<PAGE>
 
                       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, 1995


    [_]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


                         COMMISSION FILE NUMBER 1-9933
                         -----------------------------



                           AMERAC ENERGY CORPORATION
             (Exact name of Registrant as specified in its charter)

                                        
          STATE OF DELAWARE                                 75-2181442     
          (State of incorporation)                          (I.R.S. Employer  
                                                            Identification No.) 


          700 LOUISIANA
          HOUSTON, TEXAS                                    77002
          (Address of principal                             (Zip Code) 
          executive offices)  


Registrant's telephone number, including area code:         (713) 223-1833


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
                                       ---   ---     

The number of shares of Common Stock, $.05 par value, outstanding on October 31,
1995 was 20,510,444.
<PAGE>
 
                           AMERAC ENERGY CORPORATION

                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
 
     ASSETS
     ------
                                                                    December 31,   September 30,
                                                                        1994            1995
                                                                   --------------  --------------
                                                                                    (Unaudited)
<S>                                                                <C>             <C>
CURRENT ASSETS
 Cash and equivalents                                              $   3,437,000   $     262,000
 Accounts receivable                                                     142,000         228,000
 Other                                                                   356,000         178,000
                                                                   -------------   -------------
 Total current assets                                                  3,935,000         668,000
                                                                   -------------   -------------
 
OIL AND GAS PROPERTIES, successful efforts method                     16,797,000      20,434,000
 Accumulated depreciation, depletion and amortization                (11,738,000)    (12,277,000)
                                                                   -------------   -------------
   Net oil and gas properties                                          5,059,000       8,157,000
                                                                   -------------   -------------
 
OTHER ASSETS                                                             168,000         241,000
                                                                   -------------   -------------
 
                                                                   $   9,162,000   $   9,066,000
                                                                   =============   =============
     LIABILITIES AND SHAREHOLDERS' EQUITY
     ------------------------------------
 
CURRENT LIABILITIES
 Accounts payable                                                  $      47,000   $      29,000
 Accrued liabilities                                                     139,000         105,000
 Current portion of long term debt                                     1,923,000               -
 Obligations under gas contract                                          757,000         508,000
                                                                   -------------   -------------
   Total current liabilities                                           2,866,000         642,000
                                                                   -------------   -------------
 
LONG TERM LIABILITIES
 Senior debt                                                                   -       2,447,000
 Other                                                                   542,000         406,000
                                                                   -------------   -------------
 Total long term liabilities                                             542,000       2,853,000
                                                                   -------------   -------------
 
Commitments and Contingencies (Note 6)
 
SHAREHOLDERS' EQUITY
 Preferred stock 10,000,000 shares authorized
   $2.25 Convertible exchangeable preferred
   $1.00 par, 1,822,592 shares issued                                  1,823,000               -
 
   $4.00 Senior preferred, $1.00 par,
   1,747,058 shares issued and outstanding                                     -       1,747,000
 
 Common stock $.05 par value;
   50,000,000 shares authorized; 15,883,722 and 20,510,444
   shares issued and outstanding at September 30, 1994 and 1995
   respectively                                                          794,000       1,025,000
 Additional paid-in capital                                          142,936,000     142,029,000
 Accumulated deficit                                                (139,799,000)   (139,230,000)
                                                                   -------------   -------------
   Total shareholders' equity                                          5,754,000       5,571,000
                                                                   -------------   -------------
 
                                                                   $   9,162,000   $   9,066,000
                                                                   =============   =============
</TABLE>
                   See accompanying notes to these Statements

                                      -2-
<PAGE>
 
                           AMERAC ENERGY CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                        
                                  (UNAUDITED)
<TABLE>
<CAPTION>
 
                                                Three Months Ended,                 Nine Months Ended,
                                                   September 30,                      September 30,
                                            ---------------------------        ----------------------------
                                                1994           1995               1994            1995
                                            -----------      ----------        -----------     ------------
<S>                                         <C>              <C>               <C>             <C>
REVENUES                                                     
          Oil and gas sales                 $   934,000         953,000        $ 3,096,000      $ 2,780,000
          Other income                           68,000          46,000            222,000          176,000
                                            -----------      ----------        -----------      -----------
                                            $ 1,002,000         999,000        $ 3,318,000      $ 2,956,000
                                            -----------      ----------        -----------      -----------
                                                                        
EXPENSES                                                                
          Lease operating                       186,000         230,000            622,000          761,000
          Exploration                            48,000          26,000            432,000          241,000
          Depreciation, depletion                                                          
           and amortization                     316,000         286,000          1,088,000          811,000
          General and administrative            375,000         452,000          1,474,000        1,182,000
          Interest                               55,000          16,000            174,000          159,000
                                            -----------      ----------        -----------       ----------
                                            $   980,000       1,010,000        $ 3,790,000       $3,154,000
                                            -----------      ----------        -----------       ----------
                                                                        
Income (loss) before tax                         22,000         (11,000)          (472,000)        (198,000)
                                                                                           
Provision for income tax                              -               -                  -                -
                                            -----------      ----------        -----------       ----------
                                                                                           
NET INCOME (LOSS)                           $    22,000      $  (11,000)       $  (472,000)      $ (198,000)
                                                                                           
Preferred stock dividend                    $(1,025,000)     $ (204,000)       $(3,076,000)      $ (597,000)
                                            -----------      ----------        -----------       ----------
                                                                                           
NET INCOME (LOSS) APPLICABLE                                                               
          TO COMMON STOCK                   $(1,003,000)     $ (215,000)       $(3,548,000)      $ (795,000)
                                            ===========      ==========        ===========       ==========
 
Net income (loss) per
          average common share              $      (.06)     $     (.01)       $      (.22)      $     (.04)
                                            ===========      ==========        ===========       ==========

Weighted average common
          shares outstanding                 15,884,000      20,471,000         15,884,000       19,230,000 
                                            ===========     ===========        ===========      =========== 
</TABLE> 


                   See accompanying notes to these Statements

                                      -3-
<PAGE>
 
                           AMERAC ENERGY CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOW

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                         Nine Months Ended,
                                                            September 30,
                                                      ------------------------
                                                         1994         1995   
                                                      ----------   ----------- 
<S>                                                   <C>          <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net income                                          $ (472,000)  $  (198,000)
Adjustments needed to reconcile to net cash flows:
  Depreciation, depletion and amortization             1,088,000       811,000
  Amortization of discount                                18,000        22,000
  Exploration expenses                                   432,000       241,000
  Gain on sale of assets                                 (16,000)     (111,000)
  Recognition of deferred revenue                       (241,000)     (263,000)
  Other                                                        -        15,000
Changes in current items relating to operations:
  Accounts receivables and other                         186,000        92,000
  Accounts payables                                     (104,000)       (5,000)
  Other liabilities                                     (165,000)     (170,000)
                                                      ----------   -----------
NET CASH FLOW PROVIDED BY OPERATIONS                     726,000       434,000
                                                      ----------   -----------
 
CASH FLOW FROM INVESTING ACTIVITIES:
  Oil and gas expenditures                              (660,000)   (4,124,000)
  Proceeds from sale of assets                            84,000       136,000
  Net purchases of other assets                          (12,000)            -
                                                      ----------   -----------
NET CASH FLOW USED FOR INVESTING ACTIVITIES             (588,000)   (3,988,000)
                                                      ----------   -----------
 
CASH FLOW FROM FINANCING ACTIVITIES:
  Debt repayments                                       (574,000)   (1,929,000)
  Bank borrowing                                               -     2,447,000
  Other                                                  (53,000)     (139,000)
                                                      ----------   -----------
NET CASH FLOW PROVIDED BY (USED FOR)
 FINANCING ACTIVITIES                                   (627,000)      379,000
                                                      ----------   -----------
 
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS         (489,000)   (3,175,000)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD            5,345,000     3,437,000
                                                      ----------   -----------
 
CASH AND EQUIVALENTS, END OF PERIOD                   $4,856,000   $   262,000
                                                      ==========   ===========
 
SUPPLEMENTAL DISCLOSURE:
Interest paid during the period                       $  263,000   $   153,000
                                                      ==========   ===========
 
</TABLE>

                   See accompanying notes to these Statements

                                      -4-
<PAGE>
 
                           AMERAC ENERGY CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                  (Unaudited)

<TABLE>
<CAPTION>
                                    $2.25 Convertible                                                              
                                      Exchangeable                  $4.00 Senior                Common Stock      
                                     Preferred Shares                Preferred                ($.05 par value)      
                                ---------------------------  --------------------------  --------------------------
                                   Shares         Amount        Shares        Amount        Shares        Amount   
                                ------------   ------------  ------------  ------------  ------------  ------------
<S>                             <C>            <C>           <C>           <C>           <C>           <C>       
Balance -                         
  December 31, 1994                1,822,592    $ 1,823,000             -    $        -    15,883,772    $  794,000  
Exchange offer                    (1,822,592)    (1,823,000)    1,634,305     1,634,000     4,549,726       228,000  

Net loss                                                                                                  
                                  
Directors fees paid                                                                            76,946         3,000   
  in common shares                
                                  
$4.00 senior preferred            
 stock dividend                            -              -       112,753       113,000             -              -
                                  ----------    -----------     ---------    ----------    ----------     ----------
                                  
Balance -                         
  September 30, 1995                       -    $         -     1,747,058    $1,747,000    20,510,444     $1,025,000
                                  ==========    ===========     =========    ==========    ==========     ==========
</TABLE> 

<TABLE> 
<CAPTION> 
                                    Additional
                                     Paid-in         Accuulated
                                     Capital           Deficit         Total
                                   ------------    --------------   -----------
<S>                             <C>                <C>              <C>
Balance -                          
  December 31, 1994                $142,936,000    $(139,799,000)   $ 5,754,000   
Exchange offer                       (1,403,000)       1,364,000              - 
                                                                               
Net loss                                                (198,000)      (198,000)
                                                                               
Directors fees paid                      12,000                          15,000
  in common shares                 
                                   
$4.00 senior preferred             
 stock dividend                         484,000         (597,000)             - 
                                   ------------    -------------    ----------- 
                                   $142,029,000    $(139,230,000)   $ 5,571,000  
                                   ============    ==============   ===========
</TABLE> 
                   See accompanying notes to these Statements

                                      -5-
<PAGE>
 
                           AMERAC ENERGY CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  (UNAUDITED)

                          SEPTEMBER 30, 1994 AND 1995

1.   ORGANIZATION AND NATURE OF BUSINESS

     Amerac Energy Corporation (the "Company" or "Amerac") is engaged in the
acquisition, development and enhancement of oil and gas properties in the United
States. The Company was formed in 1969. Through the mid-1980's, Amerac grew
substantially. Thereafter, a lack of exploratory success and declining energy
prices, coupled with a high degree of financial leverage, forced a restructuring
of the Company. By 1994, the Company's size and financial leverage had been
substantially reduced, a new management group was recruited, its exploration
effort was eliminated and a strategy of growth through acquisitions was adopted.
In early 1995, the Company completed an exchange offer (see note 4) which
sharply reduced its obligations to its preferred stockholders, a new Board of
Directors was elected and the name of the Company was changed to Amerac Energy
Corporation.

     The Company, formerly known as Wolverine Exploration Company, is
headquartered in Houston, Texas. At September 30, 1995, Amerac had four
employees.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the year. In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments necessary to present fairly the financial position as of
September 30, 1995, and the results of operations and cash flow for the nine
months ended September 30, 1994 and 1995. These financial statements and the
notes thereto should be read in conjunction with the Company's annual report on
Form 10-K for the year ended December 31, 1994.

     Net income (loss) per common share is computed by dividing the net income
or loss attributable to common shareholders by the weighted average number of
shares of Common Stock outstanding. In computing loss per share, dividends
declared for the period and accretion of the discount on the $4.00 Senior
Preferred Stock ("Senior Preferred"), (see Note 4) decreases the income or
increases the loss attributable to common shareholders. The stock options and
convertible debt are anti-dilutive and were not included in the average shares
outstanding during the periods presented.

3.   INDEBTEDNESS

     On May 12, 1995, the Company entered into a $15 million revolving line of
credit agreement, ("Bank Credit Agreement"). The Bank Credit Agreement is a two
year facility with interest due monthly and principal due at May 31, 1997. The
Bank Credit Agreement is secured by all of the Company's properties, and
contains various restrictive covenants which may, if not met, cause the Company
to be in default or reduce its access to additional borrowing. The borrowing
base, which will be redetermined semi-annually, was initially set at $4.0
million.  At September 30, 1995, $2,447,000 was outstanding under the Bank
Credit Agreement accruing interest at the Bank One Texas Base Rate plus three
quarter percent equaling 9.50% at September 30, 1995.

4.   SHAREHOLDERS' EQUITY

     On February 3, 1995, the Company exchanged, with holders who accepted the
exchange, one share of its Senior Preferred, with a stated value of $4.00 per
share, par value $1.00 per share and an initial dividend rate of $.36 per share,
and 2.5 shares of Common Stock (the "Exchange Offer") for each outstanding share
of $2.25 Convertible Exchangeable Preferred Stock ("Old Preferred"), which
carried a stated value of $25.00 per share and a dividend rate of $2.25 per
share. At the time of the Exchange Offer, the Company had dividends in arrears
on the Old Preferred of approximately $16.5 million and a liquidation preference
of approximately $50 million. The Exchange Offer was approved by the holders of
a majority of the Common Stock and by approximately 90% of the holders of Old
Preferred. As a result, 1,634,305 shares of Old Preferred were exchanged for
1,634,305 shares of Senior Preferred and 4,085,763 shares of Common Stock.
Holders of Old Preferred that did not exchange received 2.5 shares of Common
Stock for each share of Old Preferred not exchanged, resulting in the issuance
of 470,677 shares of Common Stock. This Exchange Offer eliminated all Old
Preferred and related dividend arrearages.

                                      -6-
<PAGE>
 
                           AMERAC ENERGY CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)

                          SEPTEMBER 30, 1994 AND 1995

     At the date of the Exchange Offer, the Company discounted the Senior
Preferred by an amount which would yield its perpetual dividend rate of 15%
during the initial years while the stated dividend rate is 9.0%. Accordingly,
the Company credited retained earnings and debited additional paid in capital
for approximately $1.4 million representing the discount amount. These amounts
are being amortized over a five year period and do not effect current period
income or loss, except for Net income (loss) per average common share.

     The Senior Preferred provides, among other things, that the Company has the
option to pay the quarterly dividends, which commenced January 1, 1995, for the
first two years in either cash or additional shares of Senior Preferred. The
Company currently plans to pay these dividends in shares of Senior Preferred.
Payment to holders of record as of September 30, 1995 totaled 38,422 shares of
Senior Preferred. Beginning January 1, 1997 the Company has, under certain
conditions, the option to pay the dividends in cash or Common Stock. The annual
dividend rate increases from $.36 per share to $.60 at January 1, 2000. The
Company has the option of redeeming the Senior Preferred at face value at
anytime. If the Company fails to pay a quarterly dividend on the Senior
Preferred, then the holders of the Senior Preferred have the right to elect 80%
of the Board of Directors.


5.   ACQUISITIONS

     Since the Company changed its focus to growth through acquisitions in late
1994, it has acquired an estimated 1,500,000 Barrels of Oil Equivalent ("BOE")
of net proved reserves at a cost of approximately $6 million or $4 per BOE.

     In October, 1994, the Company acquired a portion of the North Blackwell
Field in Nolan County, Texas, for approximately $1.5 million. The acquisition
includes four producing wells and certain non-producing leases. The Company
acquired 100% working interest and a 75% net revenue interest in these wells.

     In December, 1994, the Company acquired additional interest in two of its
existing properties for $158,000.

     In April, 1995, the Company acquired a portion of the Cosden Field in Bee
County, Texas, for approximately $3.0 million. The acquisition includes three
producing wells. The Company acquired a 68% working interest and a 52% net
revenue interest in these wells.

     In May, 1995, the Company acquired the Myrtle "B" field located in Loving
County, Texas, for $760,000. This acquisition includes four producing wells and
four proved undeveloped locations. The Company acquired 100% working interest
and a 75% net revenue interest in these wells.

     In October 1995, the Company acquired a portion of the Truby Field located
in Jones County, Texas for $650,000. This acquisition includes a 320-acre lease
with two producing wells and a 200-acre undeveloped lease. The additional
acreage has provided the Company additional drilling locations. The Company
acquired 100% working interest and a 77% net revenue interest in these wells.

     The pro forma affect of the Cosden Field acquisition, assuming the
properties had been acquired at the beginning of 1995 would have been immaterial
to the nine months ended September 30, 1995. Had the North Blackwell Field and
Cosden Field acquisitions occurred at January 1, 1994, revenue for the nine
months ended September 30, 1994, would have been $4,294,000, net loss $356,000,
and loss per share of $.22. The pro forma affect of the other acquisitions,
discussed above, is immaterial to the nine months ended September 30, 1994 and
1995.

     The Company accounts for its acquisitions under the purchase method and the
results of operations related to these properties are consolidated beginning on
the first day of the month that each acquisition is effected.

                                      -7-
<PAGE>
 
6.   COMMITMENTS AND CONTINGENCIES

     In February 1995, Geodyne Resources, Inc. ("Geodyne") filed an Original
Third-Party Petition naming the Company as third-party defendant. The claim
arose out of the settlement of a 1986 accident by UPRC, operator of a property
in Summit County, Utah. UPRC subsequently sued Geodyne for a proportionate share
of the lawsuit involving the 1986 well accident. Geodyne purchased the property
from the Company in 1988 and is claiming that the Company is liable under the
indemnity provisions of the 1988 Purchase and Sale Agreement between the Company
and Geodyne. The amount of the claim against the Company is approximately
$176,000. The Company has filed a general denial and is reviewing this matter
with its insurance carriers and counsel. The Company has been indemnified for
any shortfall in the insurer's payment on the claim.

     The Company is subject to various contingencies which arise primarily from
interpretation of federal and state laws and regulations affecting the oil and
gas industry. Such contingencies include differing interpretations as to the
prices at which oil and gas sales may be made, the prices at which royalty
owners may be paid for production from their leases and other matters. Although
management believes it has complied with the various laws and regulations,
administrative rulings and interpretations thereof, adjustment could be required
as new interpretations and regulations are issued. In addition, production
rates, marketing and environmental matters are subject to regulation by various
federal and state agencies.

     In 1988, the Company settled a gas contract dispute with El Paso Natural
Gas Company ("El Paso") relating to the Shurley Ranch properties in Sutton
County, Texas. These properties had been the subject of litigation until late
1993, at which time El Paso began purchasing gas on these properties. Pursuant
to the terms of the gas contract settlement, El Paso is applying 65% of the
current production to a prepayment received by the Company in 1988. The gas
contract expires in December 1995 and at that time, as provided in the contract,
the Company is obligated to pay El Paso the lessor of the remaining prepayment
balance, or $360,000. The Company has concluded that it is unlikely that the
Shurley Ranch properties will produce sufficient gas to recover El Paso's
prepayment. The Company estimates that the fourth quarter gain, recognized as a
result of this settlement, will be between $50,000 and $100,000.

                                      -8-
<PAGE>
 
                           AMERAC ENERGY CORPORATION

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     In early 1995, the Company completed the final major step in its
restructuring, eliminating more than 80% of its preferred shareholders' claims
through an Exchange Offer. Since adopting a focus on acquisitions in late 1994,
the Company has concluded four acquisitions at a total purchase cost of
approximately $6.0 million. These transactions have added a total of 1,500,000
BOE to the Company's proved reserves at an average cost of $4.00 per BOE. The
successful pursuit of this strategy will require the identification of
appropriate acquisitions, the negotiation of attractive purchase prices and
the availability of capital under the Company's Bank Credit Agreement, the
issuance of securities or otherwise, (see Liquidity and Capital Resources.)

     The Company has also improved the reserve life index through property
acquisitions in late 1994 and early 1995. At January 1, 1994, the Company's
properties had an expected life assuming current production rates of
approximately four years. As of September 30, 1995, as a result of acquisitions,
the reserve life index has been extended to approximately eight years. One of
the immediate goals of the Company was to build a base of properties with longer
lives so that the Company has a base and time with which to continue its
acquisition strategies.

STRATEGY

     The Company believes it is now in a better position to raise capital to
support its acquisition strategy. The Company plans to concentrate initially on
acquisitions where most of the value is in proved developed producing reserves.
Management is relatively indifferent as to gas versus oil and, if possible,
prefers operatorship.

     Along with the acquisition of properties, the Company will continually
review ways to exploit existing and acquired reserves by increasing production
rates, accelerating recoveries and improving and extending the economic
viability of the properties. Exploitation activities may include workovers,
recompletions, development drilling, horizontal drilling, pressure maintenance
projects, and other methods of enhanced recovery.

     While the Company is actively pursuing these avenues, there can be no
assurance that they will have successful results in an acquisition and
exploitation program. There is a tremendous amount of competition in the
industry and the prices paid for in-place reserves make it difficult to achieve
attractive rates of return. In addition, although the Company's projected cash
flow from its existing properties will cover overhead for a few years, without
successful results the Company's ability to replace its reserves and cash flow
therefrom will be limited.

RECENT DEVELOPMENTS

     During the third quarter, the Company participated in the initial phase of
recompleting the South Timbailer 198 A-3 in the Buliminella I-A zone. This
recompletion was performed after the Buliminella I-C zone ceased to be
productive, as expected. The Company has 23.1% working interest (19.3% revenue
interest) in this property. The Company has considered this as a proved non-
producing zone with approximately 2.6 billion equivalent cubic feet of gas
reserves net to the Company. This zone, as of November 10, 1995, is producing,
net to the company, approximately 3.1 million cubic feet of gas per day and
approximately 87 barrels of oil/condensate per day. The Company's proportionate
share of the recompletion cost is estimated to be $290,000 and is being funded
through working capital and bank borrowing.

     In July 1995, the Company filed a registration statement with the
Securities and Exchange Commission for the purpose of registering the 3,651,195
shares of Common Stock held by Investment Limited Partnership ("ILP") who in
turn sold the shares to certain individuals. Three of these individuals are
directors of the Company. Messrs. Jeffrey B. Robinson, President and Chief
Executive Officer, Kenneth R. Peak and William P. Nicoletti are Directors of the
Company and acquired from ILP 800,000, 200,000 and 200,000 shares respectively.

                                      -9-
<PAGE>
 
                           AMERAC ENERGY CORPORATION

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Results of Operations
---------------------

THREE MONTHS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1995

     Oil and gas revenues increased $19,000 for the third quarter 1995 as
compared to the same period in 1994, primarily as a result in a $.06 per
thousand cubic feet increase in gas prices. Acquisitions in late 1994 and in
1995 contributed 1.7 million cubic feet per day gas and 146 barrels per day oil
production. Total oil production increased from approximately 258 barrels per
day in the third quarter of 1994 to approximately 306 barrels per day for the
comparable period in 1995. Total gas production declined from approximately 4.1
million cubic feet per day for the third quarter of 1994 to approximately 3.4
million cubic feet per day for the comparable period in 1995, as a result of a
well in the Company's major gas producing property, South Timbailer 198,
watering out, as anticipated. This well has been successfully recompleted in
another productive zone. The average prices received for production increased
for oil from $16.82 per barrel during the third quarter of 1994 to $16.87 per
barrel during the comparable period in 1995 while gas prices increased from an
average of $1.42 per thousand cubic feet for the third quarter of 1994 to an
average of $1.48 per thousand cubic feet for the third quarter of 1995.

     Lease operating expenses increased from $186,000 in the third quarter of
1994 to $230,000 for the comparable period in 1995, primarily as a result of
producing properties acquisitions. Depreciation and amortization expense also
decreased from $316,000 during the third quarter of 1994 to $286,000 for the
comparable period in 1995 as a result of a decline in gas production.

     Exploration expenses decreased from $48,000 in the third quarter of 1994 to
$26,000 for the comparable period in 1995. The 1994 expense was a result of
increased geological and geophysical activity and increased impairment expenses
associated with Lance Exploration Company ("Lance"), the company's wholly owned
exploration subsidiary, while the 1995 expense is processing and interpretation
of development seismic on a recently acquired property. Administrative expenses
increased from $375,000 for the third quarter of 1994 to $452,000 for the
comparable period in 1995 due to the use of contract labor to evaluate
acquisition candidates.

NINE MONTHS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1995

     Oil and gas revenues decreased from $3.1 million in the first nine months
of 1994 to $2.8 million during the comparable period in 1995 primarily due to a
$.55 per thousand cubic feet decline in gas prices. Acquisitions in late 1994
and 1995 contributed 1.3 million cubic feet per day and 110 barrels per day oil
production. Total oil production only increased from approximately 238 barrels
per day in the first nine months of 1994 to approximately 302 barrels per day
for the comparable period in 1995. Total gas production declined from
approximately 3.8 million cubic feet per day for the first nine months of 1994
to approximately 3.1 million cubic feet per day for the comparable period in
1995, as a result of a well in the Company's major gas producing property, South
Timbailer 198, watering out, as anticipated. This well has been successfully
recompleted in another productive zone. The average prices received for
production increased for oil from $15.09 per barrel during the first nine months
of 1994 to $16.82 per barrel during the comparable period in 1995 while gas
prices decreased from an average of $2.05 per thousand cubic feet for the first
nine months of 1994 to an average of $1.50 per thousand cubic feet for the first
nine months of 1995.

     Lease operating expenses increased from $622,000 in the first nine months
of 1994 to $761,000 for the comparable period in 1995, as a result of the
acquisition of various properties despite a general decline in gas production,
the depletion of certain wells and the sale of producing properties.
Depreciation and amortization expense decreased from $1.1 million during the
first nine months of 1994 to $811,000 for the comparable period in 1995 as a
result of a decline in gas production.

     Exploration expenses decreased from $432,000 in the first nine months of
1994 to $241,000 for the comparable period in 1995. The 1994 expense was a
result of increased geological and geophysical activity and impairment expenses
associated with Lance. The 1995 expense is development seismic on a recently
acquired property. Administrative expenses declined from $1.5 million for the
first nine months of 1994 to $1.2 million for the comparable period in 1995
primarily as a result of the disposition of Lance.

                                      -10-
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

     As discussed in Note 3, the Company entered into a Bank Credit Agreement in
May 1995, which provides a borrowing base based on the bank's determination of
the collateral value of its properties. The initial borrowing base will be
reviewed and reset semi-annually and was initially set at $4.0 million. The
Company has drawn $3.2 million against this Bank Credit Agreement, as of
November 10, 1995.

     The Company funded all of its acquisitions to date with working capital or
bank borrowings. It plans to fund future property acquisitions with the Bank
Credit Agreement, working capital, equity and other forms of financing. The
Company has repaid its subordinated debt due on May 15, 1995, with the proceeds
drawn from the Bank Credit Agreement and working capital.

     As discussed in Note 6, the Company is obligated to pay El Paso Natural Gas
Company the lessor of the remaining prepayment balance or $360,000 at the end of
December 1995, this payment will be funded through working capital and/or bank
borrowings.

     Management currently intends to pay quarterly dividends on the Senior
Preferred in shares of the Senior Preferred through December 31, 1996. (See Note
4)

                                      -11-
<PAGE>
 
                          PART II.  OTHER INFORMATION
                          ---------------------------



ITEM 1.  LEGAL PROCEEDINGS
--------------------------

         See Note 6 - The Consolidated Financial Statements.



ITEM 6.  REPORTS ON FORM 8-K DURING THE THIRD QUARTER OF 1995
-------------------------------------------------------------

         None

                                      -12-
<PAGE>
 
                                   SIGNATURE
                                   ---------



     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.


                                               AMERAC ENERGY CORPORATION
                                                      (Registrant)



                                               By: /s/ Jeffrey L. Stevens
                                                   ____________________________
                                                       Jeffrey L. Stevens
                                                    Senior Vice President and 
                                                     Chief Financial Officer


Date: November 14, 1995

                                      -13-