UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended         February 28, 1997
                                       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:                 1-9872



                              COLUMBUS ENERGY CORP.
             (Exact name of registrant as specified in its charter)

           Colorado                                 84-0891713
(State or other jurisdiction of                  (I.R.S. Employer
 incorporation or organization)                   Identification
                                                        No.)

     1660 Lincoln St., Denver, CO                         80264
(Address of principal executive offices)                (Zip Code)

                                 (303) 861-5252
              (Registrant's telephone number, including area code)

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

     Indicate  by check mark  whether the  registrant  (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
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

            Class                                  Outstanding at April 10, 1997
Common stock, $.20 par value                                  3,101,845
<PAGE>


                              COLUMBUS ENERGY CORP.

                                      INDEX


                                                                    PAGE

PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements

              Consolidated Balance Sheets -
                February 28, 1997 and
                November 30, 1996 ..............................       3

              Consolidated Statements of Income -
                Three Months Ended February 28,
                1997 and February 29, 1996 .....................       5

              Consolidated Statement of
                Stockholders' Equity -
                Three Months Ended February 28, 1997 ...........       6

              Consolidated Statements of Cash Flows -
                Three Months Ended February 28, 1997
                and February 29, 1996 ..........................       7

              Notes to the Financial Statements ................       9

     Item 2.  Management's Discussion and Analysis
                of Financial Condition and
                Results of Operations ..........................      17

PART II.  OTHER INFORMATION

     Item 1      Legal Proceedings..............................      24

     Items 2-5.  Not Applicable

     Item 6.     Exhibits and Reports         
                   on Form 8-K .................................      24

     Signatures ................................................      25

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                              COLUMBUS ENERGY CORP.

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                     February 28,   November 30,
                                                        1997           1996
                                                      --------       --------
                                                     (unaudited)
                                                            (in thousands)

Current assets:
  Cash and cash equivalents ......................      $  1,608       $  1,396
  Accounts receivable:
    Joint interest partners ......................         1,287            889
    Oil and gas sales ............................         1,711          1,544
    Less allowance for doubtful accounts .........          (116)          (116)
  Deferred income taxes (Note 3) .................           479            631
  Inventory of oil field equipment,
    at lower of average cost or market ...........            96            115
  Other ..........................................            49             77
                                                        --------       --------

        Total current assets .....................         5,114          4,536
                                                        --------       --------

Property and equipment:
  Oil and gas assets, successful efforts
    method (Note 2) ..............................        29,194         28,031
  Other property and equipment ...................         1,982          2,001
                                                        --------       --------

                                                          31,176         30,032
  Less:  Accumulated depreciation,
     depletion and amortization
     and valuation allowance .....................       (13,677)       (12,943)
                                                        --------       --------

        Net property and equipment ...............        17,499         17,089
                                                        --------       --------

                                                        $ 22,613       $ 21,625
                                                        ========       ========

                                                                     (continued)

                                       3
<PAGE>


                              COLUMBUS ENERGY CORP.

                    CONSOLIDATED BALANCE SHEETS - (continued)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                      February 28,  November 30,
                                                          1997           1996
                                                        --------       --------
                                                      (unaudited)
                                                             (in thousands)
Current liabilities:
  Accounts payable .................................     $  1,637      $  1,292
  Undistributed oil and gas
   production receipts .............................            8            54
  Accrued production and property taxes ............          330           555
  Prepayments from joint interest owners ...........          321           258
  Accrued expenses .................................          314           348
  Income taxes payable (Note 3) ....................          107            33
  Other ............................................           13            30
                                                         --------      --------

        Total current liabilities ..................        2,730         2,570
                                                         --------      --------

Long-term bank debt (Note 2) .......................        1,300         2,200
Deferred income taxes (Note 3) .....................        1,105           630

Commitments and contingent liabilities (Note 2)

Stockholders' equity:
  Preferred stock authorized 5,000,000
    shares, no par value, none issued ..............         --            --
  Common stock authorized 20,000,000 shares
    shares of $.20 par value; shares issued
    3,538,873 in 1997, and 3,499,915 in 1996
    (outstanding 3,181,690 in 1997 and
    3,155,346 in 1996) .............................          708           700
  Additional paid-in capital .......................       17,589        17,361
  Retained earnings, since
    December 1, 1987 ...............................        1,863           720
                                                         --------      --------
                                                           20,160        18,781
  Less: Treasury stock at cost
          357,183 shares in 1997 and
          344,569 shares in 1996 ...................       (2,682)       (2,556)
                                                         --------      --------
        Total stockholders' equity .................       17,478        16,225
                                                         --------      --------
                                                         $ 22,613      $ 21,625
                                                         ========      ========


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       4
<PAGE>


                              COLUMBUS ENERGY CORP.

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                           Three Months Ended
                                                           ------------------
                                                       February 28, February 29,
                                                            1997        1996
                                                           ------         ------
                                                          (in thousands, except 
                                                              per share data)

Revenues:
  Oil and gas sales ..............................         $3,765         $2,592
  Operating and management
    services .....................................            276            288
  Interest and other income ......................             37            204
                                                           ------         ------

       Total revenues ............................          4,078          3,084
                                                           ------         ------

Costs and expenses:
  Lease operating expenses .......................            518            565
  Property and production taxes ..................            321            265
  Operating and management
    services .....................................            197            202
  General and administrative .....................            338            211
  Depreciation, depletion and
    amortization .................................            753            675
  Impairment of long-lived assets ................           --              165
  Exploration expense ............................             62             33
  Litigation (Note 4) ............................              7              9
                                                           ------         ------

      Total costs and expenses ...................          2,196          2,125
                                                           ------         ------

      Operating income ...........................          1,882            959
                                                           ------         ------

Other expenses (income):
  Interest .......................................             35             71
  Other ..........................................              3              1
                                                           ------         ------
                                                               38             72
                                                           ------         ------

      Earnings before income taxes ...............          1,844            887

Provision for income taxes
  (Note 3) .......................................            701            337
                                                           ------         ------

      Net earnings ...............................         $1,143         $  550
                                                           ======         ======

Earnings per share ...............................         $  .36         $  .18
                                                           ======         ======

Average number of common shares ..................          3,171          3,058
                                                           ======         ======



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       5
<PAGE>
   

                              COLUMBUS ENERGY CORP.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  For the Three Months Ended February 28, 1997
                                   (Unaudited)
<TABLE>
<CAPTION>
                              Common Stock        Additional                  Treasury Stock
                          ---------------------    Paid-in    Retained    ----------------------
                           Shares      Amount      Capital    Earnings     Shares       Amount
                          ---------   ---------   ---------   ---------   ---------    ---------
                                                  (dollar amounts in thousands)
<S>        <C>            <C>         <C>         <C>         <C>           <C>        <C>       
Balances,
  December 1, 1996 ....   3,499,915   $     700   $  17,361   $     720     344,569    $  (2,556)

Exercise of employee
  stock options .......      36,045           7         199        --        13,333         (131)
Purchase of shares ....        --          --          --          --            14         --
Shares issued for Stock
  Purchase Plan .......       2,913           1          29        --          (733)           5
Net earnings ..........        --          --          --         1,143        --           --
                          ---------   ---------   ---------   ---------   ---------    ---------

Balances,
  February 28, 1997 ...   3,538,873   $     708   $  17,589   $   1,863     357,183    $  (2,682)
                          =========   =========   =========   =========   =========    =========
</TABLE>
                                       6
 
              The accompanying notes are an integral part of these
                       consolidated financial statements.
<PAGE>


                              COLUMBUS ENERGY CORP.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                  Three Months Ended
                                                  ------------------
                                              February 28,   February 29,
                                                 1997             1996
                                                -------         -------
                                                     (in thousands)

Net earnings .........................          $ 1,143         $   550

Adjustments to reconcile net earnings
  to net cash provided by operating
  activities:
    Depreciation, depletion, and
      amortization ...................              753             675
    Impairment of assets .............             --               165
    Deferred income tax provision ....              627             302
    Gain on asset sale ...............             --              (176)
    Other ............................               14              19
Net change in operating assets and
  liabilities ........................             (366)           (984)
                                                -------         -------
          Net cash provided by
          operating activities .......            2,171             551
                                                -------         -------

Cash flows from investing activities:
  Additions to oil and gas properties            (1,163)         (3,530)
  Additions to other assets ..........             --               (11)
  Proceeds from sale of assets .......             --               330
                                                -------         -------
        Net cash used in
          investing activities .......           (1,163)         (3,211)
                                                -------         -------

Cash flows from financing activities:
  Proceeds from long-term debt .......             --             2,700
  Reduction in long-term debt ........             (900)           (300)
  Proceeds from issuance of
    common stock .....................              235              26
  Purchase of treasury stock .........             (131)           (113)
                                                -------         -------
        Net cash provided by (used in)
          financing activities .......             (796)          2,313
                                                -------         -------

Net increase (decrease) in cash and
  cash equivalents ...................              212            (347)
Cash and cash equivalents at
  beginning of period ................            1,396           1,414
                                                -------         -------
Cash and cash equivalents at
  end of period ......................          $ 1,608         $ 1,067
                                                =======         =======

                                                                     (continued)
                                       7
<PAGE>


                              COLUMBUS ENERGY CORP.

               CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
                                   (Unaudited)

                                                  Three Months Ended
                                                  ------------------
                                              February 28,   February 29,
                                                 1997             1996
                                                -------         -------
                                                    (in thousands)
Supplemental disclosure of cash 
  flow information:
    Cash paid during the period for:
      Interest                                  $    48         $     61
                                                =======         ========
      Income taxes                              $   -0-         $    -0-
                                                =======         ========

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       8
<PAGE>


                              COLUMBUS ENERGY CORP.

                        NOTES TO THE FINANCIAL STATEMENTS
                                   (Unaudited)


(1)  BASIS OF PRESENTATION

     The accompanying  consolidated financial statements include the accounts of
Columbus Energy Corp. ("Columbus") and its wholly-owned subsidiary, Columbus Gas
Services,   Inc.("CGSI").   All  significant  intercompany  balances  have  been
eliminated in consolidation. The term "Company" as used herein includes Columbus
and its subsidiary.

     The consolidated  financial statements of the Company have been prepared in
accordance with generally accepted accounting  principles and require the use of
managements'  estimates.   The  financial  statements  contain  all  adjustments
(consisting  only  of  normal  recurring  accruals)  which,  in the  opinion  of
management,  are  necessary  to present  fairly the  financial  position  of the
Company as of  February  28,  1997 and  November  30,  1996,  the results of its
operations  and cash flows for the three  months  ended  February  28,  1997 and
February 29, 1996.  The results of operations  for such interim  periods are not
necessarily indicative of results to be expected for the full year.

     For purposes of the  statements  of cash flows,  the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash  equivalents.  Hedging  activities  are  included  in cash  flow from
operations in the cash flow statements.

     The Company uses crude oil and natural gas swaps to manage price  exposure.
Realized  gains and losses on the swaps are  recognized  in oil and gas sales as
settlement occurs.

     Earnings per share are computed using the weighted average number of common
shares outstanding. Stock options are included as common stock equivalents, when
dilutive,  using the treasury  stock method.  Common stock  equivalents  include
shares  issuable  upon  assumed  exercise of dilutive  stock  options  using the
average price for primary shares and the period end price, if higher,  for fully
diluted  shares.  For 1997 and  1996  such  common  stock  equivalents  were not
dilutive.

                                       9
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)
                                   (Unaudited)


     Oil and Gas Properties

     The Company  follows the successful  efforts  method of  accounting.  Lease
acquisition  and development  costs  (tangible and intangible) for  expenditures
relating to proved oil and gas  properties  are  capitalized.  Delay and surface
rentals are charged to expense in the year incurred. Dry hole costs incurred for
exploratory  operations are expensed.  Dry hole costs associated with developing
proved fields are  capitalized.  Expenditures  for  additions,  betterments  and
renewals are  capitalized.  Exploratory  geological  and  geophysical  costs are
expensed when incurred.

     Upon sale or  retirement  of proved  properties,  the cost  thereof and the
accumulated depreciation or depletion are removed from the accounts and any gain
or  loss  is  credited  or  charged  to  income  if  significant.   Abandonment,
restoration, and dismantlement costs and salvage value are taken into account in
determining  depletion  rates.  These  costs are  generally  about  equal to the
proceeds  from  equipment  salvage upon  abandonment  of such  properties.  When
estimated abandonment costs exceed the salvage value, the excess cost is accrued
and expensed. Maintenance and repairs are charged to operating expenses.

     Provision for  depreciation  and depletion of capitalized  exploration  and
development costs are computed on the unit-of-production  method based on proved
developed  reserves of oil and gas, as estimated by  petroleum  engineers,  on a
property by property  basis.  Unproved  properties are assessed  periodically to
determine  whether  they  are  impaired.  When  impairment  occurs,  a  loss  is
recognized  by  providing  a  valuation  allowance.  When  leases  for  unproved
properties expire, any remaining cost is expensed.

     An impairment  loss on oil and gas properties is reported as a component of
income from  continuing  operations.  The Company  recognizes an impairment loss
when the carrying value exceeds the expected  undiscounted future net cash flows
of each  property  pool at which time the  property  pool is written down to the
fair value. Fair value is estimated to be a discounted present value of expected
future net cash flows with appropriate risk consideration.

     The Company follows the entitlements method of accounting for gas balancing
of gas  production.  The Company's gas imbalances are immaterial at November 30,
1996 and February 28, 1997.

                                       10
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)
                                   (Unaudited)


     Other Property and Equipment

     Depreciation  of other assets are provided on the straight line method over
their estimated useful lives. Gains and losses from retirement or replacement of
other properties and equipment are included in income.  Betterments and renewals
are capital ized. Maintenance and repairs are charged to operating expenses.

     Accounting for Stock-Based Compensation

     The Financial  Accounting  Standards Board issued  Statement No. 123 on the
"Accounting  for  Stock-Based  Compensation".   This  statement  prescribes  the
accounting and reporting standards for stock-based  employee  compensation plans
and is effective for the Company's  1997 fiscal year. The Company has determined
it will use the alternative pro forma disclosures as provided.

(2)  LONG-TERM DEBT

     The Company has a credit agreement with Norwest Bank Denver,  N.A. that was
amended and  restated on October 23,  1996.  The credit is  collateralized  by a
first lien on oil and gas proper ties.

     As requested by the Company,  the borrowing  base is limited to $7,000,000,
without  regard to the  maximum  allowable  amount that would be set by the bank
during its semi-annual redetermina tion. A commitment fee of .25% is payable for
any unused portion of the credit which is the  difference  between the borrowing
base and the outstanding borrowings.

(3)  INCOME TAXES

     The  Company  files a  consolidated  income  tax  return  with CGSI and has
executed a tax allocation agreement which provides for an allocation and payment
of income taxes based upon each  company's  separate tax liability  calculation.
Consolidated income taxes are payable only when taxable income exceeds available
net operating loss carryforwards and other credits.

     Pursuant  to  provisions  enacted  as part of the Tax  Reform  Act of 1986,
utilization  of these  corporate  tax  carryforwards  in any one taxable year is
limited  if a  corporation  experiences  a 50%  change  of  ownership.  Columbus
experienced such a change of ownership in October 1987 effectively  limiting the
utilization  of  pre-change  ownership  net  operating  losses to  approximately
$900,000  in each  subsequent  year.  Subsequent  additional  ownership  changes
accumulated  to more  than 50% by  August  25,  1993  thereby  causing  a second
ownership change to occur.  Approximately $160,000 of these restricted post-1987
net  operating  loss  carryforwards  are available for fiscal 1997 or subsequent
years.

                                       11
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)
                                   (Unaudited)



     The  Company  uses the asset and  liability  method to  account  for income
taxes.  Under this method,  deferred tax  liabilities  and assets are determined
based on the temporary  differences between financial statement and tax basis of
assets and liabili ties using  enacted rates in effect for the year in which the
differences are expected to reverse.  Tax assets (net of a valuation  allowance)
primarily result from net operating loss carryforwards, percentage depletion and
certain accrued but unpaid employee  benefits.  Deferred tax liabilities  result
from the recognition of  depreciation,  depletion and  amortization in different
periods for financial reporting and tax purposes.

     Because of the Company's previous 1987  quasi-organization,  the Company is
required to report the effect of its net  deferred  tax asset  arising  prior to
December  1, 1987 as an  increase  in  stockholders'  equity  rather  than as an
increase to net earnings.

                                       12
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)
                                   (Unaudited)


     The provision for income taxes consists of the following (in thousands):

                                                   Three Months Ended
                                          --------------------------------------
                                          February 28, 1997    February 29, 1996
                                          -----------------    -----------------

Current:
         Federal                             $   18                 $   17
         State                                   56                     18
                                             ------                 ------
                                                 74                     35
                                             ------                 ------

Deferred:
         Federal                                471                    (49)
         Use of loss carryforwards              156                    351
                                             ------                 ------
                                                627                    302
                                             ------                 ------
  Total income tax expense                   $  701                 $  337
                                             ======                 ======

     The total tax  provision  has resulted in effective  tax rates which differ
from the statutory  Federal income tax rates. The reasons for these  differences
are:

                                               Percent of Pretax Earnings
                                               --------------------------
                                                   Three Months Ended
                                                   ------------------
                                          February 28, 1997    February 29, 1996
                                          -----------------    -----------------

U.S. Statutory rate                              34%                    34%
State income taxes                                3                      2
Other                                             1                      2
                                               -----                  -----
                                                 38%                    38%
                                               =====                  =====

                                       13
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)
                                   (Unaudited)


     During the three  months of fiscal 1997,  certain tax assets  (shown in the
table below) were utilized.  The tax effect of significant temporary differences
representing  deferred tax assets and  liabilities and changes were estimated as
follows (in thousands):

                                                        Current Year
                                         ---------------------------------------
                                         Dec. 1,                        Feb. 28,
                                          1996           Operations       1997
                                         -------         ----------     --------

     Deferred tax assets:
       Pre-1987 loss carryforwards      $ 1,361           $     -       $ 1,361
       Post-1987 loss carryforwards         596              (149)          447
       Percentage depletion
         carryforwards                    1,130                 -         1,130
       State income tax loss
         carryforwards                       88                (7)           81
       Other                                308                 4           312
                                        -------           -------       -------
                  Total                   3,483              (152)        3,331
          Valuation allowance            (1,469)                -        (1,469)
                                        -------           -------       -------
         Deferred tax assets              2,014              (152)        1,862
                                        -------           -------       -------

     Deferred tax liabilities-
       Depreciation, depletion and
         amortization and other          (2,013)             (475)       (2,488)
                                        -------           -------       -------
         Net tax asset (liability)      $     1           $  (627)      $  (626)
                                        =======           =======       =======

     The Company has net operating loss  carryforwards (in thousands)  available
at November 30, 1996 as follows:

                                                               Net
                       Expiration Year                    Operating loss
                       ---------------                    --------------

                           1999                               $ 2,710
                           2000                                   907
                           2001                                   386
                           2003                                    45
                           2004                                   115
                           2010                                 1,593
                                                              -------
                                                              $ 5,756
                                                              =======

     For  Alternative  Minimum Tax purposes the Company had net  operating  loss
carryforwards of  approximately  $6,900,000 as of November 30, 1996. The Company
also has percentage  depletion  carryforwards of $2,974,000 which do not expire.
State income tax operating loss  carryforwards  of $1,450,000  were available at
November 30, 1996.

                                       14
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)
                                   (Unaudited)


(4) LITIGATION

     Management is unaware of any asserted or unasserted  claims or  assessments
against the Company which would materially effect the Company's future financial
position or results of operations.

(5) CONTINGENCY

     The Company  entered  into a natural gas swap by selling  60,000  Mmbtu per
month for the period from March 1997  through  October  1997 at $2.20 per Mmbtu.
This  volume  represents  approximately  20%  of  Columbus'  first  quarter  gas
production.

     Columbus  also  entered  into a crude oil swap by selling a strip of 10,000
barrels per month for the twelve month period from November 1996 through October
1997 at an average  daily  price of $21.17 per barrel.  This  amount  represents
approximately  50% of Columbus'  current crude oil  production.  The  difference
between  the hedge  price and the  actual  daily  closing  price on the New York
Mercantile Exchange ("NYMEX") is settled monthly.

     The  Company's  natural  gas and crude oil swaps are  considered  financial
instruments  with  off-balance  sheet risk  which  were in the normal  course of
business to reduce its  exposure to  fluctuations  in the price of crude oil and
natural gas. Those instruments  involve, to varying degrees,  elements of market
and credit risk in excess of the amount  recognized in the balance  sheets.  The
Company had natural gas and crude oil swaps  outstanding  subsequent to February
28, 1997 as follows:

                                        Notional              Market Value as of
                                         Value                      2/28/97
                                        --------              ------------------

         Natural gas
           (3/97-10/97)                $1,056,000                 $1,183,000

         Crude oil
           (3/97-10/97)                 1,694,000                  1,804,000

                                       15
<PAGE>


                              COLUMBUS ENERGY CORP.

                 NOTES TO THE FINANCIAL STATEMENTS - (continued)


(6) RELATED PARTY TRANSACTIONS

     CEC Resources Ltd. ("Resources") was a wholly-owned  subsidiary of Columbus
prior  to its  divestiture  on  February  24,  1995.  Reimbursement  is  made by
Resources to Columbus for services  provided by Columbus  officers and employees
for managing  Resources and reduces  general and  administrative  expense.  This
reimbursement totaled $67,000 and $72,000 for the first three months of 1997 and
1996, respectively.

                                       16
<PAGE>


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

     The following  summarizes the Company's  financial condition and results of
operations and should be read in  conjunction  with the  consolidated  financial
statements and related notes.

Liquidity and Capital Resources

     During  the first  quarter of 1997 the  Company  achieved  record  results.
Significantly improved crude oil and natural gas prices and production increased
sales for 1997 by 45% compared to 1996.  This was made up of 68% higher  natural
gas revenues and 14% crude oil revenues due to increased  average  prices of 43%
and 25% while production was up 18% and down 8%,  respectively.  Net earnings of
$1,143,000,  or $.36 per share for 1997 more than  doubled  the net  earnings of
$550,000,  or $.18 per share,  in 1996. As of the end of the first quarter 1997,
shareholders'  equity was  $17,478,000  compared to  $16,225,000 at November 30,
1996.  Substantial  positive working capital of $2,384,000 on that date plus the
Company's  forecasted  future  cash  flow for the  year  should  be more  than a
sufficient  source of capital  to meet its  approved  budget of $7.1  million to
develop  its  undeveloped  reserves  as well as fund  its  proposed  exploratory
program.  The $7,000,000  bank  borrowing  base of its credit  facility has been
designated by management for acquisitions of new oil and gas properties although
the loan can be used for any legal  corporate  purpose and would be available if
needed.  Notwithstanding  the Company's  presently  favorable  swap positions of
crude oil and  natural  gas,  expected  future  decreases  in oil and gas prices
subsequent to February 28, 1997 will  probably  result in reduced cash flows and
net earnings for the remaining  three fiscal  quarters unless the results of the
drilling  program with  expected  production  increases  therefrom  should prove
sufficient to offset those price declines.

     Generally accepted  accounting  principles ("GAAP") require cash flows from
operating activities to be presented after working capital changes. Accordingly,
net cash provided by operating  activities  was $2,171,000 for the first quarter
of 1997 compared to $551,000 during 1996's quarter.  Management believes that an
important  alternative measure (commonly used in the industry although not GAAP)
of a company's cash flow is one determined  before any consideration is given to
working capital changes and without deduction of exploration  expenses.  This is
generally  known as  discretionary  cash flow  ("DCF")  for  successful  efforts
companies and is important  for  comparability  purposes  because under the full
cost accounting method used by a majority of smaller capitalization  independent
energy  companies  exploration  costs  are  capitalized  and  therefore  do  not
adversely affect operating cash flow or net earnings.  Since  exploration  costs
can be  increased  or  decreased  by  management  decision,  DCF  would  be more
comparable to cash flow of full cost companies.  Columbus' DCF for first quarter
1997 was $2,599,000  compared to $1,568,000 in 1996 which 66% increase  reflects
higher natural gas and crude oil prices and improved natural gas production this
year.  DCF is calculated  before debt  retirement  but in Columbus'  case is not
restricted  since its long-term  bank debt does not require  principal  payments
before  July 1999.  Interest  expense on  outstanding  debt has been  relatively
insignificant but is deducted when arriving at DCF anyway.

                                       17
<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - (Continued)


     Management  continues to take a strong  exception  to Financial  Accounting
Standards  Board  Statement No. 95 which directs that operating cash flow should
be determined after  consideration of working capital changes.  It reflects that
position on this matter in all of its public filings and reports  because such a
requirement  ignores entirely the significant impact on working capital that the
timing of income  received for, and expenses  incurred on behalf of, third party
owners in wells can have on a company  where it primarily  serves as an operator
of properties with only a small working interest as does Columbus.

     Neither  discretionary  cash flow nor  operating  cash flow before  working
capital  represent  cash  flows that can be  substituted  for net income or cash
available from operations as defined by GAAP. No matter how defined,  cash flows
do  not  necessarily  indicate  that  they  are  sufficient  to  fund  all  cash
requirements.

     Columbus'  hedges (swaps) of natural gas and oil prices are discussed below
in Results of Operations as well as in Note 5 to the financial statements.

     The Company's  operation and management services segment remains profitable
but has not contributed meaningfully to earnings since Resources was spun-off.

     Columbus had  outstanding  borrowings of $1,300,000 as of February 28, 1997
against its line of credit with Norwest Bank  Denver,  N.A.  which has a current
borrowing  base of  $7,000,000.  The  credit  is  collateralized  by oil and gas
properties.  At the end of the  first  quarter  1997,  the ratio of bank debt to
shareholders' equity was 0.07 and to total assets was 0.06. The debt outstanding
used a LIBOR option at an interest rate of 6.9%. The net increase or decrease in
long-term  debt  affects  reported  financing  activities  cash flow as does the
purchase of treasury stock and proceeds from the exercise of stock options.

     Working  capital at February  28,  1997  remained  positive  at  $2,384,000
compared  to  $1,966,000  at  November  30,  1996.  This  was  achieved  despite
expenditures  of $1,163,000  for new additions to oil and gas properties for the
quarter out of total budgeted  development and exploratory capital  expenditures
for 1997 of over  $7,000,000.  It is  noteworthy  that  working  capital  as the
quarter ended  exceeded  outstanding  bank debt. In that regard,  at its regular
February  meeting,  the Board of Directors voted to withdraw a previously  filed
registration  statement covering a proposed rights offering to shareholders of a
Series A Convertible  Preferred Stock issue because of the rapid paydown of bank
debt that had occurred since August 1996 as well as the  accelerating  cash flow
realized during that period.

                                       18
<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - (Continued)


     A 300,000-share repurchase was previously authorized in February 1995 which
could be  purchased  from time to time out of  available  cash  (excluding  bank
borrowings) at a price not to exceed $8.75 per share. Through February 1997, the
Company had acquired  284,000  shares  while the  remaining  16,000  shares were
purchased in early March. An overall average repurchase price of $7.21 per share
was achieved for the block.

     Subsequently, during March 1997, an additional 100,000-share repurchase was
authorized at a price not to exceed $9.75 per share. To date, 65,500 shares have
been acquired at an average price of $9.22 per share excluding commissions.

RESULTS OF OPERATIONS

     During 1997's first quarter,  the Company's  revenues  increased by 32% and
operating income increased 96% compared to first quarter 1996. Other comparisons
appear below.

     As indicated,  a record drilling budget has been approved for 1997 so it is
expected there will be a record number of well  participations  during the year.
During the first  quarter,  five gross  wells  (0.88 net) were  completed  which
resulted  in four (0.54  net)  successful  gas wells in the Laredo  area and one
(0.34 net) pumping oil well in Oklahoma. No exploratory wells were completed but
an Austin  Chalk  horizontal  well  re-entry at the Morrow 23 #1-H in  Avoyelles
Parish,  Louisiana  was in progress with the first lateral about to be commenced
as the quarter  closed.  Columbus owns a 12.5% working  interest after payout of
the costs of this well and owns a lesser interest during payout which percentage
can only be  determined  when final costs are known.  The Company owns 6,189 net
acres of working  interest  leaseholds  and minerals under approxi mately 49,512
net (57,451  gross) acres of leaseholds  and minerals in the three township Area
of Mutual  Interest  ("AMI")  in  Avoyelles  and St.  Landry  Parishes.  Also in
progress was a Red River replacement well completion  located at the apex of the
SE Froid field structure. The McCabe #1-X will allow the junked well bore at the
McCabe #1 to be abandoned in the Red River  formation and be  recompleted  as an
oil producer in one of three uphole prospective horizons.

                                       19
<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - (Continued)

     Oil and Gas Revenues and Operating Costs

     The following table shows  comparative  crude oil and natural gas revenues,
sales volumes,  average prices and percentage  changes  between  periods for the
first  quarters of 1997 and 1996 and the first quarter of 1997 versus the fourth
quarter of 1996.
<TABLE>
<CAPTION>

                                              First Quarter
                                          ---------------------        %         Fourth Qtr.       %
                                           1997           1996       Change          1996        Change
                                          ------         ------      ------       -----------    ------
<S>                                       <C>            <C>           <C>          <C>            <C> 
         Natural gas revenues M$          $2,511         $1,496        68%          $ 1,512        66 %
         Oil revenue M$                   $1,254         $1,096        14%          $ 1,315        (5)%
         Natural gas sales volumes:
           Millions of cubic feet            777            661        18%              729         7 %
           MCF/day                         8,628          7,262                       8,014

         Oil sales volumes:
           Barrels                        57,801         63,087       (8)%           60,522        (4)%
           Barrels/day                       642            693                         665

         Average price received:
           Natural gas - $/MCF            $ 3.23         $ 2.26        43%           $ 2.07        56 %
           Oil - $/BBL                    $21.69         $17.37        25%           $21.73         - %
</TABLE>

     Natural  gas  revenues  increased  68% in the  first  quarter  of 1997 when
compared to 1996's quarter  primarily  from higher  volumes and prices.  Average
prices for natural gas rose 43% in the first  quarter of 1997 compared with last
year due to increased demand and limited excess deliverability  nationwide which
affected  storage  injections.  Sales volumes  improved by 18% over 1996's first
quarter as a result of numerous wells developed  during the intervening  months.
The first  quarter of 1997  compared  to fourth  quarter of 1996  showed a sales
volume increase of 7% as a result of new well connections and an increase of 56%
in average prices received.  These factors combined to increase  revenues by 66%
in 1997's quarter.

     Oil  revenues  for the  first  quarter  were up 14% over the  similar  1996
quarter as a result of a 25% increase in the average price  received and despite
8% lower sales volumes.  Crude oil production has continued its natural  decline
with  insufficient new development wells to offset same during most quarters for
the past several  years.  Total oil  revenues in the first  quarter of 1997 were
reduced  by  $92,660 or $1.60 per  barrel,  from  swaps of crude oil.  Total oil
revenues first quarter 1996 were reduced by $30,000,  or $.47 per barrel, due to
swaps of crude oil for January and February of that year.

     Columbus'  average  sales  volume  of  natural  gas of  8,628  Mcfd and oil
production of 642 barrels per day for 1997's quarter equates to daily production
of 2,080  barrels of oil  equivalent  (BOE) which is still 5% below the previous
record quarter for U.S. daily production of 2,200 BOE. For the month of February
1997,  the daily  average  reached 2,100 BOE (or 12,600 MCFE) and was closing on
the record in March.

                                       20
<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - (Continued)

     When a comparison  is made with the fourth  quarter of 1996,  first quarter
1997 oil  revenues  were 5% lower  because of a 4%  decrease  in  quarterly  oil
production with less than 1% decrease in average price per barrel.

     Lease operating expenses for the 1997 quarter were lower than first quarter
1996 because of last year's expensive  work-overs and repairs performed on a few
older wells.  Accordingly,  lease  operating costs on a barrel of oil equivalent
basis  were  $2.76 in 1997  compared  to $3.24  in  1996.  Operating  costs as a
percentage of revenues  have  decreased in 1997 to 14% compared to 22% in 1996's
first quarter due to lower costs and significantly improved revenues.

     Production and property taxes  approximated  9% of revenues in 1997 and 10%
in 1996 and varies based on production in Texas where oil  production  tax rates
are lower than gas production tax rates.  The  relationship of taxes and revenue
is not always directly  proportional because some local jurisdiction's taxes are
based upon reserve evaluations as opposed to actual revenues or production for a
given period.

     Operating and Management Services

     This segment of the Company's U.S.  business is comprised of operations and
services conducted on behalf of third parties and includes compressor rentals.

     Operating  and  management  services  profit is fairly  consistent  between
quarters.  There was a $79,000  profit  during first quarter 1997 compared to an
$86,000 profit for the equivalent  quarter in 1996, but was only $38,000 for the
fourth  quarter  of 1996 due to annual  state  workmen's  compensation  premium,
increased  vacation  accrual and more time  allocated to operations by personnel
during fourth quarter.

     Interest Income

     Interest  income is earned  primarily  from  short-term  invest ments whose
rates  fluctuate with changes in the commercial  paper rates and the prime rate.
Interest  income  increased  in 1997 to $37,000  from  $28,000  in 1996's  first
quarter  primarily as result of an increased  amount of  investments  and stable
short-term interest rates.

                                       21
<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - (Continued)

     General and Administrative Expenses

     General and administrative expenses are considered to be those which relate
to the direct  costs of the Company  which do not  originate  from  operation of
properties or providing of services.  Corporate expense  represents a major part
of this category although other nonbillable expenses are included herein.

     The Company's general and  administrative  expenses in the first quarter of
1997  were  higher  than  last  year  because  of  intervening  grants of salary
increases in May and November  1996 for  officers and  employees  and $56,000 of
costs  associated  with the  withdrawn  preferred  stock offer and  professional
services related thereto.

     Reimbursement  for services provided by Columbus officers and employees for
managing  Resources is expected to decrease  later in fiscal 1997  assuming that
Canadian-based  management would take over following a business combination with
another junior oil and gas company. Columbus' general and administrative expense
will  increase  accordingly  since no  further  staff  reductions  are  planned.
Reimbursement  of $67,000  compares  with  $72,000  for first  quarter  1996 for
providing services to Resources.

     Depreciation, Depletion and Amortization

     Depreciation,  depletion  and  amortization  of  oil  and  gas  assets  are
calculated  based upon the units of  production  compared to proved  reserves of
each field. The expense is not only directly related to the level of production,
but also is  dependent  upon past  costs to find,  develop,  and  recover  those
reserves.  Depreciation  and  amortization  of  office  equipment  and  computer
software is also included in the total charge.

     Total charges for depletion  expense for oil and gas  properties  increased
from 1996 due to increased production. The 1997 first quarter depletion rate was
$3.88  per  barrel  of oil  equivalent  compared  to  $3.68  per  barrel  of oil
equivalent  in the like  period  of  fiscal  1996 and  $3.86  per  barrel of oil
equivalent  for all of 1996.  These  amounts  are  below  the  industry  average
primarily because of historically low finding costs.

     A non-cash impairment loss of $165,000 was recognized during the 1996 first
quarter  because a development  well drilled in Oklahoma proved to be uneconomic
and its costs exceeded the remaining cash flows from other producing  properties
in the field at that time.

                                       22
<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - (Continued)

     Exploration Expense

     In  general,   the  exploration  expense  category  includes  the  cost  of
Company-wide   efforts  to  acquire  and  explore  new  prospective  areas.  The
successful efforts method of accounting for oil and gas properties requires that
the cost of drilling unsuccessful  exploratory wells and other exploratory costs
be currently  expensed.  Exploration  expenses for  comparative  first  quarters
amounted to $62,000 for 1997 and $33,000 for 1996.  These  explora tion expenses
reduce reported cash flow from operations,  as well as net earnings, even though
they are  discretionary  expenses;  however,  such  charges  are added  back for
purposes of determining discre tionary cash flow.

     Over $500,000 of total seismic costs has been budgeted for 1997 in the S.E.
Froid and Hay Creek areas in Montana and to the extent these are  necessary  for
locating  exploratory well sites this will increase  exploration  charges during
future quarters regardless of success.

     Interest Expense

     Interest  expense varies in a direct  proportion to the amount of bank debt
and the  level  of  bank  interest  rates.  The  average  amount  of  bank  debt
outstanding  has been lower for the 1997 first quarter than in 1996. The average
bank interest rate paid this quarter was 7.0% for debt which compares to 7.5% in
1996.

     Income Taxes

     During the first  quarter of 1997 the U.S.  net deferred tax asset became a
net  liability  of $626,000 as a result of expected  use of net  operating  loss
carryforwards.  The net liability is comprised of $479,000  current deferred tax
asset and  $1,105,000  long-term tax  liability.  The estimated  utilization  of
deferred tax assets was $627,000 during the quarter. The valuation allowance was
unchanged so far in 1997. The effective tax rate for 1997 was 38%. See also Note
3 to the  consolidated  financial  statements for further  explanation of income
taxes.

     Statement  Pursuant to Safe  Harbor  Provision  of the  Private  Securities
     Litigation Reform Act of 1995

     This report may contain certain "forward-looking statements" that have been
based  on  imprecise   assumptions  with  regard  to  production  levels,  price
realizations,  and  expenditures for exploration and development and anticipated
results  therefrom.  Such statements are subject to risks and uncertainties that
could cause  actual  results to differ  materially  from those  expressed  in or
implied by the statements.

                                       23
<PAGE>


                           PART II - OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS

     Management is unaware of any asserted or unasserted  claims or  assessments
against the Company which would materially affect the Company's future financial
position or results of operations.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               11 - Computation of per share earnings

               27 - Financial data schedule

          (b)  Reports on 8-K

               Report dated January 13, 1997 related to regis  tration  covering
               400,000 shares of Series A 7% Convertible Preferred Stock.

               Report dated  February 12, 1997 related to the  withdrawal of the
               previously  filed  registration  statement  of 400,000  shares of
               Series A 7% Convertible Preferred Stock.

                                       24
<PAGE>


                                   SIGNATURES

     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.



                                                 COLUMBUS ENERGY CORP.
                                                      (Registrant)



DATE:   April 10, 1997                           /s/ Harry A. Trueblood, Jr.
        --------------                           ---------------------------
                                                 Harry A. Trueblood, Jr.
                                                 Chairman, President and
                                                 Chief Executive Officer
                                                 (a duly authorized officer)



DATE:   April 10, 1997                           /s/ Ronald H. Beck
        --------------                           ------------------
                                                 Ronald H. Beck
                                                 Vice President
                                                 (Chief Accounting Officer)

                                       25
<PAGE>


                                                      Commission File No. 1-9872



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549





                                    EXHIBITS

                                       TO

                                    FORM 10-Q



                                QUARTERLY REPORT

                         PURSUANT TO SECTION 13 OR 15(d)

                                       OF

                       THE SECURITIES EXCHANGE ACT OF 1934

                     FOR THE QUARTER ENDED FEBRUARY 28, 1997





                              COLUMBUS ENERGY CORP.
                           (Exact Name of Registrant)

                               1660 Lincoln Street
                             Denver, Colorado 80264
                     (Address of Principal Executive Office)