<PAGE>   1
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

         [X]      Annual Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

                  For the Fiscal Year Ended December 31, 2000

                                       OR

         [ ]      Transition Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

                          Commission File No. 0-19279

                        EVERFLOW EASTERN PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

                  Delaware                                   34-1659910
       (State or other jurisdiction of                    (I.R.S. Employer
       incorporation or organization)                    Identification No.)

            585 West Main Street
                P.O. Box 629
               Canfield, Ohio                                   44406
  (Address of principal executive offices)                   (Zip Code)

        Registrant's telephone number, including area code: 330-533-2692

Securities registered pursuant to Section 12(b) of the Act.

                                                  Name of each exchange
       Title of each class                         on which registered
       -------------------                         -------------------

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                      -------------------------------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             ---   ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
                            -----

         There were 4,627,222 Units of limited partnership interest held by
non-affiliates of the Registrant as of March 20, 2001. The Units generally do
not have any voting rights, but, in certain circumstances, the Units are
entitled to one vote per Unit.

         Except as otherwise indicated, the information contained in this Report
is as of December 31, 2000.

<PAGE>   2

                                     PART I
                                     ------

ITEM 1. BUSINESS
----------------

INTRODUCTION

                  Everflow Eastern Partners, L.P. (the "Company"), a Delaware
limited partnership, engages in the business of oil and gas exploration and
development. The Company was formed for the purpose of consolidating the
business and oil and gas properties of Everflow Eastern, Inc., an Ohio
corporation ("EEI"), and the oil and gas properties owned by certain limited
partnerships and working interest programs managed or operated by EEI (the
"Programs"). Everflow Management Limited, LLC (the "General Partner"), an Ohio
limited liability company, is the general partner of the Company.

                  EXCHANGE OFFER. The Company made an offer (the "Exchange
Offer") to acquire the common shares of EEI (the "EEI Shares") and the interests
of investors in the Programs (collectively the "Interests") in exchange for
units of limited partnership interest (the "Units"). The Exchange Offer was made
pursuant to a Registration Statement on Form S-1 declared effective by the
Securities and Exchange Commission on December 19, 1990 (the "Registration
Statement") and the Prospectus dated December 19, 1990 as filed with the
Commission pursuant to Rule 424(b).

                  The Exchange Offer terminated on February 15, 1991 and holders
of Interests with an aggregate value (as determined by the Company for purposes
of the Exchange Offer) of $66,996,249 accepted the Exchange Offer and tendered
their Interests. Effective on such date, the Company acquired such Interests,
which included partnership interests and working interests in the Programs, and
all of the outstanding EEI Shares. Of the Interests tendered in the Exchange
Offer, $28,565,244 was represented by the EEI Shares and $38,431,005 by the
remaining Interests.

                  The parties who accepted the Exchange Offer and tendered their
Interests received an aggregate of 6,632,464 Units. Everflow Management Company,
a predecessor of the General Partner of the Company, contributed Interests with
an aggregate Exchange Value of $670,980 in exchange for a 1% interest in the
Company.

                  THE COMPANY. The Company was organized in September, 1990. The
principal executive offices of the Company, the General Partner and EEI are
located at 585 West Main Street, Canfield, Ohio 44406 (telephone number
330-533-2692).

GENERAL

                  This Annual Report on Form 10-K contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. All statements that address operating

                                      -1-
<PAGE>   3

performance, events or developments that the Company anticipates will occur in
the future, including statements related to future revenue, profits, expenses,
and income or statements expressing general optimism about future results, are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 ("Exchange Act"). In addition, words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates," variations of such
words, and similar expressions are intended to identify forward-looking
statements. Forward-looking statements are subject to the safe harbors created
in the Exchange Act.

                  Factors that may cause such a difference include, but are not
limited to, the competition with the oil and gas industry, the price of oil and
gas in the Appalachian Basin area, the number of Units tendered pursuant to the
Repurchase Right and the ability to locate productive oil and gas prospects for
development by the Company. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.

DESCRIPTION OF THE BUSINESS

                  GENERAL. The Company has participated on an on-going basis in
the acquisition and development of undeveloped oil and gas properties and has
pursued the acquisition of producing oil and gas properties.

                  SUBSIDIARIES. The Company has two subsidiaries. EEI was
organized as an Ohio corporation in February 1979 and, since the consummation of
the Exchange Offer, has been a wholly-owned subsidiary of the Company. EEI is
engaged in the business of drilling, developing and operating oil and gas
properties and maintains a leasehold inventory from which the Company selects
prospects for development.

                  A-1 Storage of Canfield, Ltd. ("A-1 Storage") was organized as
an Ohio limited liability company in late 1995 and is 99% owned by the Company
and 1% owned by EEI. A-1 Storage's business includes leasing of office space to
the Company as well as rental of storage units to non-affiliated parties.

                  CURRENT OPERATIONS. The properties of the Company consist in
large part of fractional undivided working interests in properties containing
Proved Reserves of oil and gas located in the Appalachian Basin region of Ohio
and Pennsylvania. Approximately 91% of the estimated total future cash inflows
related to the Company's oil and gas reserves as of December 31, 2000 are
attributable to natural gas reserves. The substantial majority of such
properties are located in Ohio and consist primarily of proved producing
properties with established production histories.

                  The Company's operations since February 1991 primarily involve
the production and sale of oil and gas and the drilling and development of 244
(net) wells. The Company serves as the operator of approximately 77% of the
gross wells and 87% of the net wells which comprise the Company's properties.

                                      -2-
<PAGE>   4

                  The Company expects to hold its producing properties until the
oil and gas reserves underlying such properties are substantially depleted.
However, the Company may from time to time sell any of its producing or other
properties or leasehold interests if the Company believes that such sale would
be in its best interest.

                  BUSINESS PLAN. The Company continually evaluates whether the
Company can develop oil and gas properties at historical levels given the
current costs of drilling and development activities, the current prices of oil
and gas, and the Company's experience with regard to finding oil and gas in
commercially productive quantities. The Company has decreased its level of
activity in the development of oil and gas properties compared with historical
levels. Management of the Company has from time to time explored and evaluated
the possible sale of the Company. The Company intends to continue to evaluate
this and other alternatives to maximize Unitholder's value. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

                  ACQUISITION OF PROSPECTS. The Company, through its
wholly-owned subsidiary EEI, maintains a leasehold inventory from which the
General Partner will select oil and gas prospects for development by the
Company. EEI makes additions to such leasehold inventory on an on-going basis.
The Company may also acquire leases from third parties. Historically, EEI
generated approximately 90% of the prospects which were drilled. EEI's current
leasehold inventory consists of approximately 52 prospects in various stages of
maturity representing approximately 780 net acres under lease.

                  In choosing oil and gas prospects for the Company, the General
Partner does not attempt to manage the risks of drilling through a policy of
selecting diverse prospects in various geographic areas or with the potential of
oil and gas production from different geological formations. Rather,
substantially all prospects are expected to be located in the Appalachian Basin
of Ohio (and, to a lesser extent, Pennsylvania) and to be drilled primarily to
the Clinton/Medina Sands geological formation or closely related oil and gas
formations in such area.

                  ACQUISITION OF PRODUCING PROPERTIES. As a potential means of
increasing its reserve base, the Company expects to evaluate opportunities which
it may be presented with to acquire oil and gas producing properties from third
parties in addition to its ongoing leasehold acquisition and development
activities. The Company has acquired a limited amount of producing oil and gas
properties.

                  The Company will continue to evaluate properties for
acquisition. Such properties may include, in addition to working interests,
royalty interests, net profit interests and production payments, other forms of
direct or indirect ownership interests in oil and gas production, and properties
associated with the production of oil and gas. The Company also may acquire
general or limited partner interests in general or limited partnerships and
interests in joint ventures, corporations or other entities that have, or are
formed to acquire, explore for or develop, oil and gas or conduct other
activities associated with the ownership of oil and gas production.

                                      -3-
<PAGE>   5

                  FUNDING FOR ACTIVITIES. The Company finances its current
operations, including undeveloped leasehold acquisition activities, through cash
generated from operations and the proceeds of borrowings. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Results of Operations."

                  The Company is permitted to incur indebtedness for any
partnership purpose. It is currently anticipated that any such indebtedness will
consist primarily of borrowings from commercial banks. The Company and EEI have
a revolving credit facility with Bank One, N.A., pursuant to which it had no
borrowings in 2001 and no principal indebtedness was outstanding as of March 20,
2001. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Liquidity and Capital Resources."

                  Although the Partnership Agreement does not contain any
specific restrictions on borrowings, the Company has no specific plans to borrow
for the acquisition of producing oil and gas properties. The Company expects
that borrowings may be made for the acquisition of undeveloped acreage for
future drilling and development and to fund the Company's costs of drilling and
completing wells. In addition, the Company could borrow funds to enable it to
repurchase any Units tendered in connection with the Repurchase Right. See
"Management's Discussion and Analysis of Financial Condition and results of
operations - Liquidity and Capital Resources."

                  The Company has a substantial amount of oil and gas reserves
which have not been pledged as collateral for its existing loans. The Company
generally would not expect to borrow funds, from whatever source, in excess of
40% of its total Proved Reserves (as determined using the Company's Standardized
Measure of Discounted Future Net Cash Flows), although there can be no assurance
that circumstances would not lead to the necessity of borrowings in excess of
this amount. Based upon its current business plan, management has no present
intention to have the Company borrow in excess of this amount. The Company has
estimated Proved and Proved Developed Reserves, determined as of December 31,
2000, which aggregate $81,974,000 (Standardized Measure of Discounted Future Net
Cash Flows) with no bank debt outstanding under the revolving credit facility as
of December 31, 2000.

                                      -4-
<PAGE>   6


MARKETING

                  The ability of the Company to market oil and gas found in and
produced on its properties will depend on many factors beyond its control, the
effect of which cannot be accurately anticipated or predicted. These factors
include, among others, the amount of domestic oil and gas production and foreign
imports available from other sources, the capacity and proximity of pipelines,
governmental regulations, and general market demand.

                  OIL. Any oil produced from the properties can be sold at the
prevailing field price to one or more of a number of unaffiliated purchasers in
the area. Generally, purchase contracts for the sale of oil are cancelable on 30
days' notice. The price paid by these purchasers is generally an established or
"posted" price which is offered to all producers. All posted prices in the areas
where the Company's properties are located are generally somewhat lower than the
spot market prices, although there have been substantial fluctuations in crude
oil prices in recent years.

                  The price of oil in the Appalachian Basin has ranged from a
low of $8.50 per barrel in December 1998 to a high of $33.25 in September 2000.
As of March 20, 2001, the posted field price in the Appalachian Basin area, the
Company's principal area of operation, was $22.25 per barrel of oil. There can
be no assurance that prices will not be subject to continual fluctuations.
Future oil prices are difficult to predict because of the impact of worldwide
economic trends, supply and demand variables, and such non-economic factors as
the political impact on pricing policies by the Organization of Petroleum
Exporting Countries ("OPEC") and the possibility of supply interruptions. To the
extent the prices that the Company receives for its crude oil production decline
or remain at current levels, the Company's revenues from oil production will be
reduced accordingly.

                  Since January 1993, the Company has sold substantially all of
its crude oil production to Ergon Oil Purchasing, Inc.

                  NATURAL GAS. The deliverability and price of natural gas is
subject to various factors affecting the supply and demand of natural gas as
well as the effect of federal regulations. Prior to 2000, there had been a
surplus of natural gas available for delivery to pipelines and other purchasers.
During 2000, decreases in worldwide energy production capability and increases
in energy consumption have brought about a shortage in natural gas supplies.
This resulted in increases in natural gas prices throughout the United States,
including the Appalachian Basin. From time to time, especially in summer months,
seasonal restrictions on natural gas production have occurred as a result of
distribution system restrictions. Certain of the Company's wells have been
subject to these limited, seasonal shut-ins and restrictions.

                  Prior to the execution of the East Ohio Contracts (discussed
below), EEI's historical practice had been to generally sell natural gas
pursuant to various purchase contracts with a number of natural gas brokerage
firms, pipeline companies or end-user customers. The provisions of these
contracts, both as to term and price, varied significantly. The term of these
contracts varied from short term, month-to-month arrangements up to the life of
a particular well.

                                      -5-
<PAGE>   7

Most of these natural gas purchase contracts were for a term of one year,
expiring each October, and enabled the purchaser to renew the contracts for
additional one-year terms during the fourth quarter of the year. Pricing
provisions varied materially among the contracts.

                  The Company has one remaining Intermediate Term Adjustable
Price Gas Purchase Agreement (the "East Ohio Contract") with The East Ohio Gas
Company and its affiliates ("East Ohio"). Pursuant to the East Ohio Contract and
subject to certain restrictions and adjustments, including termination clauses,
East Ohio is obligated to purchase, and the Company is obligated to sell, all
natural gas production from a specified list of wells (the "Contract Wells"). A
summary of the Company's principal East Ohio Contract at December 31, 2000
follows:

<TABLE>
<CAPTION>
  Contract            Period         Number            Required              Shut-In           Limitation
    Date              Covered       of Wells           Purchases           Provisions          Provisions
   ------             -------       --------           ---------           ----------          ----------
<S>               <C>              <C>            <C>                 <C>                    <C>
   9/3/91           11/91-10/01        423          275 days/year        Maximum of           May-Oct. - 50%
                                                                         60 days (Nov.-       of production
                                                                         April)               from prior 6
                                                                                              month period
</TABLE>

<TABLE>
<CAPTION>
                                            Net Price per MCF
                    -----------------------------------------------------------------------
Contract Date                                Adjusted Prices
-----------------   -----------------------------------------------------------------------
                    11/98-4/99  5/99-10/99  11/99-4/00  5/00-10/00  11/00-4/01  5/01-10/01
                    ----------  ----------  ----------  ----------  ----------  ----------
<S>                <C>         <C>         <C>         <C>         <C>         <C>
    9/3/91            $ 3.71      $ 3.08      $ 3.35      $ 2.72      $ 4.83      $ 4.20
</TABLE>


                  As detailed above, the price paid for natural gas purchased
under the East Ohio Contract varies with the production period. Pricing under
the East Ohio Contract is adjusted annually, up or down, by an amount equal to
80% of the increase or decrease in East Ohio's average Gas Cost Recovery ("GCR")
rates. Additionally, the contract provides for a price cap equal to the
quarterly GCR, which amounted to $7.18, $3.93 and $3.84 in November 2000, 1999
and 1998, respectively. Price caps related to this contract are not included in
the table above. The net price per MCF includes $.20 per MCF for transportation
less a $.02 per MCF metering charge.

                  The East Ohio Contract terminates in 2001 and will be replaced
by short-term contracts with primary terms of one year. These new short-term
contracts will provide fixed pricing of $4.56 to $4.73 per MCF for gas
production of 100,000 MCF per month. Gas production in excess of 100,000 MCF per
month (estimated to average between 50,000 and 100,000 MCF per month) that was
under the principal East Ohio Contract is expected to be sold at prices in
effect at the time of production. There will be no significant production
restrictions under these new contracts.

                  In addition to the East Ohio Contract described above, the
Company has various short-term contracts (covering production from 170 gross
wells at December 31, 2000), which obligate the purchasers to purchase and the
Company to sell and deliver certain quantities of

                                      -6-
<PAGE>   8


natural gas production on a monthly basis throughout the contract periods which
have primary terms of one year. All of the wells are covered by fixed price
contracts that provide for the sale of the Company's gas at $3.02 to $5.35 per
MCF. There are no significant production restrictions under the Company's
short-term contracts as they relate to the Company's existing wells. Future
wells can be added to certain of the contracts subject to gross production
restrictions under the contracts. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Inflation and Changes in
Prices."

                  For the year ended December 31, 2000, with the exception of
East Ohio and Interstate Gas Supply, Inc. ("IGS"), which accounted for
approximately 63% and 13%, respectively, of the Company's natural gas sales, no
one natural gas purchaser has accounted for more than 10% of the Company's gas
sales. The Company expects that East Ohio and IGS will be the only material
natural gas customers for 2001.

SEASONALITY

                  The East Ohio Contract (i) provides that certain wells can be
shut-in for a period of time and (ii) limits the obligation of East Ohio to
purchase natural gas during the May to October production period. These
production restrictions, and the nature of the Company's business, result in
seasonal fluctuations in the Company's revenue, with the Company receiving more
income in the first and fourth quarters of its fiscal year.

TITLE TO PROPERTIES

                  As is customary in the oil and gas industry, the Company
performs a limited investigation as to ownership of leasehold acreage at the
time of acquisition and conducts a title examination and necessary curative work
prior to the commencement of drilling operations on a tract. Title examinations
have been performed for substantially all of the producing oil and gas
properties owned by the Company with regard to (i) substantial tracts of land
forming a portion of such oil and gas properties and (ii) the wellhead location
of such properties. The Company believes that title to its properties is
acceptable although such properties may be subject to royalty, overriding
royalty, carried and other similar interests in contractual arrangements
customary in the oil and gas industry. Also, such properties may be subject to
liens incident to operating agreements and liens for current taxes not yet due,
as well as other comparatively minor encumbrances.

COMPETITION

                  The oil and gas industry is highly competitive in all its
phases. The Company will encounter strong competition from major and independent
oil companies in acquiring economically desirable prospects as well as in
marketing production therefrom and obtaining external financing. Major oil and
gas companies, independent concerns, drilling and production purchase programs
and individual producers and operators are active bidders for desirable oil and
gas properties, as well as the equipment and labor required to operate those
properties. Many of

                                      -7-
<PAGE>   9


the Company's competitors have financial resources, personnel and facilities
substantially greater than those of the Company.

                  The availability of a ready market for the oil and gas
production of the Company depends in part on the cost and availability of
alternative fuels, the level of consumer demand, the extent of other domestic
production of oil and gas, the extent of importation of foreign oil and gas, the
cost of and proximity to pipelines and other transportation facilities,
regulations by state and federal authorities and the cost of complying with
applicable environmental regulations. The volatility of prices for oil and gas
and the continued oversupply of domestic natural gas have, at times, resulted in
a curtailment in exploration for and development of oil and gas properties.

                  There is also extensive competition in the market for gas
produced by the Company. Decreases in worldwide energy production capability and
increases in energy consumption have brought about a shortage in energy supplies
recently. This, in turn, has resulted in substantial competition for markets
historically served by domestic natural gas resources both with alternate
sources of energy, such as residual fuel oil, and among domestic gas suppliers.
As a result, at times there has been volatility in oil and gas prices,
widespread curtailment of gas production and delays in producing and marketing
gas after it is discovered. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and an increasing
tendency to rely on short-term sales contracts priced at spot market prices. See
"Marketing" above.

                  Gas prices, which were once effectively determined by
government regulations, are now influenced largely by the effects of
competition. Competitors in this market include other producers, gas pipelines
and their affiliated marketing companies, independent marketers, and providers
of alternate energy supplies.

REGULATION OF OIL AND GAS INDUSTRY

                  The exploration, production and sale of oil and natural gas
are subject to numerous state and federal laws and regulations. Such laws and
regulations govern a wide variety of matters, including the drilling and spacing
of wells, allowable rates of production, marketing, pricing and protection of
the environment. Such regulations may restrict the rate at which the Company's
wells produce oil and natural gas below the rate at which such wells could
produce in the absence of such regulations. In addition, legislation and
regulations concerning the oil and gas industry are constantly being reviewed
and proposed. Ohio and Pennsylvania, the states in which the Company owns
properties and operates, have statutes and regulations governing a number of the
matters enumerated above. Compliance with the laws and regulations affecting the
oil and gas industry generally increases the Company's costs of doing business
and consequently affects its profitability. Inasmuch as such laws and
regulations are frequently

                                      -8-
<PAGE>   10


amended or reinterpreted, the Company is unable to predict the future cost or
impact of complying with such regulations.

                  The interstate transportation and sale for resale of natural
gas is regulated by the Federal Energy Regulatory Commission (the "FERC") under
the Natural Gas Act of 1938 ("NGA"). The wellhead price of natural gas is also
regulated by FERC under the authority of the Natural Gas Policy Act of 1978
("NGPA"). Subsequently, the Natural Gas Wellhead Decontrol Act of 1989 (the
"Decontrol Act") was enacted on July 26, 1989. The Decontrol Act provided for
the phasing out of price regulation under the NGPA commencing on the date of
enactment and completely eliminated all such gas price regulation on January 1,
1993. In addition, FERC recently has adopted and proposed several rules or
orders concerning transportation and marketing of natural gas. The impact of
these rules and other regulatory developments on the Company cannot be
predicted. It is expected that the Company will sell natural gas produced by its
oil and gas properties to a number of purchasers, including various industrial
customers, pipeline companies and local public utilities, although the majority
will be sold to East Ohio as discussed earlier.

                  As a result of the NGPA and the Decontrol Act, the Company's
gas production is no longer subject to price regulation. Gas which has been
removed from price regulation is subject only to that price contractually agreed
upon between the producer and purchaser. Under current market conditions,
deregulated gas prices under new contracts tend to be substantially lower than
most regulated price ceilings originally prescribed by the NGPA. FERC recently
has proposed and enacted several rules or orders concerning transportation and
marketing of natural gas. In 1992, the FERC finalized Order 636, a rule
pertaining to the restructuring of interstate pipeline services. This rule
requires interstate pipelines to unbundle transportation and sales services by
separately pricing the various components of their services, such as supply,
gathering, transportation and sales. These pipeline companies are required to
provide customers only the specific service desired without regard to the source
for the purchase of the gas. Although the Partnership is not an interstate
pipeline, it is likely that this regulation may indirectly impact the
Partnership by increasing competition in the marketing of natural gas, possibly
resulting in an erosion of the premium price historically available for
Appalachian natural gas. The impact of these rules and other regulatory
developments on the Company cannot be predicted.

                  Regulation of the production, transportation and sale of oil
and gas by federal and state agencies has a significant effect on the Company
and its operating results. Certain states, including Ohio and Pennsylvania, have
established rules and regulations requiring permits for drilling operations,
drilling bonds and reports concerning the spacing of wells.

ENVIRONMENTAL REGULATION

                  The activities of the Company are subject to various federal,
state and local laws and regulations designed to protect the environment. The
Company does not conduct activities offshore. Operations of the Company on
onshore oil properties may generally be liable for clean-up costs to the federal
government under the Federal Clean Water Act for up to

                                      -9-
<PAGE>   11

$50,000,000 for each incident of oil or hazardous pollution substance and for up
to $50,000,000 plus response costs under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (Superfund) for hazardous
substance contamination. Liability is unlimited in cases of willful negligence
or misconduct, and there is no limit on liability for environmental clean-up
costs or damages with respect to claims by the state or private persons or
entities. In addition, the Company is required by the Environmental Protection
Agency to prepare and implement spill prevention control and countermeasure
plans relating to the possible discharge of oil into navigable waters; and the
Environmental Protection Agency will further require permits to authorize the
discharge of pollutants into navigable waters. State and local permits or
approvals may also be needed with respect to waste-water discharges and air
pollutant emissions. Violations of environment-related lease conditions or
environmental permits can result in substantial civil and criminal penalties as
well as potential court injunctions curtailing operations. Such enforcement
liabilities can result from prosecution by public or private entities.

                  Various state and governmental agencies are considering, and
some have adopted, other laws and regulations regarding environmental protection
which could adversely affect the proposed business activities of the Company.
The Company cannot predict what effect, if any, current and future regulations
may have on the operations of the Company.

                  In addition, from time to time, prices for either oil or
natural gas have been regulated by the federal government, and such price
regulation could be reimposed at any time in the future.

OPERATING HAZARDS AND UNINSURED RISKS

                  The Company's oil and gas operations are subject to all
operating hazards and risks normally incident to drilling for and producing oil
and gas, such as encountering unusual formations and pressures, blow-outs,
environmental pollution and personal injury. The Company maintains such
insurance coverage as it believes to be appropriate taking into account the size
of the Company and its operations. Losses can occur from an uninsurable risk or
in amounts in excess of existing insurance coverage. The occurrence of an event
which is not insured or not fully insured could have an adverse impact on the
Company's revenues and earnings.

                  In certain instances, the Company may continue to engage in
exploration and development operations through drilling programs formed with
non-industry investors. In addition, the Company also will conduct a significant
portion of its operations with other parties in connection with the drilling
operations conducted on properties in which it has an interest. In these
arrangements, all joint interest parties, including the Company, may be fully
liable for their proportionate share of all costs of such operations. Further,
if any joint interest party defaults on its obligations to pay its share of
costs, the other joint interest parties may be required to fund the deficiency
until, if ever, it can be collected from the defaulting party. As a result of
the foregoing or similar oilfield circumstances, the Company could become liable
for amounts significantly in excess of amounts originally anticipated to be
expended in connection with such operations. In addition, financial difficulty
for an operator of oil and gas properties could result in the

                                      -10-
<PAGE>   12

Company's and other joint interest owners' interests in properties and the wells
and equipment located thereon becoming subject to liens and claims of creditors,
notwithstanding the fact that non-defaulting joint interest owners and the
Company may have previously paid to the operator the amounts necessary to pay
their share of such costs and expenses.

CONFLICTS OF INTEREST

                  The Partnership Agreement grants the General Partner broad
discretionary authority to make decisions on matters such as the Company's
acquisition of or participation in a drilling prospect or a producing property.
To limit the General Partner's management discretion might prevent it from
managing the Company properly. However, because the business activities of the
affiliates of the General Partner on the one hand and the Company on the other
hand are the same, potential conflicts of interest are likely to exist, and it
is not possible to completely mitigate such conflicts.

                  The Partnership Agreement contains certain restrictions
designed to mitigate, to the extent practicable, these conflicts of interest.
The agreement restricts, among other things, (i) the cost at which the General
Partner or its affiliates may acquire properties from or sell properties to the
Company; (ii) loans between the General Partner, its affiliates and the Company,
and interest and other charges incurred in connection therewith; and (iii) the
use and handling of the Company's funds by the General Partner.

EMPLOYEES

                  As of March 20, 2001, the Company (either directly or
indirectly through EEI) had 17 full-time and two part-time employees. These
employees primarily are engaged in the following areas of business operations:
two in land and lease acquisition, five in field operations, five in accounting,
and seven in administration.

                                      -11-
<PAGE>   13


ITEM 2. PROPERTIES.
-------------------

                  Set forth below is certain information regarding the oil and
gas properties of the Company.

                  In the following discussion, "gross" refers to the total acres
or wells in which the Company has a working interest and "net" refers to gross
acres or wells multiplied by the Company's percentage of working interests
therein. Because royalty interests held by the Company will not affect the
Company's working interests in its properties, neither gross nor net acres or
wells reflect such royalty interests.

                  PROVED RESERVES.(1) The following table reflects the estimates
of the Company's Proved Reserves which are based on the Company's report as of
December 31, 2000.

<TABLE>
<CAPTION>
                                             Oil (BBLS)                Gas (MCF)
                                             ----------                ---------
<S>                                            <C>                    <C>
                  Proved Developed             914,000                48,534,000
                  Proved Undeveloped                -                         -
                                               -------                       ---
                  Total                        914,000                48,534,000
                                               =======                ==========
</TABLE>

                  --------------
                  (1)    The Company has not determined proved reserves
                         associated with its proved undeveloped acreage. A
                         reconciliation of the Company's proved reserves is
                         included in the Notes to the Financial Statements.


                  STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS.(1)
The following table summarizes, as of December 31, 2000, the oil and gas
reserves attributable to the oil and gas properties owned by the Company. The
determination of the standardized measure of discounted future net cash flows as
set forth herein is based on criteria promulgated by the Securities and Exchange
Commission, using calculations based solely on Proved Reserves, current
unescalated cost and price factors, and discounted to present value at 10%.

<TABLE>
<CAPTION>
                                                                       (Thousands)
                                                                        ---------
<S>                                                                    <C>
                  Future cash inflows from sales of oil and gas        $  248,711
                  Future production and development costs                  81,641
                  Future income tax expense                                 3,971
                                                                       ----------

                  Future net cash flows                                   163,099
                  Effect of discounting future net cash flows
                      at 10% per annum                                     81,125
                                                                       ----------
                  Standardized measure of discounted future
                      net cash flows                                   $   81,974
                                                                       ==========
</TABLE>

         ---------------------
         (1)      See the Notes to the Financial Statements for additional
                  information.

                                      -12-

<PAGE>   14

         PRODUCTION. The following table summarizes the net oil and gas
production, average sales prices and average production (lifting) costs per
equivalent unit of production for the periods indicated.

<TABLE>
<CAPTION>
                                                               Average
                            Production                       Sales Price
                  -------------------------------    ---------------------------    Average Lifting Cost
                    Oil (BBLS)        Gas (MCF)         Per BBL        Per MCF      Per Equivalent MCF(1)
                    ----------        ---------         -------        -------      ------------------
<S>                <C>              <C>             <C>            <C>             <C>
     2000              92,000           4,196,000       $ 27.82        $ 3.32             $ .47
     1999              97,000           4,245,000         16.08          3.08               .55
     1998              94,000           4,575,000         12.20          3.26               .50
</TABLE>

     -----------
     (1)      Oil production is converted to MCF equivalents at the rate of
              6 MCF per BBL (barrel).



                  PRODUCTIVE WELLS. The following table sets forth the gross and
net oil and gas wells of the Company as of December 31, 2000.

<TABLE>
<CAPTION>
                               GROSS WELLS                                  NET WELLS
                    ----------------------------------------------------------------------------
                            (1)        (1)                           (1)         (1)
                       OIL         GAS        TOTAL               OIL          GAS        TOTAL
                    ---------------------------------------------------------------------------
<S>                             <C>         <C>                <C>          <C>         <C>
                       77          921         998                56           656         712
</TABLE>

                    --------------

                    (1)    Oil wells are those wells which generate the majority
                           of their revenues from oil production; gas wells are
                           those wells which generate the majority of their
                           revenues from gas production.

                  ACREAGE. The Company had 43,900 gross developed acres and
31,700 net developed acres as of December 31, 2000. Developed acreage is that
acreage assignable to productive wells. The Company had approximately 780 gross
and net undeveloped acres as of December 31, 2000.

                                      -13-
<PAGE>   15


                  DRILLING ACTIVITY. The following table sets forth the results
of drilling activities on properties owned by the Company. Such information and
the results of prior drilling activities should not be considered as necessarily
indicative of future performance.

<TABLE>
<CAPTION>
                                          Development Wells(1)
                              -------------------------------------------
                                   Productive                  Dry
                              -------------------        ----------------
                               Gross         Net           Gross   Net
                              --------     ------        -------  -------
<S>                          <C>          <C>          <C>        <C>
                    2000         27         11.42            -      -
                    1999         22         12.40            2     .20
                    1998         30         19.09            1     .91
</TABLE>

                    -----------------
                    (1)    All wells are located in the United States. All wells
                           are development wells; no exploratory wells were
                           drilled.

                  PRESENT ACTIVITIES. The Company has drilled 2 gross and 0.7
net development wells since December 31, 2000. As of March 20, 2001, the Company
had no wells in the process of being drilled.

                  DELIVERY COMMITMENTS. The Company entered into various East
Ohio contracts with East Ohio which, subject to certain restrictions and
adjustments, obligate East Ohio to purchase and the Company to sell all natural
gas production from certain contract wells. The contract wells comprise more
than 60% of the Company's natural gas sales. In addition, the Company has
entered into various short-term contracts which obligate the purchasers to
purchase and the Company to sell and deliver certain quantities of natural gas
production on a monthly basis throughout the term of the contracts.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

                  There are no material pending legal proceedings to which the
Company is a party or to which any of its property is subject.

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

                  During the fourth quarter of the fiscal year ended December
31, 2000, there were no matters submitted to a vote of security holders through
the solicitation of proxies or otherwise.

                                      -14-
<PAGE>   16


                                     PART II
                                     -------

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-------------------------------------------------------------------------
MATTERS
-------

MARKET

                  There is currently no established public trading market for
the Company's Units. At the present time, the Company does not intend to list
any of the Units for trading on any exchange or otherwise take any action to
establish any market for the Units. As of March 20, 2001, there were 5,888,662
Units held by 1,499 holders of record.

DISTRIBUTION HISTORY.

                  The Company commenced operations with the consummation of the
Exchange Offer in February 1991. Management's stated intention was to make
quarterly cash distributions equal to $0.125 per Unit (or $0.50 per Unit on an
annualized basis) for the first eight quarters following the closing date of the
Exchange Offer. The Company has paid a quarterly distribution every quarter
since July 1991. Based upon the current number of Units outstanding, each
quarterly distribution of $0.125 per Unit would be approximately $744,000. The
Company made a quarterly distribution of $0.25 per Unit in January 2001 and
currently intends to make a quarterly distribution of $0.375 per Unit in April
2001 and quarterly distributions of at least $0.125 per Unit in July and October
2001.

REPURCHASE RIGHT.

                  The Partnership Agreement provides, that beginning in 1992 and
annually thereafter, the Company will repurchase for cash up to 10% of the then
outstanding Units, to the extent Unitholders offer Units to the Company for
repurchase (the "Repurchase Right"). The Repurchase Right entitles any
Unitholder, between May 1 and June 30 of each year, to notify the Company that
he elects to exercise the Repurchase Right and have the Company acquire certain
or all of his Units. The price to be paid for any such Units is calculated based
on the method provided for in the Partnership Agreement. The Company accepted an
aggregate of 35,114, 77,344 and 206,531 of its Units of limited partnership
interest at a price of $4.99, $5.79 and $6.11 per Unit pursuant to the terms of
the Company's Offers to Purchase dated April 30, 1998, 1999 and 2000,
respectively. See Note 4 in the Company's financial statement for additional
information on the Repurchase Right.

                                      -15-
<PAGE>   17


ITEM 6. SELECTED FINANCIAL DATA
-------------------------------

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                      ---------------------------------------------------------------------------
                                          2000             1999          1998             1997           1996
                                      ----------------------------------------------------------------------------

<S>                                    <C>           <C>             <C>            <C>            <C>
Revenue ............................    $16,921,139    $15,063,170     $16,558,366    $15,932,197    $14,557,405
Net Income .........................      8,590,757      5,445,941       6,897,089      5,696,407      4,227,854
Net Income Per Unit ................           1.42            .88            1.10            .90            .65
Total Assets  ......................     55,043,294     55,422,986      56,612,953     54,760,106     53,188,337
Debt(1) ............................        637,822        692,289       2,255,898      4,589,143      4,405,834
Cash Distributions Per Unit ........           1.25           .625             .50            .50            .50
</TABLE>

---------------------
(1) Debt includes the Company's long-term debt and borrowings under the
    Company's revolving credit facility.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
OF OPERATIONS
-------------

GENERAL

                  The Company was organized in September 1990 as a limited
partnership under the laws of the State of Delaware. Everflow Management
Limited, LLC, an Ohio limited liability company, is the general partner of the
Company. The Company was formed to engage in the business of oil and gas
exploration and development through a proposed consolidation of the business and
oil and gas properties of EEI, and the oil and gas properties owned by certain
limited partnerships and working interest programs managed or operated by the
Programs.

                  Effective February 15, 1991, pursuant to the Exchange Offer to
acquire the EEI shares and the Interests in exchange for Units of the Company's
limited partnership interest, the Company acquired the Interests and the EEI
Shares and EEI became a wholly-owned subsidiary of the Company.

                  The General Partner of the Company, is a limited liability
company. The members of the General Partner are EMC, two individuals who are
currently directors and/or officers of EEI, Thomas L. Korner and William A.
Siskovic, and Sykes Associates, a limited partnership controlled by Robert F.
Sykes, the Chairman of the Board of EEI.

LIQUIDITY AND CAPITAL RESOURCES

FINANCIAL POSITION

                  Working capital surplus of $7.9 million as of December 31,
2000 represented a $2.0 million increase from December 31, 1999 due primarily to
a $2.1 million increase in short-term investments and a $1.0 million increase in
accounts receivable from oil and gas production

                                      -16-
<PAGE>   18


during 2000. In September 2000, the Company entered into an agreement that
modified its prior credit agreement. The agreement provides for a revolving line
of credit in the amount of $4,000,000, all of which is available. The revolving
line of credit provides for interest payable quarterly at LIBOR plus 150 basis
points with the principal due at maturity, May 31, 2002. The Company anticipates
renewing the facility on an every other year basis to minimize debt origination,
carrying and interest costs associated with long-term bank commitments. The
Company made no borrowings under the revolving credit facilities during 2000.
Cash flows were used to pay for the funding of the Company's investment in and
the continued development of oil and gas properties and to repurchase Units
pursuant to the Repurchase Right. The Company repurchased 206,531 Units at a
price of $6.11 per Unit, or $1,261,904, on June 30, 2000. The Company also used
cash flows to make quarterly Cash Distributions, which totaled $7.6 million.

                  The following table summarizes the Company's financial
position at December 31, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
         (Amounts in Thousands)               December 31, 2000              December 31, 1999
                                         ---------------------------    ----------------------
                                               Amount         %               Amount         %
                                         ---------------------------    ----------------------

<S>                                      <C>              <C>            <C>             <C>
         Working capital                    $    7,931       15%            $   5,881       11%
         Property and equipment (net)           45,639       85                48,015       89
         Other                                     103        -                    81        -
                                               -------       --                   ---        -
              Total                         $   53,673      100%            $  53,977      100%
                                                ======      ===                ======      ===

         Long-term debt                     $      579        1%            $     638        1%
         Deferred income taxes                      50        -                    50        -
         Partners' equity                       53,044       99                53,289       99
                                               -------      ---                ------      ---
              Total                         $   53,673      100%            $  53,977      100%
                                                ======      ===                ======      ===
</TABLE>


CASH FLOWS FROM OPERATING, INVESTING AND FINANCING ACTIVITIES

         The Company generated almost all of its cash sources from operating
activities. During the years ended 2000 and 1999, cash provided by operations
was used to fund the development of additional oil and gas properties,
repurchase of Units pursuant to the Repurchase Right and distributions to
partners.

                                      -17-
<PAGE>   19


                  The following table summarizes the Company's Statements of
Cash Flows for the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
(Amounts in Thousands)                              2000                          1999
                                          --------------------------------------------------------
                                           DOLLARS            %        DOLLARS            %
                                          ---------------------------------------------------------
Operating Activities:
<S>                                       <C>          <C>          <C>            <C>
     Net income before adjustments        $  8,591            60%      $  5,446            48%
     Adjustments                             4,968            35          5,369            48
                                          --------      --------       --------      --------
     Cash flow from operations
       before working capital
       changes                              13,559            95         10,815            96
     Changes in working capital             (2,818)          (20)           468             4
                                          --------      --------       --------      --------
     Net cash provided by
       operating activities                 10,741            75         11,283           100

Investing Activities:
     Proceeds received on receivables
       from officers and employees             249             2            379             3
     Advances disbursed to officers
       and employees                          (130)           (1)          (165)           (1)
     Purchase of property and
       equipment                            (2,594)          (18)        (3,415)          (30)
     Purchase of other assets                  (64)         --             --            --
     Proceeds on sale of other assets
       and equipment                             1          --              200             2
                                          --------      --------       --------      --------
     Net cash (used) by investing
       activities                           (2,538)          (18)        (3,001)          (27)

Financing Activities:
     Distributions                          (7,574)          (53)        (3,880)          (34)
     Repurchase of Units                    (1,262)           (9)          (448)           (4)
     Debt proceeds                            --            --            2,175            19
     Debt repayments                           (54)         --           (3,739)          (33)
                                          --------      --------       --------      --------
     Net cash (used) by financing
       activities                           (8,890)          (62)        (5,892)          (52)
                                          --------      --------       --------      --------

Increase (decrease) in cash
     and equivalents                          (687)           (5)         2,390            21
</TABLE>

Note:    All items in the previous table are calculated as a percentage of total
         cash sources. Total cash sources include the following items, if
         positive: cash flow from operations before working capital changes,
         changes in working capital, net cash provided by investing activities
         and net cash provided by financing activities, plus any decrease in
         cash and cash equivalents.

                                      -18-
<PAGE>   20


                  As the above table indicates, the Company's cash flow from
operations before working capital changes during the twelve months of 2000 and
1999 represented 95% and 96% of total cash sources, respectively. Changes in
working capital other than cash and equivalents decreased cash by $2,818
thousand and increased cash by $468 thousand during 2000 and 1999, respectively.
The increase in accounts receivable at December 31, 2000 compared to December
31, 1999 is the result of higher natural gas prices and timing of production
revenues. Total production revenues receivable as of December 31, 2000 amounted
to $3.1 million compared to $2.0 million at December 31, 1999. Additionally, the
Company had $3.6 and $1.5 million of cash invested in short-term marketable
corporate debt securities at December 31, 2000 and 1999, respectively.

                  The Company's cash flows used by investing activities
decreased $464 thousand, or 15%, during 2000 as compared with 1999. The
Company's cash flows used by investing activities decreased $1,317 thousand, or
30%, during 1999 as compared with 1998. The primary reason for the decrease in
cash flows used by investing activities in 2000 and 1999 was the decrease in the
purchase of property and equipment. The purchase of property and equipment
decreased $821 thousand, or 24%, during 2000 as compared with 1999. The purchase
of property and equipment decreased $2,490 thousand, or 42%, during 1999 as
compared with 1998.

                  The Company's cash flows used by financing activities
increased $2,998 thousand, or 51%, during 2000 as compared with 1999. The
primary reason for this increase was that distributions to Unitholders increased
$3,693 thousand. Proceeds from the issuance of debt decreased $2,175 thousand
and payments on debt decreased $3,684 thousand to $54 thousand during 2000.
Additionally, payments on the repurchase of Units increased $814 thousand, or
182%, during 2000 as compared with 1999. The Company's cash flows used by
financing activities increased $255 thousand, or 5%, during 1999 as compared
with 1998. The primary reason for this increase was that proceeds from the
issuance of debt decreased $725 thousand during 1999 and payments on debt
decreased $1,494 thousand to $3,739 thousand during 1999. Distributions to
Unitholders also increased $752 thousand during 1999.

                  The Company's ending cash and equivalents balance of $2.0
million and short-term investments balance of $3.6 million at December 31, 2000,
as well as on-going monthly operating cash flows, should be adequate to meet
short-term cash requirements. The Company has established a quarterly
distribution and management believes the payment of such distributions will
continue at least through 2001. The Company has paid a quarterly distribution
every quarter since July 1991. Minimum cash distributions are estimated to be
$744 thousand per quarter ($.125 per Unit). The Company intends to distribute
$2.2 million ($.375 per Unit) in April 2001 using the proceeds from its
investments in marketable corporate debt securities.

                  Capital expenditures for the development of oil and gas
properties in the Company and the acquisition of undeveloped leasehold acreage
have decreased compared with historical levels. The Company drilled or
participated in the drilling of an additional 27 drillsites in 2000. The
Company's share of these drillsites amounts to 11.4 net developed properties.
The Company's share of proved gas reserves decreased by 3.0 million MCF's, or
6%, between

                                      -19-
<PAGE>   21

December 31, 1999 and 2000, while proved oil reserves increased by 39 thousand
barrels, or 4%, between December 31, 1999 and 2000. The Company continues to
develop primarily natural gas fields, as represented by the discovery and
addition of 1.2 million MCF's of natural gas versus 3 thousand barrels of crude
oil during 2000. The Standardized Measure of Discounted Future Net Cash Flows of
the Company's reserves increased by $28.3 million between December 31, 1999 and
2000. The primary reason for this increase was due to increases in natural gas
prices between December 31, 1999 and 2000. Management believes the Company
should be able to drill or participate in the drilling of 7 to 15 net wells each
year for the next few years.

                  The Partnership Agreement provides that the Company annually
offers to repurchase for cash up to 10% of the then outstanding Units, to the
extent Unitholders offer Units to the Company for repurchase pursuant to the
Repurchase Right. The Repurchase Right entitles any Unitholder, between May 1
and June 30 of each year, to notify the Company of his or her election to
exercise the Repurchase Right and have the Company acquire such Units. The price
to be paid for any such Units will be calculated based upon the audited
financial statements of the Company as of December 31 of the year prior to the
year in which the Repurchase Right is to be effective and independently prepared
reserve reports. The price per Unit will be equal to 66% of the adjusted book
value of the Company allocable to the Units, divided by the number of Units
outstanding at the beginning of the year in which the applicable Repurchase
Right is to be effective less all Interim Cash Distributions received by a
Unitholder. The adjusted book value is calculated by adding partner's equity,
the Standardized Measure of Discounted Future Net Cash Flows and the tax effect
included in the Standardized Measure and subtracting from that sum the carrying
value of oil and gas properties (net of undeveloped lease costs). If more than
10% of the then outstanding Units are tendered during any period during which
the Repurchase Right is to be effective, the Investor's Units so tendered shall
be prorated for purposes of calculating the actual number of Units to be
acquired during any such period. The Company repurchased 206,531, 77,344 and
35,114 Units during 2000, 1999 and 1998 pursuant to the Repurchase Right at a
price of $6.11, $5.79 and $4.99 per Unit, respectively. The Company has, in the
past, borrowed against its credit facility to meet such obligations and would
expect to do so again in 2001, although current cash flows would reduce
borrowing requirements. The Repurchase Right to be conducted in 2001 will result
in Unitholders being offered a price of $9.73 per Unit. The Company estimates it
would need to borrow up to $5.7 million in the event the 2001 offering pursuant
to the Repurchase Right is fully subscribed.

                  In the fall of 2000, there was a $1.48 per MCF increase in the
price received for natural gas pursuant to the pricing adjustment contained in
the East Ohio Contract. This pricing adjustment should increase the Company's
cash flows from operations during 2001, assuming similar production levels.

RESULTS OF OPERATIONS

                  The following table and discussion is a review of the results
of operations of the Company for the twelve months ended December 31, 2000, 1999
and 1998. All items in the table are calculated as a percentage of total
revenues. This table should be read in conjunction with the discussions of each
item below:

                                      -20-
<PAGE>   22

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                    ---------------------------
                                                       2000       1999     1998
                                                    ---------------------------
<S>                                                  <C>        <C>      <C>
Revenues:
     Oil and gas sales                                   97%        97%      97%
     Well management and operating                        3          3        3
                                                       ----       ----     ----
         Total Revenues                                 100        100      100
Expenses:
     Production costs                                    13         18       15
     Well management and operating                        1          1        -
     Depreciation, depletion and amortization            27         32       30
     Abandonment and write down
         of oil and gas properties                        2          4        6
     General and administrative                           8         11       13
     Other expense (income)                              (2)        (1)      (6)
     Income taxes                                        -          (1)      -
                                                       ----       ----     ----
         Total Expenses                                  49         64       58
                                                       ----       ----     ----
Net income                                               51%        36%      42%
                                                       ====       ====     ====
</TABLE>


                  Revenues for the year ended December 31, 2000 increased $1,858
thousand, or 12%, compared to the same period in 1999. Revenues for the year
ended December 31, 1999 decreased $1,495 thousand, or 9%, compared to the same
period in 1998. These changes were due primarily to changes in oil and gas sales
between the periods involved.

                  Oil and gas sales increased $1.9 million, or 13%, from 1999 to
2000. The primary reason for this increase was the result of higher natural gas
and oil prices. The East Ohio contractual increase in gas prices received during
November 2000 of $1.48 per MCF was partly responsible for increasing natural gas
sales. The Company's gas production decreased by 49 thousand MCF, and the
average price received per MCF increased from $3.08 to $3.32 from 1999 to 2000.
In addition, oil sales were higher due primarily to an increase in the average
sales price of oil from $16.08 to $27.82 per barrel from 1999 to 2000. Gas sales
accounted for 84%, 89% and 93% of total oil and gas sales in 2000, 1999 and
1998, respectively. Oil and gas sales decreased $1.4 million, or 9%, from 1998
to 1999. The primary reason for this decrease in oil and gas sales between 1998
and 1999 was a decrease in gas production volumes and natural gas prices. The
Company's gas production decreased by 330 thousand MCF, and the average price
received per MCF decreased from $3.26 to $3.08. In the fall of 2000, there was a
$1.48 per MCF increase in the price received for natural gas pursuant to the
pricing adjustment contained in the East Ohio Contract. This pricing adjustment
should increase the Company's cash flows from operations during 2001, assuming
similar production levels and stable oil prices.

                  Production costs decreased $393 thousand, or 15%, and
increased $88 thousand, or 3%, during 2000 and 1999, respectively. The primary
reason for the decrease in 2000 was lower operating costs relating to older
settled wells. Depreciation, depletion and amortization

                                      -21-
<PAGE>   23


decreased $252 thousand, or 5%, between 1999 and 2000. Depreciation, depletion
and amortization decreased $142 thousand, or 3%, between 1998 and 1999.

                  Well management and operating revenues increased $7 thousand,
or 2%, from 1999 to 2000. Well management and operating costs increased $16
thousand, or 15%, from 1999 to 2000. The reason for these increases in well
management and operating revenues and costs was due to the increase in Company
operated oil and gas interests. Well management and operating revenues decreased
$76 thousand, or 15%, from 1998 to 1999. Well management and operating costs
increased $5 thousand, or 5%, from 1998 to 1999.

                  Abandonments and write downs of oil and gas properties
decreased $249 thousand between 1999 and 2000 and decreased $315 thousand
between 1998 and 1999. These decreases were attributable to a reduction in the
write down of oil and gas properties and abandonments of oil and gas properties.
During 2000, the Company had no impairment on its oil and gas properties. During
1999 and 1998, the Company wrote down oil and gas properties by approximately
$601 thousand and $426 thousand, respectively, to provide for impairment on
certain of its oil and gas properties.

                  General and administrative expenses decreased $294 thousand,
or 18%, between 1999 and 2000, and decreased $498 thousand, or 24%, between 1998
and 1999. The primary reason for these decreases was a reduction in personnel
and related costs resulting from the Company's decision to decrease its level of
activity in the development of oil and gas properties. In addition, the decrease
in general and administrative expenses between 1998 and 1999 is the result of
fluctuations in professional fees associated with the Company's efforts in
evaluating the feasibility of the sale of the Company during 1998 and costs
associated with discussions with prospective purchasers.

                  Net other income amounted to $271 thousand, $77 thousand, and
$1,044 thousand in 2000, 1999 and 1998, respectively. The change between 1998
and 1999 was primarily attributable to a nonrecurring gain on sale of other
assets associated with the Company's operations during 1998. Interest income has
increased and interest expense has decreased as a result of the Company
decreasing borrowings under its credit facility and increased level of cash
available for investing resulting from reduced development activities.

                  The Company is not a tax paying entity, and the net taxable
income or loss, other than the taxable income or loss attributable to EEI, is
allocated directly to its respective partners.

                  Net income increased $3.1 million, or 58%, between 1999 and
2000. The increase was primarily the result of an increase in oil and gas sales
and decreases in direct costs and general and administrative expenses. Net
income decreased $1.5 million, or 21%, between 1998 and 1999. The decrease
resulted from decreased oil and gas sales and the decrease of a nonrecurring
gain on sale of other assets. Net income represented 51%, 36% and 42% of total
revenues during the years ended December 31, 2000, 1999 and 1998, respectively.

                                      -22-
<PAGE>   24


NEW ACCOUNTING STANDARDS

                  In June 1998, SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities," was issued. SFAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. SFAS 133,
as amended by SFAS 137, is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The effect of adoption of the standard had no
material effect on the Company's financial statements.

INFLATION AND CHANGES IN PRICES

                  While the cost of operations is affected by inflation, oil and
gas prices have fluctuated in recent years and generally have not matched
inflation. The price of oil in the Appalachian Basin has ranged from a low of
$8.50 per barrel in December 1998 to a high of $33.25 in September 2000. As of
March 20, 2001, the posted field price in the Appalachian Basin area, the
Company's principal area of operation, was $22.25 per barrel of oil. Although
the Company's sales are affected by this type of price instability, the impact
on the Company is not as dramatic as might be expected since less than 9% of the
Company's total future cash inflows related to oil and gas reserves as of
December 31, 2000 are comprised of oil reserves.

                  The various gas purchase agreements with East Ohio negotiated
since 1991 have had a significant effect on the Company's natural gas sales.
Under the purchase agreements, adjustments to the price of gas paid to the
Company by The East Ohio Gas Company are based on 80% of the increase or
decrease in East Ohio's GCRs as specified in the contracts. The average price of
gas during 1997 amounted to $3.07 per MCF, a $.29 increase compared to 1996. The
November 1997 annual price adjustment was an increase of $.59 per MCF. The
average price of gas during 1998 amounted to $3.26 per MCF, a $.19 increase
compared to 1997. The November 1998 annual price adjustment was a decrease of
$.19 per MCF. The average price of gas during 1999 amounted to $3.08 per MCF, an
$.18 decrease compared to 1998. The November 1999 annual price adjustment was a
decrease of $.36 per MCF. The average price of gas during 2000 amounted to $3.32
per MCF, a $.24 increase compared to 1999. The November 2000 annual price
adjustment was an increase of $1.48 per MCF. Natural gas prices have increased
significantly during 2000. The current price of gas in the Appalachian Basin is
above $5.00 per MCF. The Company's sales will be significantly higher should
prices remain at these levels assuming similar production levels. The result of
these higher gas prices is evident in the Company's future cash inflows related
to its oil and gas reserves as of December 31, 2000.

                  The Company's Standardized Measure of Discounted Future Net
Cash Flows increased by $28.3 million from December 31, 1999 to December 31,
2000 and increased by $2.2 million from December 31, 1998 to December 31, 1999.
A reconciliation of the Changes in the Standardized Measures of Discounted
Future Net Cash Flows is included in the Company's consolidated financial
statements.

                                      -23-
<PAGE>   25


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

                  The Company is exposed to market risk from changes in interest
rates since it, at times, funds its operations through long-term and short-term
borrowings. The Company's primary interest rate risk exposure results from
floating rate debt with respect to the Company's revolving credit. At December
31, 2000, none of the Company's total long-term debt consisted of floating rate
debt.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
---------------------------------------------------

                  See attached pages F-1 to F-23.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
--------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------

                  Not applicable.



                                      -24-
<PAGE>   26


                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------

                  The Company, as a limited partnership, does not have any
directors or executive officers. The General Partner of the Company is Everflow
Management Limited, LLC, an Ohio limited liability company formed in March 1999,
as the successor to the Company's original general partner. The members of the
General Partner as of March 20, 2001 are Everflow Management Corporation, an
Ohio corporation ("EMC"), Thomas L. Korner and William A. Siskovic, all of whom
are directors and/or officers of EEI, and Sykes Associates, a limited
partnership controlled by Robert F. Sykes, Chairman of the Board of EEI.

                  EMC is the Managing Member of the General Partner. EMC was
formed in September 1990 to act as the Managing General Partner of Everflow
Management Company, the predecessor of the General Partner. EMC is owned by the
other members of the General Partner and EMC currently has no employees, but as
Managing Member of the General Partner, makes all management and business
decisions on behalf of the General Partner and thus on behalf of the Company.

                  EEI has continued its separate existence and provides general,
administrative, management and leasehold functions for the Company. Personnel
previously employed by EEI to conduct its operation, drilling and field
supervisory functions have become employed directly by the Company and discharge
the same functions on behalf of the Company. All of EEI's outstanding shares are
owned by the Company.

                  DIRECTORS AND OFFICERS OF EEI AND EMC. The executive officers
and directors of EEI and EMC as of March 20, 2001 are as follows:

<TABLE>
<CAPTION>
                                           Positions and                    Positions and
           Name                Age       Offices With EEI                 Offices With EMC
---------------------------    ---    -----------------------------    -----------------------
<S>                           <C>    <C>                             <C>
Robert F. Sykes                77     Chairman of the Board            Chairman of the Board
                                                                       and Director

Thomas L. Korner               47     President and Director           President and Director

David A. Kidder                62     Treasurer                        None

William A. Siskovic            45     Vice President, Secretary,       Vice President, Secretary-
                                      Principal Financial and          Treasurer, Principal
                                      Accounting Officer and           Financial and Accounting
                                      Director                         Officer and Director
</TABLE>


                                      -25-
<PAGE>   27

All directors of EEI are elected to serve by the Company, which is EEI's sole
shareholder. All officers of EEI serve at the pleasure of the Board of
Directors. Directors and officers of EEI receive no compensation or fees for
their services to EEI or their services on behalf of the Company.

                  All directors and officers of EMC hold their positions with
EMC pursuant to a shareholders' agreement among EMC and such directors and
officers. The shareholders agreement controls the operation of EMC, provides for
changes in share ownership of EMC, and determines the identity of the directors
and officers of EMC as well as their replacement.

ROBERT F. SYKES has been a Director of EEI since March 1987 and Chairman of the
Board since May 1988. Mr. Sykes is the Chairman of the Board and a Director of
EMC and has served in such capacities since its formation in September 1990. He
was the Chairman of the Board of Sykes Datatronics, Inc., Rochester, New York,
from its organization in 1986 until his resignation in January 1989. Sykes
Datatronics, Inc. is a manufacturer of telephone switching equipment. Mr. Sykes
also served as President and Chief Executive Officer of Sykes Datatronics, Inc.
from 1968 until October 1983 and from January 1985 until October 1985. Mr. Sykes
also has been a Director of Voplex, Inc., Rochester, New York, a manufacturer of
plastic products, and a Director of ACC Corp., a long distance telephone
company.

THOMAS L. KORNER has been President of EEI and EMC since November 1995 and the
President and Treasurer of Everflow Nominee. Mr. Korner is also a Director of
EMC and has served in such capacity since its formation in September 1990. He
served as Vice President and Secretary of EEI from April 1985 to November 1995
and as Vice President and Secretary of EMC from September 1990 to November 1995.
He served as the Treasurer of EEI from June 1982 to June 1986. Mr. Korner
supervises and oversees all aspects of EEI's business, including oil and gas
property acquisition, development, operation and marketing. Prior to joining EEI
in June 1982, Mr. Korner was a practicing certified public accountant with Hill,
Barth and King, certified public accountants, and prior to that with Arthur
Andersen & Co., certified public accountants. He has a Business Administration
Degree from Mt. Union College.

DAVID A. KIDDER has been the Treasurer of EEI since June 1986 and has been
employed by EEI since April 1985. From 1983 to 1985, he was Treasurer of LGM
Corporation, Columbus, Ohio, an oil and gas service company; from 1982 to 1983,
he was Treasurer of OPEX, Inc., Columbus, Ohio, a producer of oil and gas; and
from 1980 to 1981, he was Treasurer of United Petroleum, Inc., Columbus, Ohio, a
producer of oil and gas. From 1973 to 1980, Mr. Kidder was involved in the oil
and gas industry in various financial and accounting capacities. Prior to that
time, Mr. Kidder practiced as a certified public accountant with Coopers &
Lybrand, certified public accountants. Mr. Kidder has a Bachelor of Arts Degree
in Accounting from the University of Cincinnati.

WILLIAM A. SISKOVIC has been a Vice President of EEI since January 1989. Mr.
Siskovic is a Vice President, Secretary-Treasurer, Principal Financial and
Accounting Officer and a Director of EMC. He has served as Principal Financial
Officer and Secretary of EMC since November 1995 and in all other capacities
since the formation of EMC in September 1990. He is


                                      -26-
<PAGE>   28

responsible for the financial operations of the Company and EEI. From August
1980 to July 1984, Mr. Siskovic served in various financial and accounting
capacities including Assistant Controller of Towner Petroleum Company, a public
independent oil and gas operator, producer and drilling fund sponsor company.
From August 1984 to September 1985, Mr. Siskovic was a Senior Consultant for
Arthur Young & Company, certified public accountants, where he was primarily
responsible for the firm's oil and gas consulting practice in the Cleveland,
Ohio office. From October 1985 until joining EEI in April 1988, Mr. Siskovic
served as Controller and Principal Accounting Officer of Lomak Petroleum, Inc.,
a public independent oil and gas operator and producer. He has a Business
Administration Degree in Accounting from Cleveland State University.

                  COMPLIANCE TO SECTION 16(a) OF THE EXCHANGE ACT. Section 16(a)
of the Securities Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than 10% of the Units to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% Unitholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

                  Based solely on review of the copies of such forms furnished
to the Company, the Company believes that for all of 2000, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION
-------------------------------

                  As a limited partnership the Company has no executive officers
or directors, but is managed by the General Partner. The executive officers of
EMC and EEI are compensated either directly by the Company or indirectly through
EEI. The compensation described below represents all compensation from either
the Company or EEI.

                  The following table sets forth information concerning the
annual and long-term compensation for services in all capacities to the Company
for the fiscal years ended December 31, 2000, 1999 and 1998, of those persons
who were, at December 31, 2000: (i) the chief executive officer; and (ii) the
other highly compensated executive officer of the Company. The Chief Executive
Officer and such other executive officer are hereinafter referred to
collectively as the "Named Executive Officers."

                                      -27-
<PAGE>   29

<TABLE>
<CAPTION>

                                     SUMMARY COMPENSATION TABLE

                                          Annual Compensation
                             ----------------------------------------------
                                                                      Other
                                                                     Annual        All Other
          Name and                                                   Compen-        Compen-
     Principal Position      Year      Salary         Bonus          Sation         Sation  (1)
     ------------------      ----      ------         -----        ---------     -----------

<S>                       <C>      <C>             <C>             <C>          <C>
Thomas L. Korner             2000    $ 80,000        $ 40,000        $ 2,008      $ 47,425(2)
President                    1999      80,000          60,000          1,954        36,710(2)
                             1998      80,000          39,000          2,067        40,302(2)

William A. Siskovic          2000      80,000          40,000          1,749        40,201(3)
Vice President and           1999      80,000          60,000          1,326        28,420(3)
Principal Financial and      1998      80,000          39,000          1,489        31,087(3)
Accounting Officer
</TABLE>

-----------------

No Named Executive Officer received personal benefits or perquisites during
2000, 1999 and 1998 in excess of the lesser of $50,000 or 10% of his aggregate
salary and bonus.

(1)      Includes amounts received from participation in certain overriding
         royalty interest arrangements organized by EEI. Also includes amounts
         contributed under the Company's 401(K) Retirement Savings Plan. The
         Company made a profit sharing contribution in 1998 and matched
         employees' contributions to the 401(K) Retirement Savings Plan to the
         extent of 50% of the first 6% of a participant's salary reduction in
         1998 and 1999. Beginning in 2000, the Company matched employees'
         contributions to the 401(K) Retirement Savings Plan to the extent of
         100% of the first 6% of a participant's salary reduction. The amounts
         attributable to the Company's matching contribution vest immediately.

(2)      Includes amounts received by Thomas L. Korner from participation in
         certain overriding royalty interest arrangements organized by EEI of
         $40,225, $28,310 and $33,031 in 2000, 1999 and 1998, respectively.

 (3)     Includes amounts received by William A. Siskovic from participation in
         certain overriding royalty interest arrangements organized by EEI of
         $33,001, $20,020 and $23,816 in 2000, 1999 and 1998, respectively.

The General Partner, EMC and the members do not receive any separate
compensation or reimbursement for their management efforts on behalf of the
Company. All direct and indirect costs incurred by the Company are borne by the
General Partner of the Company and the Unitholders as Limited Partners of the
Company in proportion to their respective interest in the Company. The members
are not entitled to any fees or other compensation as a result of the
acquisition or operation of oil and gas properties by the Company. The members,
in their individual capacities, are not entitled to share in distributions from
or income of the Company on an ongoing basis, upon liquidation or otherwise. The
members only share in the revenues, income and distributions of the Company
indirectly through their ownership of the General Partner of the Company. The
General Partner is entitled to share in the income and expense of the Company on
the basis of its interests in the Company. The General Partner through it
predecessor, Everflow Management Company, contributed Interests (as defined and
described in "Item 1. Business" above) with an Exchange value of $670,980 for
its interest as a general partner in the Company.

                  None of the officers of the Company has an employment
agreement.

                                      -28-
<PAGE>   30

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

                  The General Partner is a limited liability company of which
EMC, an Ohio corporation is the Managing Member. The members of the General
Partner are Thomas L. Korner and William A. Siskovic, both of whom are directors
and officers of EEI, and Sykes Associates, a limited partnership controlled by
Robert F. Sykes, Chairman of the Board of EEI and EMC. The General Partner of
the Company, owns a 1.1266% interest in the Company. The members and their
affiliates currently hold (in addition to the General Partner's interest in the
Company) 1,261,440 Units, representing approximately 21.42% of the outstanding
Units.

                  The following table sets forth certain information with
respect to the number of Units beneficially owned as of March 20, 2001 by each
person known to the management of the Company to own beneficially more than 5%
of the outstanding Units; by each director and officer of EMC; and by all
directors and officers as a group. The table also sets forth (i) the ownership
interests of the General Partner, and (ii) the ownership of EMC.

                  BENEFICIAL OWNERSHIP OF UNITS IN THE COMPANY,
                    EVERFLOW MANAGEMENT LIMITED, LLC AND EMC
<TABLE>
<CAPTION>
                                                                            Percentage
                                                                            Interest in
                                                         Percentage          Everflow         Percentage
              Name                      Units             of Units          Management        Interest in
             of Holder               in Company         in Company(1)     Limited, Llc(2)        EMC
---------------------------------    ----------         -------------     ---------------      -------
<S>                                  <C>                 <C>                  <C>              <C>
Robert F. Sykes(3)                    1,056,464           17.94                66.6666          66.6666
Thomas L. Korner                        135,910            2.31                16.6667          16.6667
William A. Siskovic                      69,066            1.17                16.6667          16.6667
All officers and directors as
   a group (3 persons in EMC)         1,261,440           21.42               100.0000         100.0000
</TABLE>

--------------------------

(1)  Does not include the interest in the Company owned indirectly by such
     individuals as a result of their ownership in (i) the General Partner
     (based on its 1.13% interest in the Company) or (ii) EMC (based on EMC's 1%
     managing member's interest in the General Partner).

(2)  Includes the interest in the General Partner owned indirectly by such
     individuals as a result of their share ownership in EMC resulting from
     EMC's 1% managing member's interest in the General Partner.

(3)  Includes 732,855 Units held by Sykes Associates, a New York limited
     partnership comprised of Mr. Sykes and his wife as general partners and
     four adult children as limited partners, 162,462 Units of the Company held
     by the Robert F. Sykes Annuity Trust and 161,147 Units held by the
     Catherine Sykes Annuity Trust.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

                  In the past, certain officers, directors and more than 10%
Unitholders of the Company have invested, and may in the future invest, in oil
and gas programs sponsored by EEI on the same terms as unrelated investors. In
the past, certain officers, directors and/or more than 10% Unitholders of the
Company have frequently participated and will likely participate in the future
as working interest owners in wells in which the Company has an interest. The
Company

                                      -29-
<PAGE>   31

anticipates that any such participation by individual members of the Company's
management would enable such individuals to participate in the drilling and
development of undeveloped drillsites on an equal basis with the Company or the
particular drilling program acquiring such drillsites, which participation would
be on a uniform basis with respect to all drilling conducted during a specified
time frame, as opposed to selective participation. Frequently, such
participation has been on more favorable terms than the terms which were
available to unrelated investors. Frequently, EEI loaned the officers of the
Company the funds necessary to participate in the drilling and development of
such wells. Such loans currently accrue interest at the rate of LIBOR plus 150
basis points per annum. As of December 31, 2000, the aggregate outstanding
balance of such indebtedness was approximately $91,000 owing from William A.
Siskovic.

                  Certain officers and directors of EMC own oil and gas
properties and, as such, contract with the Company to provide field operations
on such properties. These ownership interests are charged per well fees for such
services on the same basis as all other working interest owners.





                                      -30-
<PAGE>   32


                                     PART IV
                                     -------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
------------------------------------------------------------------------

(a)    (1)        FINANCIAL STATEMENTS

                  The following Consolidated Financial Statements of the
Registrant and its subsidiaries are included in Part II, Item 8:

                                                                PAGE(S)

Auditors' Report on Audited Financial Statements                  F-3
       Balance Sheets                                          F-4 - F-5
       Statements of Income                                       F-6
       Statements of Partners' Equity                             F-7
       Statements of Cash Flows                                   F-8
       Notes to Financial Statements                          F-9 - F-23

(a)    (2)        FINANCIAL STATEMENTS SCHEDULES

                  All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.

(a)    (3)        EXHIBITS

                  See the Exhibit Index at page E-1 of this Annual Report on
Form 10-K.


                                      -31-

<PAGE>   33
                                  Exhibit Index
                                  -------------

<TABLE>
<CAPTION>
    Exhibit No.         Description
    -----------         -----------
<S>                     <C>                                                         <C>
        4.1              Certificate of Limited Partnership of the Registrant            (1)
                         dated September 13, 1990, as filed with the Delaware
                         Secretary of State on September 14, 1990

        4.2              Form of Agreement of Limited Partnership of the                 (1)
                         Registrant

        4.3              General Partnership Agreement of Everflow                       (1)
                         Management Company

        4.4              Articles of Incorporation of Everflow Management                (1)
                         Corporation

        4.5              Code of Regulations of Everflow Management                      (1)
                         Corporation

        4.6              Shareholders Agreement for Everflow Management                  (1)
                         Corporation

        4.7              Third Amended and Restated Loan Agreement,                      (2)
                         dated as of May 1, 1991 between Everflow
                         Eastern, Inc., the Registrant and the banks listed
                         therein, with National Bank of Detroit as Agent

        4.8              First Amendment to Third Amended and Restated                   (5)
                         Loan and Security Agreements dated July 1, 1993,
                         between Everflow Eastern, Inc. and Everflow Eastern

                         Partners, L.P. and the banks listed therein, with
                         National Bank of Detroit as Agent

        4.9              Revolving Credit Note to First Amendment to Third               (5)
                         Amended and Restated Loan and Security Agreement
                         dated as of July 1, 1993

       4.10              Credit Agreement dated January 19, 1995 between                 (8)
                         Everflow Eastern, Inc. and Everflow Eastern Partners, L.P.
                         and Bank One, Texas, National Association
</TABLE>
                                      E-1

<PAGE>   34


                                  Exhibit Index
                                  -------------

<TABLE>
<CAPTION>
    Exhibit No.         Description
    -----------         -----------
<S>                     <C>                                                         <C>
        4.11             Amendment to Credit Agreement dated February 23, 1996          (13)
                         between Everflow Eastern, Inc. and Everflow Eastern
                         Partners, L.P. and Bank One, Texas, National Association

        4.12             Second Amendment to Credit Agreement dated December 30,        (13)
                         1996 between Everflow Eastern, Inc. and Everflow Partners,
                         L.P. and Bank One, Texas, National Association

        4.13             Loan Modification Agreement dated June 16, 1997 between        (14)
                         Bank One, N.A., Bank One, Texas, N.A. and Everflow
                         Eastern, Inc. and Everflow Eastern Partners, L.P.

        4.14             Loan Modification Agreement dated May 29, 1998 between         (15)
                         Bank One, N.A., Successor to Bank One, Texas, N.A., and
                         Everflow Eastern, Inc. and Everflow Eastern Partners L.P.

        4.15             Articles of Organization of Everflow Management                (17)
                         Limited, LLC

        4.16             Operating Agreement of Everflow Management Limited,            (17)
                         LLC dated March 8, 1999

        4.17             Loan Modification Agreement dated May 25, 1999 between         (18)
                         Bank One, N.A., and Everflow Eastern, Inc. and Everflow
                         Eastern Partners, L.P.

        4.18             Loan Modification Agreement dated September 19, 2000,          (19)
                         between Bank One, N.A., and Everflow Eastern, Inc.
                         and Everflow Eastern Partners, L.P.

        10.1             Lease Agreement dated June 30, 1984 by and                      (1)
                         between Village Green Associates, Inc. and
                         Everflow Eastern, Inc.

        10.2             Gas Purchase Agreement dated September 3, 1991                  (3)
                         by and between the Registrant and The East Ohio
                         Gas Company
</TABLE>

                                      E-2
<PAGE>   35
                                  Exhibit Index
                                  -------------

<TABLE>
<CAPTION>
    Exhibit No.         Description
    -----------         -----------
<S>                     <C>                                                         <C>
       10.3              Intermediate Term Adjustable Price Gas Purchase                 (4)
                         Agreement, contract #10342, dated October 9, 1992,
                         between The East Ohio Gas Company and Everflow
                         Eastern Partners, L.P.

       10.4              Quaker State Full Load Crude Oil Purchase Agreement             (4)
                         dated January 13, 1993, between Quaker State Oil
                         Refining Corporation and Everflow Eastern Partners, L.P.

       10.5              Intermediate Term Adjustable Gas Purchase Agreement,            (6)
                         Contract #10461, dated March 10, 1994, between The
                         East Ohio Gas Company and Everflow Eastern Partners, L.P.

       10.6              Intermediate Term Adjustable Gas Purchase Agreement,            (7)
                         Contract #10515, dated August 10, 1994, between The
                         East Ohio Gas Company and Everflow Eastern Partners, L.P.

       10.7              Operating facility lease dated October 3, 1995 between          (9)
                         Everflow Eastern Partners, L.P. and A-1 Storage of
                         Canfield, Ltd.

       10.8              Intermediate Term Adjustable Gas Purchase Agreement,           (11)
                         Contract #11245, dated May 29, 1996, between The
                         East Ohio Gas Company and Everflow Eastern Partners, L.P.

       10.9              Intermediate Term Adjustable Gas Purchase Agreement,           (11)
                         Contract #11285, dated May 29, 1996, between The
                         East Ohio Gas Company and Everflow Eastern Partners, L.P.

      10.10              One Year Term Gas Purchase Agreement dated August 1,           (12)
                         1996, between Everflow Eastern Partners, L.P. and
                         JDS Energy Corporation

      10.11              One Year Term Gas Purchase Agreement dated January 20,         (13)
                         1997, between Everflow Eastern Partners, L.P. and
                         JDS Energy Corporation

      10.12              Gas Purchase Agreement, Contract #11467, dated                 (16)
                         November 1, 1997, between Everflow Eastern Partners, L.P.
                         and CNG Energy Services Corporation.
</TABLE>

                                      E-3
<PAGE>   36
                                  Exhibit Index
                                  -------------

<TABLE>
<CAPTION>
    Exhibit No.         Description
    -----------         -----------
<S>                     <C>                                                         <C>
      10.13              One Year Term Gas Purchase Agreement dated November 1,         (16)
                         1998, between Everflow Eastern Partners, L.P. and JDS
                         Energy Systems, Inc.

       22.1              Subsidiaries of the Registrant                                 (10)
</TABLE>
-----------------------
(1)      Incorporated herein by reference to the appropriate exhibit to
         Registrant's Registration Statement on Form S-1 (Reg. No. 33-36919).
(2)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1991.
(3)      Incorporated herein by reference to the appropriate exhibit to
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1991 (File No. 0-19279).
(4)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1992 (File No. 0-19279).
(5)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1993.
(6)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1994.
(7)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the third quarter ended
         September 30, 1994.
(8)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1994 (File No. 0-19279).
(9)      Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the third quarter ended
         September 30, 1995.
(10)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1995 (File No. 0-19279).
(11)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1996.
(12)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the third quarter ended
         September 30, 1996.
(13)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1996 (File No. 0-19279).
(14)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1997.
(15)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1998.
(16)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Annual Report on Form 10-K for the year ended December 31,
         1998 (File No. 0-19279).
(17)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the first quarter ended
         March 31, 1999.
(18)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the second quarter ended
         June 30, 1999.
(19)     Incorporated herein by reference to the appropriate exhibit to the
         Registrant's Quarterly Report on Form 10-Q for the third quarter ended
         September 30, 2000.


                                      E-4
<PAGE>   37

                                   SIGNATURES
                                   ----------

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

EVERFLOW EASTERN PARTNERS, L.P.

By:      EVERFLOW MANAGEMENT LIMITED, LLC
         General Partner
By:      EVERFLOW MANAGEMENT CORPORATION
         Managing Member



By:      /s/ Robert F. Sykes        Director                    March 28, 2001
         -------------------------
         Robert F. Sykes



By:      /s/ Thomas L. Korner       President and Director      March 28, 2001
         -------------------------
         Thomas L. Korner



By:      /s/ William A. Siskovic    Vice President,             March 28, 2001
         -------------------------
         William A. Siskovic        Secretary-Treasurer
                                    and Director (principal
                                    financial and accounting
                                    officer)
<PAGE>   38









                        EVERFLOW EASTERN PARTNERS, L. P.

                       2000 CONSOLIDATED FINANCIAL REPORT













                                      F-1
<PAGE>   39

                        EVERFLOW EASTERN PARTNERS, L. P.

                                    CONTENTS

------------------------------------------------------------------------------

                                                                   Page
                                                                   ----

AUDITORS' REPORT ON THE FINANCIAL STATEMENTS                        F-3

FINANCIAL STATEMENTS
    Consolidated balance sheets                                  F-4 - F-5
    Consolidated statements of income                               F-6
    Consolidated statements of partners' equity                     F-7
    Consolidated statements of cash flows                           F-8
    Notes to consolidated financial statements                    F-9 - F-23


                                      F-2
<PAGE>   40




                          Independent Auditors' Report
                          ----------------------------

To the Partners
Everflow Eastern Partners, L. P.
Canfield, Ohio


        We have audited the accompanying consolidated balance sheets of Everflow
Eastern Partners, L. P. and subsidiaries as of December 31, 2000 and 1999, and
the related consolidated statements of income, partners' equity, and cash flows
for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

        We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Everflow Eastern Partners, L. P. and subsidiaries as of December 31, 2000 and
1999, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States.



                                                           HAUSSER + TAYLOR LLP



Cleveland, Ohio
March 16, 2001

                                      F-3
<PAGE>   41


                           EVERFLOW EASTERN PARTNERS, L. P.

                              CONSOLIDATED BALANCE SHEETS

                              December 31, 2000 and 1999
-------------------------------------------------------------------------------





<TABLE>
<CAPTION>
                                                                2000           1999
                                                                ----           ----
        ASSETS
        ------
<S>                                                          <C>            <C>
CURRENT ASSETS
  Cash and equivalents                                       $  1,997,978   $  2,684,605
  Accounts receivable:
    Production                                                  3,078,235      2,040,298
    Officers and employees                                        406,842        526,030
    Joint venture partners                                        114,708        474,355
Short-term investments                                          3,623,374      1,513,273
Other                                                              79,729         88,991
                                                             ------------   ------------
         Total current assets                                   9,300,866      7,327,552

PROPERTY AND EQUIPMENT
  Proved properties (successful efforts
    accounting method)                                        112,341,851    110,483,039
  Pipeline and support equipment                                  504,222        507,472
  Corporate and other                                           1,539,824      1,545,233
                                                             ------------   ------------
                                                              114,385,897    112,535,744
  Less accumulated depreciation, depletion,
     amortization and write down                               68,746,486     64,521,335
                                                             ------------   ------------
                                                               45,639,411     48,014,409

OTHER ASSETS                                                      103,017         81,025
                                                             ------------   ------------
                                                             $ 55,043,294   $ 55,422,986
                                                             ============   ============
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-4

<PAGE>   42


                             EVERFLOW EASTERN PARTNERS, L. P.

                               CONSOLIDATED BALANCE SHEETS

                                December 31, 2000 and 1999
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                             2000           1999
                                                             ----           ----
           LIABILITIES AND PARTNERS' EQUITY
           --------------------------------
<S>                                                       <C>           <C>
CURRENT LIABILITIES
   Current portion of long-term debt                   $    58,595   $    54,493
   Accounts payable                                      1,018,959     1,202,605
   Accrued expenses                                        292,684       189,333
                                                       -----------   -----------
     Total current liabilities                           1,370,238     1,446,431

LONG-TERM DEBT, NET OF CURRENT PORTION                     579,227       637,796

DEFERRED INCOME TAXES                                       50,000        50,000

COMMITMENTS AND CONTINGENCIES

LIMITED PARTNERS' EQUITY, SUBJECT TO REPURCHASE
 RIGHT
  Authorized - 8,000,000 units
  Issued and outstanding - 5,888,662 and 6,095,193
    units, respectively                                 52,446,234    52,708,525

GENERAL PARTNER'S EQUITY                                   597,595       580,234
                                                       -----------   -----------
     Total partners' equity                             53,043,829    53,288,759
                                                       -----------   -----------

                                                       $55,043,294   $55,422,986
                                                       ===========   ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-5

<PAGE>   43


                      EVERFLOW EASTERN PARTNERS, L. P.

                     CONSOLIDATED STATEMENTS OF INCOME

                Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                       2000           1999           1998
                                                       ----           ----           ----
<S>                                               <C>             <C>             <C>
REVENUES
  Oil and gas sales                               $ 16,490,904    $ 14,639,109    $ 16,058,164
  Well management and operating                        428,497         421,799         497,483
  Other                                                  1,738           2,262           2,719
                                                  ------------    ------------    ------------
                                                    16,921,139      15,063,170      16,558,366
DIRECT COST OF REVENUES
  Production costs                                   2,244,926       2,638,217       2,550,686
  Well management and operating                        123,265         106,965         102,176
  Depreciation, depletion and amortization           4,510,787       4,762,466       4,904,221
  Abandonment and write down of oil and gas
    properties                                         400,000         648,742         964,226
                                                  ------------    ------------    ------------
      Total direct cost of revenues                  7,278,978       8,156,390       8,521,309

GENERAL AND ADMINISTRATIVE EXPENSE                   1,322,260       1,615,932       2,113,492
                                                  ------------    ------------    ------------
      Total cost of revenues                         8,601,238       9,772,322      10,634,801
                                                  ------------    ------------    ------------

INCOME FROM OPERATIONS                               8,319,901       5,290,848       5,923,565

OTHER INCOME (EXPENSE)
  Interest income                                      316,091         157,348          90,564
  Interest expense                                     (46,239)       (101,759)       (170,611)
  Gain (loss) on sale of property and equipment           --            21,504          (5,613)
  Gain on sale of other assets                           1,004            --         1,129,184
                                                  ------------    ------------    ------------
                                                       270,856          77,093       1,043,524
                                                  ------------    ------------    ------------

INCOME BEFORE INCOME TAXES                           8,590,757       5,367,941       6,967,089

PROVISION (CREDIT) FOR INCOME TAXES
  Current                                                 --              --            70,000
  Deferred                                                --           (78,000)           --
                                                  ------------    ------------    ------------

NET INCOME                                        $  8,590,757    $  5,445,941    $  6,897,089
                                                  ============    ============    ============

Allocation of Partnership Net Income
  Limited Partners                                $  8,495,622    $  5,387,013    $  6,822,921
  General Partner                                       95,135          58,928          74,168
                                                  ------------    ------------    ------------
                                                  $  8,590,757    $  5,445,941    $  6,897,089
                                                  ============    ============    ============
Net income per unit                               $       1.42    $       0.88    $       1.10
                                                  ============    ============    ============
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-6

<PAGE>   44


                      EVERFLOW EASTERN PARTNERS, L. P.

                CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY

                Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                               2000           1999             1998
                                                               ----           ----             ----

<S>                                                    <C>             <C>             <C>
PARTNERS' EQUITY - JANUARY 1                              $ 53,288,759    $ 52,171,076    $ 48,577,802

  Net income                                                 8,590,757       5,445,941       6,897,089

  Cash distributions ($1.25 per unit in 2000, $.625 per
    unit in 1999 and $.50 per unit in 1998)                 (7,573,783)     (3,880,436)     (3,128,596)

  Purchase and retirement of Units                          (1,261,904)       (447,822)       (175,219)
                                                          ------------    ------------    ------------
PARTNERS' EQUITY - DECEMBER 31                            $ 53,043,829    $ 53,288,759    $ 52,171,076
                                                          ============    ============    ============
</TABLE>











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

                                      F-7

<PAGE>   45


                      EVERFLOW EASTERN PARTNERS, L. P.

                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                            2000           1999           1998
                                                            ----           ----           ----
<S>                                                  <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                           $  8,590,757    $  5,445,941    $  6,897,089
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation, depletion and amortization              4,569,114       4,819,592       4,929,023
    Abandonment and write down of oil and gas
     properties                                             400,000         648,742         964,226
    (Gain) loss on sale of property and equipment              --           (21,504)          5,613
    Gain on sale of other assets                             (1,004)           --        (1,129,184)
    Deferred income taxes                                      --           (78,000)           --
    Changes in assets and liabilities:
      Accounts receivable                                  (678,290)        450,714        (426,624)
      Short-term investments                             (2,110,101)        707,783      (2,221,056)
      Other current assets                                    9,262           3,364         (28,937)
      Other assets                                           41,629         (27,304)        (12,255)
      Accounts payable                                     (183,646)       (464,187)        459,524
      Accrued expenses                                      103,351        (201,854)        133,294
                                                       ------------    ------------    ------------
        Total adjustments                                 2,150,315       5,837,346       2,673,624
                                                       ------------    ------------    ------------
          Net cash provided by operating activities      10,741,072      11,283,287       9,570,713

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds received on receivables from officers and
   employees                                                248,692         379,191         540,914
  Advances disbursed to officers and employees             (129,504)       (165,499)       (545,169)
  Purchase of property and equipment                     (2,594,116)     (3,414,843)     (5,905,286)
  Purchase of other assets                                  (64,050)           --          (271,125)
  Proceeds on sale of property and equipment and
   other assets                                               1,433         199,818       1,862,000
                                                       ------------    ------------    ------------
          Net cash used by investing activities          (2,537,545)     (3,001,333)     (4,318,666)

CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions                                          (7,573,783)     (3,880,436)     (3,128,596)
  Repurchase of Units                                    (1,261,904)       (447,822)       (175,219)
  Proceeds from issuance of debt including revolver            --         2,175,000       2,900,000
  Payments on debt including revolver                       (54,467)     (3,738,609)     (5,233,245)
                                                       ------------    ------------    ------------
          Net cash used by financing activities          (8,890,154)     (5,891,867)     (5,637,060)
                                                       ------------    ------------    ------------

  NET INCREASE (DECREASE) IN CASH AND
   EQUIVALENTS                                             (686,627)      2,390,087        (385,013)

  CASH AND EQUIVALENTS - JANUARY 1                        2,684,605         294,518         679,531
                                                       ------------    ------------    ------------
  CASH AND EQUIVALENTS - DECEMBER 31                   $  1,997,978    $  2,684,605    $    294,518
                                                       ============    ============    ============

  Supplemental disclosures of cash flow information:
    Cash paid during the year for:
      Interest                                         $     46,239    $    112,648    $    178,119
      Income taxes                                             --              --            70,000
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-8


<PAGE>   46



                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.       Organization - Everflow Eastern Partners, L. P. ("Everflow")
                  is a Delaware limited partnership which was organized in
                  September 1990 to engage in the business of oil and gas
                  exploration and development. Everflow was formed to
                  consolidate the business and oil and gas properties of
                  Everflow Eastern, Inc. ("EEI") and subsidiaries and the oil
                  and gas properties owned by certain limited partnership and
                  working interest programs managed or sponsored by EEI ("EEI
                  Programs" or "the Programs").

                  Everflow Management Limited, LLC, an Ohio limited liability
                  company, is the general partner of Everflow and, as such, is
                  authorized to perform all acts necessary or desirable to carry
                  out the purposes and conduct of the business of Everflow. The
                  members of Everflow Management Limited, LLC are Everflow
                  Management Corporation ("EMC"), two individuals who are
                  Officers and Directors of EEI and Sykes Associates, a limited
                  partnership controlled by Robert F. Sykes, the Chairman of the
                  Board of EEI. EMC is an Ohio corporation formed in September
                  1990 and is the managing member of Everflow Management
                  Limited, LLC.

         B.       Principles of Consolidation - The consolidated financial
                  statements include the accounts of Everflow, its wholly-owned
                  subsidiaries, including EEI and EEI's wholly-owned
                  subsidiaries, and investments in oil and gas drilling and
                  income partnerships (collectively, the "Company") which are
                  accounted for under the proportional consolidation method. All
                  significant accounts and transactions between the consolidated
                  entities have been eliminated.

         C.       Use of Estimates - The preparation of financial statements in
                  conformity with accounting principles generally accepted in
                  the United States requires management to make estimates and
                  assumptions that affect the reported amounts of assets and
                  liabilities and disclosure of contingent assets and
                  liabilities at the date of the financial statements and the
                  reported amounts of revenues and expenses during the reporting
                  period. Actual results could differ from those estimates.

         D.       Fair Value of Financial Instruments - The fair values of cash,
                  accounts receivable, short-term investments (based on quoted
                  market values), accounts payable and other short-term
                  obligations approximate their carrying values because of the
                  short maturity of these financial instruments. The carrying
                  values of the Company's long-term obligations approximate
                  their fair value. In accordance with Statement of Financial
                  Accounting Standards ("SFAS") No. 107, "Disclosure About Fair
                  Value of Financial Instruments," rates available at balance
                  sheet dates to the Company are used to estimate the fair value
                  of existing debt.

         E.       Cash Equivalents - For purposes of the statement of cash
                  flows, the Company considers all highly liquid debt
                  instruments purchased with a maturity of three months or less
                  to be cash equivalents. The Company maintains at various
                  financial institutions cash and cash equivalents which may
                  exceed federally insured amounts and which may, at times,
                  significantly exceed balance sheet amounts due to float.

                                      F-9
<PAGE>   47

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (CONTINUED)

         F.       Property and Equipment - The Company uses the successful
                  efforts method of accounting for oil and gas exploration and
                  production activities. Under successful efforts, costs to
                  acquire mineral interests in oil and gas properties and to
                  drill and equip development wells are initially capitalized.
                  Costs of development wells (on properties the Company has no
                  further interest in) that do not find proved reserves and
                  geological and geophysical costs are expensed. The Company has
                  not participated in exploratory drilling and owns no interest
                  in unproved properties.

                  Capitalized costs of proved properties, after considering
                  estimated dismantlement and abandonment costs and estimated
                  salvage values, are amortized by the unit-of-production method
                  based upon estimated proved developed reserves. Depletion,
                  depreciation and amortization on proved properties amounted to
                  $4,477,379, $4,728,480 and $4,876,838 for the years ended
                  December 31, 2000, 1999 and 1998, respectively.

                  On sale or retirement of a unit of a proved property (which
                  generally constitutes the amortization base), the cost and
                  related accumulated depreciation, depletion, amortization and
                  write down are eliminated from the property accounts, and the
                  resultant gain or loss is recognized.

                  SFAS No. 121, "Accounting for the Impairment of Long-Lived
                  Assets and for Long-Lived Assets to be Disposed Of," requires
                  that long-lived assets (including oil and gas properties) and
                  certain identifiable intangibles be reviewed for impairment
                  whenever events or changes in circumstances indicate that the
                  carrying amount of an asset may not be recoverable. Everflow
                  utilizes a field by field basis for assessing impairment of
                  its oil and gas properties. The Company wrote down oil and gas
                  properties by approximately $400,000, $601,000 and $426,000
                  during 2000, 1999 and 1998, respectively, to provide for
                  impairment on certain of its oil and gas properties.

                  Pipeline and support equipment and other corporate property
                  and equipment are depreciated principally on the straight-line
                  method over their estimated useful lives (pipeline and support
                  equipment - 10 years, other corporate equipment - 3 to 7
                  years, other corporate property - building and improvements
                  with a cost of $1,007,107 - 39 years). Depreciation on
                  pipeline and support equipment and other corporate property
                  and equipment amounted to $91,735, $91,112 and $52,185 for the
                  years ended December 31, 2000, 1999 and 1998, respectively.

                  Maintenance and repairs of property and equipment are expensed
                  as incurred. Major renewals and improvements are capitalized,
                  and the assets replaced are retired.

         G.       Revenue Recognition - The Company recognizes revenue from oil
                  and gas production as it is extracted and sold from the
                  properties. Other revenue is recognized at the time it is
                  earned and the Company has a contractual right to such
                  revenue.

                                      F-10

<PAGE>   48

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1.        ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
               (CONTINUED)

               G.     Revenue Recognition (Continued)

                      The Company participates (and may act as drilling
                      contractor) with unaffiliated joint venture partners in
                      the drilling, development and operation of jointly owned
                      oil and gas properties. Each owner, including the Company,
                      has an undivided interest in the jointly owned
                      property(ies). Generally, the joint venture partners
                      participate on the same drilling/development cost basis as
                      the Company and, therefore, no revenue, expense or income
                      is recognized on the drilling and development of the
                      properties. Accounts receivable from joint venture
                      partners consist principally of drilling and development
                      costs the Company has advanced or incurred on behalf of
                      joint venture partners. The Company earns and receives
                      monthly management and operating fees from certain joint
                      venture partners after the properties are completed and
                      placed into production.

               H.     Income Taxes - Everflow is not a tax-paying entity and the
                      net taxable income or loss, other than the taxable income
                      or loss allocable to EEI, which is a C corporation owned
                      by Everflow, will be allocated directly to its respective
                      partners. The Company is not able to determine the net
                      difference between the tax bases and the reported amounts
                      of Everflow's assets and liabilities due to separate tax
                      elections that were made by owners of the working
                      interests and limited partnership interests that comprised
                      Programs.

                      EEI and its subsidiaries account for income taxes under
                      Statement of Financial Accounting Standards No. 109 (SFAS
                      109), "Accounting for Income Taxes." Income taxes are
                      provided for all items (as they relate to EEI and its
                      subsidiaries) in the Consolidated Statement of Income
                      regardless of the period when such items are reported for
                      income tax purposes. SFAS 109 provides that deferred tax
                      assets and liabilities be recognized for temporary
                      differences between the financial reporting basis and tax
                      basis of certain of EEI's and its subsidiaries' assets and
                      liabilities. In addition, SFAS 109 requires that deferred
                      tax assets and liabilities be measured using enacted tax
                      rates expected to apply to taxable income in the years in
                      which the temporary differences are expected to be
                      recovered or settled. The impact on deferred taxes of
                      changes in tax rates and laws, if any, is reflected in the
                      financial statements in the period of enactment. In some
                      situations, SFAS 109 permits the recognition of expected
                      benefits of utilizing net operating loss and tax credit
                      carryforwards.

               I.     Allocation of Income and Per Unit Data - Under the terms
                      of the limited partnership agreement, initially, 99% of
                      revenues and costs were allocated to the unitholders (the
                      limited partners) and 1% of revenues and costs were
                      allocated to the general partner. The allocation changes
                      as unitholders elect to exercise the repurchase right (see
                      Note 4).

                      Earnings and distributions per limited partner Unit have
                      been computed based on the weighted average number of
                      Units outstanding during the year for each year presented.
                      Average outstanding Units for earnings and distributions
                      per Unit calculations amount to 5,991,928, 6,133,865 and
                      6,190,094 in 2000, 1999 and 1998, respectively.

                                      F-11
<PAGE>   49

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1.        ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
              (CONTINUED)

               J.     New Accounting Standards - In June 1998, SFAS 133,
                      "Accounting for Derivative Instruments and Hedging
                      Activities," was issued. SFAS 133 establishes accounting
                      and reporting standards for derivative instruments and
                      hedging activities. SFAS 133, as amended by SFAS 137, is
                      effective for all fiscal quarters of all fiscal years
                      beginning after June 15, 2000. The effect of adoption of
                      the standard on January 1, 2000 had no material effect on
                      the Company's financial statements.

NOTE 2.        SHORT-TERM INVESTMENTS

               Short-term investments consist principally of marketable
               corporate debt securities which are classified as trading. The
               fair values of the investments approximate cost.

NOTE 3.        CREDIT FACILITIES AND LONG-TERM DEBT

               In September 2000, the Company entered into an agreement that
               modified its prior credit agreement. The agreement provides for a
               revolving line of credit in the amount of $4,000,000, all of
               which is available. The revolving line of credit provides for
               interest payable quarterly at LIBOR plus 150 basis points with
               the principal due at maturity, May 31, 2002. The Company
               anticipates renewing the facility every other year to minimize
               debt origination, carrying and interest costs associated with
               long-term bank commitments. Borrowings under the facility are
               unsecured; however, the Company has agreed, if requested by the
               bank, to execute any supplements to the agreement including
               security and mortgage agreements on the Company's assets. The
               agreement contains restrictive covenants requiring the Company to
               maintain the following: (i) loan balance not to exceed the
               borrowing base of $4,000,000; (ii) tangible net worth of at least
               $40,000,000; and (iii) a total debt to tangible net worth ratio
               of not more than 0.5 to 1.0. In addition, there are restrictions
               on mergers, sales and acquisitions, the incurrence of additional
               debt and the pledge or mortgage of the Company's assets.

               There were no borrowings outstanding on revolving credit
               facilities at December 31, 2000 and 1999. The following schedule
               reflects activity under the Company's revolving credit facilities
               for the years ended December 31, 2000, 1999 and 1998. The average
               amount outstanding under the facility was calculated using daily
               balances and a 365 day period. The weighted average interest
               rates were calculated by dividing the interest expense for the
               year for such borrowings by the average amounts outstanding
               during the period.

<TABLE>
<CAPTION>
                                                                              Weighted
                                         Maximum            Average           Average
                                          Amount             Amount           Interest
                                        Outstanding        Outstanding         Rate
                                        -----------        -----------       ---------
               Year Ended December 31:
<S>                                    <C>                <C>               <C>
               2000                       $     --          $     --              --

               1999                       $2,700,000        $  757,808            6.8%

               1998                       $4,100,000        $1,743,014            7.5%

</TABLE>


                                      F-12



<PAGE>   50
                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.        CREDIT FACILITIES AND LONG-TERM DEBT (CONTINUED)

               The Company purchased a building and funded its cost, including
               improvements, in part, through mortgage notes. The notes have an
               aggregate balance of $637,822 and $692,289 at December 31, 2000
               and 1999, respectively, and at December 31, 2000 bear interest at
               fixed (converting in certain subsequent years to variable) rates
               ranging from 6.51% - 8.65% and a weighted average rate of 7.27%.
               The notes at December 31, 2000 require aggregate payments of
               principal and interest of $8,647 per month. Maturities on the
               notes are expected to be as follows: 2001 - $58,595; 2002 -
               $63,100; 2003 - $68,000; 2004 - $73,200; 2005 - $78,900;
               thereafter - $296,027.

               The Company is exposed to market risk from changes in interest
               rates since it, at times, funds its operations through long-term
               and short-term borrowings. The Company's primary interest rate
               risk exposure results from floating rate debt with respect to the
               Company's revolving credit. At December 31, 2000, none of the
               Company's total long-term debt consisted of floating rate debt.

NOTE 4.        PARTNERS' EQUITY

               Units represent limited partnership interests in Everflow. The
               Units are transferable subject only to the approval of any
               transfer by Everflow Management Limited, LLC and to the laws
               governing the transfer of securities. The Units are not listed
               for trading on any securities exchange nor are they quoted in the
               automated quotation system of a registered securities
               association. However, unitholders have an opportunity to require
               Everflow to repurchase their Units pursuant to the repurchase
               right.

               Under the terms of the limited partnership agreement, initially,
               99% of revenues and costs are allocated to the unitholders (the
               limited partners) and 1% of revenues and costs are allocated to
               the general partner. Such allocation has changed and will change
               in the future due to unitholders electing to exercise the
               repurchase right.

               The partnership agreement provides that Everflow will repurchase
               for cash up to 10% of the then outstanding Units, to the extent
               unitholders offer Units to Everflow for repurchase pursuant to
               the repurchase right. The repurchase right entitles any
               unitholder, between May 1 and June 30 of each year, to notify
               Everflow that he elects to exercise the repurchase right and have
               Everflow acquire certain or all of his Units. The price to be
               paid for any such Units is calculated based upon the audited
               financial statements of the Company as of December 31 of the year
               prior to the year in which the repurchase right is to be
               effective and independently prepared reserve reports. The price
               per Unit equals 66% of the adjusted book value of the Company
               allocable to the Units, divided by the number of Units
               outstanding at the beginning of the year in which the applicable
               repurchase right is to be effective less all interim cash
               distributions received by a unitholder. The adjusted book value
               is calculated by adding partners' equity, the standardized
               measure of discounted future net cash flows and the tax effect
               included in the standardized measure and subtracting from that
               sum the carrying value of oil and gas properties (net of
               undeveloped lease costs). If more than 10% of the then
               outstanding Units are tendered during any period during which the
               repurchase right is to be effective, the investors' Units
               tendered shall be prorated for purposes of calculating the actual
               number of Units to be acquired during any such period. The price
               associated with the repurchase right, based upon the December 31,
               2000 calculation, is estimated to be $9.73 per Unit, net of the
               distributions ($.625 per Unit in total) expected to be made in
               January and April 2001.

                                      F-13
<PAGE>   51
                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4.        PARTNERS' EQUITY (CONTINUED)

               Units repurchased pursuant to the repurchase right, for each of
               the four years in the period ended December 31, 2000, are as
               follows:

<TABLE>
<CAPTION>

                                                 Per Unit
                         ------------------------------------------------------------
                            Calculated                                                                      Units
                            Price for                      Less                                          Outstanding
                            Repurchase     Premium        Interim           Net          # of Units       Following
                 Year         Right        Offered     Distributions    Price Paid       Repurchased     Repurchase
                 ----         -----        -------     -------------    ----------       -----------     ----------

<S>                       <C>            <C>          <C>             <C>                 <C>            <C>
                1997          $ 5.46         $ -          $ .25           $ 5.21              172,290        6,207,651

                1998          $ 5.24         $ -          $ .25           $ 4.99               35,114        6,172,537

                1999          $ 6.16         $ -          $ .375          $ 5.79               77,344        6,095,193

                2000          $ 6.73         $ -          $ .625          $ 6.11              206,531        5,888,662
</TABLE>




NOTE 5.        PROVISION FOR INCOME TAXES

               As referred to in Note 1, EEI and its subsidiaries account for
               current and deferred income taxes under the provisions of SFAS
               No. 109. The deferred taxes are the result of temporary
               differences arising from differences in financial reporting and
               tax reporting methods for EEI's proved properties.

               A reconciliation between taxes computed at the Federal statutory
               rate and the effective tax rate in the statements of income
               follows:

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                -----------------------------------------------------------------------------
                                                         2000                         1999                         1998
                                                -----------------------     ----------------------     ----------------------
                                                    Amount           %        Amount           %        Amount          %
                                                -----------       -----     -----------       ----     -----------     ----
<S>                                            <C>               <C>       <C>               <C>      <C>              <C>
               Provision based on the
                 statutory rate (for taxable
                 income up to $10,000,000)      $ 2,921,000        34.0     $ 1,825,000       34.0     $ 2,369,000     34.0

               Tax effect of:
                 Non-taxable status of the
                  Programs and Everflow          (2,965,000)      (34.5)     (1,866,000)     (34.8)     (2,097,000)   (30.1)
                 Excess statutory depletion         (83,000)       (1.0)        (72,000)      (1.3)        (95,000)    (1.4)
                 Graduated tax rates, state
                  income tax and other - net        127,000         1.5          35,000        0.6        (107,000)    (1.5)
                                                -----------       -----     -----------       ----     -----------     ----

                        Total                   $        --       $  --     $   (78,000)      (1.5)    $    70,000      1.0
                                                ===========       =====     ===========       ====     ===========     ====
</TABLE>

                                      F-14

<PAGE>   52

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 5.        PROVISION FOR INCOME TAXES (CONTINUED)

               EEI has percentage depletion deduction carryforwards for tax
               purposes of approximately $2,200,000. These carryforwards can be
               carried forward indefinitely. For financial reporting purposes,
               the deferred tax liability at December 31, 2000 and 1999 has been
               reduced by approximately $730,000 and $780,000, respectively, for
               the tax effect of carryforwards.

NOTE 6.        RETIREMENT PLAN

               The Company has a defined contribution plan pursuant to Section
               401(k) of the Internal Revenue Code for all employees who have
               reached the age of 21 and completed one year of service. Certain
               contributions to the plan are at the discretion of EMC's Board of
               Directors. The Company made a profit sharing contribution in 1998
               and matched employees' contributions to the 401(K) Retirement
               Savings Plan to the extent of 50% of the first 6% of a
               participant's salary reduction in 1998 and 1999. Beginning in
               2000, the Company matched employees' contributions to the 401(K)
               Retirement Savings Plan to the extent of 100% of the first 6% of
               a participant's salary reduction. The amounts attributable to the
               Company's matching contribution vest immediately. The Company
               made contributions of $52,683, $38,879 and $83,295 for the years
               ended December 31, 2000, 1999 and 1998, respectively.

NOTE 7.        RELATED PARTY TRANSACTIONS

               Since 1989, EEI provided certain employees with an opportunity to
               receive assignments of certain overriding royalty interests which
               were created at the time EEI generated certain oil and gas
               leases. Certain employees of the Company have been given the
               option of having a portion of their compensation in the form of
               an assignment in certain of such overriding royalty interests.
               Those employees who elect to receive a portion of their
               compensation in this form receive an assignment of a pro rata
               portion of each of the overriding royalty interests selected.
               During the calendar years ended December 31, 2000, 1999 and 1998,
               approximately $140,000, $117,000 and $180,000, respectively, was
               distributed to such employees from such overriding royalty
               interests.

               The Company's Officers, Directors, Affiliates and certain
               employees have frequently participated, and will likely
               participate in the future, as working interest owners in wells in
               which the Company has an interest. Frequently, the Company has
               loaned the funds necessary to participate in the drilling and
               development of such wells. Such loans currently accrue interest
               at LIBOR plus 150 basis points. Such receivables are expected to
               be paid from production revenues attributable to such interests
               or through joint interest assessments.

NOTE 8. BUSINESS SEGMENTS, RISKS AND MAJOR CUSTOMERS

               The Company operates exclusively in the United States, almost
               entirely in Ohio and Pennsylvania, in the exploration,
               development and production of oil and gas.

                                      F-15
<PAGE>   53

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8. BUSINESS SEGMENTS, RISKS AND MAJOR CUSTOMERS (CONTINUED)

               The Company operates in an environment with many financial risks,
               including, but not limited to, the ability to acquire additional
               economically recoverable oil and gas reserves, the inherent risks
               of the search for, development of and production of oil and gas,
               the ability to sell oil and gas at prices which will provide
               attractive rates of return, the volatility and seasonality of oil
               and gas production and prices, and the highly competitive and, at
               times, seasonal nature of the industry and worldwide economic
               conditions. The Company's ability to expand its reserve base and
               diversify its operations is also dependent upon the Company's
               ability to obtain the necessary capital through operating cash
               flow, additional borrowings or additional equity funds. Various
               federal, state and governmental agencies are considering, and
               some have adopted, laws and regulations regarding environmental
               protection which could adversely affect the proposed business
               activities of the Company. The Company cannot predict what
               effect, if any, current and future regulations may have on the
               operations of the Company.

               Management of the Company continually evaluates whether the
               Company can develop oil and gas properties at historical levels
               given current industry and market conditions. If the Company is
               unable to do so, it could be determined that it is in the best
               interests of the Company and its unitholders to reorganize,
               liquidate or sell the Company. Additionally, because of the
               number of recent transactions involving the purchase and sale of
               Appalachian Basin oil and gas companies and properties,
               management of the Company and the Company's investment bankers
               continue to evaluate the sale of the Company and other
               alternatives to maximize unitholder value. However, management
               cannot predict whether any sale transaction will be a viable
               alternative for the Company in the immediate future.

               Gas sales accounted for 84%, 89% and 93% of total oil and gas
               sales in 2000, 1999 and 1998, respectively. Approximate
               percentages of oil and gas sales from significant purchasers for
               the years ended December 31, 2000, 1999 and 1998, respectively,
               were as follows:


<TABLE>
<CAPTION>
                            Customer                           2000         1999          1998
                            --------                           ----         ----          ----
<S>                                                            <C>          <C>           <C>
              The East Ohio Gas Company and its affiliates
               ("East Ohio")                                    53%          67%           74%
              Ergon Oil Purchasing, Inc. ("Ergon Oil")          16           11             7
              Interstate Gas Supply, Inc. ("Interstate")        11            -             -
                                          -                     --           --            --
                                                                80%          78%           81%
                                                                ==           ==            ==
</TABLE>

               The Company expects that East Ohio, Ergon Oil and Interstate will
               be the only major customers in 2001.


                                     F-16

<PAGE>   54

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8.        BUSINESS SEGMENTS, RISKS AND MAJOR CUSTOMERS (CONTINUED)

               The Company has various gas purchase agreements with East Ohio.
               Pursuant to the agreements and subject to certain restrictions
               and adjustments, including termination clauses, East Ohio is
               obligated to purchase, and the Company is obligated to sell, all
               natural gas production from a specified list of wells. A summary
               of Everflow's principal East Ohio Gas contract at December 31,
               2000 follows:

<TABLE>
<CAPTION>
                 Contract        Period         Number          Required        Shut-In          Limitation
                   Date         Covered        of Wells        Purchases      Provisions         Provisions
                -----------    -----------    -----------    -----------      -----------      ---------------
<S>                         <C>             <C>          <C>               <C>               <C>
                    9/3/91     11/91-10/01       423        275 days/year      Maximum of       May-Oct. - 50% of
                                                                               60 days (Nov.-   production from
                                                                               April)           prior 6 month period
</TABLE>


<TABLE>
<CAPTION>
                                                               Net Price per MCF
                                --------------------------------------------------------------------------------------
                                                                  Adjusted Prices
                 Contract       --------------------------------------------------------------------------------------
                   Date         11/98-4/99    5/99-10/99     11/99-4/00        5/00-10/00      11/00-4/01    5/01-10/01
                -----------    -----------    -----------    -----------      -----------      ------------  ----------
<S>                          <C>           <C>            <C>               <C>              <C>          <C>
                    9/3/91        $ 3.71        $ 3.08         $ 3.35            $ 2.72           $ 4.83       $ 4.20

</TABLE>


               As detailed in the table, the price paid for natural gas
               purchased under the contract varies with the production period.
               Pricing under the contract is adjusted annually, up or down, by
               an amount equal to 80% of the increase or decrease in East Ohio's
               average Gas Cost Recovery ("GCR") rates. Additionally, the
               contract provides for a price cap equal to the quarterly GCR,
               which amounted to $7.18, $3.93 and $3.84 in November 2000, 1999
               and 1998, respectively. Price caps related to this contract are
               not included in the table. The net price per MCF includes $.20
               per MCF for transportation less a $.02 per MCF metering charge.
               The contract, which terminates in 2001, will be replaced by
               short-term contracts with primary terms of one year. These new
               short-term contracts will provide fixed pricing of $4.56 to $4.73
               per MCF for production of 100,000 MCF per month. Gas production
               in excess of 100,000 MCF per month (estimated to average between
               50,000 and 100,000 MCF per month) that was under the principal
               East Ohio Gas contract is expected to be sold at prices in effect
               at the time of production. There will be no significant
               production restrictions under these new contracts.

               At December 31, 2000, in addition to the principal East Ohio
               contract described above, the Company has various short-term
               contracts (covering production from 170 gross wells at December
               31, 2000) which obligate the purchasers to purchase and the
               Company to sell and deliver certain quantities of natural gas
               production on a monthly basis throughout the contract periods
               which have primary terms of one year. All of the wells are
               covered by fixed price contracts that provide for the sale of the
               Company's gas at $3.02 to $5.35 per MCF. There are no significant
               production restrictions under the Company's short-term contracts
               as they relate to the Company's existing wells. Future wells can
               be added to certain of the contracts subject to gross production
               restrictions under the contracts.

                                      F-17
<PAGE>   55
                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9.        COMMITMENTS AND CONTINGENCIES

               Everflow paid a dividend in January 2001 of $.25 per Unit. The
               distribution amounted to approximately $1,489,000.

               The Company is the general partner in certain oil and gas
               partnerships. As general partner, the Company shares in unlimited
               liability to third parties with respect to the operations of the
               partnerships and may be liable to limited partners for losses
               attributable to breach of fiduciary obligations.

NOTE 10.       SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

               The following is a summary of selected quarterly financial data
               for the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>

                                                                  Quarters Ended
                                                --------------------------------------------------
                                                  March 31     June 30   September 30  December 31
                                                ----------   ----------  ------------  -----------
               2000
               ----
<S>                                             <C>          <C>          <C>          <C>
                 Revenues                       $4,584,831   $3,328,253   $3,313,751   $5,694,304
                 Income from operations          1,782,528    1,403,796    1,241,006    3,892,571
                 Net income                      1,826,116    1,474,780    1,301,405    3,988,456
                 Net income per unit                   .30          .24          .22          .67
</TABLE>


<TABLE>
<CAPTION>

                                                                  Quarters Ended
                                                --------------------------------------------------
                                                  March 31     June 30   September 30  December 31
                                                ----------   ----------  ------------  -----------

<S>                                             <C>          <C>          <C>          <C>
               1999
               ----
                 Revenues                       $4,220,169   $2,714,639   $2,605,532   $5,522,830
                 Income from operations          1,453,780      811,510      891,562    2,133,996
                 Net income                      1,443,628      815,625      898,595    2,288,093
                 Net income per unit                   .23          .13          .15          .37
</TABLE>

               Quarterly operating results are not necessarily representative of
               operations for a full year for various reasons, including the
               volatility and seasonality of oil and gas production and prices,
               the highly competitive and, at times, seasonal nature of the oil
               and gas industry and worldwide economic conditions.

NOTE 11.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
               ACTIVITIES (UNAUDITED)

               The following supplemental unaudited oil and gas information is
               required by Statement of Financial Accounting Standards (SFAS)
               No. 69, "Disclosures About Oil and Gas Producing Activities."

                                      F-18
<PAGE>   56
                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
               ACTIVITIES (UNAUDITED) (CONTINUED)

               The tables on the following pages set forth pertinent data with
               respect to the Company's oil and gas properties, all of which are
               located within the continental United States.


                   CAPITALIZED COSTS RELATING TO OIL AND GAS
                              PRODUCING ACTIVITIES

<TABLE>
<CAPTION>
                                                                    December 31,
                                                     ------------------------------------------
                                                        2000            1999             1998
                                                        ----            ----             ----
<S>                                                <C>            <C>            <C>
               Proved oil and gas properties          $112,341,851   $110,483,039   $110,178,841
               Pipeline and support equipment              504,222        507,472        506,153
                                                      ------------   ------------   ------------
                                                       112,846,073    110,990,511    110,684,994
               Accumulated depreciation, depletion,
                amortization and write down             68,469,693     64,241,134     61,379,736
                                                      ------------   ------------   ------------

               Net capitalized costs                  $ 44,376,380   $ 46,749,377   $ 49,305,258
                                                      ============   ============   ============
</TABLE>



               COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES

<TABLE>
<CAPTION>

                                                                        December 31,
                                                      ------------------------------------------
                                                            2000           1999          1998
                                                            ----           ----          ----

<S>                                                 <C>            <C>            <C>
               Property acquisition costs             $    175,875   $    292,852   $    629,603
               Development costs, including
                 prepayments                             2,333,387      2,614,116      5,105,622

</TABLE>


               In 2000, 1999 and 1998, development costs include the purchase of
               approximately $-0-, $1,452,000 and $348,000, respectively, of
               producing oil and gas properties.

                                      F-19
<PAGE>   57

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
               ACTIVITIES (UNAUDITED) (CONTINUED)



           RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES


<TABLE>
<CAPTION>
                                                                    December 31,
                                                       --------------------------------------------
                                                          2000             1999              1998
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
               Oil and gas sales                       $ 16,490,904    $ 14,639,109    $ 16,058,164
               Production costs                          (2,244,926)     (2,638,217)     (2,550,686)
               Depreciation, depletion and
                 amortization                            (4,510,787)     (4,762,466)     (4,904,221)
               Abandonment and write down of
                 oil and gas properties                    (400,000)       (648,742)       (964,226)
                                                       ------------    ------------    ------------
                                                          9,335,191       6,589,684       7,639,031

               Income tax expense                           100,000         115,000         150,000
                                                       ------------    ------------    ------------

               Results of operations for oil and gas
                 producing activities (excluding
                 corporate overhead and financing
                 costs)                                $  9,235,191    $  6,474,684    $  7,489,031
                                                       ============    ============    ============
</TABLE>

               Income tax expense was computed using statutory tax rates and
               reflects permanent differences that are reflected in the
               Company's consolidated income tax expense for the year.



                                      F-20

<PAGE>   58

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
               ACTIVITIES (UNAUDITED) (CONTINUED)


               ESTIMATED QUANTITIES OF PROVED OIL AND GAS RESERVES
<TABLE>
<CAPTION>


                                                                       Oil            Gas
                                                                      (BBLS)         (MCF)
                                                                 -----------       -----------
<S>                                                               <C>            <C>
               Balance, January 1, 1998                              822,000        40,657,000
                 Extensions, discoveries and other
                  additions                                           67,000         4,844,000
                 Production                                          (94,000)       (4,575,000)
                 Revision of previous estimates                      140,000        11,977,000
                                                                 -----------       -----------

               Balance, December 31, 1998                            935,000        52,903,000
                 Extensions, discoveries and other
                  additions                                           38,000         4,018,000
                 Production                                          (97,000)       (4,245,000)
                 Revision of previous estimates                       (1,000)       (1,170,000)
                                                                 -----------       -----------

               Balance, December 31, 1999                            875,000        51,506,000
                 Extensions, discoveries and other
                  additions                                            3,000         1,195,000
                 Production                                          (92,000)       (4,196,000)
                 Revision of previous estimates                      128,000            29,000
                                                                 -----------       -----------

               Balance, December 31, 2000                            914,000        48,534,000
                                                                 ===========       ===========


               PROVED DEVELOPED RESERVES:
                 December 31, 1997                                   822,000        40,657,000
                 December 31, 1998                                   935,000        52,903,000
                 December 31, 1999                                   875,000        51,506,000
                 December 31, 2000                                   914,000        48,534,000

</TABLE>



               The Company has not determined proved reserves associated with
               its proved undeveloped acreage. At December 31, 2000 and 1999,
               the Company had 780 and 1,300 net proved undeveloped acres,
               respectively. The carrying cost of the proved undeveloped acreage
               that is included in proved properties amounted to $682,206 and
               $1,227,979 at December 31, 2000 and 1999, respectively.

                                      F-21
<PAGE>   59

                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
               ACTIVITIES  (UNAUDITED) (CONTINUED)

                    STANDARDIZED MEASURE OF DISCOUNTED FUTURE
                                 NET CASH FLOWS

<TABLE>
<CAPTION>
                                                         December 31,
                                            -----------------------------------
                                               2000        1999          1998
                                               ----        ----          ----
                                                (Thousands of Dollars)
<S>                                         <C>          <C>          <C>
Future cash inflows from sales of oil
  and gas                                   $ 248,711    $ 166,772    $ 153,538
Future production and development
  costs                                        81,641       64,142       57,255
Future income tax expense                       3,971        2,405        2,253
                                            ---------    ---------    ---------

Future net cash flows                         163,099      100,225       94,030
Effect of discounting future net cash
  flows at 10% per annum                       81,125       46,532       42,551
                                            ---------    ---------    ---------

Standardized measure of discounted
  future net cash flows                     $  81,974    $  53,693    $  51,479
                                            =========    =========    =========
</TABLE>

                     CHANGES IN THE STANDARDIZED MEASURE OF
                        DISCOUNTED FUTURE NET CASH FLOWS


<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                            ------------------------------------
                                               2000          1999          1998
                                               ----          ----          ----
                                                   (Thousands of Dollars)

<S>                                         <C>          <C>          <C>
Balance, beginning of year                  $  53,693    $  51,479    $  46,094
Extensions, discoveries and other
  additions                                     2,141        4,486        6,004
Development costs incurred                        245          298          801
Revision of previous estimates                  1,133       (2,240)      11,926
Sales of oil and gas, net of production
  costs                                       (14,246)     (12,001)     (13,507)
Net change in income taxes                       (708)         (55)         (60)
Net changes in prices and production
costs                                          28,769        3,304       (1,193)
Accretion of discount                           5,369        5,148        4,609
Other                                           5,578        3,274       (3,195)
                                            ---------    ---------    ---------

Balance, end of year                        $  81,974    $  53,693    $  51,479
                                            =========    =========    =========
</TABLE>



                                      F-22


<PAGE>   60
                        EVERFLOW EASTERN PARTNERS, L. P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 11.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
               ACTIVITIES (UNAUDITED) (CONTINUED)

               The estimated future cash flows are determined based on year-end
               prices for crude oil, current allowable prices (reduced for
               periods beyond the contract period to year-end market prices)
               applicable to expected natural gas production, estimated
               production of proved crude oil and natural gas reserves,
               estimated future production and development costs of reserves,
               based on current economic conditions, and the estimated future
               income tax expense, based on year-end statutory tax rates (with
               consideration of future tax rates already legislated) to be
               incurred on pretax net cash flows less the tax basis of the
               properties involved. Such cash flows are then discounted using a
               10% rate.

               The methodology and assumptions used in calculating the
               standardized measure are those required by SFAS No. 69. It is not
               intended to be representative of the fair market value of the
               Company's proved reserves. The valuation of revenues and costs
               does not necessarily reflect the amounts to be received or
               expended by the Company. In addition to the valuations used,
               numerous other factors are considered in evaluating known and
               prospective oil and gas reserves.


                                      F-23