<?xml version="1.0" encoding="us-ascii"?><InstanceReport xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"><Version>2.4.0.8</Version><ReportLongName>1010 - Disclosure - ORGANIZATION AND NATURE OF OPERATIONS</ReportLongName><DisplayLabelColumn>true</DisplayLabelColumn><ShowElementNames>false</ShowElementNames><RoundingOption /><HasEmbeddedReports>false</HasEmbeddedReports><Columns><Column FlagID="0"><Id>1</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><CurrencyCode /><FootnoteIndexer /><hasSegments>false</hasSegments><hasScenarios>false</hasScenarios><MCU><KeyName /><CurrencySymbol /><contextRef><ContextID>D2013Q2YTD</ContextID><EntitySchema>http://www.sec.gov/CIK</EntitySchema><EntityValue>0000813779</EntityValue><PeriodDisplayName /><PeriodType>duration</PeriodType><PeriodStartDate>2013-01-01T00:00:00</PeriodStartDate><PeriodEndDate>2013-06-30T00:00:00</PeriodEndDate><Segments /><Scenarios /></contextRef><UPS /><CurrencyCode /><OriginalCurrencyCode /></MCU><CurrencySymbol /><Labels><Label Key="CalendarSupplement" Id="0" Label="6 Months Ended" /><Label Key="Calendar" Id="1" Label="Jun. 30, 2013" /></Labels></Column></Columns><Rows><Row FlagID="0"><Id>1</Id><IsAbstractGroupTitle>true</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><Level>1</Level><ElementName>us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText /><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>xbrli:stringItemType</ElementDataType><SimpleDataType>string</SimpleDataType><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>ORGANIZATION AND NATURE OF OPERATIONS</Label></Row><Row FlagID="0"><Id>2</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><Level>2</Level><ElementName>us-gaap_NatureOfOperations</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><PreferredLabelRole>terseLabel</PreferredLabelRole><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="D2013Q2YTD" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;div style="font-size:10.0pt;font-family:Times New Roman;"&gt;
&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;b&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2"&gt;1.&lt;/font&gt;&lt;/b&gt;&lt;font style="FONT-SIZE: 10pt;" size="2"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160; &lt;b&gt;ORGANIZATION AND NATURE OF OPERATIONS&lt;/b&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&amp;#160;&lt;/p&gt;
&lt;p style="TEXT-INDENT: 0.25in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;Crimson Exploration Inc., together with its subsidiaries, (&lt;i&gt;&amp;#8220;Crimson&amp;#8221;, &amp;#8220;we&amp;#8221;, &amp;#8220;our&amp;#8221;, &amp;#8220;us&amp;#8221;&lt;/i&gt;) is an independent energy company engaged in the exploitation, exploration, development and acquisition of crude oil and natural gas properties.&amp;#160; We have historically focused our operations in the onshore U.S.&amp;#160;Gulf Coast, Texas and Colorado regions, which are generally characterized by high rates of return in known, prolific producing trends.&amp;#160; We have expanded our strategic focus to include longer reserve life resource plays in East Texas and South Texas that we believe provide significant long-term growth potential from multiple formations.&amp;#160; Our operating revenues are derived from crude oil, natural gas and natural gas liquids sales that are proceeds from the sale of crude oil, natural gas and natural gas liquids production and net realizations on associated commodity derivative instruments.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&amp;#160;&lt;/p&gt;
&lt;/div&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>The entire disclosure for the nature of an entity's business, the major products or services it sells or provides and its principal markets, including the locations of those markets. If the entity operates in more than one business, the disclosure also indicates the relative importance of its operations in each business and the basis for the determination (for example, assets, revenues, or earnings).</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef

 -Publisher FASB

 -Name Accounting Standards Codification

 -Topic 275

 -SubTopic 10

 -Section 50

 -Paragraph 2

 -URI http://asc.fasb.org/extlink&amp;oid=6927468&amp;loc=d3e6003-108592



Reference 2: http://www.xbrl.org/2003/role/presentationRef

 -Publisher AICPA

 -Name Statement of Position (SOP)

 -Number 94-6

 -Paragraph 10

 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009.  This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.



</ElementReferences><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>ORGANIZATION AND NATURE OF OPERATIONS</Label></Row></Rows><Footnotes /><IsEquityReport>false</IsEquityReport><ReportName>ORGANIZATION AND NATURE OF OPERATIONS</ReportName><MonetaryRoundingLevel>UnKnown</MonetaryRoundingLevel><SharesRoundingLevel>UnKnown</SharesRoundingLevel><PerShareRoundingLevel>UnKnown</PerShareRoundingLevel><ExchangeRateRoundingLevel>UnKnown</ExchangeRateRoundingLevel><HasCustomUnits>true</HasCustomUnits><IsEmbedReport>false</IsEmbedReport><IsMultiCurrency>false</IsMultiCurrency><ReportType>Sheet</ReportType><RoleURI>http://www.crimsonexploration.com/role/DisclosureOrganizationAndNatureOfOperations</RoleURI><NumberOfCols>1</NumberOfCols><NumberOfRows>2</NumberOfRows></InstanceReport>
