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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 JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 000-20849

RUTHERFORD-MORAN OIL CORPORATION
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 76-0499690
(State or Other Jurisdiction (I.R.S. Employer
Incorporation of Organization) Identification No.)

5 GREENWAY PLAZA, SUITE 220, HOUSTON, TEXAS 77046
(Address of Principal Executive Offices and Zip Code)

(713) 622-5555
(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 by check mark whether the registrants listed under the Table of
Additional Registrants (1) have 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 prior that such registrants were required to file
such reports), and (2) have been subject to such filing requirements for the
past 90 days. Yes [ ] No [X]

As of August 1, 1998, there were 25,614,000 shares of common stock, $.01
par value, of the registrant outstanding.

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2

TABLE OF ADDITIONAL REGISTRANTS

Each of the following subsidiaries of Rutherford-Moran Oil Corporation, and
each other subsidiary that is or becomes a guarantor of the 10 3/4% Senior
Subordinated Notes Due 2004 of the Company, is hereby deemed to be a registrant.

I.R.S.
STATE OR OTHER INDUSTRIAL EMPLOYER
JURISDICTION OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION NUMBER NUMBER
---- --------------- -------------- --------------

Thai Romo Limited...................... Kingdom of Thailand 1311 76-0435668
Thai Romo Holdings, Inc................ Delaware 1311 76-0511017
Rutherford-Moran Exploration Company... Delaware 1311 76-0321674

Rutherford-Moran Oil Corporation (the "Company") is a holding corporation
that owns all of its assets and conducts all of its business through its
subsidiary, Thai Romo Limited ("Thai Romo") and its affiliate, B8/32 Partners,
Ltd. ("B8/32 Partners"), each a company existing under the laws of Thailand. The
Company is the parent company of Rutherford-Moran Exploration Company ("RMEC")
and Thai Romo Holdings, Inc. ("TRH"), which collectively own the outstanding
shares of Thai Romo, except for certain nominal interests. TRH owns 46.34% of
B8/32 Partners. No separate financial information for RMEC, TRH, Thai Romo or
B8/32 Partners has been provided or incorporated by reference in this report
because: (1) the Company does not itself conduct any operations, but rather all
operations of the Company and its subsidiaries are conducted by Thai Romo and
B8/32 Partners; (ii) the Company has no material assets other than its ownership
in RMEC, TRH, Thai Romo and B8/32 Partners; and (iii) substantially all of the
assets and liabilities shown in the consolidated financial statements of the
Company are located in RMEC, TRH, Thai Romo and the Company's proportionate
interest in B8/32 Partners.
3

RUTHERFORD-MORAN OIL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997*
------------- --------------

Revenues:
Oil and gas revenue....................................... $ 9,014 $10,868
Interest income........................................... 132 66
-------- -------
Total revenues.................................... 9,146 10,934
Expenses:
Operating expense......................................... 6,540 6,316
Exploration costs......................................... (568) 53
Dry hole costs............................................ 1,042 --
Interest expense.......................................... 4,478 1,730
Depreciation, depletion and amortization.................. 6,725 4,306
General and administrative................................ 1,909 1,320
Foreign exchange loss..................................... 1,264 --
(Gain) loss on futures contract........................... (151) 135
-------- -------
Total expenses.................................... 21,239 13,860
-------- -------
Loss before income tax benefit.............................. (12,093) (2,926)
Income tax benefit.......................................... (3,351) (928)
-------- -------
Net loss.................................................... $ (8,742) $(1,998)
======== =======
Net loss per share.......................................... $ (0.34) $ (0.08)
======== =======
Weighted average number of common shares outstanding........ 25,614 25,613
======== =======

- ---------------

* Restated

See accompanying notes to unaudited condensed consolidated financial statements.

2
4

RUTHERFORD-MORAN OIL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997*
------------- --------------

Revenues:
Oil and gas revenue....................................... $ 16,935 $15,597
Interest income........................................... 185 94
-------- -------
Total revenues.................................... 17,120 15,691
Expenses:
Operating expense......................................... 12,182 9,642
Exploration costs......................................... (482) 159
Dry hole costs............................................ 2,469 --
Interest expense.......................................... 8,948 2,648
Depreciation, depletion and amortization.................. 12,371 6,071
General and administrative................................ 3,737 2,767
Foreign exchange gain..................................... (918) --
(Gain) loss on futures contract........................... (780) 135
-------- -------
Total expenses.................................... 37,527 21,422
-------- -------
Loss before income tax benefit.............................. (20,407) (5,731)
Income tax benefit.......................................... (6,593) (1,817)
-------- -------
Net loss.................................................... $(13,814) $(3,914)
======== =======
Net loss per share.......................................... $ (0.54) $ (0.15)
======== =======
Weighted average number of common shares outstanding........ 25,614 25,611
======== =======

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* Restated

See accompanying notes to unaudited condensed consolidated financial statements.

3
5

RUTHERFORD-MORAN OIL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)

ASSETS

JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(UNAUDITED)

Current assets:
Cash and cash equivalents................................. $ 465 $ 1,979
Accounts receivable....................................... 3,778 10,457
Value added tax receivable................................ 9,419 5,579
Joint interest receivable................................. 9,060 2,169
Other..................................................... 970 1,916
-------- --------
Total current assets.............................. 23,692 22,100
Property and equipment (successful efforts method).......... 273,467 238,651
Accumulated depreciation, depletion, and amortization....... (30,046) (18,002)
-------- --------
Net property and equipment........................ 243,421 220,649
Deferred charges:
Loan acquisition costs, net............................... 6,974 8,493
Escrowed funds, net....................................... 15,188 21,263
Deferred charges.......................................... 517 1,026
Deferred income tax....................................... 12,762 6,169
-------- --------
Total deferred assets............................. 35,441 36,951
-------- --------
Total assets...................................... $302,554 $279,700
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 6,481 $ 16,695
-------- --------
Total current liabilities......................... 6,481 16,695
Note payable to bank........................................ 116,300 69,000
10.75% senior subordinated notes............................ 120,000 120,000
Premium on written option................................... 69 625
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding........... -- --
Common stock, $0.01 par value, 40,000,000 shares
authorized, and 25,614,000 shares issued and
outstanding at June 30, 1998 and December 31, 1997..... 256 256
Additional paid-in capital................................ 99,571 99,571
Deferred compensation..................................... (765) (906)
Accumulated deficit....................................... (39,358) (25,541)
-------- --------
Total stockholders' equity........................ 59,704 73,380
-------- --------
Total liabilities and stockholders' equity........ $302,554 $279,700
======== ========

See accompanying notes to unaudited condensed consolidated financial statements.

4
6

RUTHERFORD-MORAN OIL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1998 _JUNE 30, 1997*
------------- ---------------

Cash flows from operating activities:
Net loss.................................................. $(13,814) $ (3,914)
Adjustments to reconcile net loss to cash provided by
(used in) operating activities:
Depreciation, depletion, and amortization.............. 12,371 6,071
Amortization of deferred financing cost................ 1,316 281
Deferred income tax benefit............................ (6,593) (1,817)
Foreign exchange gain.................................. (918) --
Dry hole cost.......................................... 2,469 --
Other.................................................. 92 135
Changes in working capital............................. (12,617) (13,194)
-------- --------
Cash used in operating activities................. (17,694) (12,438)
Cash flows from investing activities:
Capital expenditures...................................... (37,286) (36,459)
Acquisition of Maersk Oil (Thailand), Limited, net of cash
acquired............................................... -- (29,414)
-------- --------
Cash used in investing activities................. (37,286) (65,873)
Cash flows from financing activities:
Deferred financing costs.................................. (123) --
Repayments under bank notes............................... (6,050)
Borrowings under bank notes............................... 53,350 81,951
Escrowed funds............................................ 6,075 --
-------- --------
Cash provided by financing activities............. 53,252 81,951
-------- --------
Net increase (decrease) in cash and cash
equivalents..................................... (1,728) 3,640
Effect of foreign exchange rate on cash................... 214 --
Cash and cash equivalents, beginning of period............ 1,979 444
-------- --------
Cash and cash equivalents, end of period.................. $ 465 $ 4,084
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest.................. $ 10,675 $ 338
======== ========
Cash paid during the period for income tax................ $ -- $ --
======== ========
Supplemental disclosure of noncash investing and financing
activities:
Premium deferred and premium on written option............ $ (556) $ 388
======== ========

- ---------------

* Restated

See accompanying notes to unaudited condensed consolidated financial statements.

5
7

RUTHERFORD-MORAN OIL CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements
include all adjustments necessary to present fairly the consolidated financial
position of Rutherford-Moran Oil Corporation ("RMOC" or the "Company") at June
30, 1998 and December 31, 1997, and its results of operations for the three and
six months ended June 30, 1998 and 1997 and cash flows for the six months ended
June 30, 1998 and 1997. The financial statements herein should be read in
conjunction with the consolidated financial statements and notes to the
consolidated financial statements as of and for the year ended December 31,
1997, as included in the Company's annual report on Form 10-K.

(2) CHANGE IN ACCOUNTING PRINCIPLE

During the fourth quarter of 1997, the Company changed its method of
accounting for its investment in oil and gas properties from the full cost to
the successful efforts method. All prior period financial statements presented
herein have been restated to reflect the change.

Under the successful efforts method of accounting, costs of exploration,
including lease acquisition and intangible drilling costs associated with
exploration efforts which result in the discovery of proved reserves, and costs
associated with development drilling, whether or not successful, are
capitalized. Gain or loss is recognized when a property is sold or ceases to
produce or is abandoned. Estimated future expenditures for abandonment and
dismantlement costs, if material, are charged to operations utilizing the
units-of-production method based upon estimates of proved oil and gas reserves.

The cost of unproved leasehold is capitalized pending the results of
exploration efforts. Significant unproved leasehold costs are reviewed
periodically and a loss is recognized to the extent, if any, that the cost of
the property has been impaired. Exploratory dry holes, geological and
geophysical costs and delay rentals are expensed as incurred.

Capitalized drilling costs for oil and gas properties are amortized
utilizing the units of production method based on units of proved developed
reserves for each field. Lease acquisition costs related to producing oil and
gas properties are amortized using the units of production method based on units
of proved reserves for each field.

The effect of adopting the change in accounting principle during the three
and six months ended June 30, 1997 resulted in a decrease in net loss during the
period of approximately $623,000 (or $0.02 per share) and $798,000 (or $0.03 per
share), respectively.

The Company reviews proved oil and gas properties on a depletable unit
basis whenever events or circumstances indicate that the carrying value of those
assets may not be recoverable. An impairment loss is recognized whenever the
carrying value of an asset exceeds the fair value. Fair value, on a depletable
unit basis, is estimated to be the present value of expected future net revenues
computed by application of estimated future oil and gas prices, production, and
expenses, as determined by management, over the economic life of the reserves.
No such impairment was recognized during the three and six months ended June 30,
1998 or 1997.

(3) OIL AND GAS PROPERTY ACQUISITION

On December 19, 1996, the Company, through its wholly-owned subsidiary,
Thai Romo, exercised its preferential right to purchase 46.34% of the
outstanding shares of Maersk Oil (Thailand) Limited ("MOTL"), a wholly-owned
subsidiary of Maersk Olie og Gas AS of Copenhagen, Denmark ("Maersk"). MOTL was
a former Co-Concessionaire in Block B8/32 (the "Block"), with a 31.67% interest
in the Concession. The purchase was consummated on March 3, 1997, with TRH, Thai
Romo's nominee under the

6
8
RUTHERFORD-MORAN OIL CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Share Sales Agreement with Maersk, purchasing the shares for $28,617,000, which
included $1,554,000 in satisfaction of outstanding debt. After the closing, MOTL
was renamed B8/32 Partners, Limited.

In connection with the purchase, the Company recorded $7,875,000 for the
deferred tax liability related to the excess of the acquisition price over the
tax basis of the MOTL property.

The remaining 53.66% of MOTL's stock was purchased by Thaipo Limited
("Thaipo") and by Palang Sophon Limited ("Palang") of Bangkok, Thailand. Thaipo,
Palang and MOTL were co-concessionaires with Thai Romo prior to the sale of
MOTL. As a result, RMOC's interest in Block B8/32 increased to a uniform 46.34%.

(4) DEBT

Credit Facility

On September 20, 1996, the Company entered into a $150 million Revolving
Credit Facility with a group of commercial lenders. The Revolving Credit
Facility has a final maturity of September 30, 1999, and contained an initial
borrowing base limitation of $60 million. On April 29, 1997, the borrowing base
limitation was redetermined to $120 million. Subsequent to the issuance of the
Company's 10.75% Senior Subordinated Notes ("the Notes") in September 1997, the
borrowing base was reset to $60 million. The Revolving Credit Facility is
secured by the stock of certain subsidiaries and affiliates of the Company.

On September 8, 1997, the Company entered into a Credit Agreement with
Chase Manhattan Bank for an additional borrowing of $5 million. The Credit
Agreement contains covenants substantially identical to those in the Revolving
Credit Facility. The Credit Agreement was repaid on September 29, 1997 with
proceeds from the Notes.

In December 1997, the Company and two of its lenders amended the Revolving
Credit Facility. The borrowing base was reset at a fixed amount of $150 million
until September 30, 1998 (or earlier upon the completion of certain new
financings or other specified events). The amended Revolving Credit Facility
provides that the Company pays interest at rates based on a margin of 1.75% over
LIBOR if the aggregate outstanding principal amount is less than or equal to a
threshold amount, which was set at $60 million, (the "Threshold Amount") a
margin of 2.75% over LIBOR if the principal amount outstanding is greater than
the Threshold Amount on or prior to June 30, 1998, and a margin of 3.50% over
LIBOR if the principal amount outstanding is greater than the Threshold Amount
after June 30, 1998. Alternatively, the Company may pay a margin over the prime
rate of 0.25%, 1% and 1.75% respectively, for similar levels of borrowings. The
Company's current borrowing rate is 3.50% over LIBOR. The Company is also
assessed a commitment fee equal to 0.5% per annum on the average daily balance
of the unused borrowing base.

The amended Revolving Credit Facility also provides for semi-annual
borrowing base redeterminations subsequent to September 30, 1998 as well as a
limitation on additional indebtedness, and the issuance of warrants to purchase
200,000 shares of common stock under specified circumstances. The warrants were
issued on July 10, 1998 with a seven year term and an exercise price of $21 per
share.

The amended Revolving Credit Facility also requires the Company to (i) make
principal payments from the proceeds of certain asset sales (ii) restrict the
payment of dividends under certain circumstances, and (iii) maintain an Earnings
Before Interest, Taxes, Non-Cash Expenses and Exploration Expenses ("EBITDAX")
to interest coverage ratio as follows: 1.5:1 for each quarter ending on or
before September 30, 1998 and 2.5:1 thereafter, such rates to be calculated
excluding interest payable from the interest escrow for the Notes. At March 31
and June 30, 1998 the lender waived the EBITDAX ratio covenant.

At June 30, 1998, approximately $116 million was outstanding under the
Revolving Credit Facility at an interest rate of 9.1875%.

7
9
RUTHERFORD-MORAN OIL CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In August 1998, the Company obtained a commitment from its lender to amend
and increase the amended Revolving Credit Facility (the "Commitment") from $150
million to $200 million. The maturity of the facility will be extended until
December 31, 1999 and the Threshold Amount maturity will be extended from
September 30, 1998 until after October 31, 1999, while the covenants under this
facility are substantially similar to those in the December 1997 amended
Revolving Credit Facility. Additionally, the Commitment will not require
borrowing base redeterminations. The Commitment provides for interest at rates
based on a margin of 4.50% over LIBOR or 3.00% over the lender's prime rate,
with further adjustments subsequent to January 1, 1999. The Company is also
assessed a commitment fee equal to 0.5% per annum on the balance of the unused
commitment. Under the terms of the Commitment the Company will incur certain
fees up to approximately six million dollars in the form of cash and shares of
the Company's common stock. Additional warrants representing up to 9% of the
Company's outstanding common stock may vest in favor of the lender through
December 31, 1998. The actual amount of such fees and additional warrants depend
upon the future occurrence of certain specified circumstances and events. In
addition, the exercise price on the existing 200,000 warrants will be reset from
$21 per share to $10.50 per share. The commitment is subject to the execution
and delivery of definitive documentation and certain customary conditions.

Under this Commitment, the Company is required to repay by November 1, 1999
all amounts borrowed in excess of the threshold amount ($56,300,000 at June 30,
1998).

The Company must raise substantial additional funds in addition to the
Commitment to continue to fund activities subsequent to the conclusion of 1998
at current or higher levels and to repay the principal amount of the loan
facility on November 1 and December 31, 1999, through some combination of the
following: further increases in the total amount of the loan facility, arranging
additional debt, equity or other financing, and obtaining other additional
sources of funds. If production revenues do not increase or reserves decline,
or, if the Company's expected levels of capital expenditures increase
materially, the Company may have limited ability to obtain the capital necessary
to undertake or complete current and future drilling programs. There can be no
assurance that increased bank lines, debt, equity or other financing or other
sources of funds will be available or that, if available, will be on terms
acceptable to the Company or sufficient to meet these or other corporate
requirements; however, the Company has explored several alternatives which it
believes should enable it to meet its capital commitments at an acceptable cost.

Notes

On September 29, 1997, the Company issued $120 million of Senior
Subordinated Notes due 2004 (the "Notes") at an annual interest rate of 10.75%.
The net proceeds were used to repay $93 million of outstanding indebtedness
under the Revolving Credit Facility and Credit Agreement and to purchase
approximately $24 million of securities which were escrowed to pay interest on
the Notes. The Notes contain customary covenants, including limitations on the
incurrence of additional indebtedness, restricted payments and the establishment
of certain liens.

In February 1998, the Company completed the exchange of the Notes, which
had been privately placed, for publicly registered notes. The new Notes
otherwise contain identical terms and conditions to the privately placed notes.
Additional bank borrowings by the Company are permitted under the indenture
pursuant to which the Notes were issued so long as the Company's indebtedness
does not exceed certain levels and it maintains certain ratios.

The Company expects to expend monies over the next several years to support
additional exploration and development activities in Block B8/32. Should the
Company not be able to access additional sources of funds over that period, the
Company might not generate sufficient cash flow to pay the principal and
interest on its outstanding debt.

8
10
RUTHERFORD-MORAN OIL CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) ESCROWED FUNDS

In conjunction with the issuance of the Notes (See Note 4) the Company was
required to purchase $24,300,000 of U.S. Government securities and placed the
proceeds in escrow with a trustee. The amount of the securities purchased will
be sufficient to provide for payment in full of the first four semi-annual
installments of scheduled interest payments commencing April 1, 1998.

(6) CRUDE OIL HEDGING ACTIVITIES

During the first quarter of 1996, the Company entered into crude oil price
swaps with an affiliate of its lender in the amount of 1,000,000 barrels at
$15.92 per barrel for the period April through December of 1997, and in the
amount of 1,750,000 barrels at $15.92 per barrel for the year 1998. As the
Company's production in 1997 did not meet its swap obligation and the Company
expected that situation to continue in 1998, a portion of the Company's
obligation was considered speculative in 1997, marked to market and recognized
in consolidated net income.

During the first quarter of 1998, the Company entered into offsetting
positions for its entire 1998 swap position, thus resulting in no material
future exposure to the original swaps. The cost of establishing this position
was insignificant.

The Company also sold to an affiliate of its lender an option to purchase
1,250,000 barrels of aggregate oil volumes from January through December 1999 at
a price of $18.30 per barrel. The Company has accounted for the swap option
separately as it does not qualify as a hedge. At June 30, 1998, the Company
estimates the fair market value of this position to be $69,000 and has recorded
the amount as a liability on the consolidated balance sheet.

The Company has recorded a net gain of $151,000 in the Consolidated
Statement of Operations for the three months ended June 30, 1998 for the
increase in market value of the swap option as compared to a loss of $135,000
during the three months ended June 30, 1997.

(7) FOREIGN TRANSLATION GAIN/LOSS

Business transactions and foreign operations recorded in a foreign currency
are restated in U.S. Dollars, which is the Company's functional currency.
Revenues, operating and general and administrative expenses denominated in
currencies other than the functional currency are translated at an average
exchange rate for the period. Transaction gains and losses that arise from
exchange rate fluctuations on transactions denominated in a currency other than
the functional currency are recognized in consolidated income in the year of
occurrence. Net current assets and liabilities are translated monthly at current
rates and recognized in consolidated income in the year of occurrence. Currency
translations resulted in a loss of $1,264,000 and a gain of $918,000 for the
three and six month periods ended June 30, 1998; no such gain or loss resulted
in the three and six month periods ended June 30, 1997.

9
11

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

INTRODUCTION

The following discussion should be read in conjunction with the audited
consolidated financial statements as of and for the year ended December 31,
1997, included in the Company's annual report on Form 10-K.

The following discussion is intended to assist in understanding the
Company's financial position and results of operations for the three and six
month periods ended June 30, 1998. The unaudited condensed consolidated
financial statements and the notes thereto should be referred to in conjunction
with this discussion.

From time to time, the Company may elect to make certain statements that
provide the Company's stockholders and the investing public with
"forward-looking" information (as defined in the Private Securities Litigation
Reform Act of 1995). Words such as "anticipate", "believe", "estimate",
"project", and similar expressions are intended to identify such forward-looking
statements. Forward-looking statements may be made by management orally or in
writing, including, but not limited to, in press releases, as part of the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" sections of this report and as part of other sections of the
Company's filings with the Securities and Exchange Commission under the
Securities Act of 1933 and the Securities Exchange Act of 1934. Such
forward-looking statements may include, but not be limited to, statements
concerning estimates of current and future results of operations, earnings,
reserves, the timing and commencement of wells and the production therefrom,
production estimates based upon drill stem tests and other test data, future
capacity under its credit arrangements, and future capital expenditures and
liquidity requirements.

Such forward-looking statements are subject to certain risks, uncertainties
and assumptions, including without limitation, those identified below. Should
one or more of these risks or uncertainties materialize, or should any of the
underlying assumptions prove incorrect, actual results of current and future
operations may vary materially from those anticipated, estimated or projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements.

Among the factors that have a direct bearing on the Company's results of
operations and the oil and gas industry in which it operates are uncertainties
inherent in estimating reserves and future production and cash flows
particularly with respect to wells with limited production histories; access to
additional capital; changes in the price of oil and natural gas; the limited
exploration histories in Block B8/32; the status of the Company's existing and
future contractual relationships with the Government of Thailand, including the
Concession and the Gas Sales Agreement ("GSA"); risks associated with having the
Government of Thailand as the sole purchaser of the Company's gas production,
including the potential for political instability and economic downturns in the
Thailand economy and a reduction in demand for oil and natural gas in Thailand;
foreign currency fluctuation risks; the Company's substantial indebtedness, the
presence of competitors with greater financial resources and capacity;
difficulties and risks associated with offshore oil and gas exploration and
development operations and risks associated with offshore marine operations such
as capsizing, sinking, grounding, collision and damage from severe weather
conditions.

OVERVIEW

The Company began producing oil and gas from the Tantawan Field, its first
development in the Block, in February 1997. Prior to that time, the Company was
classified as a development stage company. As a result, the Company's historical
results of operations and period-to-period comparisons of such results, and
certain financial data may not be meaningful or indicative of future results. In
regard to the Company's financial condition, results of operations, future
growth and the carrying value of its proved reserves will depend substantially
on its ability to acquire or find and successfully develop additional oil and
gas reserves within the Block. The revenues expected to be generated by the
Company's future operations will be highly dependent upon production levels and
the prices of and demand for oil and natural gas. Natural gas produced from the
Company's Tantawan and Benchamas Fields is subject to the Gas Sales Agreement
("GSA") with the Petroleum Authority of Thailand ("PTT"), with prices subject to
semi-annual adjustment (or more frequent

10
12

adjustments under certain circumstances) based on movements in, among other
things, inflation, oil prices and the Thai Baht/U.S. Dollar exchange rate. The
price received by the Company for its oil production and the level of production
will depend on numerous factors beyond the Company's control, including the
condition of the world economy, political and regulatory conditions in Thailand
and other oil and gas producing countries, and the actions of the Organization
of Petroleum Exporting Countries. Decreases in the prices of oil or gas could
have an adverse effect on the carrying value of the Company's proved reserves
and the Company's revenues, profitability, cash flow and borrowing base
availability under the Revolving Credit Facility.

During the fourth quarter of 1997, the Company changed its method of
accounting for its investment in oil and gas properties from the full cost to
the successful efforts method. Under the successful efforts method of
accounting, costs of exploration and development, including lease acquisition
and intangible drilling costs associated with exploration efforts which result
in the discovery of proved reserves and costs associated with development
drilling, whether or not successful, are capitalized. The cost of unsuccessful
exploration wells and geological and geophysical costs are expensed as incurred.
Gain or loss is recognized when a property is sold or ceases to produce and is
abandoned. Capitalized drilling costs of producing properties are amortized
utilizing the units-of-production method based on units of proved developed
reserves for each field. Lease acquisition cost related to producing oil and gas
properties are amortized utilizing the units of production method based on units
of proved reserves for each field. The change to this method resulted in no
impairment to long-lived assets in accordance with Statement of Financial
Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for
Long-Lived Assets to be Disposed of".

All prior period financial statements presented herein have been restated
to reflect the aforementioned change in accounting principle. See Note 2 to
unaudited condensed consolidated financial statements.

Since the latter half of 1997, many countries in Southeast Asia, including
Thailand, have experienced significant reductions in economic growth. The
Company does not believe that this situation, even if prolonged, will
significantly impact its business position. Natural gas produced in Thailand by
the Company and other producers is primarily used for electrical power
generation. The Company believes that its natural gas will displace either
imported crude oil, lignite or imported natural gas as power generation
feedstock, because domestic natural gas is cheaper to purchase, environmentally
preferable and enables the government to increase its U.S. Dollar reserves
during a period of economic uncertainty.

As the Company exports its crude oil to the highest bidder for U.S.
Dollars, it does not believe that the recent events in Thailand and other
countries in Southeast Asia will impact its ability to market crude oil.

RESULTS OF OPERATIONS

Three Months Ended June 30, 1998, Compared with Three Months Ended June 30,
1997.

The Company's net loss of $8,742,000 or $0.34 per basic and diluted share
increased from a net loss of $1,998,000 or $0.08 per basic and diluted share for
the three months ended June 30, 1997. The increase in net loss is primarily due
to higher interest expense caused by increased debt levels, depletion, dry hole
costs, foreign exchange losses and decreased revenues associated with production
from the Tantawan Field, net of related operating costs.

Sales volumes for the three months ended June 30, 1998, before royalties,
were 301,217 barrels of oil and 3,924,260 MCF of gas, compared to 242,326
barrels of oil and 3,756,798 MCF of gas, respectively, during the three months
ended June 30, 1997. Oil production volumes increased as four platforms were on
production during the three months ended June 30, 1998 as compared to two
platforms on production during the three months ended June 30, 1997, while gas
volumes were flat as the increase in production platforms offset a voluntary
reduction in the Daily Contract Quantity ("DCQ") by the PTT. This reduction was
requested by the Concessionaires for the period April - September 1998 as a
prudent reservoir management measure.

Operating expenses incurred for the three months ended June 30, 1998, were
$6,540,000 as compared to $6,316,000 during the three months ended June 30,
1997. Operating expenses increased due to additional Tantawan Field platforms
being on production in 1998.

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13

Dry hole cost was $1,042,000 for the three months ended June 30, 1998 and
represents costs associated with the Tantawan 19 that was an unsuccessful
exploratory well. There were no such unsuccessful exploratory wells for the
three months ended June 30, 1997. Exploration expense credits for the three
months ended June 30, 1997 are primarily attributable to the overaccrual of
Jarmjuree seismic cost recorded in the fourth quarter of 1997 that were reversed
in the second quarter of 1998 upon final accounting of such cost.

Interest expense of $4,478,000 for the three months ended June 30, 1998
increased compared to $1,730,000 for the three months ended June 30, 1997. This
is due to an increase in borrowings, higher annual interest rates associated
with the placement in September 1997 of $120 million 10.75% Senior Subordinated
Notes and higher amortization of deferred financing costs partially offset by
increases in capitalized interest.

Depreciation, depletion and amortization expense recorded for the three
months ended June 30, 1998, was $6,725,000 as compared to $4,306,000 for the
three months ended June 30, 1997. This increase is primarily due to increases in
the depletable base as well as decreases in proved reserves at Tantawan Field.

General and administrative expenses of $1,909,000 for the three months
ended June 30, 1998 increased compared to $1,320,000 for the three months ended
June 30, 1997. These increases were primarily attributable to activities related
to the review of strategic alternatives announced by the Company in 1998.

The Company had a foreign exchange loss of $1,264,000 for the three months
ended June 30, 1998, versus no foreign exchange loss for the three months ended
June 30, 1997. As the value of the Baht was linked to the dollar until July
1997, no foreign exchange exposure resulted during the three months ended June
30, 1997, while a decrease in the value of the Baht relative to the dollar
during the three months ended June 30, 1998 resulted in foreign exchange loss.

Six Months Ended June 30, 1998, Compared with Six Months Ended June 30, 1997

The Company's net loss of $13,814,000 or $0.54 per basic and diluted share
increased from a net loss of $3,914,000 or $0.15 per basic and diluted share for
the six months ended June 30, 1997. The increase in net loss is primarily
attributable to higher interest expense associated with increased debt levels,
depletion, dry hole costs, and operating expense partially offset by increased
oil and gas revenues and gains on foreign exchange and futures contracts.

Sales volumes for the six months ended June 30, 1998, before royalties,
were 416,972 barrels of oil and 8,123,278 mcf of gas, compared to 358,879
barrels of oil and 4,950,343 mcf of gas, for the six months ended June 30, 1997.

Operating expense incurred for the six months ended June 30, 1998, was
$12,182,000 as compared to $9,642,000 for the six months ended June 30, 1997.
This increase is primarily attributable to an increase in the number of
production platforms, as well as only five months of operating expense recorded
for the six months ended June 30, 1997 due to Tantawan production beginning in
February, 1997.

Dry hole cost was $2,469,000 for the six months ended June 30, 1998 and
represents costs associated with the Tantawan 18 and 19 that were unsuccessful
exploratory wells. No dry hole costs were recorded for the six months ended June
30, 1997. Exploration expense credits for the six months ended June 30, 1998 are
primarily attributable to the overaccrual of Jarmjuree seismic costs recorded in
the fourth quarter of 1998 that were reversed in the second quarter of 1998 upon
final accounting of such cost.

Interest expense of $8,948,000 for the six months ended June 30, 1998
increased compared to $2,648,000 for the six months ended June 30, 1997. Such
increase is primarily attributable to an increase in borrowings and higher
interest rates and amortization of deferred financing cost associated with the
placement of the Notes, partially offset by increases in capitalized interest.

Depreciation, depletion and amortization expense recorded for the six
months ended June 30, 1998 was $12,371,000 as compared to $6,071,000 for the six
months ended June 30, 1997. Such increase reflects increases in the depletable
base as well as decreases in Tantawan proved reserves.

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14

General and administrative expenses of $3,737,000 for the six months ended
June 30, 1998 increased compared to $2,767,000 for the six months ended June 30,
1997. These increases were primarily attributable to activities related to the
review of strategic alternatives announced by the Company in 1998.

The foreign exchange gain of $918,000 for the six months ended June 30,
1998 is attributable to a decrease in the value of the Baht in relation to the
U.S. Dollar. No foreign exchange gain was recorded for the six months ended June
30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

During the period from the inception of the Company on September 21, 1990
through June 30, 1998, the Company invested approximately $285 million primarily
for development and exploration activities conducted in the Block and the
acquisition of interests in or rights to the Concession. During this period, the
Company had negative operating cash flow. Since its inception, the Company has
financed its growth with a combination of equity infusions by its principal
stockholders (primarily Messrs. Rutherford and Moran), bank and stockholders
loans, the sale of common stock and, most recently net proceeds of $117,000,000
from the issuance of 10.75% Senior Subordinated Notes ("Notes").

In June 1996, RMOC completed an initial public offering which resulted in
RMOC raising net proceeds of approximately $97 million. The proceeds were used
to repay outstanding debt to the Company's principal stockholders, repay bank
debt, and fund cash expenditures.

On September 20, 1996, the Company entered into a $150 million Revolving
Credit Facility ("Revolving Credit Facility") with a group of commercial
lenders. The Revolving Credit Facility matures on September 30, 1999 and
contains a borrowing base limitation. The Revolving Credit Facility is secured
by the stock of certain subsidiaries and affiliates of the Company.

On September 29, 1997, the Company issued $120 million of Notes. The net
proceeds from this offering were used to repay $93 million of outstanding debt
under the Revolving Credit Facility and the Credit Agreement and to purchase a
portfolio of U.S. Government obligations of approximately $24 million, which is
sufficient to provide for payment in full when due, of the first four scheduled
interest payments on the Notes. The indenture pursuant to which the Notes were
issued (the "Indenture") imposes customary financial and other restrictions on
the Company and its subsidiaries.

In December 1997, the Company and two of its lenders amended the Revolving
Credit Facility. The borrowing base was reset at a fixed amount of $150 million
until September 30, 1998 (or earlier upon the completion of certain new
financings or other specified events). The amended Revolving Credit Facility
provides that the Company pays interest at rates based on a margin of 1.75% over
LIBOR if the aggregate outstanding principal amount is less than or equal to a
threshold amount, which was set at $60 million, (the "Threshold Amount"), a
margin of 2.75% over LIBOR if the principal amount outstanding is greater than
the Threshold Amount on or prior to June 30, 1998, and a margin of 3.50% over
LIBOR if the principal amount outstanding is greater than the Threshold Amount
after June 30, 1998. Alternatively, the Company may pay a margin over the prime
rate of 0.25%, 1% and 1.75% respectively, for similar levels of borrowings. The
Company's current borrowing rate is 3.50% over LIBOR. The Company is also
assessed a commitment fee equal to 0.5% per annum on the average daily balance
of the unused borrowing base.

At June 30, 1998, approximately $116 million was outstanding under the
Revolving Credit Facility at an interest rate of 9.1875%.

In August 1998, the Company obtained a commitment from its lender to amend
and increase the amended Revolving Credit Facility (the "Commitment") from $150
million to $200 million. The maturity of the facility will be extended until
December 31, 1999 and the Threshold Amount maturity will be extended from
September 30, 1998 until October 31, 1999, while the covenants under this
facility are substantially similar to those in the December 1997 amended
Revolving Credit Facility. Additionally, the Commitment will not require
borrowing base redeterminations. The Commitment provides for interest at rates
based on a margin of 4.50% over LIBOR or 3.00% over the lender's prime rate,
with further adjustments subsequent to January 1, 1999. The Company is also
assessed a commitment fee equal to 0.5% per annum on the balance of the unused
commitment. Under the terms for the Commitment the Company will incur fees up to
six million dollars in the form of cash and shares of the Company's common
stock. Additional warrants representing up to 9% of the Company's outstanding
common stock may vest in favor of the lender through December 31, 1998. The
amount of such fees and additional warrants depend upon the future occurrence of
certain specified circumstances and events. In addition, the exercise price on
the existing 200,000 warrants will be reset from $21 per share to $10.50 per
share. The Commitment is subject to the execution and delivery of definitive
documentation and certain customary condition.

Under this Commitment, the Company is required to repay by November 1,
1999, all amounts borrowed in excess of the Threshold Amount ($56,300,000 at
June 30, 1998).

At the Concessionaires' request, PTT reduced its maximum gas nomination
from 115% of DCQ to 100% of DCQ thereby effectively reducing production from
approximately 100 MMCF/D to approximately 85 MMCF/D, between May and September
1998. This reduction reflects a prudent reservoir management measure to insure
that the Concessionaires have adequate production capacity to meet gas
nominations during that period. By October 1, 1998, the Company expects to
produce at a level of 115% of DCQ, which the Company believes PTT will nominate
at that time.

The Company makes, and will continue to make, substantial capital
expenditures for the acquisition, exploration, development and production of oil
and natural gas reserves. Since its inception, the Company has financed these
expenditures primarily through a combination of equity infusions by its
principal stockholders, bank and stockholder loans, the issuance of the Notes
and the sale of common stock. The Company made approximately $37,286,000 in
capital expenditures during the six months ended June 30, 1998, and currently
expects capital expenditures for 1998 to be in the range of $100-110 million, of
which approximately 70% to 80% is budgeted for development of the Benchamas
Field. The Company also expects to expend monies over the next several years to
support additional exploration and development activities in the Block. Should
the Company not be able to access additional sources of funds over that period,
the Company might not generate sufficient cash flow to pay the principal and
interest on its outstanding debt. The Company expects to fund these activities
in the near-term with additional bank borrowings under the loan facility.

On January 22, 1998, the Company announced that it intends to explore
various strategic alternatives regarding the ongoing development of its interest
in the Block. Such alternatives include the possible merger

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or sale of the Company which process is ongoing. There can be no assurance that
this process will result in any transaction.

CHANGING OIL PRICES

The Company is dependent on crude oil prices, which have historically been
volatile. The Company may use crude oil price swaps and other similar
arrangements to hedge against potential adverse effects of fluctuations in
future prices for the Company's future oil production. While the swaps are
intended to reduce the Company's exposure to declines in the market price of
crude oil, they may limit the Company's gain from increases in the market price.

NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," (SFAS 133). The statement standardizes the accounting
for derivative instruments, including certain derivative instruments embedded in
other contracts, by requiring that an entity recognize these items as assets or
liabilities in the statement of financial positions and measure them at fair
value. The Standard is effective as of the beginning of the first quarter of the
fiscal year beginning after June 15, 1999. The Company is evaluating the effects
SFAS 133 may have on reported results.

YEAR 2000

All of the Company's computer systems located in its Houston headquarters
are Year 2000 compliant. The Operator of the Company's computer systems in
Thailand is currently in the process of reviewing its Year 2000 compliance. To
the extent that these systems are not Year 2000 compliant, the Operator believes
that it will not incur any material costs to implement any necessary changes to
these systems.

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17

PART II -- OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The Company's amended Revolving Credit Facility provides for the issuance
to its commercial lenders of warrants to purchase common stock of the Company if
the Company fails to attain certain levels of principal reduction under such
facility. On July 10, 1998, warrants to purchase 200,000 shares of Common Stock
were issued to the lenders pursuant to the warrant agreement. The warrants have
a seven year term and an exercise price of $21 per share. Under the terms of the
Commitment the exercise price will be reset at $10.50 per share. The Company
received no proceeds from the issuance of the warrants.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10 -- Rutherford-Moran Incentive Bonus Plan adopted by the Board of
Directors of the Company on May 7, 1998.

27 -- Financial Data Schedule

(b) Reports on Form 8-K

During the three month period ended June 30, 1998, the Company did not
file any Form 8-K reports.

II-1
18

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 hereunto duly authorized.

RUTHERFORD-MORAN OIL
CORPORATION

By: /s/ DAVID F. CHAVENSON

----------------------------------
David F. Chavenson
Vice President, Finance and Chief
Financial Officer and Treasurer

Dated:
19

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 hereunto duly authorized.

RUTHERFORD-MORAN EXPLORATION COMPANY

By: /s/ DAVID F. CHAVENSON
----------------------------------
David F. Chavenson
Treasurer and Director (Principal
Financial and Accounting
Officer)

Dated:
20

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 hereunto duly authorized.

THAI ROMO HOLDINGS, INC.

By: /s/ DAVID F. CHAVENSON
----------------------------------
David F. Chavenson
Treasurer and Director (Principal
Financial and Accounting
Officer)

Dated:
21

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 hereunto duly authorized.

THAI ROMO LIMITED

By: /s/ DAVID F. CHAVENSON
----------------------------------
David F. Chavenson
Director (Principal Financial and
Accounting Officer)

Dated:
22

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10 -- Rutherford-Moran Incentive Bonus Plan
27 -- Financial Data Schedule
99 -- The Commitment