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 ____

As of November 1, 2002, the Registrant had 12,440,057 shares of Common Stock, $.001 par value, outstanding.

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Note 1.          The accompanying condensed consolidated financial statements of Beta Oil & Gas, Inc. and 
                       subsidiaries ("Beta") have been prepared in accordance with generally accepted accounting 
                       principles in the United States for interim financial information and with the instructions of 
                       Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the accompanying 
                       unaudited financial statements contain all adjustments necessary to present fairly the Company's 
                       financial position as of September 30, 2002 and the results of its operations and cash flows for 
                       the three and nine months ended September 30, 2002 and 2001. Management believes all such 
                       adjustments are of a normal recurring nature. The results of operations for interim periods are 
                       not necessarily indicative of results to be expected for a full year. Although we believe that 
                       the disclosures in these financial statements are adequate to make the information presented 
                       not misleading, certain information normally included in financial statements and related 
                       footnotes prepared in accordance with generally accepted accounting principles in the United 
                       States have been condensed or omitted pursuant to the rules and regulations of the Securities 
                       and Exchange Commission. The December 31, 2001 consolidated balance sheet was derived 
                       from audited financial statements, but does not include all disclosures required by generally 
                       accepted accounting principles in the United States. The accompanying financial statements 
                       should be read in conjunction with the audited financial statements as contained in our 
                       Annual Report on Form 10-K for the fiscal year ended December 31, 2001 that was filed 
                       April 1, 2002.

Note 2.          OIL AND GAS PROPERTIES

                      The Company follows the full cost method of accounting for oil and gas properties. Under this 
                       method, all productive and nonproductive costs incurred in connection with the exploration 
                       for and development of oil and gas reserves are capitalized. Such capitalized costs include lease 
                       acquisition, geological and geophysical work, delay rentals, drilling, completing and equipping 
                       oil and gas wells. Costs associated with production and general corporate activities are 
                       expensed in the period incurred. Interest costs related to unproved properties and properties 
                       under development are also capitalized to oil and gas properties. Normal dispositions of oil and 
                       gas properties are accounted for as adjustments of capitalized costs, with no gain or loss 
                       recognized. Depreciation, depletion, and amortization of proved oil and gas properties is 
                       computed on the units-of-production method based upon estimates of proved reserves with oil 
                       and gas being converted to a common unit of measure based on the relative energy content. 
                       Capitalized costs of evaluated properties, less accumulated amortization and related deferred 
                       income taxes, shall not exceed an amount ("the cost ceiling") equal to the sum of the present 
                       value of future net cash flows from estimated production of proved oil and gas reserves, 
                       based on current economic and operating conditions discounted at 10%, less any income tax 
                       effects related to differences between the book and tax basis of the properties involved. If 
                       capitalized costs exceed this cost ceiling, the excess is charged to earnings. Unproved or 
                       unevaluated properties, including any related capitalized interest costs, are not amortized, but 
                       are assessed for impairment either individually or on an aggregated basis on an annual basis. 
                       Unevaluated leasehold costs, including brokerage costs, are individually assessed quarterly 
                       based on the remaining term of the primary leasehold.

                       With the volatility of commodity prices and the possibility of exploration expenditures resulting in 
                       no significant proved reserve additions, it is possible that future impairments of oil and gas 
                       properties could occur. The price measurement date is on the last day of the quarter or year end 
                       and is required by SEC rules.

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                        During the nine-month period ended September 30, 2002, the Company sold interests in various 
                        internally generated prospects, unevaluated acreage and minority interests in non-core marginal 
                        producing properties for approximately $2,579,389 and certain drilling promotes. The prospects 
                        were ready for sale as the Company had completed the leasing activity in late 2001 and are ready 
                        for drilling. The prospects were as follows:

                        2.)     North Mexican Sweetheart prospect, Jackson County, Texas - -- Approximately 90% of the 
                                 Company's working interest in the acreage was sold in this deep Yegua prospect and the 
                                 Company has a 12.5% working interest after payout of the initial test well. This acreage is 
                                 100% unevaluated and has no proved reserves.

                        3.)     West Broussard prospect and surrounding acreage - -- The Company entered into an agreement 
                                  with an industry partner September 2002, whereby the partner has an option, but not an 
                                  obligation, to drill one well in both the East and West units of the prospect, with the East unit 
                                  well being the initial well. Upon execution of the agreement, the Company received $650,000 
                                  for consideration of certain rights and information granted to the partner. This payment 
                                  represented a partial reimbursement of the Company's cost in the prospect. Under the terms 
                                 of the agreement, the partner was required to make a second payment to the Company of 
                                 $650,000 if the partner elected to drill the well in the East unit. Subsequent to September 30, 
                                 2002, the partner made the election to drill and the Company received an additional $650,000 
                                 in November 2002. Should the partner elect to drill a well in the West unit, the Company will 
                                 receive $1,300,000. The Company will retain a 9.6235% working interest, which may be 
                                 proportionately reduced by up to 50% should other unit parties participate in the drilling, in 
                                 the East Unit. The Company will retain its present working interest ownership in the West 
                                 unit until such time, if any, that the partner exercises the option to drill. The Company 
                                 currently has an 84.6235 % working interest in the West unit.

                                 Previous to this agreement, approximately 15.3765% working interest in the East and West 
                                 units was sold.

                       5.)     Mid-Continent region, Oklahoma and Kansas - -- Various interests were sold in several 
                                transactions during the third quarter. The interests sold were in non-core marginal producing 
                                properties. The proved reserves associated with these properties represen