<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, 1999

                                       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 4,805,331 Units of limited partnership interest held by
non-affiliates of the Registrant as of March 20, 2000. 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, 1999.


<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, 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, Everflow Management Limited, LLC 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


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<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. Following the consummation of the Exchange Offer, 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 acting as the general partner or sponsor of the Programs. Prior
to the consummation of the Exchange Offer, EEI had acted as general contractor
in the drilling and completion of more than 550 wells and had served as operator
of more than 650 producing wells, the substantial majority of which are located
in the State of Ohio.

                  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 acquired in the Exchange
Offer 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 88% of the estimated future
gross cash flow from the oil and gas properties owned by the Company 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, following
consummation of the Exchange Offer, primarily involve the production and sale of
oil and gas from the properties acquired pursuant to the Exchange Offer and the
drilling and development of an additional 231


                                     - 2 -
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(net) wells. The Company serves as the operator of approximately 78% of the
gross wells and 88% of the net wells which comprise the Company's properties.

                  The Company expects to hold its producing properties acquired
pursuant to the Exchange Offer 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. As a result of the number of recent transactions involving the purchase
and sale of Appalachian Basin oil and gas companies and properties, 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 ongoing basis.
The Company may also acquire leases from third parties. Historically, EEI
generated approximately 90% of the prospects which were drilled by the Programs.
EEI's current leasehold inventory consists of approximately 85 prospects in
various stages of maturity representing approximately 1,300 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


                                     - 3 -
<PAGE>   5

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.

                  FUNDING FOR ACTIVITIES. The Company finances its current
operations, including undeveloped leasehold acquisition activities, through cash
generated from operations and the proceeds of borrowings. Prior to the Exchange
Offer, EEI relied upon the formation of investor drilling programs to fund a
portion of its operations; but to date, the Company has elected not to pursue
such activities. 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 borrowed up
to $2,700,000 in 1999 with no principal indebtedness outstanding as of March 20,
2000. 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,
1999, which aggregate $53,693,000 (Standardized Measure of Discounted Future Net
Cash Flows) with no bank debt outstanding under the revolving credit facility
(as of such date).

                                     - 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 during the Persian
Gulf crisis ranged from a low of $18.00 per barrel on July 30, 1990 to a high of
$37.50 per barrel on October 13, 1990. The price of oil in the Appalachian Basin
more recently has ranged from a low of $8.50 per barrel in December 1998 to a
high of $30.50 in March 2000. As of March 20, 2000, the posted field price in
the Appalachian Basin area, the Company's principal area of operation, was
$26.00 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. During the past several years, there
has been a surplus of natural gas available for delivery to pipelines and other
purchasers. This oversupply, reduced demand due to economic conditions and
several mild winters have resulted in volatility in prices for natural gas
throughout the U.S., 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
wells acquired by the Company in the Exchange Offer 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


                                     - 5 -
<PAGE>   7

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. 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 various Intermediate Term Adjustable Price Gas
Purchase Agreements (the "East Ohio Contracts") with The East Ohio Gas Company
("East Ohio"). Pursuant to the East Ohio Contracts 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 Contracts at December 31, 1999 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        424          275 days/year        Maximum of           May-Oct. - 50%
                                                                         60 days (Nov.-       of production
                                                                         April)               from prior 6
                                                                                              month period

   3/10/94           4/94-3/00          52          275 days/year        Maximum of           May-Oct. - 50%
                                                                         60 days (Nov.-       of production
                                                                         April)               from prior 6
                                                                                              month period

   8/10/94          11/94-10/00         26          Nov.-March           April-Oct.           Shut-in provisions
</TABLE>

<TABLE>
<CAPTION>
                                                         Net Price per MCF
                   ---------------------------------------------------------------------------------------------------
  Contract Date                                             Adjusted Prices
  -------------    ---------------------------------------------------------------------------------------------------
                     11/97-4/98       5/98-10/98       11/98-4/99      5/99-10/99       11/99-4/00       5/00-10/00
                     ----------       ----------       ----------      ----------       ----------       ----------
<S>                <C>            <C>                <C>             <C>              <C>              <C>
     9/3/91               $3.90          $3.27             $3.71           $3.08            $3.35            $2.72
    3/10/94               $3.54          $2.84             $3.35           $2.65            $2.99            $2.29
    8/10/94               $4.14           N/A              $3.95           N/A              $3.59           N/A
</TABLE>

                  As detailed above, the price paid for natural gas purchased
under the East Ohio Contracts varies with the production period. Pricing under
the East Ohio Contracts 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, certain of the contracts provide for a price cap equal to
the quarterly GCR, which amounted to $3.93, $3.84 and $4.20 in November 1999,
1998 and 1997, respectively. Price caps related to this contract are not
included in the


                                     - 6 -
<PAGE>   8

table above. The net price per MCF includes $.20 per MCF for transportation less
a $.02 per MCF metering charge.

                  The East Ohio Contracts terminating in 2000 will be replaced
by short-term contracts with a primary term of one year. These new short-term
contracts will provide fixed pricing of $3.02 to $3.07 per MCF for all wells
under contract. There will be no significant production restrictions under these
new contracts.

                  In addition to the East Ohio Contracts described above, the
Company has various short-term contracts (covering production from 91 gross
wells at December 31, 1999) which have a primary term of one year. All of the
wells are covered by fixed price contracts that provide for the sale of the
Company's gas at $2.75 to $3.00 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, 1999, with the exception of
The East Ohio Gas Company, which accounted for approximately 75% 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 will be
the only material natural gas customer for 2000.

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.

                                     - 7 -
<PAGE>   9

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 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 has, 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. Increases in worldwide energy production capability and
decreases in energy consumption as a result of conservation efforts have brought
about substantial surpluses in energy supplies in recent years. 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.

                  In light of these developments, many producers have accepted
prices that are lower than those previously prevailing to sell their production.
As a consequence, 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


                                     - 8 -
<PAGE>   10

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
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 The East Ohio Gas Company 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,


                                     - 9 -
<PAGE>   11

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 $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


                                     - 10 -
<PAGE>   12

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 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 Everflow Management Limited,
LLC, 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, 2000, 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. The decrease from the prior year was the result of
the Company reducing its level of activity in the development of oil and gas
properties.


                                     - 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 reflects 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, 1999.

                                           Oil (BBLS)                Gas (MCF)
                                           ----------                ---------
                  Proved Developed           875,000                51,506,000
                  Proved Undeveloped              -                         -
                                             -------                ----------
                  Total                      875,000                51,506,000
                                             =======                ==========

                  ------------------
                  (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, 1999, 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%.

                                                                     (Thousands)
                                                                      ---------

                  Future cash inflows from sales of oil and gas        $166,772
                  Future production and development costs                64,142
                  Future income tax expense                               2,405
                                                                       --------

                  Future net cash flows                                 100,225
                  Effect of discounting future net cash flows
                      at 10% per annum                                   46,532
                                                                       --------
                  Standardized measure of discounted future
                      net cash flows                                   $ 53,693
                                                                       ========
                  --------------------
                  (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>
     1999              97,000           4,245,000       $ 16.08        $ 3.08             $ .55
     1998              94,000           4,575,000         12.20          3.26               .50
     1997             126,000           4,322,000         17.10          3.07               .48
</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, 1999.

<TABLE>
<CAPTION>
                      Gross Wells                                  Net Wells
           -----------------------------------------------------------------------------
                   (1)        (1)                                 (1)               (1)
              Oil         Gas        Total               Oil          Gas        Total
           -----------------------------------------------------------------------------
<S>        <C>         <C>         <C>                <C>          <C>         <C>
              79          893         972                58           643         701
</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 42,900 gross developed acres and
31,200 net developed acres as of December 31, 1999. Developed acreage is that
acreage assignable to productive wells. The Company had approximately 1,300
gross and net undeveloped acres as of December 31, 1999.


                                     - 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>
                    1999                     22             12.40                2               .20
                    1998                     30             19.09                1               .91
                    1997                     35             19.80                -                -
</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 0.91
net development wells since December 31, 1999. As of March 20, 2000, 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, obligates East Ohio to purchase and the Company to sell all natural
gas production from certain contract wells. The contract wells comprise more
than 65% of the Company's natural gas sales.

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, 1999, 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 of Limited Partnership. 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,
2000, there were 6,095,193 Units of limited partnership interest held by 1,567
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 $770,000. The
Company currently intends to make a quarterly distribution of $0.375 per Unit in
April 2000 and quarterly distributions of at least $0.125 per Unit in July and
October 2000.

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 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 172,290, 35,114 and
77,344 of its Units of limited partnership interest at a price of $5.21, $4.99
and $5.79 per Unit pursuant to the terms of the Company's Offers to Purchase
dated April 30, 1997, 1998 and 1999 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,
                              -------------------------------------------------------------------
                                  1999          1998          1997          1996          1995
                              -------------------------------------------------------------------
<S>                         <C>           <C>           <C>           <C>           <C>
Revenue ...................   $15,063,170   $16,558,366   $15,932,197   $14,557,405   $14,478,954
Net Income ................     5,445,941     6,897,089     5,696,407     4,227,854     5,247,086
Net Income Per Unit .......           .88          1.10           .90           .65           .80
Total Assets ..............    55,422,986    56,612,953    54,760,106    53,188,337    52,756,474
Debt(1) ...................       692,289     2,255,898     4,589,143     4,405,834     4,718,207
Cash Distributions Per Unit          .625           .50           .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 become a wholly-owned subsidiary of the Company.

                  Everflow Management Limited, LLC, the General Partner of the
Company, is a limited liability company. The members of Everflow Management
Limited, LLC 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 $5.9 million as of December 31,
1999 represented a $3.5 million increase from December 31, 1998 due primarily to
a $2.4 million increase in cash


                                     - 16 -
<PAGE>   18

and equivalents and a $1.8 million reduction in borrowings under the Company's
revolving credit facility. In May 1999, the Company entered into an agreement
that extended its prior credit agreement. The agreement provides for a revolving
line of credit in the amount of $7,000,000, all of which is available. The
revolving line of credit provides for interest payable quarterly at LIBOR plus
175 basis points with the principal due at maturity, May 31, 2001. 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 paid down $1.8 million of debt under the revolving
credit facilities during 1999. 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 77,344 Units at a price of $5.79 per Unit, or $447,822, on June 30,
1999. The Company also used cash flows to make quarterly Cash Distributions,
which totaled $3.9 million.

                  The following table summarizes the Company's financial
position at December 31, 1999 and December 31, 1998:

<TABLE>
<CAPTION>
                  (Amounts in Thousands)         December 31, 1999    December 31, 1998
                                                 -----------------    -----------------
                                                 Amount       %       Amount       %
                                                 -----------------    -----------------
<S>                                            <C>        <C>        <C>       <C>
                  Working capital                $ 5,881        11%   $ 2,424         5%
                  Property and equipment (net)    48,015        89     50,246        95
                  Other                               81      --           54      --
                                                 -------   -------    -------   -------
                       Total                     $53,977       100%   $52,724       100%
                                                 =======   =======    =======   =======

                  Long-term debt                 $   638         1%   $   425         1%
                  Deferred income taxes               50      --          128      --
                  Partners' equity                53,289        99     52,171        99
                                                 -------   -------    -------   -------
                       Total                     $53,977       100%   $52,724       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 1999 and 1998, cash provided by operations
was used to fund the development of additional oil and gas properties and
distributions to partners.



                                     - 17 -
<PAGE>   19

                  The following table summarizes the Company's Statements of
Cash Flows for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
(Amounts in Thousands)                              1999                                 1998
                                        ----------------------------------------------------------------
                                            Dollars               %             Dollars                %
                                        ----------------------------------------------------------------
<S>                                      <C>             <C>                 <C>              <C>
Operating Activities:
     Net income before adjustments         $    5,446            48%            $    6,897           57%
     Adjustments                                5,369            48                  4,770           39
                                           ----------    ----------             ----------    ---------
     Cash flow from operations
       before working capital
       changes                                 10,815            96                 11,667           96
     Changes in working capital                   468             4             (    2,096)   (      17)
                                           ----------    ----------              ---------     --------
     Net cash provided by
       operating activities                    11,283           100                  9,571           79

Investing Activities:
     Proceeds received on receivables
       from officers and employees                379             3                    541            4
     Advances disbursed to officers
       and employees                       (      165)   (        1)            (      545)   (       5)
     Purchase of property and
       equipment                           (    3,415)   (       30)            (    5,905)   (      49)
     Purchase of other assets                      -             -              (      271)   (       2)
     Proceeds on sale of other assets
       and equipment                              200             2                  1,862           16
                                           ----------    ----------             ----------    ---------
     Net cash (used) by investing
       activities                          (    3,001)   (       27)            (    4,319)   (      36)

Financing Activities:
     Distributions                         (    3,880)   (       34)            (    3,129)   (      26)
     Repurchase of Units                   (      448)   (        4)            (      175)   (       2)
     Debt proceeds                              2,175            19                  2,900           24
     Debt repayments                       (    3,739)   (       33)            (    5,233)   (      43)
                                            ---------     ---------              ---------     --------
     Net cash (used) by financing
       activities                          (    5,892)   (       52)            (    5,637)   (      47)
                                            ---------     ---------              ---------     --------

Increase (decrease) in cash
     and equivalents                            2,390            21             (      385)   (       3)
</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 1999 and
1998 represented 96% of total cash sources. Changes in working capital other
than cash and equivalents increased cash by $468 thousand and decreased cash by
$2,096 thousand during 1999 and 1998, respectively. The decrease in accounts
receivable at December 31, 1999 compared to December 31, 1998 is the result of
lower production volumes and timing of production revenues resulting in lower
production revenues receivable as of December 31, 1999. Total production
revenues receivable as of December 31, 1999 amounted to $2.0 million compared to
$2.3 million at December 31, 1998. Additionally, the Company had $1.5 and $2.2
million of cash invested in short-term marketable corporate debt securities at
December 31, 1999 and 1998, respectively.

                  The Company's cash flows used by investing activities
decreased $1.3 million, or 30%, during 1999 as compared with 1998. The Company's
cash flows used by investing activities decreased $3.7 million, or 46%, during
1998 as compared with 1997. The primary reason for the decrease in cash flows
used by investing activities in 1999 and 1998 was the decrease in the purchase
of property and equipment. The purchase of property and equipment decreased $2.5
million, or 42%, during 1999 as compared with 1998. The purchase of property and
equipment decreased $1.9 million, or 24%, during 1998 as compared with 1997. In
addition to the drilling and development of 12.6 net wells during 1999, the
Company purchased producing properties of $1.5 million.

                  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 distributions to Unitholders increased $752
thousand. Proceeds from the issuance of debt decreased $725 thousand and
payments on debt decreased $1,494 thousand to $3,739 thousand during 1999.
Additionally, payments on the Repurchase of Units increased $273 thousand, or
156%, during 1999 as compared with 1998. The Company's cash flows used by
financing activities increased $1.7 million, or 45%, during 1998 as compared
with 1997. The primary reason for this increase was that proceeds from the
issuance of debt decreased $1.6 million during 1998 and payments on debt
increased $916 thousand to $5.2 million during 1998.

                  The Company's ending cash and equivalents balance of $2.7
million and investments balance of $1.5 million at December 31, 1999, as well as
ongoing 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 2000. The Company has paid a quarterly distribution every quarter since
July 1991. Minimum cash distributions are estimated to be $770 thousand per
quarter ($.125 per Unit). The Company intends to distribute $2.3 million ($.375
per Unit) on April 1, 2000 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 22 drillsites in 1999. The
Company's share of these drillsites amounts to 12.4 net developed productive
wells. The Company's share of proved gas reserves decreased by 1.4 million
MCF's, or 3%,


                                     - 19 -
<PAGE>   21

between December 31, 1998 and 1999, while proved oil reserves decreased by 60
thousand barrels, or 6%, between December 31, 1998 and 1999. The Company
continues to develop primarily natural gas fields, as represented by the
discovery and addition of 4.0 million MCF's of natural gas versus 38 thousand
barrels of crude oil during 1999. The Standardized Measure of Discounted Future
Net Cash Flows of the Company's reserves increased by $2.2 million between
December 31, 1998 and 1999. The primary reason for this increase was due to
increases in oil prices between December 31, 1998 and 1999. These increases were
mitigated by decreases in natural gas prices. Management has determined that the
Company is presently unable to develop oil and gas properties at historical
levels given current industry and market conditions. 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. Additional distributions to partners
have been made by the Company and will continue to be made at the discretion of
management. 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 continues to evaluate alternatives to maximize
Unitholder value.

                  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 77,344, 35,114 and
172,290 Units during 1999, 1998 and 1997 pursuant to the Repurchase Right at a
price of $5.79, $4.99 and $5.21 per Unit, respectively. The Company borrowed
against its credit facility to meet such obligations and would expect to do so
again in 2000, although current cash flows would reduce borrowing requirements.
The Repurchase Right to be conducted in 2000 will result in Unitholders being
offered a price of $6.11 per Unit. The Company estimates it would need to borrow
up to $3.7 million in the event the 2000 offering pursuant to the Repurchase
Right is fully subscribed.

                  In the fall of 1999, there was a $.36 per MCF decrease in the
price received for natural gas pursuant to the pricing adjustments contained in
the Company's Intermediate Term Adjustable Price Gas Purchase Agreements with
The East Ohio Gas Company. These pricing adjustments should decrease the
Company's cash flows from operations during 2000, assuming


                                     - 20 -
<PAGE>   22

similar production levels. Recent oil prices have increased and will increase
the Company's cash flows from oil production should pricing remain at such
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, 1999, 1998
and 1997. 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:

                                              Year Ended December 31,
                                              -----------------------
                                                1999  1998   1997
                                              -----------------------
Revenues:
     Oil and gas sales                           97%    97%    97%
     Well management and operating                3      3      3
                                                ---    ---    ---
         Total Revenues                         100    100    100
Expenses:
     Production costs                            17     15     15
     Well management and operating                1    --       1
     Depreciation, depletion and amortization    32     30     33
     Abandonment and write down
         of oil and gas properties                4      6      3
     General and administrative                  11     13     12
     Other expense (income)                      --    ( 6)     1
     Income taxes                               ( 1)   --     ( 1)
                                                ---    ---    ---
         Total Expenses                          64     58     64
                                                ---    ---    ---
Net income                                       36%    42%    36%
                                                ===    ===    ===


                  Revenues for the year ended December 31, 1999 decreased $1,495
thousand, or 9%, compared to the same period in 1998. Revenues for the year
ended December 31, 1998 increased $626 thousand, or 4%, compared to the same
period in 1997. These changes were due primarily to changes in oil and gas sales
and production volumes between the periods involved.

                  Oil and gas sales decreased $1.4 million, or 9%, from 1998 to
1999. The primary reason for this decrease was the result of lower gas prices
and reduced production volumes for natural gas, which were mitigated by higher
oil prices and oil production. The East Ohio contractual decrease in gas prices
received during November 1998 of $.19 per MCF was partly responsible for
decreasing natural gas sales during much of 1999. The Company's gas production
decreased by 330 thousand MCF, and the average price received per MCF decreased
from $3.26 to $3.08 from 1998 to 1999. Although the Company's revenues from gas
sales were lower in 1999, revenues from oil sales increased by 36% to $1.6
million as compared to 1998 oil sales of $1.1 million. The primary reason for
the increase in oil sales was an increase in the average sales price of oil from
$12.20 to $16.08 per barrel from 1998 to 1999. Gas sales


                                     - 21 -
<PAGE>   23

accounted for 89%, 93% and 86% of total oil and gas sales in 1999, 1998 and
1997, respectively. Oil and gas sales increased $639 thousand, or 4%, from 1997
to 1998. The primary reason for this increase in oil and gas sales between 1997
and 1998 was an increase in gas production volumes and natural gas prices. The
Company's gas production increased by 253 thousand MCF and oil production
decreased by 32 thousand barrels from 1997 to 1998. In the fall of 1999, there
was a $.36 per MCF decrease in the price received for natural gas pursuant to
the pricing adjustments contained in the Company's Intermediate Term Adjustable
Price Gas Purchase Agreements with The East Ohio Gas Company. These pricing
adjustments should decrease the Company's cash flows from operations during
2000, assuming similar production levels and stable oil prices.

                  Production costs increased $88 thousand, or 3%, and $124
thousand, or 5%, during 1999 and 1998, respectively. The primary reasons for
these increases include increased operating costs relating to older wells and
the Company's increasing costs due to placing newly drilled and acquired wells
into production. Depreciation, depletion and amortization decreased $142
thousand, or 3%, between 1998 and 1999. Depreciation, depletion and amortization
decreased $383 thousand, or 7%, between 1997 and 1998. These decreases were the
result of upward revisions of 1998 reserve estimates on certain properties and
fewer new wells.

                  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. The reason for the decreases in well
management and operating revenues was due to the acquisition of Company operated
oil and gas interests. These purchases decreased the third party share of oil
and gas properties managed and operated by the Company. Well management and
operating revenues decreased $12 thousand, or 2%, from 1997 to 1998. Well
management and operating costs decreased $30 thousand, or 23%, from 1997 to
1998.

                  Abandonments and write downs of oil and gas properties
decreased $315 thousand between 1998 and 1999 and increased $441 thousand
between 1997 and 1998. These fluctuations were attributable to the write down of
oil and gas properties, abandonments of oil and gas properties and leasehold
impairments. During 1999, the Company wrote down oil and gas properties by
approximately $601 thousand to provide for impairment on certain of its oil and
gas properties. The Company also recognized dry hole costs of approximately $48
thousand in 1999. During 1998 and 1997, the Company wrote down oil and gas
properties by approximately $426 thousand and $199 thousand, respectively, to
provide for impairment on certain of its oil and gas properties.

                  General and administrative expenses decreased $498 thousand,
or 24%, between 1998 and 1999, and increased $222 thousand, or 12%, between 1997
and 1998. The primary reason for the 1999 decrease was a reduction in personnel
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 and increase in general and
administrative expenses between 1997 and 1998 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.

                                     - 22 -
<PAGE>   24

                  Net other income (expenses) amounted to $77 thousand, $1,044
thousand, and ($124) thousand in 1999, 1998 and 1997, respectively. The changes
between 1998 and 1999 and between 1997 and 1998 were 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.

                  Income tax expense attributable to EEI decreased $148 thousand
between 1998 and 1999 and increased $220 thousand between 1997 and 1998. These
changes are due to the effect of the earnings of EEI. The Company is not a tax
paying entity, and the net taxable income or loss, other than the taxable income
or loss allocable to EEI, is allocated directly to its respective partners.

                  Net income decreased $1.5 million, or 21%, between 1998 and
1999. The decrease was primarily the result of a decrease in oil and gas sales,
and the decrease of a nonrecurring gain on sale of other assets. Net income
increased $1.2 million, or 21%, between 1997 and 1998. The increase resulted
from increased oil and gas sales and the nonrecurring gain on sale of other
assets. Net income represented 36%, 42% and 36% of total revenues during the
years ended December 31, 1999, 1998 and 1997, respectively.

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 is
expected to have 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 during the Persian Gulf
crisis ranged from a low of $18.00 per barrel on July 30, 1990 to a high of
$37.50 per barrel on October 13, 1990. The price of oil in the Appalachian Basin
more recently has ranged from a low of $8.50 per barrel in December 1998 to a
high of $30.50 in March 2000. As of March 20, 2000, the posted field price in
the Appalachian Basin area, the Company's principal area of operation, was
$26.00 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 12% of the Company's total future cash inflows related
to oil and gas reserves as of December 31, 1999 are comprised of oil reserves.

                  The various gas purchase agreements with The East Ohio Gas
Company negotiated since 1991 have had and will continue to have a significant
effect on the Company's natural gas sales. Under the purchase agreements,
adjustments to the price of gas paid to the


                                     - 23 -
<PAGE>   25

Company by The East Ohio Gas Company are based on 80% of the increase or
decrease in East Ohio's Gas Cost Recovery rates ("GCR") as specified in the
contracts. The average price of gas during 1996 amounted to $2.78 per MCF, an
$.08 decrease compared to 1995. The November 1996 annual price adjustment was an
increase of $.47 per MCF. 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 Company's Standardized Measure of Discounted Future Net
Cash Flows increased by $2.2 million from December 31, 1998 to December 31, 1999
and increased by $5.4 million from December 31, 1997 to December 31, 1998. A
reconciliation of the Changes in the Standardized Measures of Discounted Future
Net Cash Flows is included in the Company's consolidated financial statements.

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, 1999, 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-24.

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
-------------------------------------------------------------

                  Not applicable.


                                     - 24 -


<PAGE>   26
                        EVERFLOW EASTERN PARTNERS, L. P.

                       1999 CONSOLIDATED FINANCIAL REPORT




                                      F-1
<PAGE>   27

                        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-24


                                      F-2
<PAGE>   28
                          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, 1999 and 1998, and
the related consolidated statements of income, partners' equity, and cash flows
for each of the three years in the period ended December 31, 1999. 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 generally accepted auditing
standards. 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, 1999 and
1998, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.



                                                           HAUSSER + TAYLOR LLP



Cleveland, Ohio
March 14, 2000


                                      F-3
<PAGE>   29
                           EVERFLOW EASTERN PARTNERS, L. P.

                              CONSOLIDATED BALANCE SHEETS

                              December 31, 1999 and 1998

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------
                                                                  1999           1998
                                                                  ----           ----
           ASSETS
<S>                                                          <C>            <C>
CURRENT ASSETS
  Cash and equivalents                                       $  2,684,605   $    294,518
  Accounts receivable:
    Production                                                  2,040,298      2,323,510
    Officers and employees                                        526,030      1,015,458
    Joint venture partners                                        474,355        366,121
  Short-term investments                                        1,513,273      2,221,056
  Other                                                            88,991         92,355
                                                             ------------    -----------
      Total current assets                                      7,327,552      6,313,018

PROPERTY AND EQUIPMENT
  Proved properties (successful efforts accounting method)    110,483,039    110,178,841
  Pipeline and support equipment                                  507,472        506,153
  Corporate and other                                           1,545,233      1,212,857
                                                             ------------    -----------
                                                              112,535,744    111,897,851
  Less accumulated depreciation, depletion, amortization
    and write down                                             64,521,335     61,651,637
                                                             ------------    -----------
                                                               48,014,409     50,246,214

OTHER ASSETS                                                       81,025         53,721
                                                             ------------    -----------

                                                             $ 55,422,986   $ 56,612,953
                                                             ============   ============
</TABLE>

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


                                      F-4
<PAGE>   30

                              EVERFLOW EASTERN PARTNERS, L. P.

                                 CONSOLIDATED BALANCE SHEETS

                                 December 31, 1999 and 1998
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                                                1999          1998
                                                            -----------   -----------
<S>                                                         <C>           <C>
LIABILITIES AND PARTNERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term debt                         $    54,493   $    30,805
  Revolving credit facility                                        --       1,800,000
  Accounts payable                                            1,202,605     1,666,792
  Accrued expenses                                              189,333       391,187
                                                            -----------   -----------
    Total current liabilities                                 1,446,431     3,888,784

LONG-TERM DEBT, NET OF CURRENT PORTION                          637,796       425,093

DEFERRED INCOME TAXES                                            50,000       128,000

COMMITMENTS AND CONTINGENCIES

LIMITED PARTNERS' EQUITY, SUBJECT TO REPURCHASE RIGHT
  Authorized - 8,000,000 units
  Issued and outstanding - 6,095,193 and 6,172,537 units,
    respectively                                             52,708,525    51,610,054

GENERAL PARTNER'S EQUITY                                        580,234       561,022
                                                            -----------   -----------
    Total partners' equity                                   53,288,759    52,171,076
                                                            -----------   -----------

                                                            $55,422,986   $56,612,953
                                                            ===========   ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.


                                      F-5
<PAGE>   31




                      EVERFLOW EASTERN PARTNERS, L. P.

                     CONSOLIDATED STATEMENTS OF INCOME

                Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                            1999            1998           1997
                                                                            ----            ----           ----
<S>                                                                   <C>             <C>             <C>
REVENUES
  Oil and gas sales                                                   $ 14,639,109    $ 16,058,164    $ 15,418,755
  Well management and operating                                            421,799         497,483         510,039
  Other                                                                      2,262           2,719           3,403
                                                                      ------------    ------------    ------------
                                                                        15,063,170      16,558,366      15,932,197

DIRECT COST OF REVENUES
  Production costs                                                       2,638,217       2,550,686       2,427,124
  Well management and operating                                            106,965         102,176         132,531
  Depreciation, depletion and amortization                               4,762,466       4,904,221       5,287,066
  Abandonment and write down of oil and gas
    properties                                                             648,742         964,226         523,513
                                                                      ------------    ------------    ------------
      Total direct cost of revenues                                      8,156,390       8,521,309       8,370,234

GENERAL AND ADMINISTRATIVE EXPENSE                                       1,615,932       2,113,492       1,891,515
                                                                      ------------    ------------    ------------
      Total cost of revenues                                             9,772,322      10,634,801      10,261,749
                                                                      ------------    ------------    ------------

INCOME FROM OPERATIONS                                                   5,290,848       5,923,565       5,670,448

OTHER INCOME (EXPENSE)
  Interest income                                                          157,348          90,564          86,226
  Interest expense                                                        (101,759)       (170,611)       (219,896)
  Gain (loss) on sale of property and equipment                             21,504          (5,613)          9,629
  Gain on sale of other assets                                                --         1,129,184            --
                                                                      ------------    ------------    ------------
                                                                            77,093       1,043,524        (124,041)
                                                                      ------------    ------------    ------------

INCOME BEFORE INCOME TAXES                                               5,367,941       6,967,089       5,546,407

PROVISION (CREDIT) FOR INCOME TAXES
  Current                                                                     --            70,000            --
  Deferred                                                                 (78,000)           --          (150,000)
                                                                      ------------    ------------    ------------

NET INCOME                                                            $  5,445,941    $  6,897,089    $  5,696,407
                                                                      ============    ============    ============

Allocation of Partnership Net Income
  Limited Partners                                                    $  5,387,013    $  6,822,921    $  5,636,318
  General Partner                                                           58,928          74,168          60,089
                                                                      ------------    ------------    ------------
                                                                      $  5,445,941    $  6,897,089    $  5,696,407
                                                                      ============    ============    ============


Net income per unit                                                   $       0.88    $       1.10    $       0.90
                                                                      ============    ============    ============
</TABLE>

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

                                      F-6
<PAGE>   32
                      EVERFLOW EASTERN PARTNERS, L. P.

                CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY

                Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------

                                                            1999            1998            1997
                                                            ----            ----            ----
<S>                                                  <C>             <C>             <C>
PARTNERS' EQUITY - JANUARY 1                            $ 52,171,076    $ 48,577,802    $ 46,959,473


  Net income                                               5,445,941       6,897,089       5,696,407


  Cash distributions ($.625 per unit in 1999 and $.50
    per unit in 1998 and 1997)                            (3,880,436)     (3,128,596)     (3,180,447)


  Purchase and retirement of Units                          (447,822)       (175,219)       (897,631)
                                                        ------------    ------------    ------------

PARTNERS' EQUITY - DECEMBER 31                          $ 53,288,759    $ 52,171,076    $ 48,577,802
                                                        ============    ============    ============
</TABLE>

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

                                      F-7
<PAGE>   33
                       EVERFLOW EASTERN PARTNERS, L. P.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                 Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                             1999            1998            1997
                                                        ------------    ------------    ------------
<S>                                                   <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                            $  5,445,941    $  6,897,089    $  5,696,407
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation, depletion and amortization             4,819,592       4,929,023       5,327,791
      Abandonment and write down of oil and gas
        properties                                           648,742         964,226         523,513
      (Gain) loss on sale of property and equipment          (21,504)          5,613          (9,629)
      Gain on sale of other assets                              --        (1,129,184)           --
      Deferred income taxes                                  (78,000)           --          (150,000)
      Changes in assets and liabilities:
        Accounts receivable                                  450,714        (426,624)        472,370
        Short-term investments                               707,783      (2,221,056)           --
        Other current assets                                   3,364         (28,937)         19,406
        Other assets                                         (27,304)        (12,255)          5,070
        Accounts payable                                    (464,187)        459,524         (38,782)
        Accrued expenses                                    (201,854)        133,294         (41,087)
                                                         -----------     -----------     -----------
          Total adjustments                                5,837,346       2,673,624       6,108,652
                                                         -----------     -----------     -----------
            Net cash provided by operating activities     11,283,287       9,570,713      11,805,059

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds received on receivables from officers and
    employees                                                379,191         540,914         637,434
  Advances disbursed to officers and employees              (165,499)       (545,169)       (719,180)
  Purchase of property and equipment                      (3,414,843)     (5,905,286)     (7,809,435)
  Purchase of other assets                                      --          (271,125)       (102,384)
  Proceeds on sale of property and equipment and
    other assets                                             199,818       1,862,000          23,436
                                                         -----------     -----------     -----------
            Net cash used by investing activities         (3,001,333)     (4,318,666)     (7,970,129)

CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions                                           (3,880,436)     (3,128,596)     (3,180,447)
  Repurchase of Units                                       (447,822)       (175,219)       (897,631)
  Proceeds from issuance of debt including revolver        2,175,000       2,900,000       4,500,000
  Payments on debt including revolver                     (3,738,609)     (5,233,245)     (4,316,691)
                                                         -----------     -----------     -----------
            Net cash used by financing activities         (5,891,867)     (5,637,060)     (3,894,769)
                                                         -----------     -----------     -----------

NET INCREASE (DECREASE) IN CASH AND
  EQUIVALENTS                                              2,390,087        (385,013)        (59,839)

CASH AND EQUIVALENTS - JANUARY 1                             294,518         679,531         739,370
                                                         -----------     -----------     -----------

CASH AND EQUIVALENTS - DECEMBER 31                      $  2,684,605    $    294,518    $    679,531
                                                        ============    ============    ============
Supplemental disclosures of cash flow information:
  Cash paid during the year for:
    Interest                                            $    112,648    $    178,119    $    250,831
    Income taxes                                                --            70,000            --
</TABLE>

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

                                      F-8
<PAGE>   34
                        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 offered to exchange (the "Exchange Offer") its
                      Units of limited partnership interest for the common
                      shares of EEI and the interests of the Investors in the
                      Programs (collectively, the "Interests"). 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 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 Exchange Value of
                      $66,996,249 accepted the offer and tendered their
                      Interests. Effective on such date, Everflow acquired these
                      Interests, which include partnership interests and working
                      interests in the Programs, and all of the outstanding EEI
                      shares. Of these Interests tendered in the Exchange Offer,
                      $28,565,244 was represented by the EEI shares and
                      $38,431,005 by the remaining Interests. Approximately
                      6,632,000 Units were issued pursuant to the Exchange
                      Offer.

                      The tax-free combination of the Programs and EEI with
                      Everflow was accounted for as a reorganization of
                      affiliated entities under common control. Accordingly, the
                      accompanying financial statements reflect the historical
                      costs of the Programs and EEI.

                      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. Everflow Management Limited, LLC was
                      formed in March 1999 as the successor to Everflow's
                      original general partner, Everflow Management Company.

                      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.


                                      F-9
<PAGE>   35
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

               C.     Use of Estimates - The preparation of financial statements
                      in conformity with generally accepted accounting
                      principles 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.     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 $4,728,480,
                      $4,876,838 and $5,254,190 for the years ended December 31,
                      1999, 1998 and 1997, 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.




                                      F-10
<PAGE>   36
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

               F.     Property and Equipment (Continued)

                      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 $601,000, $426,000 and $199,000 during
                      1999, 1998 and 1997, 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 $91,112, $52,185 and $73,601 for the
                      years ended December 31, 1999, 1998 and 1997,
                      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.

                      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 will earn and receive
                      monthly management and operating fees from certain joint
                      venture partners after the properties are completed and
                      placed into production.


                                      F-11
<PAGE>   37

                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

               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 6,133,865, 6,190,094 and
                      6,293,796 in 1999, 1998 and 1997, respectively.


                                      F-12
<PAGE>   38
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 is expected to have no material effect on the
                      Company's financial statements.

               K.     Reclassifications - Certain reclassifications were made
                      to prior period financial statement presentations to
                      conform with current period presentations.

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 May 1999, the Company entered into an agreement that extended
               its prior credit agreement. The agreement provides for a
               revolving line of credit in the amount of $7,000,000, all of
               which is available. The revolving line of credit provides for
               interest payable quarterly at LIBOR plus 175 basis points with
               the principal due at maturity, May 31, 2001. 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 $7,000,000; (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.


                                      F-13
<PAGE>   39
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

               Borrowings on revolving credit facilities amounted to $-0- and
               $1,800,000 at December 31, 1999 and 1998, respectively. The
               following schedule reflects activity under the Company's
               revolving credit facilities for the years ended December 31,
               1999, 1998 and 1997. 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>
                    1999                        $2,700,000          $ 757,808        6.8%

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

                    1997                        $4,100,000         $1,796,986        8.0%
</TABLE>

               For purposes of the Company's borrowings LIBOR was 6.20%, 5.06%
               and 5.93% at December 31, 1999, 1998 and 1997, respectively.

               The Company purchased a building and funded its cost, including
               improvements, in part, through mortgage notes. The notes have an
               aggregate balance of $692,289 and $455,898 at December 31, 1999
               and 1998, respectively, and at December 31, 1999 bear interest at
               fixed (converting in certain subsequent years to variable) rates
               ranging from 6.51% - 8.41% and a weighted average rate of 7.34%.
               The notes at December 31, 1999 require aggregate payments of
               principal and interest of $8,637 per month. Maturities on the
               notes are expected to be as follows: 2000 - $54,493; 2001 -
               $58,700; 2002 - $63,200; 2003 - $68,000; 2004 - $73,200;
               thereafter - $374,696.

               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, 1999, 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.



                                      F-14
<PAGE>   40

                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4.        PARTNERS' EQUITY (CONTINUED)

               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,
               1999 calculation, is estimated to be $6.11 per Unit, net of the
               distributions ($.625 per Unit in total) expected to be made in
               January and April 2000.

               Units repurchased pursuant to the Repurchase Right, for each of
               the four years in the period ended December 31, 1999, 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>
                1996          $ 4.48         $ .27        $ .25           $ 4.50            53,103        6,379,941

                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
</TABLE>

                                      F-15
<PAGE>   41
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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,
                                                      ----------------------------------------------------------------------
                                                        1999                      1998                      1997
                                                      --------------------- ---------------------- -------------------------
                                                        Amount         %          Amount         %          Amount         %
                                                      -----------    ----       -----------    ----       -----------    ----
<S>                                                <C>            <C>        <C>            <C>        <C>            <C>
                  Provision based on the
                  statutory rate (for taxable
                  income up to $10,000,000)           $ 1,825,000    34.0       $ 2,369,000    34.0       $ 1,886,000    34.0

                  Tax effect of:
                  Non-taxable status of the
                  Programs and Everflow                (1,866,000)  (34.8)       (2,097,000)  (30.1)       (1,891,000)  (34.1)
                  Excess statutory depletion              (72,000)   (1.3)          (95,000)   (1.4)          (95,000)   (1.7)
                  Graduated tax rates, state
                  income tax and other - net               35,000     0.6          (107,000)   (1.5)          (50,000)   (0.9)
                                                      -----------    ----       -----------    ----       -----------    ----

                      Total                           $   (78,000)   (1.5)      $    70,000     1.0       $  (150,000)   (2.7)
                                                      ===========    ====       ===========    ====       ===========    ====
</TABLE>

               EEI has percentage depletion deduction carryforwards for tax
               purposes of approximately $2,000,000. These carryforwards can be
               carried forward indefinitely. For financial reporting purposes,
               the deferred tax liability at December 31, 1999 and 1998 has been
               reduced by approximately $780,000 and $754,000, 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 had
               reached the age of 21 and completed one year of service.
               Contributions to the plan are at the discretion of EMC's Board of
               Directors. The Company made contributions of $38,879, $83,295 and
               $88,788 for the years ended December 31, 1999, 1998 and 1997,
               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, 1999, 1998 and 1997,
               approximately $117,000, $180,000 and $175,000, respectively, was
               distributed to such employees from such overriding royalty
               interests.


                                      F-16
<PAGE>   42
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7.        RELATED PARTY TRANSACTIONS (CONTINUED)

               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 175 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.

               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.



                                      F-17
<PAGE>   43
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

               Gas sales accounted for 89%, 93% and 86% of total oil and gas
               sales in 1999, 1998 and 1997, respectively. Approximate
               percentages of oil and gas sales from significant purchasers for
               the years ended December 31, 1999, 1998 and 1997, respectively,
               were as follows:
<TABLE>
<CAPTION>
                                            Customer                       1999          1998         1997
                                            --------                       ----          ----         ----

<S>                                                                       <C>           <C>          <C>
                       The East Ohio Gas Company ("East Ohio")               67 %           74 %         70 %
                       Ergon Oil Purchasing, Inc. ("Ergon Oil")              11              7           10
                                                                             --             --           --

                                                                             78  %          81 %         80 %
                                                                             ==             ==           ==
</TABLE>

               The Company expects that East Ohio and Ergon Oil will be the only
               major customers in 2000.

               The Company has various Intermediate Term Adjustable Price Gas
               Purchase Agreements (the "East Ohio Contracts") with East Ohio.
               Pursuant to the East Ohio Contracts 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 Everflow's principal East
               Ohio Gas Contracts at December 31, 1999 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         424     275 days/year       Maximum of          May-Oct. - 50% of
                                                                                     60 days (Nov.-      production from
                                                                                     April)              prior 6 month period

                       3/10/94         4/94-3/00          52     275 days/year       Maximum of          May-Oct. - 50% of
                                                                                     60 days (Nov.-      production from
                                                                                     April)              prior 6 month period

                       8/10/94       11/94-10/00          26        Nov.-March       April-Oct.          Shut-in provisions
</TABLE>
<TABLE>
<CAPTION>
                                                                          Net Price per MCF
                                  ------------------------------------------------------------------------------------------------
                                                                            Adjusted Prices
                     Contract     ------------------------------------------------------------------------------------------------
                       Date         11/97-4/98      5/98-10/98       11/98-4/99       5/99-10/99       11/99-4/00       5/00-10/00
                     --------       ----------      ----------       ----------       ----------       ----------       ----------
<S>                    <C>         <C>              <C>              <C>             <C>              <C>              <C>
                        9/3/91        $ 3.90           $ 3.27           $ 3.71          $ 3.08           $ 3.35           $ 2.72

                       3/10/94        $ 3.54           $ 2.84           $ 3.35          $ 2.65           $ 2.99           $ 2.29

                       8/10/94        $ 4.14            N/A             $ 3.95            N/A            $ 3.59             N/A
</TABLE>


                                      F-18
<PAGE>   44
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

               As detailed in the table, the price paid for natural gas
               purchased under the East Ohio Contracts varies with the
               production period. Pricing under the East Ohio Contracts 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, certain of the contracts provide for
               a price cap equal to the quarterly GCR, which amounted to $3.93,
               $3.84 and $4.20 in November 1999, 1998 and 1997, 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 two East Ohio Contracts terminating in 2000 will be replaced
               by short-term contracts with a primary term of one year. These
               new short-term contracts will provide fixed pricing of $3.02 to
               $3.07 per MCF for all wells under contract. There will be no
               significant production restrictions under these new contracts.

               In addition to the East Ohio Contracts, the Company has various
               short-term contracts (covering production from 91 gross wells at
               December 31, 1999) which have a primary term of one year. All of
               the wells are covered by fixed price contracts that provide for
               the sale of the Company's gas at $2.75 to $3.00 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.

NOTE 9.        COMMITMENTS AND CONTINGENCIES

               Everflow paid a dividend in January 2000 of $.25 per Unit. The
               distribution amounted to approximately $1,541,000.

               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.       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."

               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.


                                      F-19
<PAGE>   45
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
                 ACTIVITIES (UNAUDITED) (CONTINUED)

                    CAPITALIZED COSTS RELATING TO OIL AND GAS
                              PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
                                                                                     December 31,
                                                              ---------------------------------------------------------
                                                                     1999               1998               1997
                                                                     ----               ----               ----

<S>                                                               <C>                <C>                <C>
                 Proved oil and gas properties                     $ 110,483,039      $ 110,178,841      $ 105,080,039
                 Pipeline and support equipment                          507,472            506,153            466,717
                                                                   -------------      -------------      -------------
                                                                     110,990,511        110,684,994        105,546,756
                 Accumulated depreciation, depletion,
                 amortization and write down                          64,241,134         61,379,736         56,192,136
                                                                   -------------      -------------      -------------

                 Net capitalized costs                             $  46,749,377      $  49,305,258      $  49,354,620
                                                                   =============      =============      =============
</TABLE>
               COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
                                                                                      December 31,
                                                                    -------------------------------------------
                                                                     1999               1998               1997
                                                                     ----               ----               ----

<S>                                                            <C>                <C>                <C>
                 Property acquisition costs                       $ 292,852          $ 629,603          $ 845,647
                 Development costs, including
                 prepayments                                      2,614,116          5,105,622          6,814,035
</TABLE>

               In 1999, 1998 and 1997, development costs include the purchase of
               approximately $1,452,000, $348,000 and $1,065,000, respectively,
               of producing oil and gas properties.


                                      F-20
<PAGE>   46
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
                 ACTIVITIES (UNAUDITED) (CONTINUED)

           RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                     -------------------------------------------------
                                                                        1999              1998              1997
                                                                        ----              ----              ----

<S>                                                                  <C>               <C>              <C>
                 Oil and gas sales                                     $ 14,639,109      $ 16,058,164     $ 15,418,755
                 Production costs                                        (2,638,217)       (2,550,686)      (2,427,124)
                 Depreciation, depletion and
                 amortization                                            (4,762,466)       (4,904,221)      (5,287,066)
                 Abandonment and write down of
                 oil and gas properties                                    (648,742)         (964,226)        (523,513)
                                                                       ------------      ------------     ------------
                                                                          6,589,684         7,639,031        7,181,052

                 Income tax expense                                         115,000           150,000          135,000
                                                                       ------------      ------------     ------------

                 Results of operations for oil and gas
                 producing activities (excluding
                 corporate overhead and financing
                 costs)                                                $  6,474,684      $  7,489,031     $  7,046,052
                                                                       ============      ============     ============
</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-21
<PAGE>   47
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10.       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, 1997                                          912,000            41,015,000
                   Extensions, discoveries and other
                   additions                                                        78,000             4,093,000
                   Production                                                     (126,000)           (4,322,000)
                   Revision of previous estimates                                  (42,000)             (129,000)
                                                                                 ---------            ----------

                 Balance, December 31, 1997                                        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
                                                                                 =========            ==========


                 PROVED DEVELOPED RESERVES:
                   December 31, 1996                                               912,000            41,015,000
                   December 31, 1997                                               822,000            40,657,000
                   December 31, 1998                                               935,000            52,903,000
                   December 31, 1999                                               875,000            51,506,000
</TABLE>
               The Company has not determined proved reserves associated with
               its proved undeveloped acreage. At December 31, 1999 and 1998,
               the Company had 1,300 and 1,600 net proved undeveloped acres,
               respectively. The carrying cost of the proved undeveloped acreage
               that is included in proved properties amounted to $1,227,979 and
               $1,569,741 at December 31, 1999 and 1998, respectively.


                                      F-22
<PAGE>   48
                       EVERFLOW EASTERN PARTNERS, L. P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10.       SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING
                 ACTIVITIES (UNAUDITED) (CONTINUED)

                  STANDARDIZED MEASURE OF DISCOUNTED FUTURE
                                NET CASH FLOWS
<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                        ------------------------------------
                                                                          1999          1998          1997
                                                                          ----          ----          ----
                                                                              (Thousands of Dollars)
<S>                                                                     <C>           <C>           <C>
                 Future cash inflows from sales of oil
                   and gas                                              $ 166,772     $ 153,538     $ 124,466
                 Future production and development
                   costs                                                   64,142        57,255        48,085
                 Future income tax expense                                  2,405         2,253         1,885
                                                                        ---------     ---------     ---------

                 Future net cash flows                                    100,225        94,030        74,496
                 Effect of discounting future net cash
                  flows at 10% per annum                                   46,532        42,551        28,402
                                                                        ---------     ---------     ---------

                 Standardized measure of discounted
                  future net cash flows                                 $  53,693     $  51,479     $  46,094
                                                                        =========     =========     =========
</TABLE>

                     CHANGES IN THE STANDARDIZED MEASURE OF
                        DISCOUNTED FUTURE NET CASH FLOWS
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                        ------------------------------------
                                                                          1999          1998          1997
                                                                          ----          ----          ----
                                                                              (Thousands of Dollars)

<S>                                                                    <C>           <C>           <C>
                 Balance, beginning of year                              $ 51,479      $ 46,094      $ 50,507
                 Extensions, discoveries and other
                  additions                                                 4,486         6,004         5,553
                 Development costs incurred                                   298           801           270
                 Revision of previous estimates                            (2,240)       11,926          (424)
                 Sales of oil and gas, net of production
                  costs                                                   (12,001)      (13,507)      (12,992)
                 Net change in income taxes                                   (55)          (60)          149
                 Net changes in prices and production
                  costs                                                     3,304        (1,193)       (2,291)
                 Accretion of discount                                      5,148         4,609         5,051
                 Other                                                      3,274        (3,195)          271
                                                                         --------      --------      --------
                 Balance, end of year                                    $ 53,693      $ 51,479      $ 46,094
                                                                         ========      ========      ========
</TABLE>
                                      F-23
<PAGE>   49
                        EVERFLOW EASTERN PARTNERS, L. P.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10.       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-24
<PAGE>   50
                                    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
Everflow Management Limited, LLC as of March 20, 2000 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 Everflow Management Limited,
LLC. EMC was formed in September 1990 to act as the Managing General Partner of
Everflow Management Company, the predecessor of Everflow Management Limited,
LLC. EMC is owned by the other members of Everflow Management Limited, LLC and
EMC currently has no employees, but as Managing Member of Everflow Management
Limited, LLC, makes all management and business decisions on behalf of Everflow
Management Limited, LLC 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, 2000 are as follows:

<TABLE>
<CAPTION>
                                                           Positions and                    Positions and
           Name                       Age                Offices with EEI                 Offices with EMC
---------------------------           ---          -----------------------------    -----------------------

<S>                                 <C>          <C>                              <C>
Robert F. Sykes                       76           Chairman of the Board            Chairman of the Board
                                                                                    and Director

Thomas L. Korner                      46           President and Director           President and Director

David A. Kidder                       61           Treasurer                        None

William A. Siskovic                   44           Vice President, Secretary,       Vice President, Secretary-
                                                   Principal Financial and          Treasurer, Principal
                                                   Accounting Officer and           Financial and Accounting
                                                   Director                         Officer and Director
</TABLE>

                                     - 25 -
<PAGE>   51


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>   52

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.

                  SECTION 16 DISCLOSURE. 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 1999, 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 Everflow Management Limited, LLC, the General
Partner of the Company. 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, 1999, 1998 and 1997, of those persons
who were, at December 31, 1999: (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>   53
                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                       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                   1999             $80,000         $60,000         $1,954           $36,710(2)
President                          1998              80,000          39,000          2,067            40,302(2)
                                   1997              80,000          43,375          1,818            35,965(2)

William A. Siskovic                1999              80,000          60,000          1,326            28,420(3)
Vice President and                 1998              80,000          39,000          1,489            31,087(3)
Principal Financial and            1997              80,000          43,375          1,497            26,609(3)
Accounting Officer
</TABLE>

-----------------------
No Named Executive Officer received personal benefits or perquisites during
1999, 1998 and 1997 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 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. 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
         $28,310, $33,031 and $32,264 in 1999, 1998 and 1997, respectively.
(3)      Includes amounts received by William A. Siskovic from participation in
         certain overriding royalty interest arrangements organized by EEI of
         $20,020, $23,816 and $22,908 in 1999, 1998 and 1997, respectively.

Everflow Management Limited, LLC, 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
Everflow Management Limited, LLC as 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
Everflow Management Limited, LLC, as the General Partner of the Company.
Everflow Management Limited, LLC is entitled to share in the income and expense
of the Company on the basis of its interests as the General Partner of the
Company. Everflow Management Limited, LLC 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>   54

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

                  Everflow Management Limited, LLC is a limited liability
company of which EMC, an Ohio corporation is the Managing Member. The members of
Everflow Management Limited, LLC 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 members and their affiliates currently hold (in addition to Everflow
Management Limited, LLC's interest as a general partner of the Company)
1,289,862 Units, representing approximately 21.16% of the outstanding Units.

                  Everflow Management Limited, LLC, as General Partner of the
Company, owns a 1.09% general partner's interest in the Company.

                  The following table sets forth certain information with
respect to the number of Units beneficially owned as of March 20, 2000 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 Everflow Management Limited, LLC, 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           17.33                66.6666          66.6666
Thomas L. Korner                               157,671            2.59                16.6667          16.6667
William A. Siskovic                             75,727            1.24                16.6667          16.6667
All officers and directors as
   a group (3 persons in EMC)                1,289,862           21.16               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) Everflow Management
     Limited, LLC (based on Everflow Management Limited, LLC's 1.07% general
     partner's interest in the Company) or (ii) EMC (based on EMC's 1% managing
     member's interest in Everflow Management Limited, LLC).
(2)  Includes the interest in Everflow Management Limited, LLC owned indirectly
     by such individuals as a result of their share ownership in EMC resulting
     from EMC's 1% managing member's interest in Everflow Management Limited,
     LLC.
(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.

                                     - 29 -
<PAGE>   55
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 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 its officers
the funds necessary to participate in the drilling and development of such
wells. Such loans currently accrue interest at the rate of LIBOR plus 175 basis
points per annum. As of December 31, 1999, the aggregate outstanding balance of
such indebtedness was approximately $150,267, with Thomas L. Korner and William
A. Siskovic owing $46,753 and $103,514, respectively.

                  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>   56

                                     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-24

(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.

(b)    On October 15, 1999, the Registrant filed a current report on Form 8-K
       relating to pricing adjustments under the Company's Agreements with The
       East Ohio Gas Company.

                                     - 31 -
<PAGE>   57
                                   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



<TABLE>
<S>                                                   <C>                                      <C>
By:      /s/Robert F. Sykes                             Director                                   March  28 , 2000
         --------------------------------------------                                                    ----
         Robert F. Sykes



By:      /s/Thomas L. Korner                            President and Director                     March  28 , 2000
         --------------------------------------------                                                    ----
         Thomas L. Korner



By:      /s/William A. Siskovic                         Vice President,                            March  28 , 2000
         --------------------------------------------   Secretary-Treasurer                              ----
         William A. Siskovic                            and Director (principal
                                                        financial and accounting
                                                        officer)

</TABLE>

<PAGE>   58

                                  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>   59

                                  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             Loan Modification Agreement dated May 25, 1999 between                           (17)
                         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

       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.
</TABLE>

                                      E-2

<PAGE>   60


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

<TABLE>
<CAPTION>
    Exhibit No.                                 Description
    -----------                                 -----------
<S>                    <C>                                                                              <C>
       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.

       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)

       27                Financial Data Schedule
</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.

                                      E-3
<PAGE>   61

(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 second
               quarter ended June 30, 1999.

                                      E-4