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, 1996

                                      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)

                         616 CENTRAL AVE. SE. SUITE 230
                          ALBUQUERQUE, NEW MEXICO 87102
(Former  names,  former  address and former  fiscal year,  if changed since last
report)

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 preceding 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, 1996 was 36,566,220 shares.


PART  I

ITEM 1. FINANCIAL STATEMENTS


                        MOUNTAINS WEST EXPLORATION, INC.
                             CONDENSED BALANCE SHEET
                                    UNAUDITED
                               September 30, 1996
                                           
ASSETS

Current Assets
    Cash ....................................................       $    71,586
    Account receivable/prepaid expenses .....................             7,537
                                                                    -----------
        Total current assets ................................            79,123

Property and Equipment
    Office furniture and equipment, at cost .................            18,201
    Less accumulated depreciation ...........................            (8,537)
                                                                    -----------
        Net property and equipment ..........................             9,664

Oil and gas properties, using the successful
    efforts method (Note 3) .................................         2,593,124
Less accumulated depreciation, depletion
    and amortization ........................................           (15,254)
                                                                    -----------
        Net oil and gas properties ..........................         2,577,870

Other assets
    Term deposit account - restricted .......................            53,042
    Note receivable, officer ................................           100,000
    Mineral Interest ........................................            41,939
                                                                    -----------
        Total other assets ..................................           194,981
                                                                    -----------
                                                                    $ 2,861,638
                                                                    ===========
LIABILITIES AND SHAREHOLDERS EQUITY

Current Liabilities
    Advances ................................................            21,627
    Accounts Payable ........................................            16,002
    Accrued liabilities .....................................             2,315
    Due to affiliates .......................................         2,533,110
                                                                    -----------
        Total Current Liabilities ...........................         2,573,054

Shareholder's Equity
    Common Stock, $.001 par value, authorized:
        50,000,00 shares, issued 36,635,720
        shares; outstanding 36,566,220 shares ...............            36,566
    Capital in excess of par value ..........................         1,557,088
    Capital in excess of par value - warrants ...............            46,687
    Accumulated  deficit ....................................        (1,351,757)
                                                                    -----------
        Total Stockholders Equity ...........................           288,584
                                                                    -----------
                                                                    $ 2,861,638
                                                                    ===========

                 See accompanying notes to financial statements.

                                                                             
                        MOUNTAINS WEST EXPLORATION, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                    UNAUDITED

                                                  Three Months     Three Months 
                                                      Ended            Ended 
                                                  September 30,    September 30,
                                                      1996             1995 

REVENUES
   Oil and Gas Sales .........................    $      7,394     $      4,022
   Interest in sale of oil & gas
     property ................................            --               --   
                                                  ------------     ------------
                                                         7,394            4,022
EXPENSES
   Production costs ..........................           1,351              453
   Depreciation and depletion ................           1,276              677
   Consulting ................................             438              955
   General and administrative ................          27,055           28,859
                                                  ------------     ------------
      Total expenses .........................          30,120           30,944
                                                  ------------     ------------
Loss from operations .........................         (22,726)         (26,922)

Other income
   Interest income ...........................           1,463            4,450
   Interest expense ..........................            --               (873)
   Gain on sale of oil and gas properties ....            --            181,690
   Other .....................................            --               (239)
                                                  ------------     ------------
Total other income (loss) ....................           1,463          185,028
                                                  ------------     ------------
Net earnings (loss) ..........................    $    (21,263)    $    158,106
                                                  ============     ============
Earnings (loss) per common share: ............    $   (0.00058)    $    0.00432
                                                  ============     ============

Weighted Average Number of Shares
   Outstanding (Note 2) ......................      36,566,220       36,635,720
                                                  ============     ============

                 See accompanying notes to financial statements.


                        MOUNTAINS WEST EXPLORATION, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   UNAUDITED

                                                  Nine Months      Nine Months 
                                                     Ended            Ended 
                                                  September 30,    September 30,
                                                     1996             1995 

REVENUES
   Oil and Gas Sales .........................    $     16,808     $      9,015
   Interest in Sale of oil & Gas
      property ...............................         170,000             --   
                                                  ------------     ------------
                                                       186,808            9,015

EXPENSES
   Production costs ..........................         108,647            4,890
   Depreciation and depletion ................           3,828            2,014
   Consulting ................................           6,438              955
   General and administrative ................         121,394           90,162
                                                  ------------     ------------
      Total expenses .........................         240,307           98,021
                                                  ------------     ------------
Loss from operations .........................         (53,499)         (89,006)

Other income
   Interest income ...........................           5,412            5,384
   Interest expense ..........................            --               (973)
   Gain on sale of oil and gas properties ....            --            181,690
   Other .....................................            --               (239)
                                                  ------------     ------------
      Total other income .....................           5,412          185,862
                                                  ------------     ------------
Net Income (loss) ............................    $    (48,087)    $     96,856
                                                  ============     ============

Earnings (loss) per common share: ............    $   (0.00013)    $    0.00264
                                                  ============     ============

Weighted Average Number of Shares
   Outstanding (Note 2) ......................      36,589,387       36,616,220
                                                  ============     ============

                 See accompanying notes to financial statements.


                        MOUNTAINS WEST EXPLORATION, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                    UNAUDITED

                                                      Nine Months   Nine Months 
                                                         Ended         Ended 
                                                     September 30, September 30,
                                                          1996         1995 

Cash flows from operating activities
   Cash received from customers ....................    $ 207,312     $   9,015
   Cash paid to suppliers & employees ..............     (238,827)      (92,358)
   Interest received ...............................        5,425         5,384
   Interest paid ...................................          (13)         (973)
                                                        ---------     ---------
      Net cash used by operating activities ........      (26,103)      (78,932)

Cash flows from investing activities
   Proceeds from sale of oil and gas properties ....         --         200,000
   Acquisition of fixed assets .....................       (1,520)         (334)
   Acquisition of oil, gas & mineral
      activities ...................................      (14,080)      (13,797)
                                                        ---------     ---------
      Net cash used by investing activities ........      (15,600)      185,869

Cash  flows from financing activities
   Purchase of Treasury Stock ......................       (2,040)       (1,070)
                                                        ---------     ---------
      Net cash provided (used) by
         financing activities ......................       (2,040)       (1,070)
                                                        ---------     ---------
Net increase (decrease) in cash ....................      (43,743)      105,867

Cash at beginning of period ........................      115,329        44,755
                                                        ---------     ---------
Cash at end of period ..............................    $  71,586     $ 150,622
                                                        =========     =========

Reconciliation of net loss to cash provided
   by operating activities
      Net earnings (loss) ..........................    $ (48,087)    $  96,856
      Adjustments
         Depreciation, depletion and
            amortization ...........................        3,828         2,014
         Decrease (increase) in prepaid
            expenses and accounts receivable .......       (3,238)          207
         Decrease in Deposit .......................         --           5,000
         Increase (decrease) in advances,
            accounts payable and
            accrued liabilities ....................       21,394        (1,319)
         Loss (gain) on sale .......................         --        (181,690)
                                                        ---------     ---------
      Net Cash provided (used) by
         Operating Activities ......................    $ (26,103)    $ (78,932)
                                                        =========     =========
Noncash Investing or Financing Activities

The  Company was loaned  $468,555 & $141,628  for the nine month  periods  ended
September  30, 1996 and 1995,  respectively.  These amounts were invested in its
oil and gas property in Papua, New Guinea.

                 See accompanying notes to financial statements


                        MOUNTAINS WEST EXPLORATION, INC.
                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

The  balance  sheet at  September  30, 1996 and  statements  of  operations  and
statements  of cash flows for the nine months ended  September 30, 1996 and 1995
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  31,1995.  The results of operations  for the nine months
ended September 30, 1996 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.  Stock options issued in
1991 have not been considered as their effect would be antidilutive.

3.  OIL AND GAS PROPERTIES

Capitalized  costs using the successful  efforts method related to the Company's
oil and gas activities as of September 30, 1996 are as follows:

                 Proved developed properties ..   $    14,779
                 Proved shut - in property ....     2,578,345
                 Accumulated depreciation,
                    depletion, amortization and
                    valuation allowances ......       (15,254)
                                                  -----------
                 Net capitalized costs ........   $ 2,577,870
                                                  ===========

4.   CONTINGENCIES

During the quarter  ended March 31,  1996,  the Company sold its interest in PPL
165. The  restricted  term deposit  that is currently  carried on the  Company's
balance  sheet at $53,042 was pledged as a guarantee  for a bond required by the
government. The Company will negotiate with GEDD for a release of claim to these
funds.  If, during the next quarter the Company is  unsuccessful  in obtaining a
release from GEDD, the deposit will be charged against the sale.

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

Plans of Operations

During the  quarter  ended  September  31,  1996,  oil and gas sales were $7,394
Compared to $4,022 for the same period in the prior year.  Significant increases
in such revenues are not anticipated by management to occur during the remainder
of the current fiscal year or until there is production  from the Southeast Gobe
Oil and Gas Field.

During the current  quarter certain  transactions  involving the Company's Papua
New Guinea  operations  occurred that will have a material effect on the Company
in future quarters and years. The original Petroleum  Prospecting License No. 56
(PPL 56) is now due to expire  in early  December  1996.  The  partners  in that
License have taken following the actions  relating to that License,  which it is
expected will be approved by the government.

a. The three oil wells in which the Company has an interest  have been  included
in an application for a Petroleum  Development  License (PDL). The oil wells and
certain  lands  within PPL 56 included  withing  the PDL will be  unitized  with
Chevron  Oil  Company's  existing  PDL to the  north.  The two new PDLs  will be
developed into the Southeast  Gobe Oil and Gas Field.  Development of this field
is well under way with an anticipated  first production  scheduled shortly after
the first of 1998.  The  Company's  interest in the unitized  PDLs will be a net
0.88%  interest which will result in an  anticipated  initial  production to the
Company's  interest of  approximately  200 barrels of oil per day. The Company's
expenses in this unit is to be carried until  production from the wells existing
on PPL 56 is sold.  The costs of getting  the oil from the unit to sale has been
estimated at more than $175,000,000,  none of which will be borne by the Company
until  after the first sale of  production.  After  that time,  all of the money
realized  from the sale of the oil will be devoted to  repayment  of the carried
cost of the project, now estimated to be approximately $3,000,000, which, at the
production  rate of 200  barrels  per day to the  Company's  interest  will take
approximately 36 months to pay out after production begins.

b.  The  southern  part  of PPL 56 has  been  refiled  as PPL  189-Foreland  Gas
Application. This new license which contains approximately 483,661 acres (24,429
net acres to the  Company's  interest)  is  expected to be issued in December of
1996. As a result of a reallocation of interests, the Company's interest will be
increased from 2.5% to 5.051%.  This license has the Barikewa  shut-in gas field
located on it. The Barikewa  field has gas reserves  estimated  from 163 billion
cubic feet to as high as 1590 billion  cubic feet.  Further  evaluation  will be
made to more  precisely  define the true  reserves  of this  field.  Chevron has
announced  plans to build a gas  pipeline  from Papua New Guinea  into  Northern
Australia.  This pipeline should greatly  increase the value of the gas reserves
at  Barikewa.  The  Company  will have to fund most 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 over the next
year.

c.  The  northern  part  of  PPL 56  has  been  refiled  as  PPL  190-Fold  Belt
Application.  This  block of  approximately  462,632  acres  (17,409  net to the
Company's  interest) has many very prospective surface structures located on it.
One of these  structures  will be  drilled  during  the  first  two years of the
license.  A  reallocation  of interests has increased the Company's  interest in
this license from 2.5% to 3.763%. During the first few months of the new License
existence,  the  Company  will have to fund its share of a new  seismic  program
which is estimated to cost approximately $1,000,000.  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 six years.  Of the total costs
that must be incurred by the  Company on this new  License,  2.5% are subject to
the carried interest granted in PPL 56,  therefore,  the Company is obligated to
pay only 1.263% of the total costs incurred prior to production  from any of the
properties  originally  encompassed  by PPL 56.  Management  estimates  that the
Company's cost in this new concession  over the next year will be  approximately
$200,000.

d. Petroleum  Prospecting  License No. 165, owned by the Company and Gedd PNG is
being evaluated at this time. An aeromagnetic  survey has been completed and the
Company is awaiting the results of the survey  which will  determine if there is
one or more  drillable  structures  on the  license.  Gedd is  funding  the work
program of this license.

With the increased  activity and development in Papua New Guinea, the Company is
now seeking funds to carry forward the programs  which are currently  under way.
With oil production only a little over a year away and the gas reserves in Papua
New Guinea currently being studied for early development,  the Company should be
able to acquire the necessary funds, either through borrowing or through sale of
equity, to meet its payment obligations under each of the licenses. However, the
Company does not presently  have the liquidity that may be necessary to meet any
call for payment of expenses  and the  Company has no present  assurance  of the
availability  of any of the funds  that may be needed  at the time  needed.  The
failure  of the  Company  to meet any 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

The Company has  experienced  a decline in cash but has  increased  total assets
through the first nine months of the current fiscal year. The Company's  primary
liability is a continually developing carried interest in certain New Guinea oil
and gas rights.  Total  liabilities aside from this obligation are approximately
$40,000.  It is Management's belief that the Company will be able to continue to
meet its financial commitments during the coming 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 HOLDERS

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.  States whether any reports on Form 8-K have been filed
during the quarter for which this report is filed,  listing the items  reported,
any financial statement filed, and the dates of any such reports.

  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, 1996
--------------------------------------------------------    

Robert A. Doak, Jr.   President, Chief Executive Officer
                             and Chief Financial Officer