FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

(Mark One)

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

    For the Quarterly Period Ended September 30, 1998

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

    For the transition  period from_________________ to _________________


                           Commission File Number: 0-9500


                           MOUNTAINS WEST EXPLORATION, INC
        (Exact name of small business issuer as specified in its charter)

                 New Mexico                                    85-0280415    
        (State or other jurisdiction of                      (I.R.S. Employer
        incorporation or organization)                       Identification No.)

                           616 CENTRAL AVE. SE. SUITE 213
                        ALBUQUERQUE, NEW MEXICO               87102
              (Address of principal executive offices)     (Zip Code)

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

The  number of shares outstanding of  the issuer's common stock, par value $.001
per share, at November 12, 1998, was 38,019,270 shares.

PART  I

                          ITEM 1. FINANCIAL STATEMENTS

                        MOUNTAINS WEST EXPLORATION, INC.
                            CONDENSED BALANCE SHEET
                                  UNAUDITED
                             September 30, 1998

 ASSETS
  Current Assets
    Cash ....................................................       $     1,927
    Due from officer ........................................               899
    Accrued interest receivable .............................            12,024
                                                                    -----------
  Total current assets ......................................            14,850
                                                                    -----------

  Furniture and Equipment
     Office furniture and equipment, at cost ................            14,470
       Less accumulated depreciation ........................           (11,697)
                                                                    -----------
     Net furniture and equipment ............................             2,773
                                                                    -----------

  Oil and gas properties, using the successful
  efforts method ............................................         4,596,441
    Less accumulated depreciation,
      depletion and amortization ............................           (14,779)
                                                                    -----------
     Net oil and gas properties .............................         4,581,662
                                                                    -----------

  Term deposit account - restricted .........................            53,140
  Note receivable, officer ..................................           100,000
  Investment in partnership .................................            15,000
  Mineral interest ..........................................            50,683
                                                                    -----------
  Total other assets ........................................           218,823
                                                                    -----------

 Total assets ...............................................       $ 4,818,108
                                                                    ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Accounts payable ........................................       $    16,002
    Accrued payroll and related taxes .......................            44,964
    Due to affiliates .......................................         4,249,016
    Due to officer ..........................................            28,259
    Note payable ............................................            35,000
                                                                    -----------
  Total Current Liabilities .................................         4,373,241
                                                                    -----------

 Shareholder's Equity
  Common Stock, $.001 par value, authorized:
   50,000,00 shares, issued 38,103,770 shares;
   outstanding 38,019,270 shares ............................            38,020
  Capital in excess of par value ............................         1,617,757
  Accumulated  deficit ......................................        (1,210,910)
                                                                    -----------
 Total Stockholders Equity ..................................           444,867
                                                                    -----------

Total Liabilities and Stockholders Equity ...................       $ 4,818,108
                                                                    ===========


                         MOUNTAINS WEST EXPLORATION, INC.
                        CONDENSED STATEMENTS OF OPERATIONS
                                    UNAUDITED

                                                 Three Months      Three Months
                                                    Ended             Ended
                                                 September 30,     September 30,
                                                     1998              1997
                                                  -----------       -----------

REVENUES
 Oil and Gas Sales .........................      $    94,996       $     6,268
                                                  -----------       -----------
                                                       94,996             6,268
                                                  -----------       -----------

EXPENSES
 Production costs ..........................            1,138             1,038
 Depreciation and depletion ................              350              --   
 Consulting ................................            6,517              --
 General and administrative ................           35,276            32,618
                                                  -----------       -----------
Total expenses .............................           43,281            33,656
                                                  -----------       -----------

Income (loss) from operations ..............           51,715           (27,388)

Other income
 Interest income ...........................            1,115             1,008
 Interest expense ..........................             (245)           (2,053)
 Other .....................................              (55)           (1,551)
                                                  -----------       -----------
Total other income (loss) ..................              815            (2,596)
                                                  -----------       -----------

Net earnings (loss) ........................      $    52,530       $   (29,984)
                                                  ===========       ===========

Earnings (loss) per common share: ..........      $     0.001       $    (0.001)
                                                  ===========       ===========

Weighted Average Number of Shares
  Outstanding (Note 2) .....................       38,019,270        37,475,788
                                                  ===========       ===========


                          MOUNTAINS WEST EXPLORATION, INC.
                         CONDENSED STATEMENTS OF OPERATIONS
                                      UNAUDITED
         
                                                Nine Months        Nine Months 
                                                   Ended              Ended 
                                                September 30,      September 30,
                                                    1998               1997
                                                ------------       ------------

REVENUES
 Oil and Gas Sales .......................      $    223,030       $     31,484
 Other operating income ..................              --               33,897
 Lease Income ............................              --               13,655
                                                ------------       ------------
                                                     223,030             79,036
                                                ------------       ------------
EXPENSES
 Production costs ........................             2,894              7,048
 Exploration costs .......................              --                 --
 Depreciation and depletion ..............             1,205              1,366
 Consulting ..............................             7,231              1,414
 General and administrative ..............           116,363            118,490
                                                ------------       ------------
Total expenses ...........................           127,693            128,318
                                                ------------       ------------

Income (Loss) from operations ............            95,337            (49,282)

Other income
 Interest income .........................             2,419             40,462
 Interest expense ........................            (3,461)            (3,929)
 Other ...................................              (352)            (2,855)
                                                ------------       ------------
Total other income (loss) ................            (1,394)            33,678
                                                ------------       ------------

Net earnings (loss) ......................      $     93,943       $    (15,604)
                                                ============       ============

Earnings (loss) per common share: ........      $      0.002       $    (0.001)
                                                ============       ============

Weighted Average Number of Shares
   Outstanding (Note 2): .................        38,019,270         37,182,807
                                                ============       ============

                                  
                        MOUNTAINS WEST EXPLORATION, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                    UNAUDITED
  
                                                      Nine Months    Nine Months
                                                        Ended          Ended
                                                     September 30, September 30,
                                                         1998           1997
                                                       ---------     ---------

   Cash Flows from Operating Activities
    Cash received from customers ...................   $ 401,333     $ 103,782
    Cash paid to suppliers & employees .............    (164,458)     (138,490)
    Interest received ..............................       1,419        39,462
    Interest paid ..................................      (3,462)       (3,929)
                                                       ---------     ---------
   Net cash provided by operating activities .......     234,832           825
                                                       ---------     ---------

   Cash Flows from Investing Activities
    Acquisition of office equipment ................      (2,000)         --
    Acquisition of oil, gas & mineral interests ....     (43,450)      (76,783)
                                                       ---------     ---------
   Net cash used by investing activities ...........     (45,450)      (76,783)
                                                       ---------     ---------

   Cash Flows from Financing Activities
    Net draw on line of credit .....................        --          35,000
    Purchase of term deposits ......................         (98)         --
    Repayments to affiliates .......................    (206,928)         --
    Proceeds (Repayment) of officer loans ..........      16,828        (2,218)
    Purchase of Treasury Stock .....................        --          10,000
    Retirement of stock ............................        (746)
                                                       ---------     ---------
   Net cash (used) provided by financing activities     (190,198)       42,036
                                                       ---------     ---------

   Net decrease in cash ............................        (816)      (33,922)

   Cash at beginning of period .....................       2,743        38,876
                                                       ---------     ---------

   Cash at end of period ...........................   $   1,927     $   4,954
                                                       =========     =========

   Reconciliation of Net income (loss) to Cash Provided by Operating Activities:

    Net earnings (Loss) ............................   $  93,943     $ (15,604)
    Adjustments
     Depreciation, depletion and amortization ......       1,205         1,366
     Decrease (increase) in prepaid expenses
       and accounts receivable .....................     175,976        (3,977)
     Increase (decrease) in advances, accounts
       payable and accrued liabilities .............     (36,292)       19,040
                                                       ---------     ---------

    Net Cash provided by operating activities ......   $ 234,832     $     825
                                                       =========     =========

   Noncash Investing or Financing Activities:
   Note issued in exchange for investment in
     oil and gas property in Papua, New Guinea: ....   $ 566,073     $ 837,247


                        MOUNTAINS WEST EXPLORATION, INC.
                         NOTES TO FINANCIAL STATEMENTS
                                    UNAUDITED
  
1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

The balance sheet at September 30, 1998,  statements of operations  for the nine
and  three  month  periods  ended  September  30,  1998 and  statements  and the
statement of cash flows for the nine month period ended September 30, 1998, have
been prepared by the company,  without audit. In the opinion of management,  all
adjustments,  including normal recurring adjustments necessary to present fairly
the financial  position,  results of operations and cash flows,  have been made.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted. It is suggested that these financial  statements
be read in  conjunction  with the  Company's  audited  financial  statements  at
December  31,  1997.  The  results of  operations  for the nine and three  month
periods  ended  September 30, 1998 are not  necessarily  indicative of operating
results for the full year.

2. NOTES TO FINANCIAL STATEMENTS.

Net income or loss per  common  share has been  computed  based on the  weighted
average number of shares outstanding during the period.


3.  OIL AND GAS PROPERTIES

Capitalized  costs using the successful  efforts method related to the Company's
oil and gas activities as of June 30, 1998 are as follows:

                  Proved developed properties .   $    14,779
                  Proved property .............     4,581,662
                  Accumulated depreciation,
                    depletion, amortization and
                    valuation allowances ......       (14,779)
                                                  -----------
                  Net capitalized costs .......   $ 4,581,662
                                                  ===========


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Plan of Operations

During  the three  months  ended  September  30,  1998,  oil and gas sales  were
$128,034  compared to $31,484 for the same period in the prior year. The Company
had no other operating  income during the quarter.  The increase in sales is due
to  production on oil and gas  interests  that the Company  holds in Papua,  New
Guinea (See "Papua New Guinea" below). Other interest held by the Company in the
Denver  Basin  of  Colorado  have  almost  reached  their   economic   limit.  A
redetermination  of the  interests  in the coal bed  methane  unit in Las Animas
County, Colorado where the company has an interest in two gas wells has caused a
decline in monthly  revenues to the Company.  Although the monthly sales revenue
has decreased,  the production  lives of these wells will be extended and should
be beneficial to the Company over the life of the wells (See "Colorado" below).

The long  awaited  production  from the SE Gobe oil  field in Papua  New  guinea
commenced in April, 1998. All of the Company's revenue from that license will be
devoted to repaying  the  Company's  debts to its  partners for its share of the
costs  of  establishing  the  production,   which  at  September  30,  1998  was
approximately  $4,249,000.  The debt  reduction  caused by this  revenue  stream
should  greatly  increase  the  stockholders'  equity  position of the  Company.
Management  anticipates  that the  production  from the license will increase as
will the  Company's  share of the revenue  from the  production  (See "Papua New
Guinea" below).

The Company owns interests in the following properties:

Colorado

The Company owns over 2400 acres of minerals in Las Animas county, Colorado. The
two coal bed methane gas wells discussed above are located on 240 acres of these
minerals.  The Company is currently considering developing these minerals itself
as funds become available.

Papua New Guinea

At the time production commenced from the property, the Company became obligated
to pay its share of all  capital  development  costs  incurred on any license in
which it holds an  interest.  As of the date of this  report the  Company was in
default  in regard to  approximately  $129,000  of cash  calls  related to these
interests.

a. The three oil wells in which the Company has an interest  have been  included
in Petroleum  Development  License  (PDL) 3. As stated  earlier  these oil wells
commenced  production  on the 17th of April,  1998.  The three  wells  initially
produced  about 12,000  barrels per day and generated  revenue to the Company of
approximately $207,000 between April 17, 1998 and September 30, 1998. Production
has increased  daily and the SE Gobe oil field is producing  20,000  barrels per
day as of the end of  September,  1998.  These  wells and  certain  other  lands
included within PDL#3 have been unitized with Chevron Oil Company's existing PDL
#4 to the north.  These two partial PDLs are being  developed  as the  Southeast
Gobe Oil  Field.  The  Company's  interest  in the  unitized  production,  after
exercise  by the  government  of its right to acquire a 22 1/2%  interest in the
fields, is a net 0.8718% which will result in an anticipated  initial production
to the  Company's  interest of  approximately  220  barrels of oil per day.  The
Company's expenses in this unit were carried until the first production from PDL
3 was sold.  The operator of the field,  Chevron,  was able to put the Gobe Main
field and the SE Gobe field on  production  approximately  two  months  ahead of
schedule and approximately  $50,000,000  under budget.  The costs of getting the
oil from the unit to sale has been estimated at more than $175,000,000,  none of
which was payable by the Company until after the first sale of  production.  All
of the money  realized from the sale of the oil is being devoted to repayment of
the carried cost of the project.  Management estimates at the production rate of
200 barrels per day at a price of $20 per barrel to the Company's  interest will
take approximately thirty six months to pay out after production begins. Because
of the recent depressed world price for oil the payout may well be substantially
longer than anticipated.
 
b. PPL 189 contains  approximately  480,000  acres  (24,245 net to the Company's
interest).  As a result of reallocation of interests,  the Company's interest in
this License is 5.051%.  This license has the Barikiwa shut-in gas field located
on it. The Barikiwa  field has gas reserves  estimated from a low of 163 billion
cubic feet to a high of 1590 billion cubic feet. Further evaluation will be made
to more  precisely  define the true  reserves of this  field.  Plans to build at
least one LNG plant in Papua,  New Guinea  have been  announced  and Chevron has
announced  plans to build a gas  pipeline  from Papua New Guinea  into  Northern
Australia.  Either an LNG plant or the proposed pipeline should greatly increase
the value of the gas  reserves at  Barikiwa.  The Company  will have to fund its
5.051% share of the work program of this license which calls for an  expenditure
of  approximately  $6,250,000  over a period of six  years,  with  approximately
$56,000 of that amount to be paid during the current year. The operator, Santos,
has recently completed a seismic program over the Barikiwa Gas field.

The seismic  records  are now being  processed  and the Company is awaiting  the
results.  As production has commenced on the SE Gobe field, the Company will now
have to pay its full share in future development of the license.

c. PPL 190 contains  approximately  460,000  acres  (17,309 net to the Company's
interest) has many very prospective  surface structures located on it. A seismic
line was run over the Masaka structure during 1997 with positive results.  It is
anticipated that the Masaka structures will be drilled during 1998,  however,  a
landowner  dispute has slowed progress and a definite date for the  commencement
of drilling is not known at this time. A reallocation of interests has increased
the Company's interest in this license to 3.763%. As production has commenced on
the SE Gobe  field,  the company  must fund its share of a new  seismic  program
which is estimated to cost  approximately  $1,000,000.  The manager of the joint
venture will issue cash calls to each partner, who will each then pay the amount
of the stated cash call. The Iehi shut in gas field lies on this license but the
reserves are  insignificant  at this time. The Company will have to fund most of
the work program of the license which calls for an  expenditure  of  $13,500,000
over the next five years.  Management  estimates that the Company's cost in this
new concession over the next year will be approximately $200,000.

d. PPL 203  (previously  PPL 165) - Oil Search Ltd, is the operator  with an 85%
ownership interest in the license.  Gedd, Inc. owns 10% while the Company owns a
5%  carried  interest  until a well is  commenced  on the  property.  A new work
program of seismic and surface  mapping is to commence  during the current year.
Under the terms of the  contract  with the  Operator,  the Company has a carried
interest in the two year work  program and will not have to pay any of the costs
until  commencement  of the first well of  production  at which time the Company
will pay its 5% share.

As stated,  the Company faces cash calls on each of the licenses in which it has
interests, while the bulk of its revenue will be devoted to paying debt incurred
over the past two decades while  production was being  established on PDL#3. The
Company  must find the funds to meet the cash calls  through  the sale of stock,
borrowings  or sale of interests in its  properties.  No specific  source of the
required  funds  is known  at the  time of this  report.  As of the date of this
report the  Company was in default in regard to  approximately  $129,000 of cash
calls related to these interests.

The Company does not presently  have the liquidity that is necessary to meet the
aforementioned  calls for  payment of  expenses  and the  Company has no present
assurance of the availability of any of the funds that may be needed to cure its
current default or meet future cash requirements.  The failure of the Company to
cure the  default  and meet any future cash call made on it for its share of the
expenses  incurred on any concession  could result it its losing its interest in
the concession.

Changes in Financial Condition

During  the  quarter  the  Company  continued  to  experience  a decline in cash
position due to the ongoing  operating  expenses of the Company.  The  Company's
total debt  increased by $156,381  during the quarter as a result of exploration
activities  in Papua,  New Guinea being funded by its  partners.  The  Company's
primary  liability is a continually  developing  carried interest in certain New
Guinea oil and gas rights.  The  Company's  total  liabilities  other than those
created by this carried interest are approximately  $124,224. It is Management's
belief that the Company will be able to secure financing  sufficient to cure its
default  on the  cash  calls  discussed  above  and  will  continue  to meet its
financial commitments during the remainder of the fiscal year.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Other than the judgment  described in the Company's annual report on form 10KSB,
incorporated  herein by reference,  management knows of no legal  proceedings or
unsatisfied judgments which have not been provided for in any court or agency to
which the Company or any of its officers or directors are or may be a party.

ITEM  2. CHANGES IN SECURITIES

        NONE

ITEM  3. DEFAULTS IN SENIOR SECURITIES

        NONE

ITEM  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER

        NONE

ITEM  5.  OTHER INFORMATION

        NONE

ITEM  6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)     There are no exhibits required by Item 601 of regulation S-K

        (b)     Reports on Form 8-K.  

                NONE

  SIGNATURES

In accordance  with section 13 to 15 (d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.


Robert A. Doak, Jr.                                          November 12, 1998
--------------------------------------------------------
Robert A. Doak, Jr.   President, Chief Executive Officer
                             and Chief Financial Officer