange Commission

                       Washington, D.C. 20549

                            Form 10-QSB

(Mark One)

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

      For the quarterly period ended September 30, 1998.

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

      For the transition period from ____________ to ____________

Commission file number 0-20760

                     HORIZONTAL VENTURES, INC.
                (Exact name of small business issuer as 
                      specified in its charter)

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

         630 Fifth Avenue, Suite 1501, New York, NY 10111
            (Address of principal executive office)     

                           (212) 218-4680
                        (Issuer's telephone number)

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

    Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the 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 X   No

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

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

             APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common Stock, no par value, outstanding at November 13, 1998: 1,570,981 shares

     Transitional Small Business Disclosure Format (check one):

Yes          No   X  


                        TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.
                                                             
     Consolidated Balance Sheet as of September 30, 1998
        (Unaudited)                                                     
     Consolidated Statements of Operations for the 
        Three Months and Nine Months Ended September 30, 1998
        and 1997 (Unaudited)                                      

     Consolidated Statements of Cash Flows for the Nine
        Months Ended September 30, 1998 and 1997 (Unaudited)         
     Notes to Consolidated Financial Statements,
        September 30, 1998 and 1997 (Unaudited)       

Item 2.  Management's Discussion and Analysis.                

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

Item 2.  Changes in Securities and Use of Proceeds.

Item 3.  Defaults Upon Senior Securities.

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

Item 5.  Other Information.

Item 6.  Exhibits and Reports on Form 8-K.

SIGNATURE


                    PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

<TABLE>
<CAPTION>
                     HORIZONTAL VENTURES, INC.
                    CONSOLIDATED BALANCE SHEET
                        SEPTEMBER 30, 1998
                           (UNAUDITED)

                              ASSETS
<S>                                                <C>
CURRENT ASSETS:
  CASH AND CASH EQUIVALENTS                           $  838,547     
  ACCOUNTS RECEIVABLE, TRADE, NET OF ALLOWANCE
    FOR DOUBTFUL ACCOUNTS OF $74,092                      12,663
  INVENTORY                                                3,272
                                                       --------- 
  TOTAL CURRENT ASSETS                                   854,482
                                                       ---------
PROPERTIES AND EQUIPMENT, AT COST, NET OF
  ACCUMULATED DEPRECIATION AND DEPLETION
  OF $824,151                                          7,748,147
                                                       ---------
DEPOSITS, PREPAYMENTS, AND DEFERRED CHARGES              325,267
                                                       ---------   
TOTAL ASSETS                                          $8,927,896 
                                                       =========

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES:
CURRENT LIABILITIES:
  CURRENT MATURITIES OF LONG TERM NOTES               $   15,771     
   ACCOUNTS PAYABLE AND ACCRUED EXPENSES                  57,172     
   OTHER CURRENT LIABILITIES                               2,500               
                                                        ---------
  TOTAL CURRENT LIABILITIES                               75,443
                                                       ---------
LONG TERM NOTES PAYABLE, NET OF CURRENT
  MATURITIES                                              52,283  
                                                       ---------     
  TOTAL LIABILITIES                                      127,726
                                                       ---------

COMMITMENTS AND CONTINGENCIES                                -

STOCKHOLDERS' EQUITY (DEFICIT):
  PREFERRED STOCK, NO PAR VALUE, 50,000,000 SHARES
    AUTHORIZED, NO SHARES ISSUED AND OUTSTANDING             -      


  COMMON STOCK, NO PAR VALUE, 50,000,000 SHARES
    AUTHORIZED, 1,570,981 SHARES ISSUED AND
    OUTSTANDING                                       11,672,519
  ACCUMULATED DEFICIT                                 (2,872,349)
                                                      ----------
TOTAL STOCKHOLDERS' EQUITY                             8,800,170
                                                      ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $ 8,927,896
                                                      ==========
</TABLE>




       The accompanying notes are an integral part of this statement.

<TABLE>
<CAPTION>
                     HORIZONTAL VENTURES, INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS       
            FOR THE THREE MONTHS AND NINE MONTHS ENDED 
                    SEPTEMBER 30, 1998 AND 1997
                           (UNAUDITED)

                   THREE MONTHS ENDED        NINE MONTHS ENDED 
                      SEPTEMBER 30,            SEPTEMBER 30, 
                   1998          1997        1998         1997
<S>            <C>          <C>          <C>          <C>
REVENUES         $  9,704     $  31,659   $  129,852   $ 160,824

COST OF REVENUES   29,942        19,165      119,334     133,029
                  -------       -------      -------     -------  
GROSS MARGIN      (20,238)       12,494       10,518      27,795

GENERAL AND 
 ADMINISTRATIVE 
 EXPENSES         394,967       124,423    1,270,978     296,509
                  -------       -------    ---------     -------
LOSS FROM 
 OPERATIONS      (415,205)     (111,929)  (1,260,460)   (268,714)

OTHER INCOME 
 (EXPENSES)        22,408        (8,660)      72,011     (45,025)
                  -------       -------    ---------     -------
LOSS BEFORE 
 INCOME TAXES    (392,797)     (120,589)  (1,188,449)   (313,739)   
PROVISION FOR 
 INCOME TAXES         -             -            -           -
                  -------       -------    ---------     ------- 
NET LOSS        $(392,797)    $(120,589) $(1,188,449)  $(313,739)
                  =======       =======    =========     =======   
NET LOSS PER                                           
 COMMON SHARE      $(0.25)       $(0.12)      $(0.76)     $(0.31)

AVERAGE SHARES 
 OUTSTANDING
 USED FOR 
 COMPUTATION 
 OF LOSS PER 
 COMMON SHARE   1,570,981     1,000,018    1,570,981   1,000,018


</TABLE>


        The accompanying notes are an integral part of these statements.

<TABLE>
<CAPTION>
                   HORIZONTAL VENTURES, INC.                                   
               CONSOLIDATED STATEMENTS OF CASH FLOWS
      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                         (UNAUDITED)

                                             NINE MONTHS ENDED
                                               SEPTEMBER 30, 
                                             1998         1997
<S>                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES: 
  NET LOSS                               $(1,188,450)  $(313,739)   
ADJUSTMENTS TO RECONCILE NET LOSS TO
    CASH USED BY OPERATING ACTIVITIES:
      DEPRECIATION, DEPLETION AND
        AMORTIZATION                         226,225     144,273
      (GAIN) LOSS ON SALE OF ASSETS              -        21,062
      STOCK AND PARTNERS' CAPITAL 
        INTEREST ISSUED FOR SERVICES             -           300
      CHANGE IN ACCOUNTS RECEIVABLE            7,952      40,011    
      CHANGE IN INVENTORY                     (3,272)        -    
      CHANGE IN ACCOUNTS PAYABLE
        AND ACCRUED EXPENSES                (213,874)    (62,589)
      CHANGE IN CURRENT PORTION OF
        LONG-TERM DEBT                        (6,011)        -
      CHANGE IN OTHER ASSETS                (270,754)        -    
      CHANGE IN OTHER LIABILITIES           (525,000)        -   
                                           ---------     -------
NET CASH USED BY OPERATING ACTIVITIES     (1,973,184)   (170,682)              
                              ---------     -------
CASH FLOWS FROM INVESTING ACTIVITIES:  
   PURCHASE OF PROPERTY AND EQUIPMENT     (1,180,560)   (122,488)     
   INCREASE IN ACCOUNTS RECEIVABLE,
     PETRO UNION, INC.                           -        (9,170)   
   PROCEEDS FROM SALE OF PROPERTY 
     AND EQUIPMENT                               -        55,181               
                                           ---------     -------
NET CASH USED BY INVESTING ACTIVITIES     (1,180,560)    (76,477)
                                           ---------     -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  NET PROCEEDS FROM SALE OF COMMON STOCK      84,446     600,000  
  INCREASE IN DUE TO RELATED PARTIES             -        60,478    
  STOCK ISSUED FOR NET ASSETS OF LIMITED
     PARTNERSHIP                                 -       972,858  
  LESS, PARTNERS' PRIOR CAPITAL
     CONTRIBUTIONS                               -      (818,000)
  CHANGE IN CUSTOMER PAYMENTS 
    RECEIVED IN ADVANCE                          -       (30,000)   
  REPAYMENT OF NOTES PAYABLE                 (24,802)   (182,614)
                                           ---------     -------
NET CASH PROVIDED BY FINANCING ACTIVITIES     59,644     602,722
                                           ---------     -------

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                        (3,094,100)    355,563 

CASH AND CASH EQUIVALENTS: 
  BEGINNING OF PERIOD                      3,932,647       6,458
                                           ---------     -------
  END OF PERIOD                           $  838,547    $362,021
                                           =========     =======


NON-CASH INVESTING AND FINANCING
 ACTIVITIES:                
   STOCK ISSUED FOR SERVICES                 $  -        $40,300
   STOCK ISSUED FOR SUBORDINATED    
     CONVERTIBLE DEBENTURES                     -        433,231      
   STOCK ISSUED FOR NET ASSETS OF
     PARTNERSHIP                                -        972,858
   STOCK ISSUED IN CONNECTION WITH
     MERGER AND REORGANIZATION                  -      4,132,469 

SUPPLEMENTARY CASH FLOW DATA:
 INTEREST PAID                               $5,694      $23,601    
 INCOME TAXES PAID                              -            -

</TABLE>


The accompanying notes are an integral part of these statements.


                    HORIZONTAL VENTURES, INC.
            Notes to Consolidated Financial Statements
                   September 30, 1998 and 1997
                          (Unaudited)


NOTE 1 - THE COMPANY:

Horizontal Ventures, Inc., a Colorado corporation (the "Company"), is an
energy company engaged primarily in the business of exploiting proven
producing oil and gas reservoirs by utilizing a low cost proprietary
horizontal drilling technology to increase production rates.  On July 13,
1998, the Company amended its Articles of Incorporation to change its name
from Petro Union, Inc. d/b/a Horizontal Ventures, Inc. to Horizontal Ventures,
Inc.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

Basis of presentation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, HVI Cat Canyon,
Inc., a Colorado corporation ("HVI Cat Canyon"), and Calox, Inc., an Indiana
corporation.  All significant intercompany accounts and transactions have been
eliminated. 

The interim period financial statements presented herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The interim financial statements should be read in conjunction
with the Company's annual financial statements included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997.

The results of operations for the interim periods presented herein are not
necessarily indicative of the results that may be expected for future periods. 
In the opinion of management, the unaudited interim financial statements
furnished reflect all adjustments necessary (which all are of a normal
recurring nature) for a fair presentation of the Company's financial condition
as of September 30, 1998, and the results of its operations and cash flows for
the interim periods ended September 30, 1998 and 1997.

The Company, then named Petro Union, Inc. ("PUI"), was a debtor in possession
under Chapter 11 of the U.S. Bankruptcy Code until August 28, 1997, at which
time the Bankruptcy Court approved its plan of reorganization.  As a part of
its plan of reorganization, PUI agreed to acquire all the outstanding stock of
Horizontal Ventures, Inc., an Oklahoma corporation ("HVI-Oklahoma"). The
acquisition of HVI-Oklahoma was completed on September 9, 1997, and after the
acquisition, HVI-Oklahoma shareholders owned more than 50% of the outstanding
shares of PUI.  Pursuant to the rules of the Securities and Exchange
Commission, the transaction was accounted for as a "reverse merger." 
Accordingly, the accompanying consolidated statements of operations and
consolidated statements of cash flows reflect the historical operations and
cash flows of HVI-Oklahoma (including those of PUI after September 9, 1997,
the effective date of the acquisition), whereas quarterly reports filed by the
Company prior to September 9, 1997 reflected operations and cash flows of PUI. 
Subsequently, HVI-Oklahoma was merged with and into the Company.

Certain reclassifications have been made to the 1997 amounts to 
conform to the 1998 presentation.  

NOTE 3 - CONTINGENCIES: 

As of September 30, 1998, the Company was the plaintiff in a lawsuit against
David J. LaPrade, a former officer and director of HVI-Oklahoma, and Mr.
LaPrade's current employer.  The Company seeks to recover losses from the
alleged breach of fiduciary duty, misappropriating confidential information
and property of the Company, using it in unfair competition with the Company,
interfering with the Company's existing and prospective relationships with its
customers, interfering with the Company's relationships with its employees,
and conversion of Company property.  Mr. LaPrade has made counterclaims
against the Company for breach of his employment agreement, libel and slander,
and intentional infliction of emotional distress; he seeks actual damages in
excess of $10,000 and punitive damages in an unspecified amount.  The Company
believes that the ultimate outcome of Mr. LaPrade's counterclaims will not
have a material adverse effect on the Company's financial condition, results
of operations or cash flows.  The accompanying financial statements do not
include a provision for any loss which might result from Mr. LaPrade's
counterclaims, nor do they include any asset that might result from the
Company's claims against Mr. LaPrade. 

NOTE 4 - SUBSEQUENT EVENTS:

Since September 30, 1998, the Company has entered into the following
transactions relating to the acquisition of securities of Saba Petroleum
Company ("Saba"), an independent energy company engaged in the acquisition,
development and exploration of oil and gas properties in the U.S. and
internationally:

On October 6, 1998, the Company entered into a Preferred Stock Transfer
Agreement (the "Preferred Stock Transfer Agreement") with RGC International
Investors, LDC ("RGC"), pursuant to which the Company acquired on October 6,
1998 690 shares of the 8,000 shares of issued and outstanding Series A
Convertible Preferred Stock of Saba (the "Saba Series A Preferred Stock") held
by RGC in exchange for cash in the amount of $750,000, of which $500,000 was
borrowed from International Publishing Holding s.a. ("IPH"), a significant
shareholder of the Company. The Company has executed a Promissory Note to
repay the $500,000 to IPH without interest on or before December 31, 1998 in
the form of cash or shares of Saba Series A Preferred Stock held by the
Company. The Promissory Note is secured by a pledge of two-thirds of the Saba
Series A Preferred Stock held by the Company. Under the Preferred Stock
Transfer Agreement, the Company was granted the exclusive right until November
6, 1998 to acquire from RGC up to an additional 6,310 shares of Saba Series A
Preferred Stock held by RGC in exchange for cash in the amount of
approximately $6,859,000, with such exclusive right subject to an extension
for an additional thirty days by the Company's payment of $500,000, which is
nonrefundable but if the option is exercised within the extended thirty day
period is applied to the acquisition price.  On November 6, 1998, the Company
paid $500,000 to RGC to extend the term of the exclusive right until December
6, 1998.  In addition, the Company has the exclusive right to acquire any
remaining shares of Saba Series A Preferred Stock held by RGC after RGC
converts a sufficient number of shares of Saba Series A Preferred Stock to
cover its short position with respect to 653,000 shares of Saba Common Stock.
The 690 shares of Saba Series A Preferred Stock acquired by the Company and
the minimum of 6,310 shares of Saba Series A Preferred Stock which the Company
has the exclusive right to acquire from RGC, along with the accrued but unpaid
dividends thereon, are convertible into an estimated aggregate of 3,040,000
shares of Saba Common Stock.

On October 8, 1998 the Company entered into a Common Stock Purchase Agreement
(the "Common Stock Purchase Agreement") pursuant to which on November 6, 1998
Saba issued to the Company 333,333 shares of Saba Common Stock in exchange for
cash in the amount of $1 million. In addition, the Common Stock Purchase
Agreement provides for  the issuance by Saba to the Company of an additional
2,166,667 shares of Saba Common Stock by December 4, 1998 in exchange for cash
in the amount of $6.5 million.

The $500,000 payment to RGC to extend the term of the exclusive right to
acquire a minimum of 6,310 shares of Saba Series A Preferred Stock and the $1
million payment to Saba to acquire 333,333 shares of Saba Common Stock were
financed by the Company's issuance to IPH on November 4, 1998 of a Promissory
Note payable in the amount of $1.5 million, with 6% interest, by December 31,
1998.  The Promissory Note is secured by the Company's pledge of all of the
issued and outstanding shares of HVI Cat Canyon.

Pursuant to an Option Agreement dated July 22, 1998 (the "Option Agreement")
between the Company and IPH, the Company holds a call option to acquire the
500,000 shares of Saba Common Stock held by IPH at an exercise price equal to
the cost to IPH of acquiring such shares plus twenty percent, which is
estimated to be approximately $1,020,000.  The Company has the option of
paying such exercise price to IPH in the form of cash or shares of the
Company's common stock.

In addition, the Company has recently acquired 80,000 shares of Saba Common
Stock in open market purchases at an aggregate cost of approximately $70,130.

To complete the purchase of the securities of Saba in the transactions
described above, the Company is currently endeavoring to obtain short-term
bridge financing in the aggregate amount of $18 million.  The Company is also
considering a private placement of the Company's Series A Convertible
Preferred Stock.

Upon consummation of the above transactions, including exercise of the option
with IPH and conversion of the Saba Series A Convertible Preferred Stock into
Saba Common Stock, the Company will own approximately 37 percent of the issued
and outstanding shares of Saba Common Stock and designees of the Company will
represent three out of five members of the Saba Board of Directors.  The
Company is considering other transactions to acquire additional shares of Saba
Common Stock with the purpose of gaining majority ownership of Saba.


Item 2.  Management's Discussion and Analysis.

Overview

The Company is engaged in the business of exploiting proven producing oil and
gas reservoirs by utilizing a low cost proprietary horizontal drilling
technology to increase production rates. The Company's business strategy since
its emergence from bankruptcy in March 1998 has been to pursue acquisitions of
oil and gas properties particularly suited to exploitation by the Company's
horizontal drilling technology.  In connection therewith, the Company has
entered into certain transactions relating to the acquisition of securities of
Saba as discussed in Note 4 of the Notes to Consolidated Financial Statements
presented elsewhere herein.  The Company is considering other transactions to
acquire additional securities of Saba with the purpose of gaining majority
ownership of Saba.

Since 1997, the Company has focused on its corporate restructuring and
acquisition efforts and its investment in a horizontal drilling pilot program
in the Cat Canyon field in California.  During the first nine months of 1998,
the Company drilled three horizontal wells in the Cat Canyon field, namely
UCB-09, UCB-38 and UCB-28. Each well was drilled utilizing the Company's Short
Radius horizontal drilling technology, and resulted in a 47 foot radius with a
435 foot lateral on UCB-09, a 60 foot radius with a 414 foot lateral on UCB-38
and a 50 foot radius with a 252 foot lateral on UCB-28. In view of the
Company's long-term strategy and the known sand problem in the Cat Canyon
basin, the Company completed each well with a different technique to establish
a standard.  UCB-09 was completed with a standard Ace down-hole pump and a KD
system, UCB-38 was completed with a KUDU pump, and UCB-28 was completed with a
Ace Teflon-Luber Plunger down-hole pump. The kick-off point for each well was
at a depth of 2,940-3,000 feet.

The variances in the completions allowed the Company to obtain direct
experience on the production capability from each of the techniques. UCB-09
net production stabilized at 20 barrels of oil per day, UCB-38 sanded up
following a few weeks of production, while UCB-28 has net production of 65
barrels of oil per day. Each of these wells were re-entries into an abandoned
well bore in the Sisquoc formation, which is one of the two pay zones within
the Company's lease in the Cat Canyon basin. Following this drilling operation
and completion technique definition, the Company proceeded with its
discussions with Saba with the intent of applying this technique on Saba's
reserves.

The Company has primarily been focused on the Saba transactions and, as
discussed in Note 4 of the Notes to Consolidated Financial Statements
presented elsewhere herein, completed the interim closing requirements for the
current agreements regarding Saba securities on November 4, 1998. 
Considerable expenses have been incurred in connection with the Saba
transactions and additional expenses are expected through the projected
closing of the current agreements on December 4, 1998.

Due to the significance to the Company of the Saba transactions, the Company's
management and staff have devoted a substantial amount of time and effort to
the acquisition.  Accordingly, levels of other operational activities such as
prior contract drilling programs have declined.  In connection with the Saba
transactions, the Company plans to establish and develop an extensive drilling
program on Saba's properties in California and commence such program late in
the fourth quarter of 1998.  

In view of the significant differences between the Company's corporate
structure and during the three months and nine months ended September 30, 1997
and that during the comparable periods ended September 30, 1998, comparisons
of the Company's results of operations for those periods are considered by
management not to be representative of the Company's long-term potential. 

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

Results of Operations

Comparison of Three-Month Periods Ended September 30, 1998 and 1997

Revenues decreased from $31,659 for the third quarter of 1997 to $9,704 for
the third quarter of 1998.  Third quarter 1998 revenues were from oil
production at the Cat Canyon field and reflect the decline of oil prices. 

Cost of Revenues increased from $19,165 for the third quarter of 1997 to
$29,942 for the third quarter of 1998. The nature and levels of such costs are
dissimilar since third quarter 1997 costs were related to contract drilling
while third quarter 1998 costs were related to production in California as a
result of the Company's change in business strategy.

General and Administrative expenses increased from $124,423 for the third
quarter of 1997 to $394,967 for the third quarter of 1998.  The increase was
primarily attributable to legal and consulting fees resulting from the
Company's acquisition and financing efforts related to the Saba transactions.
          
Comparison of Nine-Month Periods Ended September 30, 1998 and 1997

Revenues decreased from $160,824 for the nine months ended September 30, 1997
to $129,852 for the nine months ended September 30, 1998. Revenues for the
nine months ended September 30, 1998 were from oil production at the Cat
Canyon field. The decline in oil prices of over 50% coupled with the El Nino
storms in California that essentially shut the field down during February 1998
caused revenues to be lower than initially expected.  

Cost of Revenues decreased from $133,029 for the nine months ended September
30, 1997 to $119,334 for the nine months ended September 30, 1998. Planned
pilot program drilling operations in the Cat Canyon field account for most of
the expenses during the nine months ended September 30, 1998, and such
expenses are not proportional to revenues since the three wells drilled in the
Cat Canyon field were not in production during the entire period.  In
addition, the Company incurred significant repair expenses resulting from the
El Nino storms in California during February 1998.

General and Administrative expenses increased from $296,509 for the nine
months ended September 30, 1997 to $1,270,978 for the nine months ended
September 30, 1998.  The increase was primarily attributable to legal and
consulting fees resulting from the Company's acquisition and financing efforts
related to the Saba transactions, the completion of the Company's bankruptcy
reorganization, and related SEC reporting requirements.



Liquidity and Capital Resources

As of September 30, 1998, the Company had current assets in the amount of
$854,482, including cash and cash equivalents of $838,547, while current
liabilities amounted to $75,443.  The $2,353,895 decrease in working capital
from December 31, 1997 to September 30, 1998 was primarily attributable to the
Company's  final payment on the Cat Canyon field and the drilling program
expenditures related thereto, and legal and consulting fees resulting from the
Company's acquisition and financing efforts during 1998.  Long-term
liabilities as of September 30, 1998 amounted to $52,283. 

To complete the purchase of the securities of Saba in the transactions
described in Note 4 of the Notes to Consolidated Financial Statements
presented elsewhere herein, the Company is currently endeavoring to obtain
short-term bridge financing in the aggregate amount of $18 million.  The
Company is also considering a private placement of the Company's Series A
Convertible Preferred Stock.

The Company's net cash used by operating activities increased from $170,682
for the nine months ended September 30, 1997 to $1,973,184 for the nine months
ended September 30, 1998. This increase was primarily attributable to the Cat
Canyon drilling program expenditures and legal and consulting payments
resulting from the Company's acquisition and financing efforts during 1998.

The Company's net cash used by investing activities increased from $76,477 for
the nine months ended September 30, 1997 to $1,180,560 for the nine months
ended September 30, 1998.  This increase was primarily attributable to the
payments for the Cat Canyon field and other capital expenditures related
thereto.

The Company's net cash provided by financing activities decreased from
$602,722 for the nine months ended September 30, 1997 to $59,644 for the nine
months ended September 30, 1998.  Net cash provided by financing activities
for the nine months ended September 30, 1997 included the issuance of common
stock for cash in the amount of $600,000 and financing transactions related to
the acquisition of a limited partnership.     

Year 2000

Computer programs or other embedded technology that have been written using
two digits (rather than four) to define the applicable year and that have
time-sensitive logic may recognize a date using "00" as the Year 1900 rather
than the Year 2000, which could result in widespread miscalculations or system
failures.  Both information technology ("IT") systems and non-IT systems using
embedded technology may be affected by the Year 2000.  The Company does not
utilize any proprietary computer software, but uses commercially available
software programs from vendors such as Microsoft Corporation and Peachtree. 
The Company has been advised that the software it uses is Year 2000 compliant.

The Company has not completed its assessment of Year 2000 issues, in
particular the process of verification of whether vendors, suppliers and
significant customers with which the Company has material relationships are
Year 2000 compliant.  If the Company and such third parties are unable to
address Year 2000 issues in a timely manner, it could result in material
financial risk to the Company, including loss of revenue and substantial
unanticipated costs.  Accordingly, the Company plans to devote all resources
necessary to resolve significant Year 2000 issues in a timely manner.  In
addition, the Company plans to develop a Year 2000 contingency plan.  The
Company is currently not able to determine whether the Year 2000 will have a
material effect on the Company's financial condition, results of operations or
cash flows.

Inflation 

The Company does not believe that inflation will have a material impact on the
Company's future operations.


                   PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

As previously reported in the Company's 1997 Annual Report on Form 10-KSB, on
March 11, 1997 HVI-Oklahoma commenced a lawsuit in the District Court for
Tulsa County, Oklahoma against David J. LaPrade, a former officer and director
of HVI-Oklahoma, and Mr. LaPrade's current employer.  The Company seeks to
recover losses from the alleged breach of fiduciary duty, misappropriating
confidential information and property of the Company, using it in unfair
competition with the Company, interfering with the Company's existing and
prospective relationships with its customers, interfering with the Company's
relationships with its employees, and conversion of Company property.  Mr.
LaPrade has made counterclaims against the Company for breach of his
employment agreement, libel and slander, and intentional infliction of
emotional distress; he seeks actual damages in excess of $10,000 and punitive
damages in an unspecified amount.  As of September 30, 1998, the lawsuit was
still pending.  The Company believes that the ultimate outcome of this
litigation will not have a material adverse effect on the Company's financial
condition, results of operations or cash flows.

Item 2.  Changes in Securities and Use of Proceeds.

         None.

Item 3.  Defaults Upon Senior Securities.

         None.

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

         None.

Item 5.  Other Information.

         None.

Item 6.  Exhibits and Reports on Form 8-K.

         (a)    Exhibits.

         Exhibit No.     Description

         10.1            Preferred Stock Transfer Agreement dated October 7,
                         1998 between the Company and RGC.

         10.2            Common Stock Purchase Agreement dated
                         October 8, 1998 between the Company and
                         Saba.

         10.3            Option Agreement dated July 22, 1998
                         between the Company and IPH.

         10.4            Promissory Note dated October 6, 1998
                         payable by the Company to IPH.

         10.5            Pledge Agreement dated October 6, 1998
                         between the Company and IPH.

         10.6            Promissory Note dated November 4, 1998
                         payable by the Company to IPH.

         10.7            Pledge Agreement dated November 4,1998
                         between the Company and IPH.

         27              Financial Data Schedule

         (b)             Reports on Form 8-K

         During the quarter for which this report is filed, the
         Company did not file any Reports on Form 8-K.

                         SIGNATURE

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



                                     HORIZONTAL VENTURES, INC.

Date: November 23, 1998             By:/S/ RANDEEP S. GREWAL
                                       _______________________
                                     Randeep S. Grewal, Chairman
                                     and Chief Executive Officer