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

                                    FORM 10-Q

             [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999

                                       OR

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          For the transition period from.............. to .............

                         Commission file number 0-22149

                           EDGE PETROLEUM CORPORATION
             (Exact name of registrant as specified in its charter)


                        Delaware                    76-0511037
             (State or other jurisdiction of      (I.R.S. Employer
              incorporation or organization)     Identification No.)


                              Texaco Heritage Plaza
                             1111 Bagby, Suite 2100
                              Houston, Texas 77002
                    (Address of principal executive offices)

                                 (713) 654-8960
              (Registrant's telephone number, including area code)

         Indicate by checkmark  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 equity, as of the latest practicable date.

             Class                           Outstanding at August 4, 1999
         ------------                        ------------------------------
         Common Stock                                  9,158,667

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
<TABLE>
EDGE PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------------------------------------------------------

                                                                                    June 30,        December 31,
                                                                                      1999              1998
                                                                                 ---------------- ----------------
ASSETS                                                                             (Unaudited)
CURRENT ASSETS:
<S>                                                                                  <C>               <C>

   Cash and cash equivalents                                                          $ 436,110         $ 272,428
   Accounts receivable, trade                                                         2,685,850         2,237,113
   Accounts receivable, joint interest owners, net                                      996,231         2,215,096
   Accounts receivable, related parties                                                 207,859           228,922
   Other current assets                                                                 248,268           313,631
                                                                                      ---------         ---------
                Total current assets                                                  4,574,318         5,267,190

PROPERTY AND EQUIPMENT, Net - full cost method of accounting
   for oil and natural gas properties                                                46,784,544        47,258,993

INVESTMENT IN FRONTERA                                                                3,867,232         3,744,935

OTHER ASSETS                                                                              7,789             7,789
                                                                                     ----------        ----------
TOTAL ASSETS                                                                       $ 55,233,883      $ 56,278,907
                                                                                   ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable, trade                                                          $ 1,456,422       $ 2,948,791
   Accrued liabilities                                                                2,610,988         3,779,881
   Accrued interest payable                                                              55,156            93,880
   Current portion of long-term debt                                                  3,150,000         6,700,000
                                                                                      ---------         ---------

                Total current liabilities                                             7,272,566        13,522,552

LONG-TERM DEBT                                                                        4,000,000         5,800,000
                                                                                      ---------         ---------

                Total liabilities                                                    11,272,566        19,322,552

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $.01par value; 5,000,000 shares authorized; none outstanding
   Common stock,  $.01par value;  25,000,000  shares  authorized;  9,158,667
    and 7,758,667 shares issued and outstanding at June 30, 1999 and
    December 31, 1998, respectively                                                      91,586            77,586
   Additional paid-in capital                                                        55,137,609        47,769,159
   Retained earnings (deficit)                                                       (9,943,851)       (9,398,410)
   Unearned compensation - restricted stock                                          (1,324,027)       (1,491,980)
                                                                                     ----------        ----------
                Total stockholders' equity                                           43,961,317        36,956,355
                                                                                     ----------        ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $ 55,233,883      $ 56,278,907
                                                                                   ============      ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>


<TABLE>
EDGE PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
--------------------------------------------------------------------------------------------------------------------------


                                                                     Three Months Ended             Six Months Ended
                                                                          June 30,                      June 30,
                                                                 ---------------------------   ---------------------------
                                                                     1999         1998             1999         1998

<S>                                                              <C>           <C>             <C>           <C>
OIL AND NATURAL GAS REVENUES                                      $ 4,189,449   $ 3,849,045     $ 7,731,637   $ 7,634,711

OPERATING EXPENSES:
   Lifting costs                                                      487,242       558,754         966,370       928,813
   Severance and ad valorem taxes                                     334,530       312,593         687,219       613,718
   Depletion, depreciation and amortization                         2,410,543     1,713,437       4,313,303     2,900,023
   General and administrative expenses                              1,097,939     1,050,516       2,099,758     1,916,827
   Unearned compensation expense                                       83,977       176,456         167,953       331,508
                                                                    ---------     ---------       ---------     ---------
                Total operating expenses                            4,414,231     3,811,756       8,234,603     6,690,889
                                                                    ---------     ---------       ---------     ---------
OPERATING INCOME (LOSS)                                              (224,782)       37,289        (502,966)      943,822

OTHER INCOME AND EXPENSE:
   Interest expense                                                   (29,860)      (12,535)        (68,186)      (12,617)
   Interest income                                                     14,689        56,049          25,711       102,259
                                                                    ---------     ---------       ---------     ---------
NET INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND
  CUMULATIVE EFFECT OF ACCOUNTING CHANGE                             (239,953)       80,803        (545,441)    1,033,464

INCOME TAX EXPENSE                                                                  (33,981)                     (367,862)
                                                                    ----------    ---------       ---------     ---------
NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT
  OF ACCOUNTING CHANGE                                               (239,953)       46,822        (545,441)      665,602

CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                                                          1,780,835
                                                                   ----------      --------      -----------  -----------
NET INCOME (LOSS)                                                  $ (239,953)     $ 46,822      $ (545,441)  $ 2,446,437
                                                                   ==========      ========      ==========   ===========
BASIC EARNINGS (LOSS) PER SHARE:
  Net income (loss) before cumulative effect of accounting change     $ (0.03)       $ 0.01         $ (0.07)       $ 0.08

  Cumulative effect of accounting change                                                                             0.23
                                                                      -------        ------         -------        ------
  Basic earnings (loss) per share                                     $ (0.03)       $ 0.01         $ (0.07)       $ 0.31
                                                                      =======        ======         =======        ======
DILUTED EARNINGS (LOSS) PER SHARE:
  Net income (loss) before cumulative effect of accounting change     $ (0.03)       $ 0.01         $ (0.07)       $ 0.08

  Cumulative effect of accounting change                                                                             0.23
                                                                      -------        ------         -------        ------
  Diluted earnings (loss) per share                                   $ (0.03)       $ 0.01         $ (0.07)       $ 0.31
                                                                      =======        ======         =======        ======
BASIC WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                                        8,589,312     7,771,711       8,176,223     7,771,558
                                                                    =========     =========       =========     =========
DILUTED WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                                        8,589,312     7,804,165       8,176,223     7,803,393
                                                                    =========     =========       =========     =========

</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>


<TABLE>

EDGE PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                       Unearned
                                                 Common Stock          Additional                    Compensation-      Total
                                           -------------------------     Paid-in        Retained      Restricted     Stockholders'
                                              Shares        Amount       Capital    Earnings(Deficit)    Stock           Equity
                                           ----------      --------   ------------  ----------------- -------------- --------------
BALANCE,
<S>                                        <C>            <C>        <C>             <C>            <C>             <C>
   JANUARY 1, 1999                          7,758,667      $ 77,586   $ 47,769,159    $(9,398,410)  $ (1,491,980)   $36,956,355

   Private common stock offering,
    net of offering costs of $230,050       1,400,000        14,000      7,368,450                                    7,382,450

   Unearned compensation expense                                                                         167,953        167,953

   Net loss                                                                              (545,441)                     (545,441)
                                           ----------     ---------   ------------    ------------  -------------   ------------
BALANCE,
   June 30, 1999                            9,158,667      $ 91,586   $ 55,137,609    $(9,943,851)  $ (1,324,027)  $ 43,961,317
                                           ==========     =========   ============    ============  =============   ============
</TABLE>

See accompanying notes to consolidated financial statements.







                                       4
<PAGE>





<TABLE>
EDGE PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
-----------------------------------------------------------------------------------------------------------


                                                                                    Six Months Ended
                                                                                        June 30,
                                                                               ------------- --------------
                                                                                    1999          1998

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>          <C>
   Net income (loss)                                                              $ (545,441)  $ 2,446,437
   Adjustments to reconcile net income (loss) to net cash provided
     by operating activities:
      Cumulative effect of accounting change                                                    (1,780,835)
      Depletion, depreciation and amortization                                     4,313,303     2,900,023
      Deferred income taxes                                                                        367,862
      Unearned compensation expense                                                  167,953       331,508
   Changes in assets and liabilities:
      Accounts receivable, trade                                                    (448,737)       49,492
      Accounts receivable, joint interest owners, net                              1,218,865     1,655,515
      Accounts receivable, related parties                                            21,063       146,644
      Other current assets                                                            65,363      (134,085)
      Other assets                                                                                   9,443
      Accounts payable, trade                                                     (1,492,369)      242,654
      Accounts payable, related party                                                              (40,000)
      Accrued liabilities                                                         (1,168,893)       85,543
      Accrued interest payable                                                       (38,724)
                                                                                   ---------     ---------
                 Net cash provided by operating activities                         2,092,383     6,280,201
                                                                                   ---------     ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Oil and natural gas property and equipment purchases                           (5,487,573)  (19,961,191)
   Proceeds from the sale of oil and natural gas properties                        1,648,719     2,735,569
   Investment in Frontera                                                           (122,297)
                                                                                  ----------   -----------
                 Net cash used in investing activities                            (3,961,151)  (17,225,622)
                                                                                  ----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from private offering, net of offering cost                             7,382,450
  Proceeds (payment) on notes payable                                             (5,350,000)    8,000,000
                                                                                   ---------     ---------
                Net cash provided by financing activities                          2,032,450     8,000,000
                                                                                   ---------     ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 163,682    (2,945,421)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                       272,428     3,777,950
                                                                                   ---------     ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $ 436,110     $ 832,529
                                                                                   =========     =========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
  Cash paid for interest, net of amounts capitalized                                $ 68,584       $ 3,696
  Issuance of restricted stock                                                                     144,017



</TABLE>



See accompanying notes to consolidated financial statements.

                                       5
<PAGE>


EDGE PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The  financial  statements  included  herein  have  been  prepared  by  Edge
Petroleum  Corporation,  a Delaware  corporation (the "Company"),  without audit
pursuant to the rules and regulations of the Securities and Exchange Commission,
and reflect all adjustments  which are, in the opinion of management,  necessary
to present a fair  statement  of the results for the interim  periods on a basis
consistent with the annual audited consolidated  financial statements.  All such
adjustments are of a normal recurring nature.  The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
an  entire  year.  Certain   information,   accounting   policies  and  footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
rules and  regulations,  although the Company  believes that the disclosures are
adequate to make the information  presented not  misleading.  Certain prior year
amounts have been reclassified to conform to the current year presentation. Such
reclassifications  do not affect net income (loss).  These financial  statements
should be read in conjunction with the Company's audited consolidated  financial
statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 1998.

      Accounting  Change - The Company uses the  full-cost  method of accounting
for its oil and natural gas  properties.  Under this  method,  all  acquisition,
exploration  and  development  costs  that  are  directly  attributable  to  the
Company's acquisition, exploration and development activities are capitalized in
a "full-cost  pool" as  incurred.  In the second  quarter of 1998 and  effective
January 1, 1998,  the Company  changed  its method of  accounting  for  internal
geological and geophysical ("G&G") costs to one of capitalization of such costs,
which are directly  attributable  to  acquisition,  exploration  and development
activities,  to oil and natural gas properties.  Prior to the change the Company
expensed these costs as incurred.  The Company  believes the  accounting  change
provides  for a better  matching of  revenues  and  expenses  and  enhances  the
comparability  of it's financial  statements  with those of other companies that
follow the full-cost  method of  accounting.  The $1,780,835 (or $0.23 basic and
diluted  earnings  per share)  cumulative  effect of the  change in prior  years
(after reduction for income taxes of $958,910) is included in income for the six
months ended June 30, 1998.

Accounting Pronouncements

Derivatives - In June 1998,  the  Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting Standard No. 133,  "Accounting for Derivative
Instruments  and  Hedging   Activities"   ("SFAS  133").  SFAS  133  establishes
accounting  and  reporting  standards  for  derivative  instruments  and hedging
activities  that require an entity to recognize all  derivatives  as an asset or
liability  measured  at  fair  value.  Depending  on  the  intended  use  of the
derivatives,  changes in its fair value will be reported in the period of change
as either a component of earnings or a component of other comprehensive income.

      In June 1999, the Financial Accounting Standards Board issued SFAS No.137,
"Accounting for Derivative  Instruments and Hedging Activities - Deferral of the
Effective  Date of FASB  Statement  No. 133" ("SFAS  137").  SFAS 137 delays the
effective  date for  implementation  of SFAS 133 for one  year  making  SFAS 133
effective for all fiscal  quarters of all fiscal years  beginning after June 15,
2000.  Retroactive  application to periods prior to adoption is not allowed. The
Company has not quantified the impact of adoption on its financial statements or
the date it intends to adopt. Earlier application of SFAS 133 is encouraged, but
not prior to the beginning of any fiscal  quarter that begins after  issuance of
the statement.


                                       6
<PAGE>


2.   LONG TERM DEBT

    During July 1995, the Company entered into a revolving  credit facility (the
"Revolving  Credit  Facility") with a bank to finance  temporary working capital
requirements.  The  Revolving  Credit  Facility  provided  up to $20  million in
borrowings  limited by a  borrowing  base,  as defined by the  Revolving  Credit
Facility.  The Revolving  Credit Facility  provided for interest at the lender's
prime rate plus 0.75%. The borrowing base was subject to review by the bank on a
quarterly basis and could be adjusted subject to the provisions of the Revolving
Credit  Facility.  Effective April 1, 1998, the Company amended and restated its
Revolving  Credit  Facility to provide a revolving  line of credit of up to $100
million  bearing  interest  at a rate  equal to prime  or LIBOR  plus  1.5% - 2%
depending on the level of borrowing  base  utilization.  The  Company's  initial
borrowing  base  authorized  by the banks was  approximately  $15  million.  The
Revolving  Credit  Facility  is secured by  substantially  all the assets of the
Company.

    Effective   September  29,  1998,   the  Company  had  its  borrowing   base
redetermined and amended its Revolving Credit  Facility.  The initial  borrowing
base authorized by the bank was $15 million.  Beginning  October 1, 1998, and on
the first day of each month  thereafter,  the borrowing  base was required to be
reduced by $550,000.

    Effective  March 1, 1999,  the  Company and the Bank  amended the  Revolving
Credit Facility to include the following  terms;  1) the initial  borrowing base
was $12 million  comprised of a two tranche  financing of a $9 million Revolving
Credit Facility and a $3 million term facility, 2) Beginning May 1, 1999, and on
the first day of each month thereafter,  the Revolving Credit Facility borrowing
base was  required to be reduced by $400,000,  3) 75% of prospect  sales will be
used to pay down the term  facility  with the  remaining  unpaid  term  facility
balance maturing on August 31, 1999. On May 8, 1999, from proceeds  generated by
the Private  Offering (see Note 5), the Company  repaid the $3 million term loan
in addition to $1.9 million of the Revolving Credit Facility.  Total outstanding
long-term debt(including current portion) as of June 30, 1999 was $7.15 million.

    Effective July 1, 1999, the Company had its borrowing base redetermined. The
initial borrowing base authorized by the bank is $8.8 million.  Beginning August
1, 1999,  and on the first day of each month  thereafter,  the borrowing base is
required  to be  reduced  by  $400,000.  Total  borrowing  available  under  the
Revolving Credit Facility was approximately $1.65 million at June 30, 1999.

The Revolving Credit Facility provides for certain  restrictions,  including but
not limited  to,  limitations  on  additional  borrowings  and issues of capital
stock, sales of its oil and natural gas properties or other collateral, engaging
in merger or  consolidation  transactions  and  prohibitions  of  dividends  and
certain  distributions  of cash or properties and certain  liens.  The Revolving
Credit  Facility also contains  certain  financial  covenants.  The Tangible Net
Worth Covenant  requires that at the end of each quarter the Company's  Tangible
Net Worth be at least 90% of the Company's actual tangible net worth as reported
at December 31, 1998 (or  $33,260,720)  plus 50% of positive net income and 100%
of other  increases  in equity  for all fiscal  quarters  ending  subsequent  to
December 31, 1998.  The Fixed Charge  Covenant  requires that at the end of each
quarter  beginning June 30, 1999, the ratio of annualized EBITDA (as defined) to
the sum of  annualized  interest  expense  plus  50% of the  quarter  end  loans
outstanding  must be at least 1.25 to 1.00.  Interest  will  accrue at a rate of
LIBOR plus 1.75% - 2.75%  depending on the borrowing base  utilization.  At June
30, 1999 the Company was in compliance with the above mentioned covenants.

3.   EARNINGS PER SHARE

The Company  accounts  for earnings per share in  accordance  with  Statement of
Financial  Accounting  Standard No. 128 - "Earnings per Share," ("SFAS No. 128")
which  establishes the requirements  for presenting  earnings per share ("EPS").
SFAS No. 128 requires the  presentation of "basic" and "diluted" EPS on the face
of the income statement.  Basic earnings per common share amounts are calculated
using the  average  number of common  shares  outstanding  during  each  period.
Diluted  earnings  per share  assumes  the  exercise  of all stock  options  and
warrants having exercise prices less than the average market price of the common
stock using the treasury stock method.


                                       7
<PAGE>


    The  following  is  presented  as a  reconciliation  of the  numerators  and
denominators of basic and diluted earnings per share computations, in accordance
with SFAS No. 128.

<TABLE>
                                                              Three Months Ended
                               --------------------------------------------------------------------------------
                                            June 30, 1999                              June 30, 1998
                               -------------------------------------      -------------------------------------

                                  Income       Shares      Per-Share         Income       Shares      Per-Share
                               (Numerator)  (Denominator)    Amount       (Numerator)  (Denominator)    Amount
                               -----------  -------------  ---------      -----------  -------------  ---------
Basic EPS
Income (loss) available to
<S>                           <C>              <C>          <C>          <C>             <C>            <C>
  common stockholders          $  (239,953)    8,589,312     $(0.03)      $   46,822      7,771,711      $ 0.01

Effect of Dilutive Securities
  Common stock options                                                                       32,454
                               ------------    ---------     -------      -----------     ---------     -------
Diluted EPS
Income (loss) available to
  common stockholders          $  (239,953)    8,589,312     $(0.03)      $   46,822      7,804,165      $ 0.01
                               ============    =========     =======      ===========     =========     =======



                                                                Six Months Ended
                               --------------------------------------------------------------------------------
                                            June 30, 1999                              June 30, 1998
                               -------------------------------------      -------------------------------------

                                  Income       Shares      Per-Share         Income       Shares      Per-Share
                               (Numerator)  (Denominator)    Amount       (Numerator)  (Denominator)    Amount
                               -----------  -------------  ---------      -----------  -------------  ---------
Basic EPS
Income (loss) available to
<S>                           <C>             <C>          <C>           <C>            <C>            <C>
  common stockholders          $ (545,441)     8,176,223    $(0.07)       $2,446,437     7,771,558      $ 0.31

Effect of Dilutive Securities
  Common stock options                                                                      31,835
                               -----------     ---------    -------       -----------     ---------     -------
Diluted EPS
Income (loss) available to
  common stockholders          $ (545,441)     8,176,223    $(0.07)       $2,446,437      7,803,393     $ 0.31
                               ===========     =========    =======       ===========     =========     =======

</TABLE>


4.   INCOME TAXES

           The  Company  accounts  for  income  taxes  under the  provisions  of
Statement of  Financial  Accounting  Standards  No. 109  "Accounting  for Income
Taxes," ("SFAS No. 109") which provides for an asset and liability  approach for
accounting  for income  taxes.  Under  this  approach,  deferred  tax assets and
liabilities are recognized based on anticipated  future tax consequences,  using
currently  enacted  tax laws,  attributable  to  differences  between  financial
statement  carrying  amounts of assets and liabilities and their  respective tax
bases.  Due to the  Company  incurring  a net loss for the  three  and six month
periods ended June 30, 1999 and due to the Company having  significant  deferred
tax assets, no tax benefit (expense) was recorded. Due to the uncertainty of the
Company's  ability to become  profitable  in the future,  an allowance  has been
provided to offset the tax  benefits  of certain tax assets.  Should the Company
have net income in future  periods  income tax  expense  will be  recorded  upon
utilization of available deferred tax assets.

5.   EQUITY

     On May 7, 1999,  the Company  completed a "Private  Offering"  of 1,400,000
shares of common  stock at a price of $5.40 per common  share.  The Company also
issued  warrants,  which were  purchased  for $0.125 per warrant,  to acquire an
additional 420,000 shares of common stock at $5.35 per share and are exercisable
through May 6, 2004. At the election of the Company,  the warrants may be called
at a  redemption  price of $0.01 per warrant at any time after any date at which
the average daily per share closing bid price for the immediately  proceeding 20
consecutive  trading days exceeds  $10.70.  No warrants  have been  exercised as
of June 30, 1999. Total proceeds, net of offering costs, were approximately $7.4
million of which $4.9 million was used to repay debt under the Revolving  Credit
Facility  with  the  remainder   being  utilized  to  satisfy   working  capital
requirements and fund a portion of the Company's future exploration program.

                                       8
<PAGE>


     Effective May 21, 1999, the Company amended and restated it's  Nonqualified
Stock Option Plan. In  conjunction  with the amendment of the plan,  the Company
exchanged, on a voluntary basis, 594,733 outstanding  Nonqualified Stock options
of certain  employees  and  Directors  of the Company and for 326,700 new common
stock options.  The grant price of the  replacement  options was $7.0625,  which
approximates  the fair market value on the date of grant.  The reissued  options
have a ten-year term with 50% of the options vesting  immediately on the date of
grant with the  remaining  50% vesting on May 21,  2000.  On May 21,  1999,  the
Company also  elected to issue  114,000 new  ten-year  common  stock  options to
employees,  which vest 100% on May 21, 2001.  The grant price of the new options
was $7.0625,  which  approximates the fair market value on the date of grant. On
June 1,  1999  the  Company  issued  21,000  10 year  common  stock  options  to
non-employee directors with an exercise price of $7.28 per share vesting 100% on
June 1, 2001.

       The Company  accounts for Stock Based  Compensation  in  accordance  with
Financial  Accounting  Standards Board Statement No. 123 - "Accounting for Stock
Based  Compensation,"  ("SFAS No.  123").  Under SFAS No.  123,  the  Company is
permitted  to either  record  expenses  for  stock  options  and other  employee
compensation plans based on their fair value at the date of grant or to continue
to apply its current accounting policy under Accounting Principles Board Opinion
No. 25 ("APB No.25") and recognize  compensation  expense,  if any, based on the
intrinsic value of the equity  instrument at the  measurement  date. The Company
elected to continue following APB No. 25.


                                       9
<PAGE>


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

         The  following  is  management's  discussion  and  analysis  of certain
significant  factors  that  have  affected  certain  aspects  of  the  Company's
financial  position and  operating  results  during the periods  included in the
accompanying  unaudited  condensed   consolidated  financial  statements.   This
discussion  should  be read  in  conjunction  with  the  accompanying  unaudited
condensed consolidated financial statements included elsewhere in this Form 10-Q
and with the Company's audited consolidated financial statements included in the
Company's  annual  report on Form 10-K for the year  ended  December  31,  1998.
Unless otherwise  indicated by the context,  references  herein to the "Company"
mean Edge Petroleum Corporation,  a Delaware corporation that is the registrant,
and its subsidiaries.

Overview

         Edge Petroleum  Corporation is an independent energy company engaged in
the  exploration,  development  and  production  of oil and  natural  gas.  Edge
conducts its operations  primarily along the onshore Gulf Coast with its primary
emphasis  in  South  Texas  and  South  Louisiana  where it  currently  controls
interests in excess of 192,000  gross acres under lease and option.  The Company
explores for oil and natural gas by  emphasizing  an integrated  application  of
highly advanced data visualization  techniques and computerized 3-D seismic data
analysis to identify potential hydrocarbon  accumulations.  The Company believes
its approach to processing and analyzing geophysical data differentiates it from
other  independent  exploration  and production  companies and is more effective
than  conventional  3-D seismic data  interpretation  methods.  The Company also
believes it maintains  one of the largest  databases of onshore South Texas Gulf
Coast 3-D seismic data of any  independent  oil and natural gas company,  and is
continuously acquiring additional data within this core region.

         The Company  acquires  3-D seismic  data by  organizing  and  designing
regional data  acquisition  surveys for its proprietary  use, as well as through
selective  participation in regional  non-proprietary  3-D surveys.  The Company
negotiates  seismic  options  for a  majority  of the areas  encompassed  by its
proprietary surveys, thereby allowing it to secure identified prospect leasehold
interests  on  a   non-competitive,   pre-arranged   basis.   In  the  Company's
non-proprietary 3-D survey areas, the Company's technical  capabilities allow it
to rapidly and  comprehensively  evaluate  large volumes of regional 3-D seismic
data,  facilitating  its  ability  to  identify  attractive  prospects  within a
surveyed  region and to secure the  corresponding  leasehold  interests ahead of
other industry participants.

     The Company's  extensive  technical  expertise has enabled it to internally
generate  substantially all of its 3-D prospects drilled to date and to assemble
a large  portfolio  of 3-D based  prospects  for future  drilling.  The  Company
pursues  drilling  opportunities  that  include a blend of  shallower,  normally
pressured  reservoirs that generally involve moderate costs and risks as well as
deeper,  over-pressured  reservoirs  that  generally  involve  greater costs and
risks,  but have higher  economic  potential.  In recent years,  the Company has
expanded   its  relative   focus  to  increase   its  exposure  to   exploration
opportunities  in the deeper  geological  section.  The  Company  mitigates  its
exposure  to  exploration  costs  and risk by  conducting  its  operations  with
industry partners,  including major oil companies and large  independents,  that
generally pay a disproportionately  greater share of seismic acquisition and, in
many  instances,  leasing and drilling  costs than the Company.  The Company may
seek to participate in an increased  number of externally  generated  prospects,
including those in which the Company pays a disproportionate  share of the cost,
depending  upon the  quality,  size,  price and other  factors  relating to such
prospects.


                                       10
<PAGE>


         The Company uses the  full-cost  method of  accounting  for its oil and
natural gas  properties.  Under this method,  all  acquisition,  exploration and
development costs,  including certain general and administrative  costs that are
directly attributable to the Company's acquisition,  exploration and development
activities,  are  capitalized  in a "full-cost  pool" as  incurred.  The Company
capitalizes  internal Geological and Geophysical ("G&G") costs that are directly
attributable to acquisition,  exploration and development  activities to oil and
natural gas properties.  Total internal G&G costs  capitalized  during the three
months ended June 30, 1999 and 1998 were  $505,148 and  $654,777,  respectively,
and during  the six months  ended  June 30,  1999 and 1998 were  $1,068,740  and
$1,194,742,  respectively.  The Company records  depletion of its full-cost pool
using the unit of production method.  Investments in unproved properties are not
subject to amortization  until the proved reserves  associated with the projects
can be  determined  or until  impaired.  To the extent  that  capitalized  costs
subject to  amortization  in the full-cost pool (net of depletion,  depreciation
and  amortization  and related deferred taxes) exceed the present value (using a
10% discount rate) of estimated  future net after-tax cash flows from proved oil
and natural gas  reserves,  such excess  costs are charged to  operations.  Once
incurred, an impairment of oil and natural gas properties is not reversible at a
later  date.  Impairment  of oil and  natural  gas  properties  is assessed on a
quarterly  basis in conjunction  with the Company's  quarterly  filings with the
Security and Exchange  Commission.  At June 30, 1999,  no full cost ceiling test
write down of oil and natural gas properties was necessary.

      Due to the  instability  of oil and natural  gas  prices,  the Company has
entered into, from time to time, price risk management transactions (e.g., swaps
and  collars)  for a portion of its  natural  gas  production  to achieve a more
predictable  cash flow, as well as to reduce  exposure from price  fluctuations.
While  the use of these  arrangements  limits  the  benefit  to the  Company  of
increases  in the price of  natural  gas it also  limits  the  downside  risk of
adverse price  movements.  The Company's  hedging  arrangements  apply to only a
portion of its  production  and provide only partial  price  protection  against
declines in natural gas prices and limits  potential gains from future increases
in prices.  The Company  accounts for these  transactions as hedging  activities
and, accordingly,  gains and losses are included in oil and natural gas revenues
during the period the hedged  production  occurs.   During  December  1998,  the
Company  entered into a fixed price swap for $1.957 per MMbtu  (delivered  price
basis, Houston Ship Channel),  with settlement for each calendar month occurring
five business days following the publishing of the Inside F.E.R.C. Gas Marketing
Report.  This fixed  price swap  covers  13,000  MMbtu per day and is  effective
beginning March 1, 1999 and expires on October 31, 1999.  During April 1999, the
Company entered into an additional  fixed price swap for $2.145 per MMbtu.  This
fixed price swap covers  3,000 MMbtu per day and is effective  beginning  May 1,
1999 and expires on October 31, 1999. Total natural gas production  hedged under
these arrangement was 1,366,000 MMbtu and 1,769,000 MMbtu,  respectively for the
three-month and six-month periods ended June 30, 1999.  Existing swaps currently
cover approximately 76% of current daily production. During the six months ended
June 30, 1998,  the Company had in place three  natural gas  commodity  collars,
expiring on January 31, April 30, and June 30, 1998, respectively. These collars
covered  5,000-10,000 MMbtu per day, or approximately 45% of the Company's daily
production,  with floating floor and ceiling  prices  ranging  between $2.15 and
$3.15 per MMbtu.  Total natural gas production  hedged under these  arrangements
was 1,060,000 MMbtu and 1,510,000 MMbtu,  respectively,  for the three-month and
six-month periods ended June 30, 1998.  Included within natural gas revenues for
the three and six month periods ended June 30, 1999 and 1998 was  ($258,534) and
$30,000 and  ($116,188)  and $66,700,  respectively,  representing  (losses) and
gains from swap and collar activity.

         The  Company's  revenue,  profitability  and future  rate of growth and
ability to borrow funds or obtain additional capital,  and the carrying value of
its properties,  are substantially  dependent upon prevailing prices for oil and
natural  gas.  These  prices are  dependent  upon  numerous  factors  beyond the
Company's control, such as economic,  political and regulatory  developments and
competition  from other  sources  of energy.  Even  though oil and  natural  gas
commodity prices have shown signs of recent recovery,  a substantial or extended
decline in oil and natural gas prices  could have a material  adverse  effect on
the Company's financial  condition,  results of operation and access to capital,
as well as the  quantities  of oil and natural gas reserves that the Company may
economically produce.




                                       11
<PAGE>


RESULTS OF OPERATIONS

Three Months Ended June 30, 1999 Compared to the Three Months Ended June 30,
1998

Revenue and Production

     Oil and  natural  gas  revenues  for the three  months  ended June 30, 1999
increased 9% from $3.8 million to $4.2 million,  as compared to the three months
ended June 30, 1998.  Production  volumes for oil and  condensate  for the three
months ended June 30, 1999 increased 52% from 39 MBbls to 60 MBbls,  as compared
to the three  months ended June 30,  1998.  The  increase in oil and  condensate
production  during the three  months ended June 30, 1999  increased  revenues by
$239,000 (based on 1998 comparable quarter average prices), further increased by
a 9%  increase in the average  oil and  condensate  sales price which  increased
revenues by $65,000 (based on current quarter  production).  Production  volumes
for natural gas for the three months ended June 30, 1999 increased 9% from 1,520
MMcfs to 1,660 MMcfs,  as compared to the three months ended June 30, 1998.  The
increase in natural gas  production  during the three months ended June 30, 1999
increased revenues by $312,000,  offset by an 8% decrease in the average natural
gas sales price which  decreased  revenues by $274,000.  The increase in oil and
natural gas  production  was primarily due to 23 gross (6.05 net) new successful
exploratory  and  development  wells being drilled and completed  since June 30,
1998 offset by normal  production  declines  from existing  wells.  As described
within hedging  activities  above,  included within natural gas revenues for the
three  months  ended  June  30,  1999  and  1998  was  ($258,534)  and  $30,000,
respectively,  representing  (losses)  and gains from swap and collar  activity.
Hedging   activities   decreased  the  effective  natural  gas  sales  price  by
approximately  $0.16 per Mcf (or 7%) and  increased  the  effective  natural gas
price by approximately $0.02 per Mcf (or 1%) for the three-months ended June 30,
1999 and 1998, respectively.

       The following  table sets forth certain  operational  data of the Company
for the periods presented:

<TABLE>

                                                 Three Months Ended            1999 Period Compared
                                                       June 30,                   to 1998 Period
                                            ----------------------------     ------------------------
                                                                               Increase   % Increase
                                                1999            1998          (Decrease)   (Decrease)
Production volumes:
<S>                                          <C>             <C>              <C>            <C>
   Oil and condensate (Bbls)                     59,641          39,351         20,290         52%
   Natural gas (Mcf)                          1,660,259       1,520,368        139,891          9%
   Natural gas equivalents (Mcfe)             2,018,105       1,756,474        261,631         15%

Average sales prices:
   Oil and condensate ($ per Bbl)               $ 12.87         $ 11.78         $ 1.09          9%
   Natural gas ($ per Mcf)                      $  2.06         $  2.23         $ 0.17          8%
   Natural gas equivalents ($ per Mcfe)         $  2.08         $  2.19         $ 0.11          5%

Operating revenues:
   Oil and condensate                       $   767,402     $   463,658     $  303,744         66%
   Natural gas                                3,422,047       3,385,387         36,660          1%
                                            -----------     -----------     ----------
Total                                       $ 4,189,449     $ 3,849,045     $  340,404          9%
                                            ===========     ===========     ==========
</TABLE>

Costs and Operating Expenses

         Lifting  costs for the three months ended June 30, 1999  decreased  13%
from  $558,754 to $487,242 as compared to the three  months  ended June 30, 1998
due primarily to operating  efficiencies in the field.  Lifting costs were $0.24
per Mcfe and $0.32 per Mcfe for the three-month  periods ended June 30, 1999 and
1998, respectively.

         Depletion, depreciation and amortization expense ("DD&A") for the three
months  ended  June 30, 1999  increased  41% from  $1,713,437 to $2,410,543,  as
compared to the three months ended June 30, 1998.  Included  within DD&A for the
three-month  periods  ended  June 30,  1999 and 1998 was $2.2  million  and $1.5
million,  respectively,  representing  depletion  expense of oil and natural gas
property,


                                       12
<PAGE>


which  increased  by 47%.  Increased  oil and natural gas  production
increased  depletion  expense by  $228,000  and a 28%  increase  in the  overall
depletion rate further increased depletion expense by $472,000.  The increase in
the  depletion  rate was  primarily  attributable  to  abandonments  of  certain
projects,  prospects  and  wells  and dry  holes  drilled  since  June 30,  1998
contributing to an overall increase in finding cost. Depletion expense on a unit
of production basis for the three-month periods ended June 30, 1999 and 1998 was
$1.11 per Mcfe and $0.87 per Mcfe, respectively.  The remaining decrease in DD&A
is due  primarily  to the  amortization  of  deferred  loan  cost on the  Credit
Facility which was fully amortized at March 31, 1999.

         General and administrative  expenses ("G&A") for the three months ended
June 30, 1999  increased 5% from  $1,050,516 to  $1,097,939,  as compared to the
three months ended June 30, 1998. The increase in G&A was primarily attributable
to a $126,000  decrease in overhead and  management  fees  received from various
management,  operating and seismic agreements during the three months ended June
30, 1999.  Overhead and  management  fees are recorded as a reduction of G&A and
were  approximately  $118,000  and  $244,000 for the three months ended June 30,
1999 and 1998,  respectively.  General and administrative  expenses on a unit of
production  basis for the three-month  periods ended June 30, 1999 and 1998 were
$0.54 per Mcfe and $0.60 per Mcfe, respectively.

         Unearned  compensation expense for the three months ended June 30, 1999
decreased  from $176,456 to $83,977,  as compared to the three months ended June
30, 1998. The decrease is due to the  resignation of the former CEO and Chairman
of the  Board  during  November  of 1998  whereby  he  vested  in his  remaining
restricted stock grant. The Company charged to expense his unamortized  unearned
compensation upon his resignation.

         Interest  expense for the three  months ended June 30, 1999 was $29,860
as compared  to $12,535  for the three  months  ended June 30,  1998.  The total
amount of interest  capitalized  to oil and natural  gas  properties  during the
three-month  periods  ended June 30,  1999 and 1998 was  $120,685  and  $65,484,
respectively.  The  increase in interest  expense is due to the  increase in the
weighted  average  long-term  debt balance  outstanding  during the three months
ended June 30,  1999  compared to the three month  period  ended June 30,  1998.
Weighted  average debt was $9.1 million for the three months ended June 30, 1999
compared to $4.4 million for the three months ended June 30, 1998.

         Interest income for the three months ended June 30, 1999 decreased from
$56,049 to $14,689,  as compared to the three months  ended June 30,  1998.  The
decrease in interest income is due to the overall reduction in invested funds.

         Due to the Company incurring a net loss for the three-months ended June
30, 1999 and due to the Company having  significant  deferred tax assets, no tax
benefit (expense) was recorded.  Due to the uncertainty of the Company's ability
to become  profitable in the future an allowance has been provided to offset the
tax benefits of certain tax assets. Should the Company have net income in future
periods,  income tax expense will be recorded upon  utilization of available tax
assets. Tax expense for the three-months ended June 30, 1998 was $33,981.

         For the three months ended June 30, 1999,  the Company had an operating
loss of $(224,782)  compared to operating  income of $37,289 for the three month
period  ended June 30,  1998,  primarily  reflecting  increased  DD&A  offset by
increased oil and natural gas revenues  resulting from increased oil and natural
gas production.  The net loss was $(239,953) for the three months ended June 30,
1999 as compared to net income of $46,822 for the three-month  period ended June
30, 1998.

The Six Months Ended June 30, 1999 Compared to the Six Months Ended June 30,
1998

Revenue and Production

      Oil and  natural  gas  revenues  for the six months  ended  June 30,  1999
increased  1% from $7.6 million to $7.7  million,  as compared to the six months
ended June 30,  1998.  Production  volumes  for oil and  condensate  for the six
months ended June 30, 1999 increased 19% from 81 MBbls to 97 MBbls,  as compared
to the six months  ended  June 30,  1998.  The  increase  in oil and  condensate
production  increased  revenues by  $198,000  (based on 1998  comparable  period
average  prices) and an 8% decrease in average oil and  condensate  sales price


                                       13
<PAGE>


decreased  revenue by $94,000  (based on current  year  production).  Production
volumes for  natural  gas  increased  17% from 2,843  MMcfs to 3,329  MMcfs,  as
compared  to the six months  ended June 30,  1998.  The  increase in natural gas
production  increased  revenues  by $1.1  million,  offset by a 15%  decrease in
average natural gas sales price which decreased  revenues by $1.1 million.  The
increase in oil and natural  gas  production  was due to 23 gross (6.05 net) new
successful  exploratory and development  wells being drilled and completed since
June 30, 1998 offset by normal  production  declines  from  existing  wells.  As
described within hedging activities above,  included within natural gas revenues
for the six months  ended June 30,  1999 and 1998 was  $(116,188)  and  $66,700,
respectively,  representing  gains and  (losses)  from  swap and collar
activity.  Hedging activities decreased the effective natural gas sales price by
approximately $0.3 per Mcf (or 1%) and increased the effective natural gas price
by  approximately  $0.02 per Mcf (or 1%) for the six months  ended June 30, 1999
and 1998, respectively.

      The following table sets forth-certain operational data of the Company for
the periods presented:

<TABLE>
                                                   Six Months Ended            1999 Period Compared
                                                       June 30,                   to 1998 Period
                                            ----------------------------     ------------------------
                                                                               Increase   % Increase
                                                1999            1998          (Decrease)   (Decrease)
Production volumes:
<S>                                              <C>             <C>             <C>           <C>
   Oil and condensate (Bbls)                     97,051          81,492         15,559         19 %
   Natural gas (Mcf)                          3,328,682       2,843,391        485,291         17 %
   Natural gas equivalents (Mcfe)             3,910,988       3,332,343        578,645         17 %

Average sales prices:
   Oil and condensate ($ per Bbl)               $ 11.78         $ 12.75        $ (0.97)        (8)%
   Natural gas ($ per Mcf)                      $  1.98         $  2.32        $ (0.34)       (15)%
   Natural gas equivalents ($ per Mcfe)         $  1.98         $  2.29        $ (0.31)       (14)%

Operating revenues:
   Oil and condensate                       $ 1,143,421     $ 1,039,114     $  104,307         10 %
   Natural gas                                6,588,216       6,595,597         (7,381)        (0)%
                                            -----------     -----------     ----------
Total                                       $ 7,731,637     $ 7,634,711     $   96,926          1 %
                                            ===========     ===========     ==========
</TABLE>

Costs and Operating Expenses

         Lifting costs for the six months ended June 30, 1999  increased 4% from
$928,813 to $966,370,  as compared to the six months  ended June 30,  1998,  due
primarily  to  increased  oil and natural  gas  production  offset by  operating
efficiencies  in the field.  Lifting  costs on a unit of  production  basis were
$0.25 per Mcfe and $0.28 per Mcfe for the six-month  periods ended June 30, 1999
and 1998, respectively.

         Depletion,  depreciation and amortization  expense ("DD&A") for the six
months ended June 30, 1999  increased  49% from  $2,900,758  to  $4,313,303,  as
compared to the six months  ended June 30,  1998.  Included  within DD&A for the
six-month  periods ended June 30, 1999 and 1998 was $4 million and $2.6 million,
respectively,  representing  depletion  expense of oil and natural gas property,
which  increased  by 54%.  Increased  oil and natural gas  production  increased
depletion  expense by $446,000 and a 31% increase in the overall  depletion rate
further increased  depletion expense by $954,000.  The increase in the depletion
rate was primarily  attributable to abandonments of certain projects,  prospects
and wells and dry holes drilled since June 30, 1998  contributing  to an overall
increase in finding cost.  Depletion  expense on a unit of production  basis for
the  six-month  period ended June 30, 1999 and 1998 was $1.01 per Mcfe and $0.77
per Mcfe, respectively.

         General and  administrative  expenses for the six months ended June 30,
1999  increased  10% from  $1,916,827 to  $2,099,758,  as  compared  to the  six
months ended June 30, 1998. The increase in G&A was primarily  attributable to a
$251,000   decrease  in  overhead  and  management  fees  billed  under  various
management,  operating and seismic  agreements  during the six months ended June
30, 1999.  Total overhead and management fees are recorded as a reduction of G&A
and were approximately  $173,000 and $424,000,  respectively,  for the six-month


                                       14
<PAGE>


periods ended June 30, 1999 and 1998. G&A on a unit of production  basis for the
six-month  periods ended June 30, 1999 and 1998 was $0.54 per Mcfe and $0.58 per
Mcfe, respectively.

         Unearned  compensation  expense for the six months  ended June 30, 1999
decreased  from  $331,508 to $167,953,  as compared to the six months ended June
30, 1998. The decrease is due to the  resignation of the former CEO and Chairman
of the  Board  during  November  of 1998  whereby  he  vested  in his  remaining
restricted stock grant. The Company charged to expense his unamortized  unearned
compensation upon his resignation.

         Interest  expense  for the six months  ended June 30,  1999 was $68,186
compared to $12,617 for the six months ended June 30, 1998.  The total amount of
interest  capitalized to oil and natural gas properties was $346,282 and $65,484
for the six months ended June 30, 1999 and 1998,  respectively.  The increase in
interest expense is due to the increase in the weighted  average  long-term debt
balance  outstanding  during the six months ended June 30, 1999  compared to the
six month period ended June 30, 1998.  Weighted  average debt was $10.5  million
for the six months  ended June 30,  1999  compared  to $2.2  million for the six
months ended June 30, 1998.

         Interest  income for the six months  ended  June 30,  1999 was  $25,711
compared to $102,259  for the six months  ended June 30,  1998.  The decrease in
interest income is due to the overall reduction in invested funds.

        Due to the Company  incurring  a net loss for the six months  ended June
30, 1999 and due to the Company having  significant  deferred tax assets, no tax
benefit (expense) was recorded.  Due to the uncertainty of the Company's ability
to become profitable in the future, an allowance has been provided to offset the
tax benefits of certain tax assets. Should the Company have net income in future
periods  income tax expense will be recorded upon the  utilization  of available
tax assets. Tax expense for the six months ended June 30, 1998 was $367,862.

         For the six months  ended June 30,  1999,  the Company had an operating
loss of $(502,966)  compared to operating  income of $943,822 for the six months
ended  June 30,  1998,  primarily  reflecting  increased  DD&A and G&A offset by
increased oil and natural gas revenues  resulting from increased oil and natural
gas  production.  The net loss was  $(545,441) for the six months ended June 30,
1999 compared to net income of $2.4 million,  $665,602 before  cumulative effect
of accounting change, for the six months ended June 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

     On May 7, 1999,  the Company  completed a "Private  Offering"  of 1,400,000
shares of common  stock at a price of $5.40 per common  share.  The Company also
issued  warrants,  which were  purchased  for $0.125 per warrant,  to acquire an
additional 420,000 shares of common stock at $5.35 per share and are exercisable
through May 6, 2004. At the election of the Company,  the warrants may be called
at a  redemption  price of $0.01 per warrant at any time after any date at which
the average daily per share closing bid price for the immediately  proceeding 20
consecutive  trading days exceeds  $10.70.  No warrants  have been  exercised as
of June 30, 1999. Total proceeds, net of offering costs, were approximately $7.4
million of which $4.9 million was used to repay debt under the Revolving  Credit
Facility  with  the  remainder   being  utilized  to  satisfy   working  capital
requirements and fund a portion of the Company's future exploration program.

         The Company had cash and cash  equivalents at June 30, 1999 of $436,110
consisting  primarily of  short-term  money market  investments,  as compared to
$272,428 at December 31, 1998.  Working capital  (deficit) was $(2.7) million at
June 30, 1999, as compared to $(8.3) million at December 31, 1998.

         Operating cash flow was approximately $3.9 million and $4.3 million for
the six-month periods ended June 30, 1999 and 1998, respectively. Operating cash
flow,  a measure  of  performance  for  exploration  and  production  companies,


                                       15
<PAGE>


represents cash flows from operating  activities  prior to changes in assets and
liabilities.  Operating  cash flow should not be considered in isolation or as a
substitute  for  net  income,   operating  income,  cash  flows  from  operating
activities or any other measure of financial performance presented in accordance
with generally accepted  accounting  principles or as a measure of profitability
or liquidity.

         During the six months  ended June 30,  1999,  the Company  continued to
reinvest a  substantial  portion of its cash flows to  increase  its 3-D project
portfolio,  improve  its 3-D  seismic  interpretation  technology  and  fund its
drilling program. Capital expenditures during the six months ended June 30, 1999
were  approximately  $5.5  million as compared  to $20  million  during the same
period in 1998.  The Company  expended  $2.5 million in its drilling  operations
resulting  in the  drilling  of gross 8 (3.19 net)  wells  during the six months
ended June 30,  1999 as  compared  to gross 50 (23.9 net) wells  during the same
period in 1998. Two wells,  spud prior to June 30, 1999, are currently  drilling
or in the process of being completed, the Varn #2 located in South Louisiana and
the Evans #1 located in South Texas. Land and data acquisition expenditures were
$3.0  million and were  largely  attributable  to its  Nodosaria  Embayment  3-D
Project  Area in  South  Louisiana.  Total  capital  expenditures  for  1999 are
expected to be approximately $15 million.

         Due to the Company's active  exploration and development and technology
enhancement  programs,  the Company has  experienced  and expects to continue to
experience substantial working capital requirements. The Company intends to fund
its 1999 capital  expenditures,  commitments  and working  capital  requirements
through  cash flows from  operations,  available  borrowings  under its existing
Revolving  Credit  Facility,   and  to  the  extent  necessary  other  financing
activities.  To provide  additional  working  capital the Company  continues  to
market a portion  of its  interest  in various  Company  generated  drill  ready
prospects.  Additionally,  the Company is currently evaluating various financing
and refinancing  options as well as  divestitures of certain  non-core and under
performing  assets.  The Company  believes  it will be able to generate  capital
resources and liquidity  sufficient  to fund its capital  expenditures  and meet
such financial obligations as they come due. In the event such capital resources
are not  available to the Company,  its  drilling  and other  activities  may be
curtailed.

Revolving Credit Facility

         During July 1995, the Company entered into a revolving  credit facility
(the  "Revolving  Credit  Facility")  with a bank to finance  temporary  working
capital  requirements.  The Revolving Credit Facility provided up to $20 million
in borrowings  limited by a borrowing  base, as defined by the Revolving  Credit
Facility.  The Revolving  Credit Facility  provided for interest at the lender's
prime rate plus 0.75%. The borrowing base was subject to review by the bank on a
quarterly basis and could be adjusted subject to the provisions of the Revolving
Credit  Facility.  Effective April 1, 1998, the Company amended and restated its
Revolving  Credit  Facility to provide a revolving  line of credit of up to $100
million  bearing  interest  at a rate  equal to prime  or LIBOR  plus  1.5% - 2%
depending on the level of borrowing  base  utilization.  The  Company's  initial
borrowing  base  authorized  by the banks was  approximately  $15  million.  The
Revolving  Credit  Facility  is secured by  substantially  all the assets of the
Company.

         Effective  September  29,  1998,  the  Company had its  borrowing  base
redetermined and amended its Revolving Credit  Facility.  The initial  borrowing
base authorized by the bank was $15 million.  Beginning  October 1, 1998, and on
the first day of each month  thereafter,  the borrowing  base was required to be
reduced by $550,000.

         Effective March 1, 1999, the Company and the Bank amended the Revolving
Credit Facility to include the following  terms;  1) the initial  borrowing base
was $12 million  comprised of a two tranche  financing of a $9 million Revolving
Credit Facility and a $3 million term facility, 2) Beginning May 1, 1999, and on
the first day of each month thereafter,  the Revolving Credit Facility borrowing
base is required  to be reduced by  $400,000,  3) 75% of prospect  sales will be
used to pay down the term  facility  with the  remaining  unpaid  term  facility
balance maturing on August 31, 1999. On May 8, 1999, from proceeds  generated by
the Private Offering, the Company repaid the $3 million term loan in addition to


                                       16
<PAGE>


$1.9 million of the Revolving Credit Facility.  Total outstanding long-term debt
as of June 30, 1999 was $7.15 million.


         Effective   July  1,  1999,   the  Company  had  its   borrowing   base
redetermined. The initial borrowing base authorized by the bank is $8.8 million.
Beginning  August 1, 1999,  and on the first day of each month  thereafter,  the
borrowing base is required to be reduced by $400,000.  Total borrowing available
under the Revolving Credit Facility was approximately  $1.65 million at June 30,
1999.

         The  Revolving  Credit   Facility   provides  for certain restrictions,
including but not limited to, limitations on additional borrowings and issues of
capital stock,  sales of its oil and natural gas properties or other collateral,
engaging in merger or  consolidation  transactions and prohibitions of dividends
and certain distributions of cash or properties and certain liens. The Revolving
Credit  Facility also contains  certain  financial  covenants.  The Tangible Net
Worth Covenant  requires that at the end of each quarter the Company's  Tangible
Net Worth be at least 90% of the Company's actual tangible net worth as reported
at December 31, 1998 (or  $33,260,720)  plus 50% of positive net income and 100%
of other  increases  in equity  for all fiscal  quarters  ending  subsequent  to
December 31, 1998.  The Fixed Charge  Covenant  requires that at the end of each
quarter  beginning June 30, 1999, the ratio of annualized EBITDA (as defined) to
the sum of  annualized  interest  expense  plus  50% of the  quarter  end  loans
outstanding  must be at least 1.25 to 1.00.  Interest  will  accrue at a rate of
LIBOR plus 1.75% - 2.75%  depending on the borrowing base  utilization.  At June
30, 1999 the Company was in compliance with the above mentioned covenants.

Accounting Change

         The Company uses the  full-cost  method of  accounting  for its oil and
natural gas  properties.  Under this method,  all  acquisition,  exploration and
development costs that are directly  attributable to the Company's  acquisition,
exploration and development  activities are capitalized in a "full-cost pool" as
incurred.  In the second  quarter  of 1998 and  effective  January 1, 1998,  the
Company changed its method of accounting for internal geological and geophysical
("G&G")  costs  to one of  capitalization  of such  costs,  which  are  directly
attributable to acquisition,  exploration and development activities, to oil and
natural gas properties.  Prior to the change the Company expensed these costs as
incurred.  The Company  believes  the  accounting  change  provides for a better
matching of  revenues  and  expenses  and  enhances  the  comparability  of it's
financial  statements  with those of other  companies  that follow the full-cost
method of accounting.  The  $1,780,835 (or $0.23 basic and diluted  earnings per
share)  cumulative  effect of the change in prior  years  (after  reduction  for
income  taxes of  $958,910)  is included in income for the six months ended June
30, 1998.

Year 2000

         The Company has  completed its  assessment of the Year 2000  processing
issues of its internal  technology  systems,  considering  current financial and
accounting,  production,  land and  geological  computer  systems  and  software
utilized by the Company. Due to the need for improved management reporting,  the
Company is in the process of replacing its existing  financial  and  accounting,
production and land applications with new software which is year 2000 compliant.
Implementation  is expected to be completed on or before September 30, 1999 at a
total cost of  approximately  $235,000.  As of June 30,  1999,  the  Company has
incurred  approximately  $180,000 converting to its new financial and accounting
system and software with a majority of the remaining  cost to be incurred  prior
to September 30, 1999.  The Company expects the production and land applications
to be operational on or before  September 30, 1999. These costs have been funded
from cash flows from  operations  and the cost of the new software and necessary
hardware upgrades have been  capitalized.  Future costs to address the Year 2000
issue are also  expected to be funded from cash flows from  operations,  and the
future  costs  of  new  software  and  hardware  upgrades  are  expected  to  be
capitalized.  Based on  assertions  made by  vendors,  the Company  believes its
geological systems and software are Year 2000 compliant. In addition the Company
is performing other forms of due diligence to ensure that its geological systems
are compliant.  The Company has not identified  any  non-information  technology
systems that use embedded technology on which it relies and which it believes to
have a Year 2000 problem.  However, the Company's assessment of these systems is
expected to continue through September 30, 1999.

         The Company is also in the process of evaluating  the risk presented by
potential Year 2000  non-compliance  by third  parties.  Because such risks vary
substantially, companies are being contacted based on the estimated magnitude of
risk  posed to the  Company  by their  Year  2000  non-compliance.  The  Company


                                       17
<PAGE>


anticipates that these efforts will continue through 1999 and will not result in
significant costs to the Company.

         The Company believes that its most reasonable  likely  worst-cast  Year
2000  scenario  would be the shut-down of its purchaser  pipelines.  Should this
occur the  Company  would be  required  to  transport  its  natural  gas through
pipelines  of  other  purchasers  that  are  Year  2000  compliant  or  shut  in
production  volumes  from  being  produced.  Should  this  occur  prouction  and
associated cash flows may be impacted.

         The  Company's  assessment  of  its  Year  2000  issues  involves  many
assumptions. There can be no assurance that the Company's assumptions will prove
accurate, and actual results could differ significantly from the assumptions. In
conducting its Year 2000 compliance efforts, the Company has relied primarily on
vendor  representations  with  respect  to  internal  computerized  systems  and
representations   from  third  parties  with  which  the  Company  has  business
relationships and has not independently verified  representations.  There can be
no assurance that these representations will prove accurate. A Year 2000 failure
could result in a business  interruption  that  adversely  affects the Company's
business,  financial  condition  or results of  operations.  Although  it is not
currently aware of any likely business disruptions,  the Company is developing a
contingency plan to address and assess the readiness of its material  suppliers,
customers and other  entities as it relates to Year 2000  processing  issues and
expects this work to be completed on or before  September 30, 1999.  The Company
is not insured for this type of a loss should a loss occur.

Accounting Pronouncements

     Derivatives - In June 1998, the Financial Accounting Standards Board issued
Statement of Financial  Accounting Standard No. 133,  "Accounting for Derivative
Instruments  and  Hedging   Activities"   ("SFAS  133").  SFAS  133  establishes
accounting  and  reporting  standards  for  derivative  instruments  and hedging
activities  that require an entity to recognize all  derivatives  as an asset or
liability  measured  at  fair  value.  Depending  on  the  intended  use  of the
derivatives,  changes in its fair value will be reported in the period of change
as either a component of earnings or a component of other comprehensive income.

     In June 1999, the Financial  Accounting Standards Board issued SFAS No.137,
"Accounting for Derivative  Instruments and Hedging Activities - Deferral of the
Effective  Date of FASB  Statement  No. 133" ("SFAS  137").  SFAS 137 delays the
effective  date for  implementation  of SFAS 133 for one  year  making  SFAS 133
effective for all fiscal  quarters of all fiscal years  beginning after June 15,
2000.  Retroactive  application to periods prior to adoption is not allowed. The
Company has not quantified the impact of adoption on its financial statements or
the date it intends to adopt. Earlier application of SFAS 133 is encouraged, but
not prior to the beginning of any fiscal  quarter that begins after  issuance of
the statement.

FORWARD LOOKING STATEMENTS

         The statements contained in all parts of this document,  including, but
not limited to, those relating to the Company's  drilling plans, its 3-D project
portfolio, capital expenditures,  use of Offering proceeds, future capabilities,
the  sufficiency of capital  resources and liquidity to support  working capital
and capital expenditure  requirements,  reinvestment of cash flows and any other
statements  regarding  future  operations,  financial  results,  business plans,
sources of liquidity and cash needs and other statements that are not historical
facts are forward  looking  statements.  When used in this  document,  the words
"anticipate,"  "estimate,"  "expect,"  "may,"  "project,"  "believe" and similar
expressions  are  intended  to be among the  statements  that  identify  forward
looking statements. Such statements involve risks and uncertainties,  including,
but  not  limited  to,  those  relating  to  the  Company's  dependence  on  its
exploratory drilling  activities,  the volatility of oil and natural gas prices,
the need to replace reserves depleted by production,  operating risks of oil and
natural gas  operations,  the  Company's  dependence on its key  personnel,  the
Company's reliance on technological development and possible obsolescence of the
technology  currently used by the Company,  significant capital  requirements of
the Company's  exploration and development and technology  development programs,
the potential  impact of government  regulations,  litigation and  environmental
matters,  the  Company's  ability to manage its growth and achieve its  business
strategy,  competition,  the  uncertainty of reserve  information and future net


                                       18
<PAGE>


revenue estimates,  property acquisition risks and other factors detailed in the
Company's  Form  10-K  and  other  filings  with  the  Securities  and  Exchange
Commission.  Should one or more of these risks or uncertainties materialize,  or
should  underlying  assumptions  prove  incorrect,   actual  outcomes  may  vary
materially from those indicated.



                                       19
<PAGE>




                           PART II - OTHER INFORMATION

Item 1 - Legal Proceedings...............................................   None

Item 2 - Changes in Securities and Use of Proceeds......................

     On May 6, 1999 the  Company  issued  1,400,000  shares of Common  Stock and
420,000 warrants (the "Warrants"), each warrant entitling the holder to purchase
one share of Common  Stock.  The sale  consisted of units of one share of common
stock and 0.3  warrants,  each unit priced at $5.4375.  The total price paid for
these  securities  was  $7,612,000  before fees and expenses.

     The  purchasers of securities  were as follows:  Mark G. Egan;  The Private
Investment  Fund;   Special   Situations  Private  Equity  Fund,  L.P.;  Special
Situations Fund III, L.P.;  Special Situations Cayman Fund, L.P.; and an IRA for
John W. Elias.

     The sale of the  shares  of Common  Stock and  Warrants  were  exempt  from
registration  requirements of the Securities Act of 1933, as amended,  by virtue
of section 4(2) thereof as a transaction not involving any public offering.

     Each Warrant is  exercisable  for the purchase of one share of Common Stock
upon a price of $5.35 per share.  Each  Warrant is  exercisable  through  May 6,
2004.  The  Company  may  redeem a Warrant  at a  redemption  price of $0.01 per
Warrant, at any time after any date at which the average daily per share closing
price for the  immediately  preceding 20 consecutive  trading days on the Nasdaq
National Market exceeds $10.70.

     The  Warrants  contain a provision  to protect the  Warrantholders  against
dilution by adjusting  the price at which the Warrants are  exercisable  and the
number of shares issuable upon exercise of the Warrants,  upon the occurrence of
certain  events.  These  events  include:  the payment of stock  dividends,  and
distributions, stock splits, and reclassifications.

     The Company was required to (1) file a registration  statement with the SEC
registering the resale of Common Stock, the Warrants and Common Stock underlying
the  Warrants  under the  Securities  Act of 1933 as  amended,  and (2) agree to
idemnify  the  purchasers  of the  securities  in the  August 12,  1999  private
placement from certain liabilities.

Item 3 - Defaults Upon Senior Securities.................................   None

Item 4 - Submission of Matters to a Vote of Security Holders - ..........

(A) Annual Meeting of Shareholders on May 11, 1999.
(B) Set fourth below are the results of the voting with respect to each matter
acted upon at

                                                                      Broker
                             For       Against   Withheld  Abstain   Non Votes


Election of Directors:
 Vincent S. Andrew        4,845,593     22,814
 David D. Benedict        4,845,593     22,814
 Nils P. Peterson         4,845,593     22,914


Approval of the Appointment
 of Deloitte and Touche LLP
 as Independent Public
 Accountants              4,913,353      36,682


     In addition to the election of the directors  indicated  above, the term of
the of the  following  directors  continued as directors  following the meeting:
John W. Elias, James D. Calaway,  Stanley Raphael,  Robert W. Shower, William H.
White, and John Sfondrini.





Item 5 - Other Information...............................................   None

Item 6 - Exhibits and Reports on Form 8-K................................

    (A)  EXHIBITS.  The following exhibits are filed as part of this report:

                                INDEX TO EXHIBITS
Exhibit No.
--------------

+2.1              --        Amended  and  Restated  Combination   Agreement  by
                  and  among  (i) Edge  Group II   Limited   Partnership,   (ii)
                  Gulfedge Limited Partnership,  (iii) Edge  Group Partnership,
                  (iv) Edge Petroleum Corporation,  (v) Edge  Mergeco, Inc. and
                  (vi) the Company,  dated as of  January 13, 1997 (Incorporated
                  by reference  from exhibit 2.1 to the  Company's Registration
                  Statement on Form S-4 (Registration No. 333-17269))

+3.1              --        Restated Certificate of Incorporated of the Company,
                  as amended  (Incorporated by reference from exhibit 3.1 to the
                  Company's Registration Statement on Form S-4 (Registration No.
                  333-17269)).

+3.2              --       Bylaws of the Company (Incorporated by reference from
                  exhibit 3.2 to the Company's  Registration  Statement on Form
                  S-4 (Registration No. 333-17269)).

+4.1              --       Common  Stock   Subscription  Agreement dated  as of
                  April 30, 1999 between the Company  and the  purchasers  named
                  therein (Incorporated  by reference from exibit  4.5   to the
                  Company's form 10-Q/A for the quarter ended March 31, 1999).

+4.2              --       Warrant agreement dated as of May 6, 1999 between
                  the Company and the Warrant holders named therein (Included
                  in and incorporated by reference from exibit 4.5 to the
                  Company's Form 10-Q/A for the quarter ended March 31, 1999).

+4.3              --       Form of Warrant for the purchase of the Common Stock
                  (Included in and incorporated by reference from the Common
                  Stock Subscription Agreement from exibit 4.5 to the Company's
                  Form 10Q/A for the quarter ended March 31, 1999).

11.1              --       Computation of Earnings Per Share.

27.1              --       Financial Data Schedule.

  + Incorporated by reference as indicated.

             (B)  Reports on Form 8-K...................................   None




                                       22
<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.



                                                 EDGE PETROLEUM CORPORATION,
                                                    A DELAWARE CORPORATION
                                                         (REGISTRANT)



Date           8/16/99                           /S/     John W. Elias
-----------------------                        ------------------------------
                                                         John W. Elias
                                                 Chief Executive Officer and
                                                    Chairman of the Board

Date           8/16/99                           /S/    James D. Calaway
-----------------------                        ------------------------------
                                                        James D. Calaway
                                          President and Chief Operations Officer
                                                         and Director

Date           8/16/99                           /S/    Michael G. Long
-----------------------                        ------------------------------
                                                        Michael G. Long
                                                    Senior Vice President and
                                                     Chief Financial Officer

Date           8/16/99                          /S/     Brian C. Baumler
-----------------------                        ------------------------------
                                                        Brian C. Baumler
                                                   Controller and Treasurer



                                       23
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