<PAGE>

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

                                    FORM 10-Q

(Mark One)

   [X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2001

                                       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 001-14575
                       ---------

                               PRIZE ENERGY CORP.
               --------------------------------------------------
               (Exact name of registrant as specified in charter)

          Delaware                                               75-2766114
-------------------------------                              -------------------
(State or other jurisdiction of                              (I. R. S. Employer
incorporation or organization)                               Identification No.)

3500 William D. Tate, Suite 200   Grapevine, TX                     76051
--------------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

                                 (817) 424-0400
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes  X  No
    ---    ---

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

          Class                                Outstanding at November 13, 2001,
----------------------------                   ---------------------------------
Common Stock, $.01 Par Value                              12,536,006

<PAGE>

                               PRIZE ENERGY CORP.

                       Index to Form 10-Q Quarterly Report
                    to the Securities and Exchange Commission

<Table>
<Caption>
                                                                                              Page No.
                                                                                              --------

<S>                                                                                           <C>
Part I.  Financial Information

   Item 1.  Consolidated Financial Statements............................................         3

      Consolidated Balance Sheets at September 30, 2001 (Unaudited)
      and December 31, 2000..............................................................         4

      Consolidated Statements of Operations (Unaudited),
      for the Three and Nine Months Ended September 30, 2001 and 2000....................         5

      Consolidated Statements of Stockholders' Equity, for the
      Periods Ended September 30, 2001 (Unaudited)
      and December 31, 2000..............................................................         6

      Consolidated Statements of Cash Flows (Unaudited), for
      the Three and Nine Months Ended September 30, 2001 and 2000........................         7

      Notes to Unaudited Consolidated Financial Statements...............................         8

   Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations..........................................        14

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk...................        20

Part II.  Other Information..............................................................        21
</Table>

                                   DEFINITIONS
                            As used in this document:
                         "Mcf" means thousand cubic feet
                         "MMcf" means million cubic feet
                         "Bcf" means billion cubic feet
                               "Bbl" means barrel
                         "MBbls" means thousand barrels
                         "MMBbls" means million barrels
                      "Boe" means equivalent barrels of oil
                 "Mboe" means thousand equivalent barrels of oil
                 "MMboe" means million equivalent barrels of oil
                     "Oil" includes crude oil and condensate
                        "NGLs" means natural gas liquids

                                       2
<PAGE>

                               PRIZE ENERGY CORP.

                          PART I. FINANCIAL INFORMATION

                   ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS,
                           SEPTEMBER 30, 2001 AND 2000




                                       3
<PAGE>

                               PRIZE ENERGY CORP.
                           CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND SHARES)

<Table>
<Caption>
                                                                                        SEPTEMBER 30,      DECEMBER 31,
                                                                                             2001             2000
                                                                                        -------------      ------------
ASSETS                                                                                   (UNAUDITED)
<S>                                                                                      <C>               <C>
      Current assets:
         Cash  and cash equivalents                                                      $      5,150      $        820
         Accounts receivable - oil & gas                                                       23,638            29,710
         Accounts receivable - trade, net of allowance for doubtful accounts of $251            4,204             4,942
         Prepaid income taxes                                                                   7,352             5,153
         Fair value of derivatives - short term                                                19,607                --
         Other                                                                                  2,829             3,078
                                                                                         ------------      ------------
      Total  current assets                                                                    62,780            43,703

      Properties and equipment at cost:
         Oil and gas properties                                                               457,788           349,971
         Other                                                                                  3,793             2,978
                                                                                         ------------      ------------
                                                                                              461,581           352,949
         Less accumulated depreciation and depletion                                          (61,380)          (34,186)
                                                                                         ------------      ------------
      Total properties and equipment at cost, net                                             400,201           318,763
      Fair value of  derivatives - long-term                                                    9,002                --
      Deposit on acquisition                                                                       --             6,500
      Other assets, net                                                                         5,708             2,698
                                                                                         ------------      ------------
 TOTAL ASSETS                                                                            $    477,691      $    371,664
                                                                                         ============      ============

 LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
         Accounts payable                                                                $     11,984      $     15,650
         Accrued production taxes                                                               4,717             2,240
         Accrued interest                                                                       1,032             2,583
         Fair value of derivatives                                                                462               390
         Other accrued liabilities                                                              4,394             5,895
                                                                                         ------------      ------------
      Total current liabilities                                                                22,589            26,758

      Long-term debt                                                                          250,819           214,319
      Deferred income taxes                                                                    41,313            19,019

      Stockholders' equity:
         Common stock, $.01 par value:
              authorized shares - 50,000,000
              issued and outstanding - 14,614,587                                                 146               146
         Paid-in capital                                                                       96,287            96,413
         Retained earnings                                                                     74,895            40,285
         Accumulated other comprehensive income                                                23,802                --
         Treasury stock - 2,078,581 and 1,747,182 shares, respectively                        (32,160)          (25,276)
                                                                                         ------------      ------------
      Total stockholders' equity                                                              162,970           111,568
                                                                                         ------------      ------------
TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY                                              $    477,691      $    371,664
                                                                                         ============      ============
</Table>

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

                                       4
<PAGE>

                               PRIZE ENERGY CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND SHARES)

<Table>
<Caption>
                                                         THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                            SEPTEMBER 30,                       SEPTEMBER 30,
                                                    ------------------------------      ------------------------------
                                                        2001              2000              2001              2000
                                                    ------------      ------------      ------------      ------------

<S>                                                 <C>               <C>               <C>               <C>
 OIL AND GAS SALES                                  $     43,006      $     40,962      $    145,712      $    107,280

 COSTS AND EXPENSES
      Lease operations                                    11,622             7,836            32,309            23,340
      Production taxes                                     3,554             4,412            14,021            11,064
      Depletion, depreciation, and amortization           10,080             6,565            27,194            18,825
      General and administrative                           3,380             2,610             9,232             6,578
                                                    ------------      ------------      ------------      ------------
          Total costs and expenses                        28,636            21,423            82,756            59,807
                                                    ------------      ------------      ------------      ------------
 OPERATING INCOME                                         14,370            19,539            62,956            47,473

 OTHER:
      Interest expense                                     3,901             4,846            13,474            12,806
      Change in derivative fair value                      1,645                --            (4,735)               --
      Other income                                           (88)             (250)             (720)             (501)
                                                    ------------      ------------      ------------      ------------
          Total other expense                              5,458             4,596             8,019            12,305
                                                    ------------      ------------      ------------      ------------
 INCOME BEFORE INCOME TAXES                                8,912            14,943            54,937            35,168
 PROVISION FOR INCOME TAXES                               (3,298)           (5,529)          (20,327)          (13,012)
                                                    ------------      ------------      ------------      ------------
 NET INCOME                                                5,614             9,414            34,610            22,156
 PREFERRED DIVIDEND                                           --                --                --              (459)
                                                    ------------      ------------      ------------      ------------
 INCOME AVAILABLE TO
      COMMON STOCKHOLDERS                           $      5,614      $      9,414      $     34,610      $     21,697
                                                    ============      ============      ============      ============

 INCOME PER COMMON SHARE:
      Basic                                         $       0.45      $       0.71      $       2.71      $       1.80
                                                    ============      ============      ============      ============
      Diluted                                       $       0.42      $       0.66      $       2.54      $       1.56
                                                    ============      ============      ============      ============

 WEIGHTED-AVERAGE
      COMMON SHARES OUTSTANDING:
      Basic                                           12,587,910        13,314,060        12,791,211        12,074,592
      Diluted                                         13,361,942        14,199,704        13,622,983        14,236,086
</Table>

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

                                       5
<PAGE>

                               PRIZE ENERGY CORP.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          (IN THOUSANDS, EXCEPT SHARES)

<Table>
<Caption>
                                          CONVERTIBLE VOTING
                                            PREFERRED STOCK                    COMMON STOCK             ADDITIONAL
                                      ---------------------------       --------------------------       PAID-IN         RETAINED
                                        SHARES          AMOUNT            SHARES         AMOUNT          CAPITAL         EARNINGS
                                      ----------      -----------       ----------     -----------     -----------      -----------

<S>                                   <C>             <C>               <C>            <C>             <C>              <C>
Balance as of January 1, 2000          3,958,879      $    30,907        8,291,301     $        83     $    49,260      $     8,202

Issuance of stock in acquisition              --               --        2,339,089              23          15,788               --
Preferred stock dividend                  25,318              198               --              --              --             (459)
Preferred conversion                  (3,984,197)         (31,105)       3,984,197              40          31,065               --
Purchase of treasury shares                   --               --               --              --              --               --
Warrant exercises                             --               --               --              --             330               --
Option exercises                              --               --               --              --             (30)              --
Net income                                    --               --               --              --              --           32,542
                                      ----------      -----------       ----------     -----------     -----------      -----------
Balance as of December 31, 2000               --               --       14,614,587             146          96,413           40,285

(UNAUDITED)
Option exercises                              --               --               --              --            (126)              --
Issuance of shares to directors               --               --               --              --              --               --
Purchase of treasury shares                   --               --               --              --              --               --
Comprehensive income:
    Net income                                --               --               --              --              --           34,610
    Cumulative effect of change in
        accounting                            --               --               --              --              --               --
    Hedge fair value adjustment               --               --               --              --              --               --
    Total comprehensive income
                                      ----------      -----------       ----------     -----------     -----------      -----------
Balance as of September 30, 2001              --      $        --       14,614,587     $       146     $    96,287      $    74,895
                                      ==========      ===========       ==========     ===========     ===========      ===========

<Caption>

                                         OTHER                  TREASURY STOCK
                                      COMPREHENSIVE      ---------------------------
                                         INCOME            SHARES          AMOUNT            TOTAL
                                      -------------      ----------      -----------      -----------

<S>                                    <C>               <C>             <C>              <C>
Balance as of January 1, 2000          $        --               --      $        --      $    88,452

Issuance of stock in acquisition                --             (900)             (22)          15,789
Preferred stock dividend                        --               --               --             (261)
Preferred conversion                            --               --               --               --
Purchase of treasury shares                     --       (1,810,182)         (26,138)         (26,138)
Warrant exercises                               --           45,000              615              945
Option exercises                                --           18,900              269              239
Net income                                      --               --               --           32,542
                                       -----------       ----------      -----------      -----------
Balance as of December 31, 2000                 --       (1,747,182)         (25,276)         111,568

(UNAUDITED)
Option exercises                                --           90,433            1,314            1,188
Issuance of shares to directors                 --              693               15               15
Purchase of treasury shares                     --         (422,525)          (8,213)          (8,213)
Comprehensive income:
    Net income                                  --               --               --           34,610
    Cumulative effect of change in
        accounting                         (55,409)              --               --          (55,409)
    Hedge fair value adjustment             79,211               --               --           79,211
                                                                                          -----------
Total comprehensive income                                                                     58,412
                                       -----------       ----------      -----------      -----------
Balance as of September 30, 2001       $    23,802       (2,078,581)     $   (32,160)     $   162,970
                                       ===========       ==========      ===========      ===========
</Table>

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

                                       6
<PAGE>

                               PRIZE ENERGY CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                            (UNAUDITED, IN THOUSANDS)

<Table>
<Caption>
                                                                             THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                                SEPTEMBER 30,                 SEPTEMBER 30,
                                                                             2001           2000           2001            2000
                                                                           ---------      ---------      ---------      ---------

<S>                                                                        <C>            <C>            <C>            <C>
OPERATING ACTIVITIES
   Net Income                                                              $   5,614      $   9,414      $  34,610      $  22,156

   Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation, depletion and amortization                                  10,080          6,565         27,194         18,825
    Amortization of loan origination fees                                        135            110            392            323
    Change in derivative fair value                                            1,645             --         (4,735)            --
    Shares issued to directors in lieu of cash                                    15             --             15             --
    Deferred income tax                                                        4,650          9,444         22,294          9,444
                                                                           ---------      ---------      ---------      ---------
                                                                              22,139         25,533         79,770         50,748

    Changes in operating assets and liabilities:
     Accounts receivable                                                       8,448            633          6,810         (8,064)
     Other assets                                                              1,116        (12,381)        (4,900)       (15,816)
     Accounts payable and accrued liabilities                                 (2,591)        (9,383)        (4,241)        (4,312)
                                                                           ---------      ---------      ---------      ---------

CASH PROVIDED BY OPERATING ACTIVITIES                                         29,112          4,402         77,439         22,556

INVESTING ACTIVITIES
   Additions to oil and gas properties                                       (16,266)       (12,519)      (113,507)       (33,207)
   Additions to other properties and equipment                                  (148)          (346)          (815)        (1,338)
   Proceeds from sale of properties and equipment                                 --             --         12,190             --
                                                                           ---------      ---------      ---------      ---------

CASH USED BY INVESTING ACTIVITIES                                            (16,414)       (12,865)      (102,132)       (34,545)

FINANCING ACTIVITIES
   Proceeds from issuance of common stock                                         45            991            736            991
   Purchase of treasury stock                                                 (6,648)          (260)        (8,213)       (18,689)
   Borrowings under credit facilities                                          4,000             --         72,000         28,750

   Repayment of credit facilities                                             (8,000)            --        (35,500)            --
   Payment of preferred dividend                                                  --             --             --           (261)
                                                                           ---------      ---------      ---------      ---------

CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                 (10,603)           731         29,023         10,791

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               2,095         (7,732)         4,330         (1,198)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                 3,055          9,887            820          3,353
                                                                           ---------      ---------      ---------      ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                   $   5,150      $   2,155      $   5,150      $   2,155
                                                                           =========      =========      =========      =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for income taxes                            $      --      $  11,108      $      --      $  16,915
   Cash paid during the period for interest                                $   4,381      $   3,959      $  14,633      $  11,151

NON-CASH TRANSACTIONS
   Other comprehensive income adjustment for fair value of derivatives     $  23,877      $      --      $  25,178      $      --
   Reclass of prior year acquisition deposit to property                   $      --      $      --      $   6,500      $      --
   Dividend in kind                                                        $      --      $      --      $      --      $     198
</Table>

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

                                       7
<PAGE>

                               PRIZE ENERGY CORP.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2001 AND 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements and notes of Prize Energy
Corp. ("Prize" or the "Company") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. The accompanying
consolidated financial statements and notes should be read in conjunction with
the consolidated financial statements and notes included in Prize's 2000 annual
report on Form 10-K.

In the opinion of Prize's management, all adjustments (all of which are normal
and recurring) have been made which are necessary to fairly state the
consolidated financial position of Prize and its subsidiaries as of September
30, 2001, and the results of their operations and cash flows for the three and
nine months ended September 30, 2001 and 2000.

BUSINESS AND ORGANIZATION

Prize was formed on January 15, 1999 (inception) and is a Delaware corporation
engaged in the acquisition, development, and production of proved oil and gas
properties. The Company's corporate headquarters are located in Grapevine, Texas
with oil and gas producing properties primarily located in Texas, Louisiana, and
Oklahoma.

On February 8, 2000, the Company merged with Vista Energy Resources, Inc.
(Vista), an independent oil and gas development and production company. Though
the Company's stockholders exchanged their shares for new shares of Vista, the
stockholders of the Company acquired an 84% controlling interest in the merged
company. Accordingly, the transaction was accounted for as a purchase of Vista
by the Company in accordance with the provisions of APB 16. The merged company's
stock is listed on the American Stock Exchange under the ticker symbol "PRZ."

2. HEDGING

Effective January 1, 2001, the Company adopted Financial Accounting Standards
Board Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (Statement No. 133). The adoption of Statement No. 133 resulted in a
cumulative effect of an accounting change of $55.4 million being recognized as a
charge to accumulated other comprehensive income, a component of stockholders'
equity.

Under Statement No. 133, the accounting for changes in the fair value of a
derivative instrument depends on whether it has been designated and qualifies as
part of a hedging relationship and further, on the type of hedging relationship.
For those derivative instruments that are designated and qualify as hedging
instruments, a company must designate the hedging instrument, based upon the
exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a
net investment in a foreign operation. Substantially all of the Company's hedges
are cash flow hedges. As such, the effective portion of the gain or loss on the
derivative instrument is reported

                                       8
<PAGE>

as a component of other comprehensive income and reclassified into earnings in
the same period or periods during which the hedged transaction affects earnings.
The remaining gain or loss on the derivative instrument in excess of the
cumulative change in the present value of future cash flows of the hedged item,
if any, is recognized in earnings during the period of change. For derivative
instruments not designated as hedging instruments, the gain or loss is
recognized in current earnings during the period of change.

To protect against the volatility of oil and gas prices related to the Company's
production, the Company has instituted a program to hedge portions of its
forecasted revenues from oil and gas production. When oil and gas prices rise,
the increase in the expected cash flows from production is offset by hedging
losses. When oil and gas prices decrease, the decrease in the expected cash
flows from production is offset by hedging gains. The Company's hedging program
includes crude oil and natural gas swaps and collar options.

The Company's cumulative effect of adoption included a charge of $11.5 million
for certain options which previously qualified for hedge treatment but will not
qualify as hedges under Statement No. 133. Accordingly, this amount was
initially charged to accumulated other comprehensive income; all but $.4 million
has been reclassified to earnings during the nine months ended September 30,
2001.

During the first quarter of 2001, the Company recognized a net gain of $5
million related to the ineffectiveness of its cash flow hedging instruments. The
gain was primarily due to changes in the time and volatility value of the
Company's natural gas collar options. Beginning in April 2001, the Company
adopted an interpretation of Statement No. 133 (Derivatives Implementation
Group, or DIG, Issue G-20), which allows owners of options to measure
effectiveness based on a comparison of the cumulative change in the fair value
of the option to the cumulative change in the expected future cash flows of the
hedged transaction. Under DIG Issue G-20, if the measurement of effectiveness is
performed as described above, and the option has the same basis and maturity
dates of the expected dates of the hedged transaction, all changes in the
option's fair value are recorded in other comprehensive income until settlement
of the hedged transaction. Accordingly, beginning April 1, 2001, changes in the
time and volatility value of the Company's collars were recognized in other
comprehensive income.

The settlement of the Company's hedges which were designated against production
during the three and nine months ended September 30, 2001 resulted in an
increase in revenues of $.3 million and a charge to revenues of $27.6 million,
respectively.

At September 30, 2001, a net amount of $23.8 million remains in accumulated
other comprehensive income. Of this amount, $6.9 million relates to hedges which
are designated against 2001 production, while $16.9 million is designated
against 2002 and 2003 production.

                                       9
<PAGE>

The following table summarizes the effect of hedges not qualifying for hedge
accounting and the hedge ineffectiveness recognized in earnings during the three
and nine months ended September 30, 2001 (in thousands):

<Table>
<Caption>
                                                  Three Months Ended         Nine Months Ended
                                                  September 30, 2001         September 30, 2001
                                                  ------------------         ------------------

<S>                                               <C>                        <C>
Change in fair value of derivatives not
 qualifying for hedge accounting ................     $(1,455)                    $   445
Ineffective portion of derivatives qualifying
 for hedge accounting ...........................        (190)                      4,290
                                                      -------                     -------
                                                      $(1,645)                    $ 4,735
                                                      =======                     =======
</Table>

The estimated fair values of the Company's derivatives as of September 30, 2001
are provided below (in thousands):

<Table>
<Caption>
                                           September 30,
                                               2001
                                           -------------

<S>                                        <C>
Derivative assets:
    Natural gas collars ................      23,098
    Natural gas swaps ..................       1,580
    Crude oil collars ..................         175
    Crude oil swaps ....................       3,756
                                             -------
                                             $28,609
                                             =======
Derivative liabilities:
    Crude oil collars ..................         462
                                             -------
                                             $   462
                                             =======
</Table>

Set forth below is the contract amount and material terms of all natural gas
collars and swaps held by Prize at November 13, 2001 (the strike price of
outstanding swaps have been included in both floor and ceiling prices):

NATURAL GAS
-----------

<Table>
<Caption>
                                          Fourth Quarter
                                               2001           2002           2003           2004
                                          --------------   ----------     ----------     ----------

<S>                                       <C>              <C>            <C>            <C>
Weighted Average Daily Gas Volume (Mcf)         38,000         43,000         40,000         15,000

Weighted Average Floor Price per Mcf        $     3.12     $     4.05     $     3.23     $     3.00

Weighted Average Ceiling Price per Mcf      $     4.52     $     4.70     $     3.90     $     4.20
</Table>

                                       10
<PAGE>

Set forth below is the contract amount and material terms of all crude oil
collars and swaps held by Prize at November 13, 2001 (the strike price of
outstanding swaps have been included in both floor and ceiling prices):

CRUDE OIL
---------

<Table>
<Caption>
                                          Fourth Quarter
                                              2001          2002
                                          --------------  ---------

<S>                                       <C>             <C>
Weighted Average Daily Oil Volume (Bbl)         6,500         5,750

Weighted Average Floor Price per Bbl        $   23.41     $   23.23

Weighted Average Ceiling Price per Bbl      $   27.62     $   26.17
</Table>

3. ACQUISITIONS AND DISPOSITIONS

On February 28, 2001, the Company closed on the purchase of $61.8 million of
interests in oil and gas properties from Apache Corporation ("Apache
Properties"), net of subsequent closing adjustments. The results of operations
of the Apache Properties have been included in the Company's earnings from the
date of acquisition. At December 31, 2000, the Company had deposited $6.5
million towards the purchase. The Company financed the acquisition under its
existing bank credit facility.

On April 30, 2001, the Company closed on the sale of $12.2 million of interests
in oil and gas properties to Texas Petroleum Investment Company. The properties
divested are located in the Onshore Gulf Coast region of South Texas and
Louisiana. The sales price approximated the carrying value of the properties,
and no significant gain or loss was recognized.

4. CREDIT FACILITIES

On February 8, 2000, in connection with the merger with Vista, the Company
amended its credit facility (Senior Facility) to provide for total borrowings of
up to $400 million. Since then, the Company has further amended the Senior
Facility which is now due June 29, 2006. The revised Senior Facility provides
for letters of credit in addition to a revolving credit facility. In October
2000 and July 2001, the Company amended the Senior Facility to provide for
letters of credit up to an aggregate of $15 million. At September 30, 2001, $2.5
million was outstanding under the letter of credit provisions of the facility.
As of April 1, 2001, the Company's borrowing base was raised from $325 million
to $375 million. Effective, October 1, 2001, the Company's borrowing base was
reaffirmed at $375 million with prior approval from the bank group required for
borrowings above $325 million. At September 30, 2001, $250.8 million was
outstanding. Since financing the Apache acquisition in February 2001, the
Company has repaid $35.5 million through October 31, 2001.

The Senior Facility converts to a term loan on June 29, 2004, with quarterly
principal payments after that date through June 29, 2008. Interest is due
quarterly at either the bank's prime rate or LIBOR rate plus a margin as defined
in the agreement. Currently, Prize's interest rate is LIBOR plus 1.75%. The bank
credit facility has various restrictions including a limit on incurred debt and
asset dispositions. The Company is required to maintain certain financial and
non-financial covenants including minimum current and interest coverage ratios.
Borrowings under the credit facility are secured by substantially all of the
Company's assets.

                                       11
<PAGE>
 In October 2001, the Company entered into interest rate protection agreements
with Fleet National Bank (the "Swap Agreements") to modify the interest
characteristics of certain portions of the revolving line of credit from a
variable rate to a fixed rate. The Swap Agreements require the Company to pay a
fixed rate interest obligation and receive an interest obligation based on
variable LIBOR rates. All of the Company's Swap Agreements have been designated
as cash flow hedges. As such, the effective portion of any gain or loss on the
Swap Agreements will be reported as a component of other comprehensive income
and reclassified into earnings in the same period or periods during which the
hedged transaction affects earnings. The remaining gain or loss on the Swap
Agreements in excess of the cumulative change in the present value of future
cash flows of the hedged item, if any, will be recognized in interest expense
during the period of change. The terms of the Swap Agreements are set forth
below:

<Table>
<Caption>
            Hedged         Weighted-Average
Year        Amount            Fixed Rate
----    ---------------    ----------------

<S>     <C>                 <C>
2001    $170.8 million          3.37%
2002    $160.6 million          3.42%
2003    $121.48 million         3.67%
2004    $50.8 million           3.98%
</Table>

5. STOCKHOLDERS' EQUITY

On March 28, 2000, Prize entered into an agreement with Pioneer Natural
Resources (Pioneer) to repurchase 1,346,482 shares of Prize common stock from
Pioneer for approximately $18.4 million. Prior to the acquisition, Pioneer
agreed to convert all convertible preferred stock to common stock, resign the
two board seats held by Pioneer, and cancel the exploration and participation
agreement associated with the convertible preferred stock. The transaction was
effective March 31, 2000 and was funded through the Company's Senior Credit
Facility.

On May 8, 2001 and August 22, 2001, 324 and 369 shares of common stock of the
Company, respectively, were issued in lieu of cash to three of the outside
directors of the Company for attending meetings of the Board of Directors of the
Company.

On July 30, 2001, the Company amended its Senior Facility to allow for the
purchase of $25 million of its common shares from that date forward. In August
2001, the Company's Board of Directors approved a plan to buyback an additional
$25 million of its common stock which, when combined with the previous
repurchases, brought the total Board authorized repurchases to $40 million
(excluding the shares repurchased from Pioneer discussed above). From June 18,
2001 through September 30, 2001, Prize repurchased 422,525 of its common shares
for a total of $8.2 million.

                                       12
<PAGE>

6. EARNINGS PER SHARE

The following tables provide reconciliations between basic and diluted earnings
per common share for the three and nine months ended September 30, 2001 and
2000.

Three Months Ended September 30, 2001 and 2000 (in thousands, except shares and
per share amounts):

<Table>
<Caption>
                                                  2001                                      2000
                                  --------------------------------------   -------------------------------------
                                                   Weighted                                Weighted
                                                   Average     Per Share                   Average     Per Share
                                     Income         Shares      Amount       Income         Shares       Amount
                                   ----------     ----------   ---------   ----------     ----------   ---------

<S>                                <C>            <C>          <C>         <C>            <C>          <C>
Basic earnings per share
  Income available
    to common stockholders         $    5,614     12,587,910     $0.45     $    9,414     13,314,060     $0.71
Effect of dilutive securities:
  Employee stock options                             774,032                                 884,106
  Warrants                                                                                     1,538
                                   ----------     ----------     -----     ----------     ----------     -----
Diluted earnings per share         $    5,614     13,361,942     $0.42     $    9,414     14,199,704     $0.66
                                   ==========     ==========     =====     ==========     ==========     =====
</Table>

Nine Months Ended September 30, 2001 and 2000 (in thousands, except shares and
per share amounts):

<Table>
<Caption>
                                                   2001                                     2000
                                   -------------------------------------   -------------------------------------
                                                   Weighted                                Weighted
                                                   Average     Per Share                   Average     Per Share
                                     Income         Shares      Amount       Income         Shares       Amount
                                   ----------     ----------   ---------   ----------     ----------   ---------

<S>                                <C>            <C>          <C>         <C>            <C>          <C>
Basic earnings per share
  Income available
    to common stockholders         $   34,610     12,791,211     $2.71         21,697     12,074,592     $1.80
Effect of dilutive securities:
  Employee stock options                             831,580                                 837,949
  Convertible preferred shares                                                    459      1,323,219
  Warrants                                               192                                     326
                                   ----------     ----------     -----     ----------     ----------     -----
Diluted earnings per share         $   34,610     13,622,983     $2.54     $   22,156     14,236,086     $1.56
                                   ==========     ==========     =====     ==========     ==========     =====
</Table>

Warrants to purchase 1,718,724 and 1,687,296 shares of common stock have been
excluded from the earnings per share calculation as antidilutive for the three
months ended September 30, 2001 and 2000, respectively, and warrants to purchase
1,708,724 and 1,500,734 shares of common stock have been excluded from the
earnings per share calculation as antidilutive for the nine months ended
September 30, 2001 and 2000, respectively.

                                       13
<PAGE>

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

The following discussion addresses material changes in results of operations for
the three and nine months ended September 30, 2001 compared to the same periods
in 2000 and in financial condition since December 31, 2000. It is presumed that
readers have read or have access to Prize's 2000 annual report on Form 10-K. The
following discussion also includes "forward-looking" statements as defined by
the Securities and Exchange Commission. Such statements are those concerning the
Company's plans, expectations and objectives for future operations. All
statements, other than statements of historical facts, included in this
discussion that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future are
forward-looking statements. This includes reserve estimates, future financial
performance, and other matters. These statements are based on certain
assumptions made by the Company based on its experience and perception of
historical trends, current conditions, expected future developments and other
factors it believes is appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the Company. Factors that could cause actual results to
differ materially include, among others: general economic conditions, the market
price of oil and natural gas, the risks associated with exploration, the
Company's ability to find, acquire, market, develop and produce new properties,
operating hazards inherent to the oil and natural gas business, uncertainties in
the estimation of proved reserves and in the projection of future rates of
production and timing of development expenditures, the strength and financial
resources of the Company's competitors, the Company's ability to find and retain
skilled personnel, climatic conditions, labor relations, availability and cost
of material and equipment, environmental risks, the results of financing
efforts, and regulatory developments. All forward-looking statements in this
Form 10-Q are expressly qualified in their entirety by such Cautionary
Disclosures. The Company disclaims any obligation to update or revise any
forward-looking statement to reflect events or circumstances occurring hereafter
or to reflect the occurrence of anticipated or unanticipated events.

OVERVIEW

On February 28, 2001, the Company closed on the purchase of $61.8 million of
interests in oil and gas properties from Apache Corporation ("Apache
Properties"), net of subsequent closing adjustments. The results of operations
of the Apache Properties have been included in the Company's earnings from the
date of acquisition. At December 31, 2000, the Company had deposited $6.5
million towards the purchase. The Company financed the acquisition under its
existing bank credit facility.

On April 30, 2001, the Company closed on the sale of $12.2 million of interests
in oil and gas properties to Texas Petroleum Investment Company. The properties
divested are primarily located in the Onshore Gulf Coast region of South Texas
and Louisiana. The sales price approximated the carrying value of the
properties, and no significant gain or loss was recognized.

For the quarter ended September 30, 2001, net income was $5.6 million or $0.45
(basic) per common share. This compares to third quarter of 2000 net income of
$9.4 million or $.71 (basic) per common share. For the nine months ended
September 30, 2001, net income available to common stockholders was $34.6
million or $2.71 (basic) per common share. This compares to net income available
to common stockholders for the nine months ended September 30, 2000 of

                                       14
<PAGE>

$21.7 million or $1.80 (basic) per common share. The decline in the third
quarter net income is attributable to the decline in realized prices and higher
operating expenses from the properties acquired from Apache. The substantial
increase in the 2001 nine months net income is the result of increased
production from acquisitions and heightened levels of development activities as
well as substantial increases in oil and gas prices during the first half of
2001.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND
2000

Prize merged with Vista on February 8, 2000. Accordingly, the financial
statements of Prize for the nine months ended September 30, 2000 include only
eight months of the oil and gas operations from the Vista properties. Likewise,
the financial statements for the three and nine months ended September 30, 2000
do not contain any operations from the properties acquired from Apache on
February 28, 2001. Consequently, a portion of the changes discussed below are
due to these acquisitions. Changes in oil/liquids and gas production, average
realized prices including the effects of hedging, and revenues for the three and
nine months ended September 30, 2001 and 2000, are shown in the table below:

<Table>
<Caption>
                                     THREE MONTHS ENDED SEPT 30,          NINE MONTHS ENDED SEPT 30,
                                   -------------------------------      ------------------------------
                                                              2001                                2001
                                                               VS.                                 VS.
                                     2001         2000        2000        2001         2000       2000
                                   --------     --------      ----      --------     --------     ----

<S>                                <C>          <C>           <C>       <C>          <C>          <C>
PRODUCTION
   Oil/liquids (MBbls)                  972          935      4.0%         2,843        2,657      7.0%
   Gas (MMcf)                         7,281        6,130     18.8%        22,170       17,605     25.9%
   Total (Mboe)                       2,186        1,957     11.7%         6,538        5,591     16.9%

AVERAGE REALIZED PRICES
   Oil/liquids (per Bbl)           $  23.68     $  24.17     (2.0)%     $  23.36     $  22.04      6.0%
   Gas (per Mcf)                   $   2.75     $   2.99     (8.0)%     $   3.58     $   2.77     29.2%
   Per Boe                         $  19.67     $  20.93     (6.0)%     $  22.29     $  19.19     16.2%

 TOTAL REVENUES (IN THOUSANDS)
   Oil/liquids                     $ 23,017     $ 22,603      1.8%      $ 66,403     $ 58,555     13.4%
   Gas                               19,989       18,359      8.9%        79,309       48,725     62.8%
                                   --------     --------                --------     --------
   Total                           $ 43,006     $ 40,962      5.0%      $145,712     $107,280     35.8%
                                   ========     ========                ========     ========
</Table>

OIL/LIQUIDS REVENUES FOR 2001 COMPARED TO 2000. Oil/liquids revenues increased
$.4 million or 1.8% in the third quarter of 2001 compared to the same period in
2000. Production gains of 37,000 barrels, or 4%, increased oil/liquids revenues
by $.9 million in the 2001 period. The increase in production occurred as a
result of Prize's ongoing development program and the Apache acquisition. These
production increases were partially offset by a decrease of $.5 million in
oil/liquids revenues as a result of the $0.49 per barrel, or 2%, price decrease
realized in the third quarter of 2001 compared to the same period in 2000.
Realized hedging losses decreased oil/liquids revenue by $.1 million or $.14 per
barrel for the three months ended September 30, 2001 compared to $4.2 million or
$4.49 per barrel in the 2000 period.

Oil/liquids revenues increased $7.8 million or 13.4% in the first nine months of
2001 compared to the same period in 2000. Production gains of 186,000 barrels,
or 7%, added $4.1 million of

                                       15
<PAGE>

oil/liquids revenues in the 2001 period. The increase in production occurred as
a result of Prize's ongoing development program and the Vista and Apache
acquisitions. In addition to the production increases, oil/liquids revenues
increased $3.7 million as a result of the $1.32 per barrel, or 6%, price
increase realized in the nine month period of 2001. Realized hedging losses
decreased oil/liquids revenue by $5.7 million or $2.01 per barrel for the nine
months ended September 30, 2001 compared to $12.1 million or $4.55 per barrel in
the 2000 period.

GAS REVENUES FOR 2001 COMPARED TO 2000. Gas revenues increased $1.6 million or
8.9% in the third quarter of 2001 compared to the same period in 2000.
Production gains of 1.2 Bcf of gas, or 18.8%, added $3.3 million of gas revenues
in the 2001 period. The production gains were primarily the result of Prize's
ongoing development program and the Apache acquisition. These production
increases were partially offset by a decrease of $1.7 million in gas revenues as
a result of the realized gas price decreasing $.24 per Mcf, or 8%, in the third
quarter of 2001 as compared to the same period in 2000. Realized hedging gains
increased gas revenue by $.4 million or $0.05 per Mcf for the three months ended
September 30, 2001 compared to a loss of $6.0 million or $0.99 per Mcf in the
2000 period.

Gas revenue increased $30.6 million or 62.8% in the first nine months of 2001
compared to the same period in 2000. Production increased by 4.6 Bcf of gas, or
25.9%, increasing revenues by $12.6 million in the 2001 period. The increase in
production occurred as a result of Prize's ongoing development program and the
Vista and Apache acquisitions. Gas revenues increased $18 million as a result of
the $.81 per Mcf, or 29.2%, price increase realized in the first nine months of
2001. Realized hedging losses decreased gas revenue by $21.9 million or $.98 per
Mcf for the nine months ended September 30, 2001 compared to $9.0 million or
$0.51 per Mcf in the 2000 period.

PRODUCTION AND OPERATING EXPENSE. Listed below are the changes in production and
operating expenses for the three and nine months ended September 30, 2001 as
compared to the 2000 period:

<Table>
<Caption>
                              THREE MONTHS ENDED SEPTEMBER 30,    NINE MONTHS ENDED SEPTEMBER 30,
                              --------------------------------    -------------------------------
                                                        2001                               2001
                                                         VS.                                VS.
                                 2001         2000      2000        2001        2000       2000
                                -------     -------     ----       -------     -------     ----

<S>                             <C>         <C>         <C>        <C>         <C>         <C>
PRODUCTION AND OPERATING
  EXPENSES (000'S)
   Recurring Operations and
      Maintenance Expense       $ 9,130     $ 6,047     51.0%      $24,268     $17,413     39.4%
   Well Workover Expense          2,492       1,789     39.3%        8,041       5,927     35.7%
   Production Taxes               3,554       4,412     (19.4)%     14,021      11,064     26.7%
                                -------     -------                -------     -------
      Total                     $15,176     $12,248     24.0%      $46,330     $34,404     34.7%
                                =======     =======                =======     =======

PER BOE PRODUCED
   Recurring Operations and
      Maintenance Expense       $  4.18     $  3.09     36.9%      $  3.71     $  3.11     19.9%
   Well Workover Expense        $  1.14     $   .91     25.3%      $  1.23     $  1.06     16.0%
   Production Taxes             $  1.63     $  2.25     (27.6)%    $  2.14     $  1.98      8.1%
</Table>

Recurring operations and maintenance expenses increased $3.1 million or 51.0% in
the third quarter of 2001 and $6.9 million or 39.4% in the nine months ended
September 30, 2001. The increase in the recurring operations and maintenance
expenses is substantially attributable to

                                       16
<PAGE>

operating expenses from the Apache acquisition properties and increased well
servicing activities. Well workover expense increased $0.7 million or 39.3% in
the third quarter of 2001 and $2.1 million or 35.7% in the nine months ended
September 30, 2001. The rise in well workover expense is a result of the
Company's ongoing effort to enhance production and reserves. Production taxes
decreased $0.9 million or 19.4% and increased $3.0 million or 26.7% in the three
and nine months ended September 30, 2001. The production tax increase for the
nine months ended is directly correlated to the corresponding changes in oil and
gas revenues.

DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES (DD&A). DD&A expense in the
quarter ended September 30, 2001 was $10.1 million as compared to $6.6 million
in the 2000 period. On a Boe basis, the average DD&A rate was $4.61, or 37.6%
higher than the rate of $3.35 in 2000. The DD&A expense in the nine months ended
September 30, 2001 was $27.2 million or $4.16 per Boe, as compared to $18.8
million or $3.37 per Boe for 2000. The increase in rate is attributable to the
Vista and Apache acquisitions and capital expenditures from the Company's
ongoing development program. Since the end of the year, natural gas prices have
declined. Consequently, the Company has revised its reserve estimates, resulting
in an additional increase in depletion expense of approximately $.5 million in
the third quarter of 2001.

GENERAL AND ADMINISTRATIVE EXPENSES (G&A). G&A expense in the quarter ended
September 30, 2001 was $3.4 million versus $2.6 million for the 2000 period. On
a Boe basis, the G&A rate was $1.55, 16.5% higher than the rate of $1.33 for the
2000 period. G&A expense during the nine months ended September 30, 2001 was
$9.2 million, or $1.41 per Boe, versus $6.6 million, or $1.18 per Boe in the
2000 period. The increase in the 2001 period resulted substantially from Prize's
increase in its corporate staff during the second half of 2000 and the first
half of 2001.

INTEREST EXPENSE. Interest expense for the three and nine months ended September
30, 2001 was $3.9 million and $13.5 million, respectively, as compared to $4.8
million and $12.8 million in the respective 2000 periods. The average rate on
the debt outstanding was 5.65% and 7.02% for the three and nine months ended
September 30, 2001, respectively, compared to 8.47% and 8.21% for the respective
2000 periods. In addition, 2000 included $53.7 million of debt assumed in the
Vista acquisition only from February 8, 2000, forward and $18.4 million borrowed
on March 28, 2000 for the purchase of shares from Pioneer. 2001 also included
interest after February 28, 2001 on $54 million borrowed in connection with the
Apache acquisition.

CHANGE IN DERIVATIVE FAIR VALUE. The Company recorded an unrealized loss of $1.6
million in the 2001 third quarter and an unrealized gain of $4.7 million for the
nine month period primarily relating to the ineffective portion of derivatives
qualifying for hedge accounting. See Footnote 2 to the Financial Statements for
additional discussion.

INCOME TAXES. Income tax expense is based upon the estimated effective income
tax rate that is expected for the entire fiscal year. The estimated effective
tax rate for 2001 and 2000 is 37%.

CAPITAL EXPENDITURES, CAPITAL RESOURCES, AND LIQUIDITY

The following discussion of capital expenditures, capital resources and
liquidity should be read in conjunction with the consolidated statements of cash
flows included in Part 1, Item 1 elsewhere herein.

                                       17
<PAGE>

CAPITAL EXPENDITURES. Approximately $16.3 million was spent in the third quarter
of 2001 for oil and gas property capital expenditures bringing the 2001 year to
date total to $113.5 million. Of the $16.3 million incurred, $15.9 million was
spent on drilling and development, and an additional $.4 million was spent
related to the Apache acquisition. Of the $120 million incurred for the nine
months ended September 30, 2001 (including a $6.5 million deposit on the Apache
acquisition made in December 2000), $58.2 million was spent on drilling and
development, and $61.8 million was spent on the Apache acquisition. For the
three and nine months ended September 30, 2001, the Company has participated in
the drilling of 13 and 54 wells, respectively, achieving a success rate of 92%
and 94%, respectively. In addition, the Company has performed a total of 15 and
59 recompletions, respectively, with a success rate of 67% and 83%,
respectively. The success rates achieved in the 2001 capital expenditure program
have significantly contributed to the increase in production realized in 2001.

The timing of most of the Company's capital expenditures is discretionary with
no material long-term capital expenditure commitments. Consequently, the Company
has a significant degree of flexibility to adjust the level of such expenditures
as circumstances warrant. The Company uses internally generated cash flow to
substantially fund capital expenditures other than significant acquisitions and
anticipates that its cash flow, net of debt service obligations, will be
sufficient to fund its planned 2001 capital expenditures, estimated between $62
million and $65 million, excluding acquisitions.

Prize does not have a specific acquisition budget since the timing and size of
acquisitions are difficult to forecast. Prize regularly engages in discussions
relating to the potential acquisition of oil and gas properties. Any future
acquisitions may require additional financing and will be dependent upon
financing arrangements being available at the time.

CAPITAL RESOURCES AND LIQUIDITY. On February 8, 2000, in connection with the
merger agreement with Vista, the Company amended its Senior Facility to provide
for total borrowings of $400 million. The amended Senior Facility is due June
29, 2006. As of Apri1 1, 2001, the Company's borrowing base was raised from $325
million to $375 million. Effective October 1, 2001, the Company's borrowing base
was reaffirmed at $375 million with prior approval from the bank group required
for borrowings above $325 million. Also, in June 2001, the Company reduced the
outstanding balance on its letter of credit to $2.5 million. As of September 30,
2001, Prize's outstanding long-term debt was $250.8 million. During the first
nine months of 2001, Prize borrowed $72 million on the Senior Facility. Prize
utilized the borrowings to fund the Apache acquisition and a portion of its
capital expenditures. Since financing the Apache acquisition in February 2001,
the Company has repaid borrowings of $35.5 million under the Senior Facility
through October 31, 2001.

Cash provided by operating activity before changes in working capital
("operating cash flow") was the primary source of capital and liquidity in the
first nine months of 2001. Operating cash flow for the three and nine months
ended September 30, 2001 was $22.1 million and $79.8 million, respectively.

On March 28, 2000, the Company entered into a stock purchase agreement with
Pioneer Natural Resources to acquire 1,346,482 shares of Prize common stock for
$18.4 million. In September 2000, the Company's Board of Directors approved a
plan to buy back up to an additional $15 million of its common stock from time
to time in the open market or through negotiated transactions. On July 30, 2001,
the Company amended its Senior Facility to allow for the

                                       18
<PAGE>

purchase of $25 million of its common shares from that date forward. Also, in
August 2001, the Company's Board of Directors approved a plan to buyback an
additional $25 million of its common stock, which when combined with the
previously approved $15 million repurchase plan, brings the total Board
authorized repurchases to $40 million (excluding shares repurchased from Pioneer
discussed above). As of September 30, 2001, the Company had acquired an
additional 422,525 common shares in 2001 for $8.2 million and reissued 90,433
shares for stock option exercises.

In October 2001, the Company entered into interest rate protection agreements
with its bank (the "Swap Agreements") to modify the interest characteristics of
certain portions of the revolving line of credit from a variable rate to a fixed
rate. The Swap Agreements require the Company to pay a fixed rate interest
obligation and receive an interest obligation based on variable LIBOR rates. The
terms of the Swap Agreements are set forth below:

<Table>
<Caption>
            Hedged            Weighted-Average
Year        Amount               Fixed Rate
----    ---------------       ----------------

<S>     <C>                   <C>
2001    $170.8 million             3.37%
2002    $160.6 million             3.42%
2003    $121.48 million            3.67%
2004    $50.8 million              3.98%
</Table>

                                       19
<PAGE>

             ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                                   MARKET RISK

See the information included in "Quantitative and Qualitative Disclosures About
Market Risk" in Item 7A of Prize's 2000 Annual Report on Form 10-K and the
information included in Note 2 in Part 1, Item 1 elsewhere herein. Such
information includes a description of Prize's potential exposure to market
risks, including commodity price risk and interest rate risk. As a result of
decreases in both oil and natural gas prices, Prize had a net asset of $28.1
million as of September 30, 2001, at fair market value, relating to its hedges,
as compared to a net liability of $55.4 million as of December 31, 2000.

Interest Rates. Prize significantly increased its interest rate hedging in
October 2001. Prize's interest rate risk exposure results from having short-term
variable rates under its credit facility. All of Prize's outstanding
indebtedness is subject to market rates of interest as determined from time to
time by the banks under the credit facility. Any increases in the variable
interest rates related to this facility can have an adverse impact on Prize's
results of operations and cash flow. As of November 13, 2001, Prize had $250.8
million of outstanding debt under the credit facility.

In October 2001, the Company entered into interest rate protection agreements
with its bank (the "Swap Agreements") to modify the interest characteristics of
certain portions of the revolving line of credit from a variable rate to a fixed
rate. The Swap Agreements require the Company to pay a fixed rate interest
obligation and receive an interest obligation based on variable LIBOR rates. The
effect of changes in the fair value of the swaps due to changes in interest
rates will be reduced by offsetting changes in interest expense associated with
the Senior Facility. The terms of the Swap Agreements are set forth below:


<Table>
<Caption>
            Hedged           Weighted-Average
Year        Amount               LIBOR Rate
----    ---------------      ----------------

<S>     <C>                  <C>
2001    $170.8 million             3.37%
2002    $160.6 million             3.42%
2003    $121.48 million            3.67%
2004    $50.8 million              3.98%
</Table>

                                       20
<PAGE>

PART II. OTHER INFORMATION

         ITEM 1.  LEGAL PROCEEDINGS

                  Not applicable.

         ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

                  The outside directors of the Company receive a fee payable in
                  cash for each meeting of the Board of Directors of the Company
                  that they attend. The outside directors, however, may elect to
                  receive 50% of that fee in common stock of the Company. Three
                  of the directors have elected to receive 50% of their fees in
                  common stock. On August 22, 2001, an aggregate of 369 shares
                  of common stock of the Company were issued to such directors
                  at a price of $20.26 per share. The issuance of such shares
                  was exempt from registration under Section 4(2) of the
                  Securities Act of 1933, as amended. Each of the outside
                  directors is an accredited investor.

         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  Not applicable.

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not applicable.

         ITEM 5.  OTHER INFORMATION

                  Not applicable.

         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  a) Exhibits

                  The following documents are included as exhibits to this Form
                  10-Q. Those exhibits below incorporated by reference herein
                  are indicated as such by the information supplied in the
                  parenthetical thereafter. If no parenthetical appears after an
                  exhibit, such exhibit is filed herewith.

  EXHIBIT
  NUMBER                                DESCRIPTION
  -------                               -----------
   10.1           Sixth Amendment to Amended and Restated Credit Agreement,
                  dated as of October 1, 2001, among Prize Energy Resources,
                  L.P., the Company, Fleet National Bank, successor-in-interest
                  to BankBoston, N.A., as administrative agent, and certain
                  financial institutions.

                       b) Reports on Form 8-K

                       None.

                                       21
<PAGE>

                                   Signatures
                                   ----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                       Prize Energy Corp.
                                       -----------------------------------------
                                       (Registrant)

DATE: November 13, 2001                /s/ Lon C. Kile
      -----------------                -----------------------------------------
                                       Lon C. Kile
                                       President
                                       (Principal Accounting Officer)

                                       22
<PAGE>

                                  EXHIBIT INDEX

The following documents are included as exhibits to this Form 10-Q. Those
exhibits below incorporated by reference herein are indicated as such by the
information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.

<Table>
<Caption>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------

<S>           <C>
 10.1         Sixth Amendment to Amended and Restated Credit Agreement, dated as
              of October 1, 2001, among Prize Energy Resources, L.P., the
              Company, Fleet National Bank, successor-in-interest to BankBoston,
              N.A., as administrative agent, and certain financial institutions.
</Table>