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[   ]      Preliminary Proxy Statement
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[X]      Definitive Proxy Statement
[   ]      Definitive Additional Materials
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1. Title of each class of securities to which transaction applies:

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3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the fling fee is calculated and state how it was determined):

4. Proposed maximum aggregate value of transaction: $434,000.

5. Total fee paid: $86.80

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[   ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1. Amount Previously Paid: $86.80

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To the stockholders of Gladstone Energy, Inc.:

An Annual Meeting of Stockholders (the "annual meeting") of Gladstone Energy, Inc. (the "Company") will be held at 3500 Oak Lawn Avenue, Suite 590, Dallas, Texas 75219 at 10:00 a.m., local time, on December 29, 2000, for the following purposes:

The board of directors has fixed the close of business on December 5, 2000, as the record date for the determination of stockholders entitled to vote at the annual meeting.

If you would like to attend the annual meeting and your shares are held by a broker, bank or other nominee, you must bring to the annual meeting a recent brokerage statement or letter from the nominee confirming your beneficial ownership of the shares of common stock. You must also bring a form of personal identification. In order to vote your shares at the annual meeting you must obtain from each nominee a proxy issued in your name.

      This notice of annual meeting, proxy statement, proxy and our 1999 Annual Report to Stockholders are being distributed on or about December 8, 2000.

By Order of the Board of Directors,

Sheila Irons
Secretary

Dallas, Texas
December 5, 2000

APPENDIX A - Sale and Purchase Agreement by and between Gladstone Energy, Inc. and EXCO Resources, Inc. dated as of October 25, 2000, effective as of production date September 1, 2000.

The following questions and answers are intended to address briefly some commonly asked questions regarding the Annual Meeting and the Purchase and Sale Agreement between Buyer and the Company dated October 25, 2000 (the "sale agreement") and the sale of substantially all of the assets of the Company (the "asset sale"). These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement and the appendices to this proxy statement.

A.           The annual meeting will take place on Friday, December 29, 2000, at 10:00 a.m., local time, at 3500 Oak Lawn, Suite 590, Dallas, Texas 75219.

A. The board of directors of the Company.

Q. What am I being asked to vote upon?

A. Your board of directors is asking you to vote to elect five members of the board of directors and to approve or disapprove a sale agreement, which provides that the Company will sell its remaining 8.575% working interest in the Right Hand Creek Field located in Beauregard and Allen Parishes of Louisiana (the "Right Hand Creek property") that constitute substantially all of its assets to Buyer.

A. The board of directors of the Company unanimously recommends that stockholders vote FOR each of the proposals submitted at this year's Annual Meeting.

A. Directors need the affirmative vote of holders of a plurality of the voting power present to be elected. At the annual meeting, the five nominees receiving the greatest number of votes will be deemed to have received a plurality of the voting power present. To approve the asset sale, stockholders holding a majority of the outstanding shares entitled to vote must affirmatively vote to approve the sale.

Q. If the sale is completed, what will the Company receive for its assets?

A. If the transaction with Buyer is consummated, the Company will receive $434,000.00 at closing.

Q. Why is your board of directors recommending the sale?

A. We believe the sale represents a unique opportunity for the Company to realize a fair price for the Right Hand Creek property. Our board of directors believes that the asset sale is fair to, and in the best interests of, the Company and its stockholders.

Q. Does the board of directors or officers of the Company have any special interest in the outcome of the vote?

A. As described in the proxy statement, the members of our board of directors and officers of the Company do not have any interests in the asset sale that are different from or in addition to your interests, which may create possible conflicts of interest.

Q. Will stockholders have appraisal rights?

A. Under Delaware law you will have no appraisal rights as a result of the asset sale.

A. No. The Company intends to deposit the proceeds in its corporate interest bearing account to be used in connection with our future business plan.

A. Voting can take place at the annual meeting only if stockholders owning a majority of the voting power of the common stock (a majority of the total number of votes entitled to be cast) are present in person or represented by effective proxies. On the record date, we had 848,782 shares of common stock outstanding. Both abstentions and broker non-votes are counted as present for purposes of establishing the quorum necessary for the meeting to proceed.

Q. What happens if I do not instruct a broker holding my shares as to how to vote them or I abstain from voting?

A. If your shares are held by a broker as nominee, your broker will not be able to vote your shares without instructions from you. You should instruct your broker on how to vote your shares, using the instructions which will be provided to you by your broker prior to the annual meeting. If your broker is unable to vote your shares or if you abstain, it will have the effect of voting against adoption of the sale agreement and the asset sale.

Q. Can I vote shares at the meeting that are held by a broker as nominee?

A. If you would like to attend the annual meeting and your shares are held by a broker, bank or other nominee, you must bring to the annual meeting a recent brokerage statement or letter from the nominee confirming your beneficial ownership of the shares of common stock. You must also bring a form of personal identification. In order to vote your shares at the annual meeting you must obtain from each nominee a proxy issued in your name.

Q. Who is entitled to vote at the annual meeting?

A. Holders of record of our common stock as of the close of business on December 5, 2000, are entitled to vote at the annual meeting. Each stockholder has one vote for each share of our common stock owned.

Q. Do I need to attend the annual meeting in person?

A. No. It is not necessary for you to attend the annual meeting in order to vote your shares, although you are welcome to attend.

Q. What do I need to do now?

A. After you have carefully read this proxy statement, please complete, sign and mail your proxy card in the enclosed return envelope as soon as possible. That way, your shares can be represented at the annual meeting. If your shares are held by a broker as nominee, you should receive a proxy card from your broker. Company stockholders must return their proxy cards before the annual meeting or attend the annual meeting in person in order for their votes to be counted at the annual meeting. Your proxy materials include detailed information on how to vote.

Q. Can I change my vote after I have mailed my proxy card?

A. Yes. You can change your vote at any time before your proxy is voted at the annual meeting. You may revoke your proxy by notifying our Secretary in writing or by submitting a new proxy, in each case, dated after the date of the proxy being revoked. In addition, your proxy may be revoked by attending the annual meeting and voting in person. However, simply attending the annual meeting will not revoke your proxy. If you have instructed a broker to vote your shares, you must follow the instructions received from your broker to change your vote.

Q. Where can I find more information about the Company?

A. We file periodic reports and other information with the Securities and Exchange Commission. You may read and copy this information at the Commission's public reference facilities. Please call the Commission at 1-800-SEC-0330 for information about these facilities. This information is also available at the Internet site maintained by the Commission at http://www.sec.gov.

Q. Who can help answer my questions?

A. If you have questions about the sale after reading this proxy statement, you should contact Sheila Irons, our Secretary, at (214) 528-9710.

The following is a brief summary of the material information relating to the election of directors and the sale contained elsewhere in this proxy statement. This proxy summary is qualified in its entirety by the more detailed information contained elsewhere in this proxy statement and the appendices to this proxy statement. The "Company," "we" "us" or "our" refers to Gladstone Energy, Inc. "Buyer" refers to EXCO Resources, Inc.. Capitalized terms not otherwise defined below have the meanings ascribed to them elsewhere in this proxy statement. Stockholders are urged to read this proxy statement and its appendices in their entirety.

The board of directors of the Company has nominated the five directors presented in this proxy statement for election and has approved the sale of substantially all of the Company's assets, and unanimously recommends that you vote "FOR " the election of the five nominees to the board of directors and "FOR" the approval of the asset sale.

This proxy statement, the accompanying proxy card and the Annual Report to stockholders covering the Company's fiscal year ended December 31, 1999, are first being mailed on December 8, 2000, to all stockholders of the Company. Although the Annual Report and this proxy statement are being mailed together, the Annual Report does not form any part of this proxy statement.

The board of directors of the Company fixed the close of business on December 5, 2000, as the record date (the "record date") for the annual meeting. Accordingly, only holders of record of the Company's common stock, at $.001 par value per share, at the close of business on the record date will be entitled to vote at the annual meeting, either by proxy or in person. As of the record date, 848,782 shares of the Company's common stock were issued and 848,782 shares were outstanding. Each share of the Company's common stock entitles the stockholder to one vote on each matter to be submitted to stockholders at the annual meeting. There were 512 stockholders of record as of the record date.

The Company will bear the cost of printing and mailing this proxy statement and the proxy, as well as all other costs incurred in connection with the solicitation of proxies from the stockholders of the Company on behalf of the board of directors of the Company. In addition to the solicitation of proxies by use of the mail, officers, directors and regular employees of the Company may solicit the return of proxies by personal interview, mail, telephone and facsimile. These persons will not be additionally compensated, but will be reimbursed for out-of-pocket expenses. The Company will also request brokerage houses and other custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of shares. The Company will reimburse such persons and the transfer agent for their reasonable out-of-pocket expenses in forwarding such materials.

To the extent necessary in order to ensure sufficient representation at the Company's annual meeting, the Company may request by telephone or telegram the return of proxy cards. The extent to which this will be necessary depends entirely upon how promptly proxy cards are returned. The Company will bear all of the cost of the solicitation. Stockholders are urged to send in their proxies without delay.

A quorum, consisting of a majority of the issued and outstanding shares of the Company's common stock, must be present in person or by proxy before any action may be taken at the annual meeting. To be elected directors must receive a plurality of the common stock present and voting in person or by proxy, provided a quorum exists. A plurality means receiving the largest number of votes, regardless of whether that is a majority. Under the applicable provisions of Delaware law, the affirmative vote of the holders of at least the majority of the outstanding shares of the Company's common stock entitled to vote is required to approve and adopt the sale agreement and the asset sale. All properly executed proxies received by the Company prior to the annual meeting and not revoked will be voted in accordance with the instructions marked thereon. Unless instructions to the contrary are marked thereon, proxies will be voted "FOR" the election as directors of those persons named below and "FOR" the sale of the Company's assets, and in the discretion of the proxy holders, upon such other business as may properly come before the annual meeting.

Abstentions and broker "non-votes" will be considered in determining the presence of a quorum at the annual meeting. Votes to withhold authority and broker non-votes will have no effect on the election of directors. The proposal to approve the sale is required to be approved by the holders of at least a majority of the outstanding shares of common stock; therefore, abstentions and broker "non-votes" will have the same effect as votes against this proposal. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. As of the record date, the directors and officers of the Company in the aggregate beneficially owned and are entitled to vote 632,920 shares, or 74.57% of the outstanding common stock. Each of the directors and officers has indicated their intention to vote FOR election of the five nominees to the board of directors and approval of the sale of substantially all of the assets.

The Company encourages the personal attendance of its shareholders at the annual meeting. An execution of the accompanying proxy will not affect a shareholder's right to attend the annual meeting and to vote in person.

Proxies may be revoked if you:

On January 19, 1999, Wayne Gifford, Charles B. Humphrey, Johnathan Hill, Fred Oliver, David Tyrrell (individually and as trustee of the Katherine Desporte Tyrrell Trust), Sheila Irons (individually and as trustee of the Humphrey Children's Trust) and Katherine Murphy acquired approximately 74% of the common stock of the Company pursuant to two separate purchases as described in the Company's Current Report on Form 8-K dated January 19, 1999 which is incorporated herein by reference, a copy of which will be provided upon request to the Secretary.

The Bylaws of the Company provide that the number of directors shall be determined by resolution of the Board of Directors or by the stockholders at an annual or special meeting called for such purpose. Five directors will be elected at the annual meeting to serve until the Company's next annual meeting of stockholders and until their respective successors are elected and qualified, or until the earliest of their death, resignation or removal.

The following table sets forth certain information for each nominee and for each continuing director of the Company. Each of the nominees for director named in the following table is currently serving as a director of the Company and was appointed to the board of directors in March 1999. There is no family relationship between any of the directors or between any director and any executive officer of the Company.

Johnathan M. Hill has served as President, Chief Executive Officer and a director of Gladstone since March 1999. Mr. Hill is the President of Hill & Hill Production Company, an oil and gas production company, the Secretary and Treasurer of Hill Energy Company, an oil and gas investment company, and the Vice President of HPC Operating Company, an oil and gas operating company, all based in Dallas, Texas, positions he has held since 1985.

Charles B. Humphrey has served as a director of the Company since March, 1999. Mr. Humphrey is the President, Treasurer, and sole Director of Humphrey Oil Corporation, an oil and gas exploration company based in Dallas, Texas, and the President and a Director of Lindenshire, Inc., a real estate development company based in Dallas, Texas, positions he has held since 1984. Since 1984 Mr. Humphrey also has been engaged in real estate development and investment individually and through numerous other partnerships, joint ventures and corporations.

H. Wayne Gifford has served as a director of Gladstone since March, 1999. Mr. Gifford is the President and a Director of Gifford Operating Company, an oil and gas operating company based in Dallas, Texas, positions he has held since 1987. Mr. Gifford has also been active as an independent geological consultant since 1980.

Katherine R. Murphy has served as Treasurer, Assistant Secretary and a director of Gladstone since March, 1999. Ms. Murphy is the Vice President and Assistant Secretary of Humphrey Oil Corporation, positions she has held since 1989.

Fred Oliver has served as a director of Gladstone since March, 1999. Mr. Oliver is the President of Petroleum Ventures of Texas, Inc., an oil and gas investment company based in Dallas, Texas, a position he has held since 1975. Mr. Oliver also has been engaged in geological and engineering consulting since 1953.

Unless otherwise indicated on any duly executed and dated proxy, the proxies will be voted "FOR" the election of the nominees listed in the table above for the term specified. The Company does not anticipate that any of the above-named nominees will refuse or be unable to accept or serve as a director of the Company for the class and the term specified. However, if any nominee is unable or unwilling to serve as a director, the proxies will vote for the election of such other person(s) as may be nominated by management, unless you indicate to vote otherwise. Assuming the receipt by each nominee of the affirmative vote of at least a plurality of the shares of common stock present or represented at the annual meeting, the five nominees receiving the greatest number of votes will be elected as directors.

The board of directors held 1 meeting during the fiscal year ended December 31, 1999. Each director attended at least 75% of the total number of meetings of the board of directors held during the fiscal year ended December 31, 1999. The board of directors did not have an audit, compensation, executive or other committee during the fiscal year ended December 31, 1999.

Each director receives a fee of $250 for each regular directors' meeting attended.

               In 1999 and through June 30, 2000, the Company reimbursed Humphrey Oil Corporation, of which Charles B. Humphrey, a director, is the majority owner, $18,056 and $8,904, respectively, for rent and administrative expenses incurred for Company business. On August 31, 2000, the Company sold 9.5918367% of the Company's interest in and to the Righthand Creek Field to the Humphrey Children's Trust for a purchase price of $64,265.31. Humphrey Children's Trust is a trust set up for the benefit of Charles B. Humphrey's children.

Our executive officers are Johnathan Hill, President, Sheila Irons, Vice President and Secretary, and Katherine R. Murphy, Treasurer and Assistant Secretary. Biographical information about Mr. Hill and Ms. Murphy is set forth on page 11. Ms. Irons, 59, has served as Secretary of the Company since March, 1999. Ms. Irons is the Vice President of Humphrey Oil Corporation, a position she has held since 1989.

Neither the chief executive officer or any other executive officer of the Company received any salary or bonus during the fiscal year ended December 31, 1999. During fiscal years ended December 31, 1998 and 1997, the Company provided Mr. Edward Brooks, its former president and chief executive officer, a vehicle for Company business and reimbursed Mr. Brooks for expenses incurred in the operation of the vehicle. The depreciation expense for 1998 for the vehicle was $2,664 and the amount of the reimbursed expenses for 1998 was $1,159.

No stock options or stock appreciation rights were granted to any executive officer of the Company during fiscal year 1999.

No stock options or stock appreciation rights were exercised by any executive officer of the Company in fiscal year 1999, and no stock options or stock appreciation rights were outstanding at the end of fiscal year 1999.

The Company did not have any long-term incentive plans in effect during fiscal year 1999.

The Company does not have any employment agreements with any of its officers.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers and beneficial owners of more than 10% of the Company's common stock to file with the Securities and Exchange Commission ("SEC") initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file. We have reviewed the reports from officers and directors. Based on this review, the Company believes that all filing requirements during 1999 were met.

Gladstone Energy, Inc., a Delaware corporation (the "Company"), has principally been engaged in the acquisition of, exploration for and production of oil and natural gas. The Company's acquisition, exploration, development and production activities have been conducted primarily in Louisiana, Texas and New Mexico. The Company does not refine or process the oil and natural gas that it produces. The Company sells the oil it produces under short-term contracts at market prices in the areas in which the producing properties are located, generally at F.O.B. field prices posted by the principal purchaser of oil in such areas. The Company contracts with other parties to act as contract operator of the oil and gas properties in which the Company has an interest. The contract operator supervises production, maintains production records, employs field personnel and performs the functions required in the production and administration of the property.

In the past, the Company normally expected to hold most of its producing properties until the economically recoverable reserves attributable to such properties were depleted. However, during the course of normal business, the Company disposed of marginal producing properties and undeveloped acreage if the Company believed that such sale was in its best interests.

EXCO Resources, Inc. ("Buyer") is an independent oil and natural gas company which has been engaged in the oil and natural gas business since 1955. Buyer currently conducts its primary operations in Texas and Louisiana. Buyer focuses on acquiring, developing and exploiting properties which already produce oil or natural gas or are capable of producing oil or natural gas.

Previously, on January 18, 1999, the Company sold certain of its oil and gas properties in Schleicher and Kent Counties, Texas to Buyer as described in the Company's Current Report on Form 8-K dated January 19, 1999 which is incorporated herein by reference. Additionally, on October 10, 2000 the Company sold to Buyer its San Juan County, New Mexico properties as described below under 'Pro Forma Financial Information."

Under the terms of the asset sale the Company will sell in one transaction its 8.575% working interest in the Right Hand Creek Field in the Beauregard and Allen Parishes in Louisiana (the "Right Hand Creek property") that constitutes substantially all of the assets of the Company. The Right Hand Creek property include 6 gross productive wells (.735 net productive wells) with current net production of approximately 55 barrels of oil and no cubic feet of natural gas per day, and 2 gross (.285 net) nonproducing wells that require completion and/or workovers. The Right Hand Creek property constitutes approximately 99% of the Company's oil and gas properties.

In November 1999, our board of directors unanimously elected to pursue a strategic change in corporate direction to maximize shareholder value. This strategic change included authorization of management to consider opportunities to sell the Company's existing oil and gas assets and direct the business to other industries or a potential merger, sale or recapitalization of the Company. Management of the Company began soliciting potential purchasers of the Company's oil and gas properties. On August 31, 2000, the Company disposed, in three simultaneous transactions, an aggregate of 30% of the Company's interest in the Right Hand Creek property.

On October 25, 2000, after an extended period of negotiations between the Company and Buyer, the Company executed the sale agreement with Buyer in which the Right Hand Creek property will be sold for $434,000, with an effective date of September 1, 2000. Management of the Company submitted to the board of directors the Buyer's proposal concerning the sale of the Right Hand Creek properties as set forth in the form of the sale agreement attached as Appendix A to this proxy statement. Copies of the sale agreement had been provided to each member of the board of directors prior to the meeting. After extended consideration, the board of directors concluded that the sale was fair to, and in the best interests of, the Company and its stockholders, approved the sale agreement and authorized its execution. The directors also agreed to recommend that the Company's stockholders approve the asset sale.

The Company's board of directors believes that the terms of the sale agreement, which are the product of arm's length negotiations between representatives of Buyer and the Company, are fair and in the best interests of the Company and its stockholders. In reaching its conclusion our board of directors considered a number of factors, including:

In addition, we believe that it is in our best interest to exit the acquisition of, exploration and production of oil and gas and seek a new industry or a potential merger, sale or recapitalization of the Company, which we believe offer better potential for increasing stockholder value. Although we have not identified any specific course, we believe that the proceeds from the asset sale will place us in a better position to:

We can offer you no assurance that we will be able to locate suitable new lines of business in which to invest the proceeds of the sale or that if we do, that any such business will prove successful. Nor can we assure you that we will identify a merger or sale opportunity that will provide greater shareholder value.

The above discussion of the factors considered by the board of directors is not intended to be exhaustive. In determining whether to approve and recommend the sale agreement, the board of directors did not assign any relative or specific weights to any of the foregoing factors, and individual directors may have weighed factors differently. After deliberating with respect to the asset sale and the sale agreement, considering, among other things, the reasons discussed above, the Company's board of directors unanimously approved and adopted the sale agreement and the sale as being in the best interests of the Company and its stockholders.

The net proceeds to the Company from the sale of the Right Hand Creek property, after deducting estimated transaction expenses of $2,500, are expected to be between $431,500 and $434,000. We will use a portion of the net proceeds from the sale to pay taxes that will be owed as a result of the sale. In addition, the Company will use the remaining net proceeds from the sale in connection with its future business plan, which may include acquisitions or a merger or sale of the Company. Consequently, the Company notes that the asset sale bears some increased risk because management currently has no definite plan for the use of the cash generated from the sale. Stockholders of the Company will be dependent upon the judgment of the Company's management to redeploy the net proceeds generated from the sale with limited information concerning the specific purposes to which the funds will ultimately be applied. No assurances can be given that the Company's strategy of redeploying the cash generated from the sale will prove to be successful.

Following the consummation of the sale, the stockholders of the Company will retain their equity interest in the Company. The sale will not result in any changes in the rights of the Company's stockholders. As indicated above, the Company will not distribute any of the proceeds derived from the sale to its stockholders.

If the asset sale is closed, we will receive at the closing a cash sale price of $434,000.

The sale agreement contains various customary representations and warranties made by the Company and Buyer, which include without limitation, representations with regard to the enforceability of the sale agreement, authority and organization of the Company and Buyer, and that no security interests encumber the Right Hand Creek property.

The completion of the sale depends upon satisfaction of a number of conditions, including, among other things:

No regulatory approval is required.

The Company and Buyer pay their own expenses incident to the negotiation and preparation of the sale agreement and consummation of the asset sale.

We will recognize taxable gain on the sale of the Right Hand Creek property, which will result in corporate income tax. Our taxable gain will be equal to the amount realized by us in the transaction, which will be the cash received, less the adjusted tax basis of the Right Hand Creek property. Consummation of the transaction will not result in any federal income tax consequences to stockholders. If the sale had occurred at December 31, 1999, the federal tax on the asset sale would have been $5,259. The sale will be accounted as an asset sale in accordance with the generally accepted accounting principles. We will recognize a gain from the asset sale based upon the excess net proceeds we receive over the net book value of the assets sold.

The Company is organized under the corporate laws of the State of Delaware. Delaware law does not provide for appraisal or other similar rights for dissenting stockholders in connection with the asset sale. Accordingly, the Company's stockholders will have no right to dissent and obtain payment for their shares.

No director or executive officer of the Company has any interest, direct or indirect, in the asset sale other than any interest arising from the ownership of securities of the Company.

If our stockholders approve the asset sale, we expect that the closing of the sale will take place on or about December 29, 2000, or at such other time as we and Buyer may agree upon.

The following unaudited Pro Forma Balance Sheet of the Company as of June 30, 2000, gives effect to (i) the prior sale of approximately 30% of the Company's interest in and to the Righthand Creek Field to a) G. R. Partners, Inc., 4625 Greenville Avenue, Suite 101, Dallas, TX 75206, who acquired 8.1632653% of the Company's interest in and to the Righthand Creek Field for a purchase price of $54,693.88; b) Bagwell No. 6 Family L. P., P. O. Box 50010, Amarillo, TX 79105, who acquired 12.2448980% of the Company's interest in and to the Righthand Creek Field for a purchase price of $82,040.82; and (c) the Humphrey Children's Trust, 3500 Oak Lawn Avenue, Suite 590, LB 49, Dallas, TX 75219, (the "1^st RHC Sale"); (ii) the prior sale of the Company's interest in the San Juan County New Mexico property to EXCO Resources, Inc. (the "San Juan Sale") and (iii) the sale of the Right Hand Creek property described in this proxy statement (the "2 ^nd RHC Sale") and the related pro forma adjustments as described in the notes to the Pro Forma Financial Statements. The balance sheet is presented as though the sales occurred on June 30, 2000.

The following unaudited Pro Forma Statements of Operations for the six months ended June 30, 2000 and year ended December 31, 1999, give effect to the elimination of results of operations of the Company for (i) the 1^st RHC Sale, (ii) the San Juan Sale, and (iii) the 2^nd RHC Sale and the related pro forma adjustments as described in the notes to the Pro Forma Financial Statements. The unaudited Pro Forma Statement of Operations is presented as though each sale occurred on January 1, 1999.

The unaudited Pro Forma Balance Sheet and Statements of Operations of the Company should be read in conjunction with the notes thereto and with the historical consolidated financial statements of the Company and the notes thereto as included in the reports filed by the Company with the Commission from time to time.

The Company has never declared or paid any cash dividends on the common stock and does not presently intend to pay cash dividends on the common stock in the foreseeable future. The Company intends to retain future earnings for use in connection with future business plan.

There were 512 shareholders of record at December 5, 2000, and approximately 64 beneficial stockholders.

The information in the Annual Report on Form 10-K for the fiscal year ended December 31, 1999, filed by the Company with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, is incorporated by reference in this proxy statement.

Stockholder Proposals

Any stockholder who wishes to submit a proposal for inclusion in the Company's proxy material and for presentation at the Company's 2001 Annual Meeting of Shareholders must forward such proposal to the Secretary of the Company at the address indicated on the first page of this proxy statement, so that the Secretary receives it no later than March 1, 2001.

In accordance with past practices, the Company does not recommend an independent public accountant for ratification by stockholders. The Company's independent public accountant for fiscal year 1999 was Harold L. Ratcliff and he is expected to continue to serve as our independent public accountant for fiscal year 2000. We do not expect Mr. Ratcliff to attend the annual meeting.

Our board of directors is not aware of any other matters that are to be presented for action at the annual meeting. However, if any other matters properly come before the annual meeting or any adjournment(s) thereof, it is intended that the enclosed proxy will be voted in accordance with the judgment of the persons voting the proxy.

December 5, 2000

The Company, without charge, will provide to each stockholder, on written request, a copy of the Company's Annual Report on Form 10-K, but without exhibits, required to be filed with the Securities and Exchange Commission for the fiscal year ended December 31, 1999. Written requests for such Form 10-K should be directed to Mrs. Sheila Irons, Secretary, Gladstone Energy, Inc., 3500 Oak Lawn Avenue, Suite 590, Dallas, Texas 75219.

Dallas, Texas
December 5, 2000

The undersigned hereby appoints Johnathan M. Hill and Katherine R. Murphy, and each or any of them, as proxies of the undersigned, with full power of substitution, and hereby authorizes each of them to represent and vote, as designated below, all of the shares of common stock of Gladstone Energy, Inc. (the "Company") held of record by the undersigned on December 5, 2000, at the annual meeting of stockholders of the Company to be held on December 29, 2000, and at any adjournments thereof.

        1.     Proposal to elect as directors of the Company the following persons, to hold office for the term indicated or until their respective successors have been duly elected and have qualified.

         Nominees:        Charles B. Humphrey, Johnathan M. Hill, Fred Oliver, H. Wayne Gifford, Katherine R. Murphy

(INSTRUCTION: to withhold authority to vote for any individual nominee,

write the nominee's name on the line below.)

_______________________________________________________________________

        2.     Proposal to approve the sale agreement and the sale of substantially all of the Company's assets.

Please sign this proxy as your name appears thereon. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized person. If a partnership, please sign in partnership name by authorized person.