<PAGE>

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

                                   FORM 10-K
(Mark One)
[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

        For the transition period from ____________ to ________________

                        Commission File Number 1-10537

                              NUEVO ENERGY COMPANY
             (Exact name of registrant as specified in its charter)

          Delaware                               76-0304436
   (State or other jurisdiction of       (I.R.S. Employer Identification No.)
   incorporation or organization)

 1021 Main, Suite 2100, Houston, Texas              77002
(Address of principal executive offices)          (Zip Code)

      Registrant's telephone number, including area code: (713) 652-0706

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

         Title of each class           Name of each exchange on which registered
         -------------------           -----------------------------------------
Common Stock, par value $.01 per share           New York Stock Exchange
$2.875 Term Convertible Securities, Series A     New York Stock Exchange
Preferred Stock Purchase Rights                  New York Stock Exchange

       Securities registered pursuant to Section 12(g) of the Act:  None

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 [X].

The aggregate market value of the voting stock held by non-affiliates of the
registrant at March 22, 2000, was approximately $350,119,028.

As of March 22, 2000, the number of outstanding shares of the registrant's
common stock was 17,560,829.

Documents Incorporated by Reference:

Portions of the registrant's annual proxy statement, to be filed within 120 days
after December 31, 1999, are incorporated by reference into Part III.
<PAGE>

                             NUEVO ENERGY COMPANY


                           ANNUAL REPORT ON FORM 10-K
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                               TABLE OF CONTENTS



<TABLE>
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                                                                                                           Page
                                                                                                           Number
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<S>                      <C>                                                                               <C>

PART I

   Item 1.       Business...........................................................................          2
   Item 2.       Properties.........................................................................         13
   Item 3.       Legal Proceedings..................................................................         21
   Item 4.       Submission of Matters to a Vote of Security Holders................................         21

PART II

   Item 5.       Market for the Registrant's Common Equity and Related Stockholder Matters..........         22
   Item 6.       Selected Financial Data............................................................         24
   Item 7.       Management's Discussion and Analysis of Financial
                 Condition and Results of Operations................................................         25
   Item 7a.      Quantitative and Qualitative Disclosures About Market Risk.........................         36
   Item 8.       Financial Statements and Supplementary Data........................................         37
   Item 9.       Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure................................................         73

PART III

   Item 10.      Directors and Executive Officers of the Registrant.................................         73
   Item 11.      Executive Compensation.............................................................         73
   Item 12.      Security Ownership of Certain Beneficial Owners and Management.....................         73
   Item 13.      Certain Relationships and Related Transactions.....................................         73

PART IV

   Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K....................         73

                 Signatures
</TABLE>


                                      i
<PAGE>

                              NUEVO ENERGY COMPANY



                                     PART I

This document includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act").  All
statements other than statements of historical facts included in this document,
including without limitation, statements under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, estimated quantities and net present values of
reserves, business strategy, plans and objectives of management of the Company
for future operations and covenant compliance, are forward looking statements.
The Company can give no assurances that the assumptions upon which such forward
looking statements are based will prove to be correct.  Important factors that
could cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are set forth throughout this document. All subsequent
written and oral forward looking statements attributable to the Company or
persons acting on its behalf are expressly qualified by the Cautionary
Statements.

ITEM 1. BUSINESS

General

  Nuevo Energy Company ("Nuevo") was formed as a Delaware corporation on
March 2, 1990, to acquire the businesses of certain public and private
partnerships (collectively "Predecessor Partnerships"). On July 9, 1990, the
plan of consolidation ("Plan of Consolidation") was approved by limited partners
owning a majority of units of limited partner interests in the Predecessor
Partnerships. Such Plan of Consolidation provided for the exchange of the net
assets of the Predecessor Partnerships for common stock of Nuevo ("Common
Stock"). The Common Stock began trading on the New York Stock Exchange on
July 10, 1990, under the symbol "NEV." All references to the "Company" include
Nuevo and its majority and wholly-owned subsidiaries, unless otherwise indicated
or the context indicates otherwise.

  Nuevo, headquartered in Houston, Texas, is primarily engaged in the
exploration for, and the acquisition, exploitation, development and production
of crude oil and natural gas.  The Company's strategy to differentiate itself
from its numerous peer group competitors and to generate long term shareholder
value consists of: (i) a unique management philosophy that frames all important
decisions in terms of anticipated impact on per share (rather than absolute)
growth of reserves, production, cash flow and net asset value; (ii) a contrarian
investment and financing orientation; (iii) the outsourcing of non-strategic
functions; (iv) the alignment of employee compensation structures with
shareholder objectives; and (v) a commitment to an exemplary governance
structure which reinforces the overarching view of Nuevo as a conduit for
shareholders to achieve superior long term capital gains.

  The Company accumulates oil and gas reserves through the drilling of
exploratory wells on acreage owned by or leased to the Company, or through the
purchase of reserves from others.  The Company maximizes production from these
reserves through the drilling of developmental wells and through other
exploitative techniques.  The Company also owns and operates gas plants and
other facilities, which are ancillary to the primary business of producing oil
and natural gas.  The Company also owns certain surface real estate parcels in
California that are candidates for sale and/or development in future years.

Oil and Gas Activities

  Since its inception in 1990, Nuevo has expanded its operations through a
series of disciplined, low-cost acquisitions of oil and gas properties and the
subsequent exploitation and development of these properties.  The Company has
complemented these efforts with strategic divestitures and an opportunistic
exploration program, which provides exposure to high potential prospects.  The
Company's primary strengths are its track record of rapid reserve growth on a
per share basis, achieved at extremely low cost relative to industry averages;
its large inventory of exploitation projects in its core areas of operation
which the Company believes will support future growth in reserves and production
per share; its demonstrated ability to significantly reduce operating costs on
acquired properties from levels experienced by prior operators; its ability to
identify and acquire, at attractive prices, long-lived producing properties
which have significant potential for further exploration, exploitation and
development; a capital structure supportive of a growing investment program and
future acquisitions; and a price risk management

                                       2
<PAGE>

                             NUEVO ENERGY COMPANY

policy designed to protect the Company's ability to generate self-sustaining
cash flow and to meet the interest coverage tests under the Company's bond
indentures. During the five years ended December 31, 1999, the Company invested
$595.4 million in seven acquisitions that added estimated net proved reserves of
214.6 million barrels ("MMBBLS") of oil and 171.1 billion cubic feet ("BCF") of
natural gas and replaced 501% of its production at an average cost of $2.72 per
barrel of oil equivalent ("BOE"). As a result, the Company's estimated net
proved equivalent reserves have increased by approximately 258% since 1995.

Domestic Operations

  As of December 31, 1999, the Company's estimated net U.S. proved reserves
totaled 263.4 million barrels of oil equivalent ("MMBOE") or 91% of Nuevo's
total proved reserve base.  During 1999, the Company's domestic production was
18.9 MMBOE, or 91% of total production.

  West:  The majority of the Company's domestic properties are located in the
state of California, where the Company operates from an office in Bakersfield.
The Company's properties in California are categorized by district as either
Bakersfield, Pacific Onshore or Pacific Offshore.

  Nuevo's Bakersfield district operations encompass an estimated net proved
reserve base of 135.4 MMBOE as of December 31, 1999, and produced 8.5 MMBOE in
1999.  Bakersfield district properties include the Company's interests in the
Cymric, Midway-Sunset and Belridge oil fields in the Western San Joaquin Basin
in Kern County, California, and in the Coalinga gas field in the North San
Joaquin Valley.  The Company's Bakersfield properties utilize thermal operations
to maximize current production and the ultimate recovery of reserves.  The
Company owns a 100% working interest (88% net revenue) in its properties in the
Cymric field and the entire working interest and an average net revenue interest
of approximately 98% in its properties in the Midway-Sunset field.  Production
is from two zones in the Cymric field, the Tulare formation and the Antelope
Shale.  The Midway-Sunset field produces from five zones with the Potter Sand
and the thermal Diatomite accounting for the majority of the total production.
The productive zones of the Belridge field above 2,000 feet in which the Company
owns royalty interest are operated by another independent energy company. The
remaining deeper zones of the Belridge field are operated and owned by the
Company in fee with 100% working and net revenue interests.  The Coalinga gas
field is operated by Nuevo and the Company owns an average 61% working interest
(52% net revenue).  Production is from the Gatchell formation.

  Nuevo's Pacific Onshore district operations encompass an estimated net proved
reserve base of 50.8 MMBOE as of December 31, 1999, and produced 2.5 MMBOE in
1999.  Pacific Onshore district properties include the Company's interest in the
Brea Olinda oil field in northern Orange County.  The Company operates three fee
properties in the Brea Olinda field with a 100% working and net revenue
interest.  The Company also has royalty interests in additional wells in the
Brea Olinda field.  Brea Olinda production is from multiple-pay zones in the
Miocene and Pliocene sandstones at depths up to 6,500 feet.

  Nuevo's Pacific Offshore district operations encompass an estimated net proved
reserve base of 74.9 MMBOE as of December 31, 1999, and resulted in production
of 6.9 MMBOE in 1999.  Pacific Offshore district properties include the
Company's interests in the Point Pedernales, Dos Cuadras, Huntington Beach,
Santa Clara and Belmont oil fields in federal OCS leases, offshore Santa Barbara
and Ventura Counties and Long Beach.  The Company acquired a 12% working
interest (10% net revenue) in the Point Pedernales field in July 1994 and an
additional 68% working interest (57% net revenue) in the field as part of the
acquisition of the California properties in 1996.  The Point Pedernales field is
operated by the Company, and is located 3.5 miles offshore Santa Barbara County,
California, in federal waters.  Production is from the Monterey Shale at depths
from 3,500-5,150 feet.  The Dos Cuadras fields are located offshore five and
one-half miles from Santa Barbara in the Santa Barbara Channel.  The Company
operates three platforms with a 50% working interest (42% net revenue) and
another platform with a 67.5% working interest (56% net revenue).

                                       3
<PAGE>

                             NUEVO ENERGY COMPANY

  East: The Company also has properties located in the onshore Gulf Coast
region, which are operated from the Company's headquarters in Houston.  Nuevo's
Houston district operations encompass an estimated net proved reserve base of
2.3 MMBOE as of December 31, 1999, and produced 1.0 MMBOE in 1999.  Houston
district properties include the Company's interests in the Giddings gas fields
in Grimes and Austin Counties, Texas; and in the North Frisco City oil field in
Monroe County, Alabama.  The Company owns an interest in 12 producing wells in
the Giddings field and has an average 46.9% working (35.2% net revenue) interest
in these wells.  The North Frisco City field is Company-operated.  Nuevo owns
approximately a 22% working (17% net revenue) interest.

  General:   The Company continues to create value through domestic oil and
gas development projects.  The Company initiates workovers, recompletions,
development drilling, secondary and tertiary recovery operations and other
production enhancement techniques to maximize current production and the
ultimate recovery of reserves.  The Company has identified in excess of 1,250
domestic exploitation projects on existing properties, at a West Texas
Intermediate ("WTI") crude price of $18.50 per barrel of oil ("BBL"). Capital
expenditures for domestic exploitation projects totaled $38.3 million in 1999
and are budgeted at approximately $105.0 million in 2000, if the crude oil
forward strip remains above $20.00 per BBL.  Examples of current or planned
projects include the continuation of horizontal drilling in the Bakersfield
district and infill drilling in the recently acquired acreage in the Cymric
field to further exploit the Diatomite formation.

  The Company also has an exploration program targeting potential reserve
opportunities in California.  The Company seeks to reduce the risks normally
associated with exploration through the use of advanced technologies, such as
3-D seismic surveys and computer aided exploration ("CAEX") techniques, and by
participating with experienced industry partners. The Company's exploration
program resulted in four dry wells in 1999.

  Capital expenditures for domestic exploration activity totaled $3.9 million
in 1999 and are budgeted at approximately $11.0 million in 2000.

International Operations

  As of December 31, 1999, the Company's estimated international net proved
reserves totaled 26.0 MMBOE, or 9% of Nuevo's total proved reserve base.  During
1999, the Company's international production was 1.8 MMBOE, or 9% of Nuevo's
total production.

  Congo:  The Company's international reserves and production consist of a
50% working interest (37.5% average net revenue) in the Yombo and Masseko oil
fields located in the Marine I Permit offshore the Republic of Congo in West
Africa ("Congo").  Estimated net proved reserves of the Yombo and Masseko oil
fields as of December 31, 1999 were 26.0 MMBOE, and production during 1999
totaled 1.8 MMBOE, all from the Yombo field. In 1999, revenues relating to
production from the Yombo field accounted for approximately 13% of the total oil
and gas revenues for the Company.  The properties are located 27 miles offshore
in approximately 370 feet of water.  The Company also owns an interest in a
converted super tanker with storage capacity of over one million barrels of oil
for use as a floating production, storage and off loading vessel ("FPSO").  The
Company's production is converted on the FPSO to No. 6 fuel oil with less than
0.3% sulfur content.

  The Company's most significant international discovery in 1997 was the Masseko
M-4 well drilled on the Marine I Permit approximately six miles to the northwest
of the Yombo field. The Company drilled an exploration well to evaluate the
Lower Sendji and sub-salt sections underlying the Masseko structure, as well as
to further delineate the Upper Sendji and Tchala zones, which were discovered
but not developed by a previous operator. This well tested at rates over 3,000
gross barrels per day from a newly discovered middle Sendji section. Platform
design and development plans are being formulated for Masseko. Other potential
exploration features are being evaluated for possible future drilling.
Additionally, the Company initiated a waterflood project in the Yombo field to
enhance production from existing Upper Sendji and Tchala zones. Plans for 2000
include performing a study to evaluate waterflood performance and to convert up
to three wells to water injectors.

  Ghana:  In February 2000, the Company relinquished its concession for
petroleum rights covering approximately 1.7 million acres in the East Cape Three
Points concession offshore the Republic of Ghana in West Africa ("Ghana").  In
September 1998, the Company plugged and abandoned its first well in Ghana on the
East Cape

                                       4
<PAGE>

                             NUEVO ENERGY COMPANY

Three Points concession due to the lack of commercial quantities of
hydrocarbons.  Dry hole costs and geological and geophysical costs for this well
(net to the Company) were $7.3 million and $1.6 million, respectively, in 1998.

  In October 1997, Nuevo Ghana, Inc., ("Nuevo Ghana"), signed a petroleum
agreement with Ghana and the Ghana National Petroleum Corporation, ("GNPC") for
petroleum rights covering 2.7 million acres offshore Ghana in the Accra-Keta
prospect area.  The Company is the operator of this prospect with a 100% working
interest.  The exploration program for this acreage involves reprocessing
existing seismic data, shooting additional seismic and drilling an exploration
well during the first phase of the agreement.  The Company completed a 3-D
seismic survey across this concession in March 2000.  The results are currently
being reviewed in-house, and based upon the results, the Company plans to drill
its first exploratory well on the concession in late 2000.

  Tunisia:  In December 1998, the Company temporarily abandoned the Chott
Fejaj #3 well in Tunisia, North Africa. Based on the Company's evaluation of the
initial test results on this well, the Company expensed the $1.8 million of
costs incurred as dry hole costs in 1998.  The Company has acquired additional
regional seismic data across its Chott-Fejaj concession.  This data was acquired
to better evaluate the sub-salt potential beneath the #3 well, which the Company
plans to deepen in late 2000.   The Company owns a 17.5% working interest in the
well.

  General:  Capital expenditures for 1999 international exploration and
development activity totaled $2.3 million and $20.4 million, respectively.  The
Company's 2000 international exploration budget of approximately $8.0 million
includes seismic evaluation, data acquisition and the drilling of two wells.
International development plans for 2000 include the continuation of the
Company's waterflood program in the Congo and are budgeted at approximately $2.0
million.

  The Company's international investments involve risks typically associated
with investments in emerging markets such as an uncertain political, economic,
legal and tax environment and expropriation and nationalization of assets.  In
addition, if a dispute arises in its foreign operations, the Company may be
subject to the exclusive jurisdiction of foreign courts or may not be successful
in subjecting foreign persons to the jurisdiction of the United States.  The
Company attempts to conduct its business and financial affairs so as to protect
against political and economic risks applicable to operations in the various
countries where it operates, but there can be no assurance that the Company will
be successful in so protecting itself.  A portion of the Company's investment in
the Congo is insured through political risk insurance provided by the Overseas
Private Investment Corporation ("OPIC"). See "Risk Factors".

Gas Plant and Other Facilities

  The Company has owned and operated gas plants and other facilities, most of
which have been ancillary to the primary business of producing oil and natural
gas.

  As of December 31, 1999, the Company owned two gas plants in California that
are strategic assets for the Company's oil and gas activities in California.
The Stearns Gas Plant is located in the Brea Olinda field and was processing 3.2
MMCFD at December 31, 1999. The HS&P Gas Plant is used to process gas production
from the Point Pedernales field.  At December 31, 1999, the HS&P Gas Plant was
processing 2.6 MMCFD.

  In December 1999, the Company sold the Santa Clara Valley Gas Plant, which is
located east of Ventura, California, in connection with the Company's sale of
its interest in the non-core properties onshore California.

  In addition to the gas plants that process Company production, Nuevo has owned
certain non-core gas gathering, pipeline and storage assets.  In December 1997,
the Company announced its intention to dispose of these non-core assets during
1998.  Such assets included:  the Company's 48.5% interest in the Richfield Gas
Storage facility, which was sold in February 1998 at its approximate carrying
value, an 80% interest in Bright Star Gathering, Inc., which was sold in July
1998 at its approximate carrying value, and the Illini pipeline, which was sold
in November 1999 at its approximate carrying value. The Company recorded a non-
cash, pre-tax charge to fourth quarter 1997 earnings of $23.9 million,
reflecting the estimated loss on the disposition of these assets.  A positive
revision to this charge was made in the fourth quarter of 1998 in the amount of
$3.7 million to reflect the estimated current fair value of the Illini pipeline.
The Company's results of operations included the operating results from these
assets through the disposition date, as applicable; however, these assets were
not depreciated subsequent

                                       5
<PAGE>

                             NUEVO ENERGY COMPANY


to 1997. The Company retained its remaining two California gas plants, as these
plants are strategic assets for the Company's oil and gas activities in
California.

  On May 2, 1997, the Company sold its 95% interest in the NuStar Joint Venture,
which owned an interest in the Benedum natural gas processing plant, and an
interest in certain related assets and natural gas gathering systems located in
West Texas.  The Company recognized a $2.3 million gain on this sale, which was
effective January 1, 1997.

Real Estate

  In April 1996, along with its acquisition of certain California upstream oil
and gas properties from Union Oil Company of California ("Unocal") (see
"Acquisitions and Divestitures of Oil and Gas Properties"), the Company acquired
tracts of land in Orange and Santa Barbara Counties in California, two office
buildings, one in Ventura County and one in Santa Barbara County, and nearly
16,000 acres of agricultural property in the central valley of California.  As
of December 31, 1999, there was $51.0 million allocated to land.  The office
buildings are included in other facilities at December 31, 1999.

  Consistent with Nuevo's proactive asset management strategy, the Company plans
to sell certain of its surface real estate assets in late 2000 or 2001.  With
land values rising in California, the Company expects to monetize a significant
portion of its California real estate portfolio.

  The surface fee in Orange County lies within the sphere of influence of the
city of Brea, which is in north Orange County and includes three fee parcels,
the Stearns Fee, the Stearns Columbia Fee and Naranjal "B" Fee.  These are
contiguous parcels with gross residential development potential of approximately
230 acres.  Nuevo is working toward entitlement of this property, which is
expected to be complete in the second half of 2000.  The Company will evaluate
its options at that time, including the potential sale.  Plans are being
formulated in relation to the tract of land in Santa Barbara County.  The
agricultural land, primarily in Kings County, Fresno County and Kern County, has
surface leases for grazing or farming use, which are compatible with the
production of oil.

Acquisitions and Divestitures of Oil and Gas Properties

  Consistent with its contrarian acquisition and divestiture strategy, Nuevo
has, from time to time, been an active participant in the market for oil and gas
properties.  The Company attempts to purchase high growth assets which, for any
of a variety of reasons, are out of favor in the marketplace and hence available
for acquisition at attractive prices.  From time to time, the Company also seeks
to divest itself of lower growth assets at times when those assets are valued
highly by the marketplace.  Examples of this contrarian strategy are listed
below:

  On December 31, 1999, the Company completed the sale of its interests in 13
onshore fields and a gas processing plant located in Ventura County, California
for an adjusted sales price of $29.6 million.  The effective date of the sale
was September 1, 1999.  A portion of the proceeds, $4.5 million, was deposited
in escrow to address possible remediation issues.  All or any portion of the
funds not used in remediation shall be delivered to the Company.  The remainder
of the proceeds from the sale were used to repay a portion of the Company's
outstanding bank debt.

  In June 1999, the Company acquired oil and gas properties located onshore
and offshore California for $61.4 million from Texaco, Inc.  To purchase these
assets, the Company used funds from a $100.0 million interest-bearing escrow
account that provided "like-kind exchange" tax treatment for the purchase of
domestic oil and gas producing properties.  The escrow account was created with
proceeds from the Company's January 1999 sale of its East Texas natural gas
assets.  Following the Texaco transaction, the $41.0 million remaining in the
escrow account, which included $2.4 million of interest income, was used to
repay a portion of outstanding bank debt in early July 1999.  The acquired
properties had estimated net proved reserves at June 30, 1999, of 33.7 million
barrels of oil equivalent ("BOE") and are either additional interests in the
Company's existing properties or are located near its existing properties.  The
acquisition included interests in Cymric, East Coalinga, Dos Cuadras, Buena
Vista Hills and other fields the Company operates.

                                       6
<PAGE>

                             NUEVO ENERGY COMPANY


  On January 6, 1999, the Company completed the sale of its East Texas
natural gas assets to an affiliate of Samson Resources Company for an adjusted
sales price of approximately $191.0 million (see Note 4 to the Notes to
Consolidated Financial Statements).  The Company realized an $80.2 million
adjusted pre-tax gain on the sale of these assets.  A $5.2 million gain on
settled hedge transactions was also realized in connection with the closing of
this sale in 1999.  The effective date of the sale was July 1, 1998.  The
Company reclassified these assets to assets held for sale and discontinued
depleting these assets during the third quarter of 1998.  Estimated net proved
reserves associated with these properties totaled approximately 329.0 BCF of
natural gas equivalent at January 1, 1999.

  In April 1998, the Company acquired a third party's interest in the Marine I
Permit in the Congo for $7.8 million.  This acquisition increased the Company's
net working interest in the Congo from 43.75% to 50.0%.

  In July 1996, the Company completed the acquisition of certain East Texas oil
and gas properties, which added 31.2 BCF to the Company's reserve base, for a
net purchase price of $9.3 million in cash.  The package consisted of interests
in 11 fields.  In December 1996, the holders of the preferential rights on these
properties exercised such rights for a cash payment of $8.0 million, acquiring
properties constituting approximately half of the estimated proved reserves
related to this acquisition.

  In June 1996, the Company sold 177 producing wells and the majority of its
acreage in the Giddings field and East Texas Austin Chalk holdings for $27.3
million, representing estimated net proved reserves of 4.2 MMBOE as of
December 31, 1995. The Company retained ownership of seven wells and surrounding
acreage in the Turkey Creek prospect area of the Austin Chalk trend located in
Grimes County, Texas.

  In April 1996, the Company acquired certain upstream oil and gas properties
located onshore and offshore California ("Unocal Properties") from Unocal and
certain California oil properties ("Point Pedernales Properties" and, together
with the Unocal Properties, the "California Properties") from Torch and certain
of its wholly-owned subsidiaries for a combined net purchase price of $525.9
million, plus a contingent payment based on future realized oil prices.  The
California Properties consisted of 26 fields with approximately 2,400 active
wells, and estimated net proved reserves as of December 31, 1999 of 249.3 MMBOE.
During 1999, the California Properties constituted 86% of the Company's total
oil and natural gas production on a barrel of oil equivalent basis.  Since
acquiring the California Properties, the Company has spent approximately $255.0
million to complete over 470 exploitation and development projects.

Industry Segment Information

  For industry segment data (including foreign operations), see Note 13 to the
Notes to Consolidated Financial Statements.

                                       7
<PAGE>

                             NUEVO ENERGY COMPANY


Markets

  The markets for hydrocarbons continue to be quite volatile.  The Company's
financial condition, operating results, future growth and the carrying value of
its oil and gas properties are substantially dependent on prevailing prices of
oil and gas.  The Company's ability to maintain or increase its borrowing
capacity and to obtain additional capital on attractive terms is also
substantially dependent upon oil and gas prices.  Prices for oil and gas are
subject to large fluctuations in response to relatively minor changes in the
supply of and demand for oil and gas, market uncertainty and a variety of
additional factors beyond the control of the Company.  These factors include
weather conditions in the United States, the condition of the United States
economy, the actions of the Organization of Petroleum Exporting Countries,
governmental regulation, political stability in the Middle East and elsewhere,
the foreign supply of oil and gas, the price of foreign oil imports and the
availability of alternate fuel sources.  Any substantial and extended decline in
the price of oil or gas would have an adverse effect on the Company's carrying
value of its proved reserves, borrowing capacity, the Company's ability to
obtain additional capital, and its revenues, profitability and cash flows from
operations.  (See Note 17 to the Notes to Consolidated Financial Statements.)

  Production of California San Joaquin Valley heavy oil (defined herein as those
fields which produce primarily 15(degrees) API quality crude oil or heavier
through thermal operations) constituted 40% of the Company's total 1999 output.

  In addition, properties which produce primarily other grades of relatively
heavy oil (generally, 19(degrees) API or heavier but produced through non-
thermal operations) constituted 17% of the Company's total 1999 output.

  The market price for California heavy oil differs from the established market
indices for oil elsewhere in the U.S., due principally to the higher
transportation and refining costs associated with heavy oil.

  In February 2000, the Company entered into a 15-year contract, effective
January 1, 2000, to sell all of its current and future California crude oil
production to Tosco Corporation.  The contract provides pricing based on a fixed
percentage of the NYMEX crude oil price for each type of crude oil that Nuevo
produces in California.  While the contract does not reduce the Company's
exposure to price volatility, it does effectively eliminate the basis
differential risk between the NYMEX price and the field price of the Company's
California oil production.  In doing so, the contract makes it substantially
easier for the Company to hedge its realized prices.

  The Company's Yombo Field production in its Marine I Permit offshore the Congo
produces a relatively heavy crude oil (16-20(degrees) API gravity) which is
processed into a low-sulfur, No. 6 fuel oil product for sale to worldwide
markets. Production from this property constituted 9% of the Company's total
1999 output. The market for residual fuel oil differs from the markets for WTI
and other benchmark crudes due to its primary use as an industrial or utility
fuel versus the higher value transportation fuel component, which is produced
from refining most grades of crude oil.

  Sales to Tosco Corporation accounted for 79%, 60% and 62% of 1999, 1998 and
1997 oil and gas revenues, respectively.  Also in 1999 and 1998, sales to Torch
Energy Marketing accounted for 12% and 10% of total 1999 and 1998 oil and gas
revenues, respectively.  The loss of any single significant customer or contract
could have a material adverse short-term effect on the Company; however,
management of the Company does not believe that the loss of any single
significant customer or contract would materially affect its business in the
long-term.

Regulation

  Oil and Gas Regulation

  The availability of a ready market for oil and gas production depends upon
numerous factors beyond the Company's control.  These factors include state and
Federal regulation of oil and gas production and transportation, as well as
regulations governing environmental quality and pollution control, state limits
on allowable rates of production by a well or proration unit, the amount of oil
and gas available for sale, the availability of adequate pipeline and other
transportation and processing facilities and the marketing of competitive fuels.
For example, a productive gas well may be "shut-in" because of an over-supply of
gas or lack of an available gas pipeline in the

                                       8
<PAGE>

                             NUEVO ENERGY COMPANY


areas in which the Company may conduct operations. State and Federal regulations
generally are intended to prevent waste of oil and gas, protect rights to
produce oil and gas between owners in a common reservoir, control the amount of
oil and gas produced by assigning allowable rates of production and control
contamination of the environment. Pipelines and gas plants also are subject to
the jurisdiction of various Federal, state and local agencies.

  The Company's sales of natural gas are affected by the availability, terms and
costs of transportation.  The rates, terms and conditions applicable to the
interstate transportation of gas by pipelines are regulated by the Federal
Energy Regulatory Commission ("FERC") under the Natural Gas Acts, as well as
under Section 311 of the Natural Gas Policy Act.  Since 1985, the FERC has
implemented regulations intended to increase competition within the gas industry
by making gas transportation more accessible to gas buyers and sellers on an
open-access, non-discriminatory basis.

  The Company's sales of oil are also affected by the availability, terms and
costs of transportation.  The rates, terms, and conditions applicable to the
interstate transportation of oil by pipelines are regulated by the FERC under
the Interstate Commerce Act.  In this connection, FERC has implemented a
simplified and generally applicable ratemaking methodology for interstate oil
pipelines to fulfill the requirements of Title VIII of the Energy Policy Act of
1992 comprised of an indexing system to establish ceilings on interstate oil
pipeline rates. The FERC has announced several important transportation-related
policy statements and rule changes, including a statement of policy and final
rule issued February 25, 2000 concerning alternatives to its traditional cost-
of-service rate-making methodology to establish the rates interstate pipelines
may charge for their services.  The final rule revises FERC's pricing policy and
current regulatory framework to improve the efficiency of the market and further
enhance competition in natural gas markets.

     With respect to transportation of natural gas on or across the Outer
Continental Shelf ("OCS"), the FERC requires, as a part of its regulation under
the Outer Continental Shelf Lands Act ("OCSLA"), that all pipelines provide open
and non-discriminatory access to both owner and non-owner shippers.  Although to
date the FERC has imposed light-handed regulation on offshore facilities that
meet its traditional test of gathering status, it has the authority to exercise
jurisdiction under the OCSLA over gathering facilities, if necessary, to permit
non-discriminatory access to service.  For those facilities transporting natural
gas across the OCS that are not considered to be gathering facilities, the
rates, terms and conditions applicable to this transportation are regulated by
FERC under the NGA and NGPA, as well as the OCSLA. With respect to the
transportation of oil and condensate on or across the OCS, the FERC requires, as
part of its regulation under the OCSLA, that all pipelines provide open and non-
discriminatory access to both owner and non-owner shippers.  Accordingly, the
FERC has the authority to exercise jurisdiction under the OCSLA, if necessary,
to permit non-discriminatory access to service.

     In the event the Company conducts operations on federal, state or Indian
oil and gas leases, such operations must comply with numerous regulatory
restrictions, including various nondiscrimination statutes, royalty and related
valuation requirements, and certain of such operations must be conducted
pursuant to certain on-site security regulations and other appropriate permits
issued by the Bureau of Land Management ("BLM") or Minerals Management Service
("MMS") or other appropriate federal or state agencies.

     The Company's OCS leases in federal waters are administered by the MMS and
require compliance with detailed MMS regulations and orders.  The MMS has
promulgated regulations implementing restrictions on various production-related
activities, including restricting the flaring or venting of natural gas. Under
certain circumstances, the MMS may require any Company operations on federal
leases to be suspended or terminated.  Any such suspension or termination could
materially and adversely affect the Company's financial condition and
operations.  On March 15, 2000, the MMS issued a final rule effective June 1,
2000 which amends its regulations governing the calculation of royalties and the
valuation of crude oil produced from federal leases.  Among other matters, this
rule amends the valuation procedure for the sale of federal royalty oil by
eliminating posted prices as a measure of value and relying instead on arm's
length sales prices and spot market prices as market value indicators.  Because
the Company sells its production in the spot market and therefore pays royalties
on production from federal leases, it is not anticipated that this final rule
will have any substantial impact on the Company.

     The Mineral Leasing Act of 1920 ("Mineral Act") prohibits direct or
indirect ownership of any interest in federal onshore oil and gas leases by a
foreign citizen of a country that denies "similar or like privileges" to
citizens

                                       9
<PAGE>

                             NUEVO ENERGY COMPANY


of the United States. Such restrictions on citizens of a "non-reciprocal"
country include ownership or holding or controlling stock in a corporation that
holds a federal onshore oil and gas lease. If this restriction is violated, the
corporation's lease can be canceled in a proceeding instituted by the United
States Attorney General. Although the regulations of the BLM (which administers
the Mineral Act) provide for agency designations of non-reciprocal countries,
there are presently no such designations in effect. The Company owns interest in
numerous federal onshore oil and gas leases. It is possible that holders of
equity interests in the Company may be citizens of foreign countries, which at
some time in the future might be determined to be non-reciprocal under the
Mineral Act.

     The Company's pipelines used to gather and transport its oil and gas are
subject to regulation by the Department of Transportation ("DOT") under the
Hazardous Liquids Pipeline Safety Act of 1979, as amended ("HLPSA") relating to
the design, installation, testing, construction, operation, replacement and
management of pipeline facilities.  The HLPSA requires the Company and other
pipeline operators to comply with regulations issued pursuant to HLPSA designed
to permit access to and allowing copying of records and to make certain reports
and provide information as required by the Secretary of Transportation.

     The Pipeline Safety Act of 1992 (The "Pipeline Safety Act") amends the
HLPSA in several important respects.  It requires the Research and Special
Programs Administration ("RSPA") of DOT to consider environmental impacts, as
well as its traditional public safety mandate, when developing pipeline safety
regulations.  In addition, the Pipeline Safety Act mandates the establishment by
DOT of pipeline operator qualification rules requiring minimum training
requirements for operators, and requires that pipeline operators provide maps
and records to RSPA.  It also authorizes RSPA to require certain pipeline
modifications as well as operational and maintenance changes.  The Company
believes its pipelines are in substantial compliance with all HLPSA and the
Pipeline Safety Act.  Nonetheless, significant expenses would be incurred if new
or additional safety measures are required.

  Environmental Regulation

  General.  The Company's activities are subject to existing Federal, state and
local laws and regulations governing environmental quality and pollution
control.  It is anticipated that, absent the occurrence of an extraordinary
event, compliance with existing Federal, state and local laws, rules and
regulations regulating the release of materials in the environment or otherwise
relating to the protection of the environment will not have a material effect
upon the operations, capital expenditures, earnings or the competitive position
of the Company.

  Activities of the Company with respect to exploration, drilling and production
from wells, natural gas facilities, including the operation and construction of
pipelines, plants and other facilities for transporting, processing, treating or
storing natural gas and other products, are subject to stringent environmental
regulation by state and Federal authorities including the Environmental
Protection Agency ("EPA"), the Department of Transportation and FERC.  Such
regulation can increase the cost of planning, designing, installing and
operating such facilities.  In most instances, the regulatory requirements
relate to water and air pollution control measures.

  Waste Disposal.  The Company currently owns or leases, and has in the past
owned or leased, numerous properties that have been used for production of oil
and gas for many years.  Although the Company has utilized operating and
disposal practices that were standard in the industry at the time, hydrocarbons
or other wastes may have been disposed of or released on or under the properties
owned or leased by the Company.  In addition, many of these properties have been
operated by third parties over whom the Company had no control as to such
entities' treatment of hydrocarbons or other wastes or the manner in which such
substances may have been disposed of or released.  State and Federal laws
applicable to oil and gas wastes and properties have become more strict.  Under
these new laws, the Company could be required to remove or remediate previously
disposed wastes (including wastes disposed of or released by prior owners or
operators) or property contamination (including groundwater contamination) or to
perform remedial plugging operations to prevent future contamination.

  The Company may generate wastes, including hazardous wastes that are subject
to the Federal Resource Conservation and Recovery Act and comparable state
statutes.  The EPA has limited the disposal options for certain hazardous wastes
and is considering the adoption of stricter disposal standards for nonhazadous
wastes.  Furthermore, certain wastes generated by the Company's oil and gas
operations that are currently exempt from

                                       10
<PAGE>

                             NUEVO ENERGY COMPANY


treatment as "hazardous wastes" may in the future be designated as "hazardous
wastes," and therefore be subject to more rigorous and costly operating and
disposal requirements.

  Superfund.  The Federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as the "Superfund" law, imposes joint and
several liability, without regard to fault or the legality of the original
conduct, on certain classes of persons with respect to the release of a
"hazardous substance" into the environment.  These persons include the current
owner and operator of a facility and persons that disposed of or arranged for
the disposal of the hazardous substances found at a facility.  CERCLA also
authorizes the EPA and, in some cases, third parties to take actions in response
to threats to the public health or the environment and to seek to recover from
the responsible classes of persons the costs of such action.  In the course of
its operations, the Company may have generated and may generate wastes that fall
within CERCLA's definition of "hazardous substances".  The Company may also be
an owner of facilities on which "hazardous substances" have been released by
previous owners or operators.  The Company may be responsible under CERCLA for
all or part of the costs to clean up facilities at which such wastes have been
released.  Neither the Company nor, to its knowledge, its Predecessor
Partnerships has been named a potentially responsible person under CERCLA nor
does the Company know of any prior owners or operators of its properties that
are named as potentially responsible parties related to their ownership or
operation of such property.

  Air Emissions.  The operations of the Company are subject to local, state and
Federal regulations for the control of emissions of air pollution.
Administrative enforcement actions for failure to comply strictly with air
pollution regulations or permits are generally resolved by payment of monetary
fines and correction of any identified deficiencies.  Alternatively, regulatory
agencies could require the Company to forego construction, modification or
operation of certain air emission sources, although the Company believes that in
the latter cases it would have enough permitted or permittable capacity to
continue its operations without a material adverse effect on any particular
producing field.

  Oil Pollution Act.  The Oil Pollution Act of 1990 ("OPA") and regulations
thereunder impose certain duties and liabilities on "responsible parties"
related to the prevention of oil spills and damages resulting from such spills
in United States waters.  A "responsible party" includes the owner or operator
of a facility or vessel, or the lessee or permittee of the area in which a
facility covered by OPA is located.  OPA assigns joint and several liability to
each responsible party for oil removal costs and a variety of public and private
damages.  Few defenses exist to the liability imposed by OPA.

  The OPA also imposes ongoing requirements on a responsible party, including
proof of financial responsibility to cover at least some costs in a potential
spill. Certain amendments to the OPA that were enacted in 1996 require owners
and operators of offshore facilities that have a worst case oil spill potential
of more than 1,000 barrels to demonstrate financial responsibility in amounts
ranging from $10 million in specified state waters and $35 million in federal
OCS waters, with higher amounts, up to $150 million based upon worst case oil-
spill discharge volume calculations. The Company believes that it currently has
established adequate proof of financial responsibility for its offshore
facilities.

  Management believes that the Company is in substantial compliance with current
applicable environmental laws and regulations and that continued compliance with
existing requirements will not have a material adverse impact on the Company.

Competition

  The Company operates in the highly competitive areas of oil and gas
exploration, development and production.  The availability of funds and
information relating to a property, the standards established by the Company for
the minimum projected return on investment and the availability of alternate
fuel sources are factors that affect the Company's ability to compete in the
marketplace.  The Company's competitors include major integrated oil companies
and a substantial number of independent energy companies, many of which possess
greater financial and other resources than the Company.

                                       11
<PAGE>

                             NUEVO ENERGY COMPANY


Personnel

  At December 31, 1999, the Company employed 62 full time employees who
represent the executive officers and key operating, exploration, financial and
accounting management.  The Company outsources certain administrative and
operational functions to Torch and its subsidiaries, which maintains a large
technical, operating, accounting and administrative staff to provide services to
Nuevo and its other clients. (See Note 6 to the Notes to Consolidated Financial
Statements).  The combined personnel of Torch and the Company consisted of 982
employees at December 31, 1999.

                                       12
<PAGE>

                             NUEVO ENERGY COMPANY

ITEM 2.  PROPERTIES

Reserves, Productive Wells, Acreage and Production

  The Company holds interests in oil and gas wells located in the United States
and West Africa.  The Company's principal developed properties are located in
California, Texas, Louisiana, Alabama, and offshore Congo, West Africa;
undeveloped acreage is located primarily in California, Texas, Congo, Ghana and
Tunisia.  Estimated proved oil and gas reserves at December 31, 1999 increased
approximately 12% since December 31, 1998, primarily as a result of higher oil
prices.  (See Note 17 to the Notes to Consolidated Financial Statements).  The
Company has not filed any different oil or gas reserve information with any
foreign government or other Federal authority or agency.

  The following table sets forth certain information, as of December 31, 1999,
which relates to the Company's principal oil and gas properties:
<TABLE>
<CAPTION>

                                            Net Proved Reserves (SEC)
                                                December 31, 1999              1999 Production
                                          -----------------------------   --------------------------
                                  Gross     Oil*       Gas                 Oil*       Gas
                                  Wells   (Mbbls)     (Mmcf)     MBOE     (Mbbls)   (Mmcf)     MBOE      PV-10**
                                  -----   --------   --------   -------   -------   -------   ------   -----------
<S>                               <C>     <C>        <C>        <C>       <C>       <C>       <C>      <C>
U.S. PROPERTIES
California Fields
-----------------
 Cymric........................     574    75,285      2,260     75,662    3,798     2,001     4,131   $  420,596
 Midway-Sunset.................     483    37,537         --     37,537    2,590        --     2,590      200,526
 Brea Olinda...................     217    33,275     21,924     36,929      783        55       792      123,790
 Belridge......................     342    12,336        683     12,450      676       178       706       89,395
 Santa Clara...................      26    20,572     37,565     26,833      840       628       944       84,650
 Dos Cuadras...................      98    13,336      8,407     14,737      660       499       743       61,733
 Point Pedernales..............      12    13,682      4,584     14,446    2,202       726     2,323       43,622
 Huntington Beach..............      17     6,533        507      6,617      663        75       676       41,310
 Other.........................     632    26,040     58,890     35,855    3,205    10,234     4,912      146,894
                                  -----   -------    -------    -------   ------    ------    ------   ----------
  Total California Fields......   2,401   238,596    134,820    261,066   15,417    14,396    17,817    1,212,516
                                  -----   -------    -------    -------   ------    ------    ------   ----------
Other U.S. Fields
-----------------
 North Frisco City, Alabama....       6       401      1,132        590      230       185       261        5,999
 Giddings, Texas...............      13         8      2,724        462        6     1,739       296        3,793
 Other.........................      27       185      6,449      1,259      239     1,300       455        8,147
                                  -----   -------    -------    -------   ------    ------    ------   ----------
  Total U.S. Properties........   2,447   239,190    145,125    263,377   15,892    17,620    18,829    1,230,455
                                  -----   -------    -------    -------   ------    ------    ------   ----------

FOREIGN PROPERTIES
 Yombo, Congo..................      24    18,017         --     18,017    1,835        --     1,835      126,386
 Masseko, Congo................      --     8,031         --      8,031       --        --        --       16,615
                                  -----   -------    -------    -------   ------    ------    ------   ----------
  Total Foreign Properties           24    26,048         --     26,048    1,835        --     1,835      143,001
                                  -----   -------    -------    -------   ------    ------    ------   ----------

Unocal contingent payment...         --        --         --         --       --        --        --      (59,413)
Hedge effect...................      --        --         --         --       --        --        --      (69,421)
                                  -----   -------    -------    -------   ------    ------    ------   ----------

TOTAL PROPERTIES                  2,471   265,238    145,125    289,425   17,727    17,620    20,664   $1,244,622
                                  =====   =======    =======    =======   ======    ======    ======   ==========
</TABLE>
-----------------
*       includes natural gas liquids
**      pre-tax

                                       13
<PAGE>

                             NUEVO ENERGY COMPANY


  The summary of SEC reserves, which is presented on the previous page, is
computed based on realized prices at December 31, 1999, held constant over time
(see Note 17 to the Notes to Consolidated Financial Statements).  Oil prices at
December 31, 1999, were unusually high.  Management believes that the following
reserve information, which reflects fluctuating commodity pricing based on
market information available at year-end, is more consistent with management's
belief that the current oil and gas prices will revert to long-term historical
averages.  The following table sets forth this alternative reserve information
(based on NYMEX prices of $22.40 per barrel of oil in 2000 and $20.00 per barrel
thereafter, and $2.50 per Mcf of gas held constant), as of December 31, 1999:
<TABLE>
<CAPTION>

                                                    Net Proved Reserves (Estimated Market Case)
                                                                 December 31, 1999
                                                  ------------------------------------------------
                                                      Oil*             Gas
                                                     (Mbbls)          (Mmcf)            MBOE             PV-10**
                                                  -------------   --------------   ---------------   ---------------

<S>                                                   <C>             <C>              <C>               <C>
U.S. PROPERTIES
California Fields
-----------------
 Cymric......................................         72,265            2,247             72,640         $247,633
 Midway-Sunset...............................         35,656               --             35,656          114,632
 Brea Olinda.................................         33,118           21,866             36,762           78,504
 Santa Clara.................................         19,454           35,212             25,323           52,853
 Belridge....................................         12,259              661             12,369           50,541
 Dos Cuadras.................................         12,058            7,522             13,312           34,388
 Point Pedernales............................         13,636            4,597             14,402           27,533
 Huntington Beach............................          5,915              457              5,991           20,702
 Other.......................................         22,753           60,677             32,865           90,823
                                                     -------          -------            -------         --------
  Total California Fields....................        227,114          133,239            249,320          717,609
                                                     -------          -------            -------         --------
Other U.S. Fields
-----------------
 North Frisco City, Alabama..................            401            1,132                590            5,054
 Giddings, Texas.............................              8            2,737                464            4,134
 Other.......................................            176            6,471              1,255            8,295
                                                     -------          -------            -------         --------
  Total U.S. Properties......................        227,699          143,579            251,629          735,092
                                                     -------          -------            -------         --------

FOREIGN PROPERTIES
 Yombo, Congo................................         18,589               --             18,589          111,808
 Masseko, Congo..............................          8,057               --              8,057            9,777
                                                     -------          -------            -------         --------
  Total Foreign Properties                            26,646               --             26,646          121,585
                                                     -------          -------            -------         --------

Hedge effect.....................                         --               --                 --          (35,179)
                                                     -------          -------            -------         --------

TOTAL PROPERTIES                                     254,345          143,579            278,275         $821,498
                                                     =======          =======            =======         ========
</TABLE>

-------------------
*      includes natural gas liquids
**     pre-tax


Acreage

  The following table sets forth the acres of developed and undeveloped oil and
gas properties in which the Company held an interest as of December 31, 1999.
Undeveloped acreage is considered to be those leased acres on which wells have
not been drilled or completed to a point that would permit the production of
commercial quantities of oil and gas, regardless of whether or not such acreage
contains proved reserves.  A gross acre in the following table refers to the
number of acres in which a working interest is owned directly by the Company.
The number of net acres is the sum of the fractional ownership of working
interests owned directly by the Company in the gross acres expressed as a whole
number and percentages thereof.  A "net acre" is deemed to exist when the sum of
fractional ownership of working interests in gross acres equals one.

                                       14
<PAGE>

                             NUEVO ENERGY COMPANY

<TABLE>
<CAPTION>
                                                        Gross                   Net
                                                    --------------        ---------------
                <S>                                     <C>                    <C>
                Developed Acreage                         184,877                115,790
                Undeveloped Acreage                     5,710,074              4,301,168
                                                        ---------              ---------
                  Total                                 5,894,951              4,416,958
                                                        =========              =========
 </TABLE>
The following table sets forth the Company's undeveloped acreage as of December
31, 1999:
<TABLE>
<CAPTION>
                                                           Gross                  Net
                                                        -------------         --------------
                <S>                                       <C>                    <C>
                California                                232,455                111,381
                Texas                                      37,955                 14,144
                Congo, West Africa:
                 Marine 1 Permit                           38,000                 19,000
                Ghana, West Africa:
                 East Cape Three Points                 1,700,000*             1,275,000*
                 Accra-Keta                             2,700,000              2,700,000
                Tunisia, North Africa                     976,540                170,895
                Other                                      25,124                 10,748
                                                        ---------              ---------
                 Total                                  5,710,074              4,301,168
                                                        =========              =========
</TABLE>
________
*Relinquished in February 2000

Productive Wells

  The following table sets forth the Company's gross and net interests in
productive oil and gas wells as of December 31, 1999.  Productive wells are
producing wells and wells capable of production.


<TABLE>
<CAPTION>
                                                        Gross               Net
                                                      ----------        ----------
                <S>                                     <C>                <C>
                Oil Wells                                2,361             1,743
                Gas Wells                                  110                66
                                                         -----             -----
                    Total                                2,471             1,809
                                                         =====             =====
</TABLE>

Production

  The Company's principal production volumes for the year ended December 31,
1999, were from California and the Congo.

  Data relating to production volumes, average sales prices, average unit
production costs and oil and gas reserve information appears in Note 17 to the
Notes to Consolidated Financial Statements.

Drilling Activity and Present Activities

  During the three year period ended December 31, 1999, the Company's principal
drilling activities occurred in the continental United States and offshore in
state and Federal waters, and offshore the Congo in West Africa.

  The Company believes that its demonstrated ability to reduce operating costs
to levels well below those of the larger oil and gas companies from which
acquisitions have been made allows it to compete successfully in an industry
characterized by fluctuating commodity prices.

  Between the date of the California Properties acquisition, April 9, 1996, and
the end of 1999, the Company drilled 248 wells in the Cymric field in central
California, which contained 26% of the Company's total estimated net proved
equivalent reserves at December 31, 1999, and anticipates drilling approximately
120 wells during 2000.  In the Midway-Sunset field in central California, which
contained 13% of the total estimated net proved equivalent

                                       15
<PAGE>

                             NUEVO ENERGY COMPANY


reserves at December 31, 1999, the Company drilled 10 wells during 1999, and
plans to drill approximately 45 wells in 2000.

  In 1997, the Company drilled an exploration well to evaluate the Lower Sendji
and subsalt sections underlying the Masseko structure located several miles to
the west of the Yombo field in the Congo, as well as to further delineate the
Upper Sendji and Tchala zones, which were discovered but not developed by the
previous operator.  This well tested at rates over 3,000 gross barrels per day
from a newly discovered middle Sendji section.  Platform design and development
plans are being formulated for Masseko.  Other potential exploration features
are being evaluated for possible future drilling.  Additionally, the Company
initiated a waterflood project in the Yombo field to enhance production from
existing Upper Sendji and Tchala zones.  Plans for 2000 include performing a
study to evaluate waterflood performance and to convert up to three wells to
water injectors.

  The Company's most significant discoveries in 1998 were: (i) four successful
wells at Four Isle Dome in Louisiana, which helped increase net production from
0.6 MMCFPD and 35 BOPD at the beginning of 1998 to 7.9 MMCFPD and 170 BOPD at
the end of 1998; (ii) two successful wells at Weeks Island, Louisiana, which
each resulted in completions producing in excess of 700 BOPD; and (iii)
successful extension to the south and east at the Monument Junction reservoir in
the Cymric Field in California.  In 1997, the Company's exploration program
resulted in nine successful wells out of 14 drilled. Discoveries in 1997
included: the Masseko structure offshore Congo, the Monument Junction reservoir
in Cymric field, California and Tranquillon Ridge, offshore California.

  The Company had nine gross (nine net) wells in progress at December 31, 1999.
The following table sets forth the results of drilling activity by the Company,
net to its interest, for the last three calendar years.  Gross wells, as it
applies to wells in the following tables, refers to the number of wells in which
a working interest is owned directly by the Company.  The number of net wells is
the sum of the fractional ownership of working interests owned directly by the
Company in gross wells expressed as whole numbers and percentages thereof.

<TABLE>
<CAPTION>
                                                               Exploratory Wells
                    ----------------------------------------------------------------------------------------------------
                                          Gross                                                 Net
                    ----------------------------------------------       -----------------------------------------------
                                           Dry                                                  Dry
                        Productive        Holes          Total               Productive        Holes           Total
                       -------------   ------------   ------------          -------------   ------------   -------------

        <S>                 <C>             <C>            <C>                   <C>             <C>            <C>
        1997                 9              5             14                     6.63           2.33            8.96
        1998                 8              6             14                     4.09           3.58            7.67
        1999                --              4              4                       --           2.33            2.33

                                                               Development Wells
                    ----------------------------------------------------------------------------------------------------
                                          Gross                                                 Net
                    ----------------------------------------------       -----------------------------------------------
                                           Dry                                                  Dry
                        Productive        Holes          Total               Productive        Holes           Total
                       -------------   ------------   ------------          -------------   ------------   -------------

        1997               236              1            237                   217.52           1.00           218.52
        1998               155             --            155                   134.43             --           134.43
        1999                44              1             45                    40.21           0.33            40.54
</TABLE>


Gas Plant, Pipelines and Other Facilities

  As of December 31, 1999, the Company owned interests in the following gas
plant facilities:

<TABLE>
<CAPTION>
                                                                                              1999
                                                                         Capacity          Throughput          Ownership
      Facility            State                 Operator                  MMCFD              MMCFD             Interest
--------------------   ------------   ----------------------------   ----------------   ----------------   -----------------

<S>                    <C>            <C>                                  <C>                <C>                <C>
Stearns Gas Plant      California         Nuevo Energy Company               5                3.2                100%
HS&P Gas Plant         California         Nuevo Energy Company              13                3.7                 80%
</TABLE>

                                       16
<PAGE>

                             NUEVO ENERGY COMPANY

     In December 1999, the Company sold the Santa Clara Valley Gas Plant, which
is located east of Ventura, California, in connection with the Company's sale of
its interest in the non-core properties onshore California.

     In December 1997, the Company announced its intention to dispose of the
remainder of its non-core gas gathering, pipeline and storage assets during
1998.  Such assets included:  the Company's 48.5% interest in the Richfield Gas
Storage facility, which was sold in February 1998 at its approximate carrying
value; an 80% interest in Bright Star Gathering, Inc., which was sold in July
1998 at its approximate carrying value; and the Illini pipeline, which was sold
in November 1999 at its approximate carrying value.  This resulted in a non-
cash, pre-tax charge to fourth quarter 1997 earnings of $23.9 million,
reflecting the estimated loss on the disposition of these assets.  A positive
revision to this charge was made in the fourth quarter of 1998 in the amount of
$3.7 million to reflect the current estimated fair value of the Illini pipeline.
The Company's results of operations included operating results from these assets
through the disposition date, as applicable; however, these assets were not
depreciated subsequent to 1997.  The Company retained its remaining two
California gas plants, as these plants are strategic assets for the Company's
oil and gas activities in California.

     On May 2, 1997, Nuevo Liquids, a wholly-owned subsidiary of the Company,
sold its 95% interest in the NuStar Joint Venture, which held the Company's
investment in the Benedum Plant System, for proceeds of $25.0 million. The
Company recognized a pre-tax gain of $2.3 million on this sale. The effective
date of this sale was January 1, 1997.

Risk Factors

Recently Low Oil Prices

     The Company's financial condition, operating results, future growth and the
carrying value of its oil and gas properties are substantially dependent on
prevailing oil and gas prices.  The Company's ability to maintain or increase
its borrowing capacity and to obtain additional capital on attractive terms is
also substantially dependent upon oil and gas prices.  Beginning in late 1997
and continuing through early 1999, oil prices were very low compared with prices
received for oil historically.  Oil prices improved significantly during 1999,
however, these low prices adversely affected the Company's revenues and
operating cash flows during 1998 and early 1999.  Any substantial or extended
decline in future oil prices would have a material adverse effect on the Company
in the future.   During 1999, the Company formalized its policies regarding the
management of oil price risk to help reduce its exposure to changes in oil
prices.

Volatility of Oil and Gas Prices

     Prices for oil and gas are subject to large fluctuations in response to
relatively minor changes in the supply of and demand for oil and gas, market
uncertainty and a variety of additional factors beyond the control of the
Company.  These factors include weather conditions in the United States, the
condition of the United States economy, the actions of the Organization of
Petroleum Exporting Countries ("OPEC"), governmental regulation, political
stability in the Middle East and elsewhere, the foreign supply of oil and gas,
the price of foreign oil imports and the availability of alternate fuel sources.
Any substantial and extended decline in the price of oil or gas would have an
adverse effect on the Company's carrying value of its proved reserves, borrowing
capacity, the Company's ability to obtain additional capital, and its revenues,
profitability and cash flows from operations.

     Volatile oil and gas prices make it difficult to estimate the value of
producing properties for acquisition and often cause disruption in the market
for oil and gas producing properties, as buyers and sellers have difficulty
agreeing on such value.  Price volatility also makes it difficult to budget for
and project the return on acquisitions and development and exploitation
projects.

     A portion of the Company's production is California heavy oil.  The market
price for California heavy oil differs substantially from the established market
indices for oil and gas, due principally to the higher transportation and
refining costs associated with heavy oil.  As a result, the price received for
heavy oil is generally lower than the price for medium and light oil, and the
production costs associated with heavy oil are relatively higher than for
lighter grades.  The margin (sales price minus production costs) on heavy oil
sales is generally less than for lighter

                                       17
<PAGE>

                             NUEVO ENERGY COMPANY

oil, and the effect of material price decreases will more adversely affect the
profitability of heavy oil production compared with lighter grades of oil. (See
"Hedging" below for discussion of 15-year crude oil contract).

Reserve Replacement Risks

  The Company's future performance depends upon its ability to find, develop and
acquire additional oil and gas reserves that are economically recoverable.
Without successful exploration, exploitation or acquisition activities, the
Company's reserves and revenues will decline.  No assurances can be given that
the Company will be able to find and develop or acquire additional reserves at
an acceptable cost.

  The successful acquisition and development of oil and gas properties requires
an assessment of recoverable reserves, future oil and gas prices and operating
costs, potential environmental and other liabilities and other factors.  Such
assessments are necessarily inexact and their accuracy inherently uncertain.  In
addition, no assurances can be given that the Company's exploitation and
development activities will result in any increases in reserves.  The Company's
operations may be curtailed, delayed or canceled as a result of lack of adequate
capital and other factors, such as title problems, weather, compliance with
governmental regulations or price controls, mechanical difficulties or shortages
or delays in the delivery of equipment.  In addition, the costs of exploitation
and development may materially exceed initial estimates.

Substantial Capital Requirements

  The Company makes, and will continue to make, substantial capital expenditures
for the exploitation, exploration, acquisition and production of oil and gas
reserves.  Historically, the Company has financed these expenditures primarily
with cash generated by operations, proceeds from bank borrowings and the
proceeds of debt and equity issuances.  The Company believes that it will have
sufficient cash provided by operating activities and borrowings under its bank
credit facility to fund planned capital expenditures.  If revenues or the
Company's borrowing base decreases as a result of lower oil and gas prices,
operating difficulties or declines in reserves, the Company may have limited
ability to expend the capital necessary to undertake or complete future drilling
programs.  There can be no assurance that additional debt or equity financing or
cash generated by operations will be available to meet these requirements.

Uncertainty of Estimates of Reserves and Future Net Cash Flows

  Estimates of economically recoverable oil and gas reserves and of future net
cash flows are based upon a number of variable factors and assumptions, all of
which are to some degree speculative and may vary considerably from actual
results.  Therefore, actual production, revenues, taxes, and development and
operating expenditures may not occur as estimated.  Future results of operations
of the Company will depend upon its ability to develop, produce and sell its oil
and gas reserves.  The reserve data included herein are estimates only and are
subject to many uncertainties.  Actual quantities of oil and gas may differ
considerably from the amounts set forth herein.  In addition, different reserve
engineers may make different estimates of reserve quantities and cash flows
based upon the same available data.

Operating Risks

  Nuevo's operations are subject to risks inherent in the oil and gas industry,
such as blowouts, cratering, explosions, uncontrollable flows of oil, gas or
well fluids, fires, pollution, earthquakes and other environmental risks.  These
risks could result in substantial losses to the Company due to injury and loss
of life, severe damage to and destruction of property and equipment, pollution
and other environmental damage and suspension of operations.  Moreover, offshore
operations are subject to a variety of operating risks peculiar to the marine
environment, such as hurricanes or other adverse weather conditions, to more
extensive governmental regulation, including regulations that may, in certain
circumstances, impose strict liability for pollution damage, and to interruption
or termination of operations by governmental authorities based on environmental
or other considerations.  The Company's operations could result in liability for
personal injuries, property damage, oil spills, discharge of hazardous
materials, remediation and clean-up costs and other environmental damages.  The
Company could be liable for environmental damages caused by previous property
owners.  As a result, substantial liabilities to third parties or governmental

                                       18
<PAGE>

                             NUEVO ENERGY COMPANY


entities may be incurred, the payment of which could have a material adverse
effect on the Company's financial condition and results of operations.  The
Company maintains insurance coverage for its operations, including limited
coverage for sudden environmental damages, but does not believe that insurance
coverage for environmental damages that occur over time is available at a
reasonable cost.  Moreover, the Company does not believe that insurance coverage
for the full potential liability that could be caused by sudden environmental
damages is available at a reasonable cost. Accordingly, the Company may be
subject to liability or may lose substantial portions of its properties in the
event of certain environmental damages.

Foreign Investments

  The Company's foreign investments involve risks typically associated with
investments in emerging markets such as uncertain political, economic, legal and
tax environments and expropriation and nationalization of assets. The Company
attempts to conduct its business and financial affairs so as to protect against
political and economic risks applicable to operations in the various countries
where it operates, but there can be no assurance the Company will be successful
in protecting against such risks.

  The Company's international assets and operations are subject to various
political, economic and other uncertainties, including, among other things, the
risks of war, expropriation, nationalization, renegotiation or nullification of
existing contracts, taxation policies, foreign exchange restrictions, changing
political conditions, international monetary fluctuations, currency controls and
foreign governmental regulations that favor or require the awarding of drilling
contracts to local contractors or require foreign contractors to employ citizens
of, or purchase supplies from, a particular jurisdiction.  In addition, if a
dispute arises with foreign operations, the Company may be subject to the
exclusive jurisdiction of foreign courts or may not be successful in subjecting
foreign persons, especially foreign oil ministries and national oil companies,
to the jurisdiction of the United States.

  The Company's private ownership of oil and gas reserves under oil and gas
leases in the United States differs distinctly from its ownership of foreign oil
and gas properties.  In the foreign countries in which the Company does
business, the state generally retains ownership of the minerals and consequently
retains control of (and in many cases, participates in) the exploration and
production of hydrocarbon reserves.  Accordingly, operations outside the United
States, and estimates of reserves attributable to properties located outside the
United States, may be materially affected by host governments through royalty
payments, export taxes and regulations, surcharges, value added taxes,
production bonuses and other charges.

Hedging

  During 1999, the Company formalized its policies regarding the management of
oil price risk to ensure the Company's ability to optimally manage its portfolio
of investment opportunities. In a typical hedging transaction, the Company will
have the right to receive from the counterparty to the hedge the excess of the
fixed price specified in the hedge contract and a floating price based on a
market index, multiplied by the quantity hedged. If the floating price exceeds
the fixed price, the Company is required to pay the counterparty the difference.
The Company would be required to pay the counterparty the difference between
such prices regardless of whether the Company's production was sufficient to
cover the quantities specified in the hedge. In addition, the index used to
calculate the floating price in a hedge is frequently not the same as the prices
actually received for the production hedged. The difference (referred to as
basis differential) may be material, and may reduce the benefit or increase the
detriment caused by a particular hedge. There is not an established pricing
index for hedges of California heavy crude oil production, and the cash market
for heavy oil production in California tends to vary widely from index prices
typically used in oil hedges. Consequently, prior to 2000, hedging California
heavy crude oil was particularly subject to the risks associated with volatile
basis differentials. In February 2000, the Company entered into a 15-year
contract, effective January 1, 2000, to sell all of its current and future
California crude oil production to Tosco Corporation. The contract provides
pricing based on a fixed percentage of the NYMEX crude oil price for each type
of crude oil that Nuevo produces in California. While the contract does not
reduce the Company's exposure to price volatility, it does effectively eliminate
the basis differential risk between the NYMEX price and the field price of the
Company's California oil production, thereby facilitating Nuevo's ability to
hedge its realized prices.

                                       19
<PAGE>

                             NUEVO ENERGY COMPANY


Competition/Markets for Production

  The Company operates in the highly competitive areas of oil and gas
exploration, exploitation, development and production.  The availability of
funds and information relating to a property, the standards established by the
Company for the minimum projected return on investment, the availability of
alternate fuel sources and the intermediate transportation of gas are factors
which affect the Company's ability to compete in the marketplace.  The Company's
competitors include major integrated oil companies and a substantial number of
independent energy companies, many of which possess greater financial and other
resources than the Company.

  The Company's heavy crude oil production in California requires special
treatment available only from a limited number of refineries.  Substantial
damage to such a refinery or closures or reduction in capacity due to financial
or other factors could adversely affect the market for the Company's heavy crude
oil production.

Environmental and Other Regulation

  The Company's operations are subject to numerous laws and regulations
governing the discharge of materials into the environment or otherwise relating
to environmental protection.  These laws and regulations require the acquisition
of a permit before drilling commences, restrict the types, quantities and
concentration of various substances that can be released into the environment in
connection with drilling and production activities, limit or prohibit drilling
activities on certain lands lying within wilderness, wetlands and other
protected areas, and impose substantial liabilities for pollution which might
result from the Company's operations.  Moreover, the recent trend toward
stricter standards in environmental legislation and regulation is likely to
continue.  For instance, legislation has been proposed in Congress from time to
time that would reclassify certain oil and gas exploration and production wastes
as "hazardous wastes" which would make the reclassified wastes subject to much
more stringent handling, disposal and cleanup requirements.  If such legislation
were to be enacted, it could have a significant impact on the operating costs of
the Company, as well as the oil and gas industry in general.  Initiatives to
further regulate the disposal of oil and gas wastes are also pending in certain
states, and these various initiatives could have a similar impact on the
Company.  The Company could incur substantial costs to comply with environmental
laws and regulations.

  The OPA imposes a variety of regulations on "responsible parties" related to
the prevention of oil spills.  The implementation of new, or the modification of
existing, environmental laws or regulations, including regulations promulgated
pursuant to the OPA, could have a material adverse impact on the Company.

                                       20
<PAGE>

                             NUEVO ENERGY COMPANY



ITEM 3.  LEGAL PROCEEDINGS

     The Company has been named as a defendant in the lawsuit Gloria Garcia
Lopez and Husband, Hector S. Lopez, Individually, and as successors to Galo Land
& Cattle Company v. Mobil Producing Texas & New Mexico, et al. currently pending
in the 79th Judicial District Court of Brooks County, Texas (the "Lopez Case").
The plaintiffs, based on pleadings and deposition testimony, allege: (i)
underpayment of royalties and claim damages, on a gross basis against all
working interest owners, of $56.5 million, including interest for the period
from 1985 to date; (ii) that their production was improperly commingled with gas
produced from an adjoining lease, resulting in damages, including interest, of
$40.8 million, on a gross basis; (iii) failure to develop, claiming damages and
interest of $106.3 million (gross) for interest in the alleged failure to
develop; and (iv) numerous other claims, including claims for drainage, breach
of the implied covenant to reasonably develop the lease, conversion, fraud,
emotional distress, lease termination and exemplary damages, that may result in
unspecified damages. Nuevo's working interest in these properties is 20%. The
Company, along with the other defendants in this case, denies these allegations
and is vigorously contesting these claims. Management does not believe that the
outcome of this matter will have a material adverse impact on the Company's
operating results, financial condition or liquidity.

  The Company has been named as defendant in certain other lawsuits incidental
to its business.  Management does not believe that the outcome of such
litigation will have a material adverse impact on the Company's operating
results or financial condition.  However, these actions and claims in the
aggregate seek substantial damages against the Company and are subject to the
inherent uncertainties in any litigation.  The Company is defending itself
vigorously in all such matters.


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

     There were no matters submitted to a vote of security holders during the
fourth quarter of 1999.

                                       21
<PAGE>

                             NUEVO ENERGY COMPANY

                                    PART II

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

  The principal market on which the Company's Common Stock is traded is the New
York Stock Exchange (Symbol: NEV).  There were approximately 1,160 stockholders
of record and approximately 4,936 additional beneficial owners as of March 22,
2000.  The Company has not paid dividends on its Common Stock and does not
anticipate the payment of cash dividends in the immediate future as it
contemplates the use of cash flows for expansion of its operations.  In
addition, certain restrictions contained in the Company's financing arrangements
restrict the payment of dividends (See Management's Discussion and Analysis of
Financial Condition and Results of Operations - Capital Resources and Liquidity
and Note 10 to the Notes to Consolidated Financial Statements).  The high and
low recorded prices of the Company's Common Stock during 1999 and 1998 are
presented in the following table:

<TABLE>
<CAPTION>
                                                               Market Price
                                                 ------------------------------------------
                                                       High                        Low
                                                  ---------------            ---------------
<S>                                                    <C>                        <C>
          Quarter Ended:

          March 31, 1999...................            $16.38                     $ 6.13
          June 30, 1999....................            $18.19                     $11.63
          September 30, 1999...............            $18.13                     $13.50
          December 31, 1999................            $19.50                     $13.63


          March 31, 1998...................            $40.56                     $30.19
          June 30, 1998....................            $37.81                     $30.25
          September 30, 1998...............            $32.75                     $15.50
          December 31, 1998................            $23.50                     $ 9.94
</TABLE>


Treasury Stock Repurchases

  Since December 1997, the Board of Directors of the Company authorized the open
market repurchase of up to 3,616,600 shares of outstanding Common Stock at times
and at prices deemed appropriate by management.  As of December 31, 1999, the
Company had repurchased 1,999,100 shares of its Common Stock in open market
transactions at an average purchase price, including commissions, of $16.50 per
share.  As of March 22, 2000, the Company had repurchased 2,610,600 shares at an
average purchase price of $16.75 per share, including commissions.

  In March 1997, the Board of Directors authorized the open market repurchase of
up to 1,000,000 shares of outstanding Common Stock during 1997, at times and
prices deemed attractive by management.  During April 1997, the Company
repurchased 500,000 shares of Common Stock in open market transactions, at an
average purchase price of $38.94 per share, plus 42,491 shares acquired from the
cancellation of warrants issued during 1996.

Put Options

  In May 1997, the Company sold put options on its Common Stock to a third
party.  The options gave the purchaser the right to sell to the Company 500,000
shares of its Common Stock at prices ranging from $40.26 to $41.04 per share
through December 31, 1997.  The contract gave the Company the choice of net
cash, net shares, or physical settlement.  Any repurchased shares would have
been treated as Treasury Stock.  The Company generated $1.6 million in option
premium from these transactions, which is reflected in additional paid-in
capital on the balance sheet.  As of December 31, 1997, 400,000 of these options
had expired with the Company's share prices above the strike price, and 100,000
of these options were settled on December 31, 1997, for a nominal amount of net
cash.

                                       22
<PAGE>

                             NUEVO  ENERGY COMPANY


Shareholder Rights Plan

  In March 1997, the Company adopted a Shareholder Rights Plan to protect the
Company's shareholders from coercive or unfair takeover tactics.  Under the
Shareholder Rights Plan, each outstanding share and each share of subsequently
issued Common Stock has attached to it one Right.  Generally, in the event a
person or group ("Acquiring Person") acquires or announces an intention to
acquire beneficial ownership of 15% or more of the outstanding shares of Common
Stock without the prior consent of the Company, or the Company is acquired in a
merger or other business combination, or 50% or more of its assets or earning
power is sold, each holder of a Right will have the right to receive, upon
exercise of the Right, that number of shares of common stock of the acquiring
company, which at the time of such transaction will have a market price of two
times the exercise price of the Right.  The Company may redeem the Right for
$.01 at any time before a person or group becomes an Acquiring Person without
prior approval.  The Rights will expire on March 21, 2007, subject to earlier
redemption by the Board of Directors of the Company.

     On January 10, 1999, the Company amended the Shareholder Rights Plan to
provide that if the Company receives and consummates a transaction pursuant to a
Qualifying Offer, the provisions of the Shareholder Rights Plan are not
triggered.  In general, a Qualifying Offer is an all cash, fully-funded tender
offer for all outstanding Common Shares by a person who, at the commencement of
the offer, beneficially owns less than five percent of the outstanding Common
Shares.  A Qualifying Offer must remain open for at least 120 days, must be
conditioned on the person commencing the Qualifying Offer acquiring at least 75%
of the outstanding Common Shares and the per share consideration must exceed the
greater of (1) 135% of the highest closing price of the Common Shares during the
one-year period prior to the commencement of the Qualifying Offer or (2) 150% of
the average closing price of the Common Shares during the 20 day period prior to
the commencement of the Qualifying Offer.

Executive Compensation Plan

  During July 1997, the Board of Directors of the Company adopted a plan to
encourage senior executives to personally invest in the shares of the Company,
and to regularly review executives' ownership versus targeted ownership
objectives.  These incentives include a deferred compensation plan (the "Plan")
that gives key executives the ability to defer all or a portion of their
salaries and bonuses and invest in Common Stock of the Company at a discount to
market prices or make other investments at the employee's discretion.  Stock
acquired at a discount will be held in a benefit trust and restricted for a two-
year period, and the Plan does not permit investment in a diversified equity
portfolio until and unless targeted levels of Common Stock ownership in the
Company are achieved and maintained.  Target levels of ownership are based on
multiples of base salary and are administered by the Compensation Committee of
the Board of Directors.  The Plan applies to all executives at a level of Vice-
President and above.

                                       23
<PAGE>

                             NUEVO ENERGY COMPANY


ITEM 6.  SELECTED FINANCIAL DATA

  The following selected financial data with respect to the Company should be
read in conjunction with the consolidated financial statements and supplementary
information included in Item 8 (amounts in thousands, except per share data).

<TABLE>
<CAPTION>
                                              As of and for the Years ended December 31,
                                  ---------------------------------------------------------------
                                       1999         1998       1997(4)      1996(4)      1995(4)
                                     ---------   ----------   ----------   ----------   ---------
<S>                                  <C>         <C>          <C>          <C>          <C>
Oil and gas revenues..............    $239,306    $240,010     $331,973     $279,859     $102,455
Gas plant revenues................       2,968       2,665       14,826       34,802       27,183
Pipeline and other revenues.......           4       2,700        5,772        6,774        7,222
Gain on sale of assets, net.......      85,294       5,768        1,372        6,008           --
Interest and other income.........       4,663       1,560        3,335        1,614        1,106
                                      --------    --------     --------     --------     --------
  Total revenues..................     332,235     252,703      357,278      329,057      137,966
Total costs and expenses before
 extraordinary item (including
 income taxes and minority
 interest)(3).....................     300,793     346,975      367,954      294,779      133,834

Extraordinary loss on early
 extinguishment of debt...........          --          --        3,024           --           --
                                      --------    --------     --------     --------     --------
Net income (loss)(1) (5)..........    $ 31,442    $(94,272)    $(13,700)    $ 34,278     $  4,132
                                      ========    ========     ========     ========     ========
Net income (loss) attributable to
 Common stockholders..............    $ 31,442    $(94,272)    $(13,700)    $ 33,339     $  2,660
Earnings (loss) per Common Share
 - Basic(2).......................       $1.62      $(4.76)      $(0.69)       $1.99     $   0.24
Earnings (loss) per Common share
 - Diluted(2).....................       $1.61      $(4.76)      $(0.69)       $1.84     $   0.23
Total Assets......................    $760,030    $817,685     $804,286     $817,643     $262,359

Long-term debt, net of current
 maturities.......................    $340,750    $419,150     $305,940     $287,038     $113,032


</TABLE>
(1) No Common Stock dividends have been declared since the formation of the
Company.  See Note 10 to the Notes to Consolidated Financial Statements
concerning restrictions on the payment of Common Stock dividends.

(2) Retroactively restated to reflect the adoption of Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings per Share".  (See Note 2 to the
Notes to Consolidated Financial Statements).

(3) Results for the years ended 1998 and 1997 include impairments of oil and gas
properties of $68.9 million and $30.0 million, respectively, and (revision to)
provision for impairment on assets held for sale of ($3.7) million and $23.9
million, respectively.

(4) Retroactively restated to reflect the Company's January 1, 1998 conversion
from the full cost method to the successful efforts method of accounting for its
investments in oil and gas properties.  (See Note 2 to the Notes to Consolidated
Financial Statements).

(5)  The year ended December 31, 1996, includes activity of the California
Properties from the date of acquisition (April 9, 1996).

                                       24
<PAGE>

                             NUEVO ENERGY COMPANY


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

Overview

     Nuevo, headquartered in Houston, Texas, is primarily engaged in the
exploration for, and the acquisition, exploitation, development and production
of crude oil and natural gas.  The Company's strategy to differentiate itself
from its numerous peer group competitors and to generate long term shareholder
value consists of: (i) a unique management philosophy that frames all important
decisions in terms of anticipated impact on per share (rather than absolute)
growth of reserves, production, cash flow and net asset value; (ii) a contrarian
investment and financing orientation; (iii) the outsourcing of non-strategic
functions; (iv) the alignment of employee compensation structures with
shareholder objectives; and (v) a commitment to an exemplary governance
structure which reinforces the overarching view of Nuevo as a conduit for
shareholders to achieve superior long term capital gains.

  Nuevo is an independent energy company.  Since its inception in 1990, Nuevo
has expanded its operations through a series of disciplined, low-cost
acquisitions of oil and gas properties and the subsequent exploitation and
development of these properties.  The Company has complemented these efforts
with strategic divestitures and an opportunistic exploration program, which
provides exposure to high-potential prospects.  The Company's primary strengths
are its track record of rapid reserve growth on a per share basis, achieved at
extremely low cost relative to industry averages; its large inventory of
exploitation projects in its core areas of operation, which the Company believes
will support future growth in reserves and production per share; its
demonstrated ability to significantly reduce operating costs from levels
experienced by prior operators; its ability to identify and acquire, at
attractive prices, long-lived producing properties, which have significant
potential for further exploration, exploitation and development; a capital
structure supportive of a growing investment program and future acquisitions;
and a price risk management policy designed to protect the Company's ability to
generate self-sustaining cash flow and to meet the interest coverage tests under
the Company's bond indentures.

  The Company's results of operations have been significantly affected by
fluctuations in oil and gas prices. The Company's success in acquiring oil and
gas properties and its ability to maintain or increase production through its
exploitation activities have also significantly affected the Company's results.
The following table reflects the Company's oil and gas production and its
average oil and gas prices (inclusive of crude oil and natural gas price swaps),
by oil and gas segment and in total, for the periods presented:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                  ------------------------------------------------------
Production:                                             1999               1998               1997
                                                  ----------------   ----------------   ----------------
<S>                                               <C>                <C>                <C>
 Oil (MBBLS):
      East.....................................                413                838                878
      West.....................................             15,272             16,284             14,694
      Foreign..................................              1,835              1,461              1,555
                                                            ------             ------             ------
      Total....................................             17,520             18,583             17,127
                                                            ======             ======             ======
 Natural gas (MMCF):
      East.....................................              3,224             18,816             20,831
      West.....................................             14,396             13,705             14,794
                                                            ------             ------             ------
      Total....................................             17,620             32,521             35,625
                                                            ======             ======             ======
 Natural gas liquids (MBBLS):
      East.....................................                 62                 67                 76
      West.....................................                145                156                206
                                                            ------             ------             ------
      Total....................................                207                223                282
                                                            ======             ======             ======
</TABLE>

                                       25
<PAGE>

                             NUEVO ENERGY COMPANY


<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                  ------------------------------------------------------
AVERAGE SALES PRICE:                                    1999               1998               1997
                                                  ----------------   ----------------   ----------------
<S>                                               <C>                <C>                <C>
 Oil (per barrel):
      East.....................................             $15.25             $12.63             $18.95
      West.....................................             $10.44             $ 8.98             $14.73
      Foreign..................................             $16.69             $10.82             $14.66
      Total....................................             $11.21             $ 9.25             $14.86
 Natural gas (per MCF):
      East.....................................             $ 2.00             $ 1.80             $ 2.08
      West.....................................             $ 2.33             $ 2.21             $ 2.06
      Total....................................             $ 2.27             $ 2.00             $ 2.06

AVERAGE UNIT PRODUCTION COST PER EQUIVALENT
 BARREL (6 MCF EQUAL 1 BARREL):
      East.....................................             $ 2.45             $ 2.88             $ 2.71
      West.....................................             $ 6.28             $ 5.94             $ 5.53
      Foreign..................................             $ 7.01             $ 8.14             $ 7.70
      Total....................................             $ 6.15             $ 5.56             $ 5.14
</TABLE>

  Effective January 1, 1998, the Company elected to convert from the full cost
method to the successful efforts method of accounting for its investments in oil
and gas properties.  The Company believes that the successful efforts method of
accounting is preferable, as it will provide a fair presentation of the
Company's development activities in its core California business and the
drilling success of its selective exploration activities, and reflect an
impairment in the carrying value of its oil and gas properties only when there
has been a permanent decline in their fair value.  Accordingly, all prior year
financial statements have been restated to conform to successful efforts
accounting.  The effect, after tax, of the change in accounting method as of
December 31, 1997, was a reduction to retained earnings of $64.1 million,
primarily attributable to a decrease in net property and equipment and the
deferred tax liability of $99.2 million and $38.0 million, respectively.  The
change in accounting method resulted in a decrease in net income of $32.5
million ($1.64 per share - basic and diluted) during 1997.

  Under the successful efforts method of accounting, oil and gas lease
acquisition costs and intangible drilling costs associated with exploration
efforts that result in the discovery of proved reserves and costs associated
with development drilling, whether or not successful, are capitalized when
incurred.  When a proved property is sold, ceases to produce or is abandoned, a
gain or loss is recognized.  When an entire interest in an unproved property is
sold for cash or cash equivalent, a gain or loss is recognized, taking into
consideration any recorded impairment.  When a partial interest in an unproved
property is sold, the amount received is treated as a reduction of the cost of
the interest retained.

  Unproved leasehold costs are capitalized, pending the results of exploration
efforts.  Significant unproved leasehold costs are reviewed periodically and a
loss is recognized to the extent, if any, that the cost of the property has been
impaired.  An impairment of unproved leasehold costs of $8.1 million was
recognized as of December 31, 1998.  No such impairment was recognized for the
years ended December 31, 1999 or 1997.  Exploration costs, including geological
and geophysical expenses, exploratory dry holes and delay rentals, are charged
to expense as incurred.

  Costs of productive wells, development dry holes and productive leases are
capitalized and depleted on a unit-of-production basis over the life of the
remaining proved reserves.  Capitalized drilling costs are depleted on a unit-
of-production basis over the life of the remaining proved developed reserves.
Estimated costs (net of salvage value) of dismantlement, abandonment and site
remediation are computed by the Company's independent reserve engineers and are
included when calculating depreciation and depletion using the unit-of-
production method.

  The Company reviews proved oil and gas properties on a depletable unit basis
whenever events or circumstances indicate that the carrying value of those
assets may not be recoverable.  For each depletable unit

                                       26
<PAGE>

                             NUEVO ENERGY COMPANY

determined to be impaired, an impairment loss equal to the difference between
the carrying value and the fair value of the depletable unit is recognized. Fair
value, on a depletable unit basis, is estimated to be the present value of the
undiscounted expected future net revenues computed by application of estimated
future oil and gas prices, production and expenses, as determined by management,
to estimated future production of oil and gas reserves over the economic life of
the reserves. If the carrying value exceeds the undiscounted future net
revenues, an impairment is recognized equal to the difference between the
carrying value and the discounted estimated future net revenues of that
depletable unit. The Company considers all proved reserves and commodity pricing
based on market information available at year-end in its estimate of future net
revenues. Fair value impairments of oil and gas properties of $60.8 million and
$30.0 million were recognized as of December 31, 1998 and 1997, respectively; no
such impairment was recognized during 1999.

  Interest costs associated with non-producing leases and exploration and
development projects are capitalized only for the period that activities are in
progress to bring these projects to their intended use.  The capitalization
rates are based on the Company's weighted average cost of funds used to finance
expenditures.

  Any reference to oil and gas reserve information in the Notes to Consolidated
Financial Statements is unaudited.

Financing Activities

     The Company had $341.5 million in outstanding indebtedness at December 31,
1999, which is scheduled to mature as follows (amounts in thousands):

<TABLE>
           <S>                                       <C>
          2000..........................         $    750
          2001..........................               --
          2002..........................               --
          2003..........................           81,000
          2004..........................               --
Thereafter..............................          259,750
                                                 --------
                                                 $341,500
                                                 ========
</TABLE>

   In July 1999, the Company authorized a new issuance of $260.0 million of
9 1/2% senior subordinated notes due June 1, 2008 ("9 1/2% Notes"). The Company
offered to exchange the new notes for its outstanding $160.0 million of 9 1/2%
senior subordinated notes due 2006 ("Old 9 1/2% Notes") and $100.0 million of
8 7/8% senior subordinated notes due 2008 ("8 7/8 % Notes"). In August 1999, the
Company received tenders to exchange $157.46 million of its Old 9 1/2% Notes and
$99.85 million of the 8 7/8% Notes. In connection with the exchange offers, the
Company solicited consents to proposed amendments to the indentures under which
the old notes were issued. These amendments streamline the Company's covenant
structure and provide the Company with additional flexibility to pursue its
operating strategy. The exchange was accounted for as a debt modification. As
such, the consideration that the Company paid to the holders of the Old 9 1/2%
Notes who tendered in the exchange offer (equal to 3% of the outstanding
principal amount of the Old 9 1/2% Notes exchanged) was accounted for as
deferred financing costs. Also in connection with this exchange offer, the
Company incurred a total of $3.1 million in third-party fees during the third
and fourth quarters of 1999, which are included in other expense.

   Interest on the 9 1/2% Notes accrues at the rate of 9 1/2% per annum and
is payable semi-annually in arrears on June 1 and December 1.  The 9 1/2% Notes
are redeemable, in whole or in part, at the option of the Company, on or after
June 1, 2003, under certain conditions.  The Company is not required to make
mandatory redemption or sinking fund payments with respect to the 9 1/2% Notes.
The indenture contains covenants that, among other things, limit the Company's
ability to incur additional indebtedness, limit restricted payments, limit
issuances and sales of capital stock by restricted subsidiaries, limit
dispositions of proceeds of asset sales, limit dividends and other payment
restrictions affecting restricted subsidiaries, and restrict mergers,
consolidations or sales of assets. The 9 1/2% Notes are not currently guaranteed
by Nuevo's subsidiaries but are required to be guaranteed by any subsidiary that
guarantees pari passu or subordinated indebtedness. The 9 1/2% Notes are
unsecured general obligations of the Company, and are subordinated in right of
payment to all existing and future senior indebtedness of the Company. In the
event of a defined change in control, the Company will be required to make an
offer to repurchase

                                       27
<PAGE>

                             NUEVO ENERGY COMPANY

all outstanding 9 1/2% Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of redemption.

     In June 1998, the Company issued $100.0 million, 8 7/8% Notes.  In August
1999, most of the 8 7/8% Notes, except for $150,000, were exchanged for 9 1/2%
Notes. The remaining $150,000 were retired in December 1999. No significant
costs were incurred in connection with this early retirement of debt.

     Nuevo's Amended and Restated Credit Agreement, (the "Agreement"), dated
June 30, 1999, provides for secured revolving credit availability of up to
$400.0 million (subject to a semi-annual borrowing base determination) from a
bank group led by Bank of America, N.A. and Morgan Guaranty Trust Company of New
York, until its expiration on April 1, 2003.

     The borrowing base determination establishes the maximum borrowings that
may be outstanding under the credit facility, and is determined by a two-thirds
vote of the banks (three-fourths in the event of an increase in the borrowing
base), each of which bases its judgement on (i) the present value of the
Company's oil and gas reserves based on its own assumptions regarding future
prices, production, costs, risk factors and discount rates, and (ii) on
projected cash flow coverage ratios calculated under varying scenarios.  If
amounts outstanding under the credit facility exceed the borrowing base, as
redetermined from time to time, the Company would be required to repay such
excess over a defined period of time.

     The borrowing base was reduced from $380.0 million to $200.0 million in
January 1999, reflecting the sale on that date of the Company's East Texas
natural gas reserves, and also reflecting a significant decline in projected oil
prices since the previous determination.  The borrowing base was subsequently
increased in October 1999 to $300.0 million, as a result of the significant
increase in commodity prices and the inclusion of recently acquired oil and gas
properties in California (see Note 3 to the Notes to Consolidated Financial
Statements).

     Amounts outstanding under the credit facility bear interest at a rate equal
to the London Interbank Offered Rate ("LIBOR") plus an amount which increases as
borrowing base utilization increases.  At December 31, 1999, the Company's
interest rate under the credit facility was LIBOR plus .625%, or 7.13%.
Outstandings under this facility at December 31, 1999 were $81.0 million.

     The Credit Agreement has customary covenants including, but not limited to,
covenants with respect to the following matters:  (i) limitations on certain
restricted payments and investments; (ii) limitations on guarantees and
indebtedness; (iii) limitations on prepayments of subordinated and certain other
indebtedness; (iv) limitations on mergers and consolidations, on certain types
of acquisitions and on the issuance of certain securities by subsidiaries; (v)
limitations on liens; (vi) limitations on sales of properties; (vii) limitations
on transactions with affiliates; (viii) limitations on derivative contracts; and
(ix) limitations on debt in subsidiaries.  The Company is also required to
maintain certain financial ratios and conditions, including without limitation
an EBITDAX (earnings before interest, taxes, depreciation, depletion,
amortization and exploration expenses) to fixed charge coverage ratio and
a funded debt to capitalization ratio. As a result of reduced revenues in 1998
due to falling oil prices, the Company obtained amendments for relief from the
EBITDAX fixed charge coverage test through March 31, 2000. The Company was in
compliance with this test and all other covenants of the Agreement at December
31, 1999, and does not anticipate any issues of non-compliance arising in the
foreseeable future.

     On July 24, 1992, the Company closed the sale of $75.0 million aggregate
principal amount of 12 1/2% Senior Subordinated Notes (the "Notes") due June 15,
2002.  In June 1997, the Company redeemed the Notes at a total cost of $78.0
million, representing $75.0 million face value of the debt plus a 4% premium of
$3.0 million.  In addition to the premium, the Company wrote off approximately
$2.0 million of unamortized discount and deferred financing costs.  The
redemption resulted in an extraordinary loss on early extinguishment of debt of
$3.0 million, net of the related tax benefit of $2.0 million.  The Company used
proceeds from the Credit Facility to fund the redemption.

     In February 1995, in connection with the purchase of the stock of the Amoco
Congo Petroleum Company, the Company negotiated with the Overseas Private
Investment Corporation ("OPIC") and an agent bank for a non-recourse credit
facility in the amount of $25.0 million.  The credit facility expired in June
1999.  The initial

                                       28
<PAGE>

                             NUEVO ENERGY COMPANY

drawdown on the facility was $8.8 million to finance a portion of the purchase
price. A portion of the remaining outstanding commitment, $6.0 million, was
drawn down in January 1996 to fund the first phase of the development drilling
program in the Congo. The interest rate associated with such credit facility is
LIBOR plus 20 basis points and a guaranty fee of 2.75% of the outstanding loan
balance, all of which is payable quarterly. At December 31, 1999, the interest
rate was 5.8%, plus the 2.75% guaranty fee. The loan agreement requires a
sixteen-quarter repayment period and will be fully paid in April 2000.

     At present, there is no plan to pay dividends on Common Stock.  The Company
maintains a policy of reinvesting its discretionary cash flows for the expansion
of its business and operations.

Other Matters

Year 2000

   In 1998, the Company and its outside service provider, Torch Energy Advisers
Incorporated ("Torch"), jointly developed a plan to address Nuevo's risks
associated with the Year 2000 issues ("Y2K.")  The plan grouped the risks
associated with Y2K into three general areas: i) financial and administrative
systems, ii) embedded systems in field process control units, and iii) third
party exposures. The Company did not encounter any critical financial and
administrative system or embedded system failures during the date roll over to
the Year 2000, and has not experienced any disruptions of business activities as
a result of Year 2000 failures encountered by third parties (customers,
suppliers and service providers.)  To date, the Company has not incurred, and
does not expect to incur, any material expenditures in connection with
identifying, assessing or remediating Y2K compliance issues.

Results of Operations

Revenues

   The Company has experienced significant oil and gas revenue volatility in
recent years.  Beginning in late 1997 and continuing through early 1999, oil
prices were very low compared with historical prices.  Oil prices improved
significantly during 1999.  During this three-year period, the volatility of oil
and gas prices directly impacted revenues.   To reduce its exposure to changes
in oil and gas prices, the Company utilizes derivative financial instruments in
accordance with its price risk management policy, which was adopted in 1999.  As
a result of such hedging transactions, oil and gas revenues were reduced by
$44.9 million in 1999, increased by $0.6 million in 1998, and reduced by $6.0
million in 1997.

   Oil and gas revenues for 1999 were relatively flat as compared to 1998,
however the factors driving oil and gas revenues for each period were different.
The 15% decrease in oil and gas production from 1998 to 1999 was almost entirely
offset by higher commodity prices received in 1999.  Oil volumes decreased 6%
from 1998 to 1999 primarily as a result of reduced capital spending during 1999.
This decrease was partially offset by the production from the California
properties acquired from Texaco in June 1999.  Gas volumes decreased 46% from
1998 to 1999 principally due to the January 1999 sale of the East Texas natural
gas assets, and to a lesser extent, natural field declines in California.
Offsetting these production declines, oil and gas price realizations increased
21% and 14%, respectively, from 1998 to 1999.

   Oil and gas revenues for 1998 were 28% lower than 1997 oil and gas
revenues primarily due to a 38% decrease in average realized oil prices from
1997 to 1998.  Also contributing to this decline in oil and gas revenues were
decreases in natural gas production and realized gas prices.  The Company's gas
production decreased 9% from 1997 to 1998, and average realized gas prices
decreased 3% from 1997 to 1998.  The decline in oil and gas revenues was
partially offset by a 9% increase in the Company's oil production from 1997 to
1998.

   Gas plant revenues were 11% higher in 1999 as compared to 1998, primarily
due to a 27% increase in natural gas liquids price realizations.  Gas plant
revenues in 1998 were 82% lower than 1997 revenues due to the sale of the
Company's interest in the Benedum Plant System in May 1997.  The Company
recognized a $2.3 million pre-tax gain on the sale in 1997.

                                       29
<PAGE>

                             NUEVO ENERGY COMPANY

   Pipeline and other revenues decreased 100% from 1998 to 1999 and 53% from
1997 to 1998.  These decreases are due to the sale of the Company's interests in
the Richfield Gas Storage facility in February 1998 and Bright Star Gathering,
Inc. in July 1998.

   The net gain on sale of assets for 1999 was $85.3 million, which is
comprised of: (i) an $80.2 million gain on the sale of the Company's East Texas
natural gas assets in January 1999, (ii) a $5.4 million gain on the sale of the
Company's interest in 13 onshore fields and a gas processing plant located in
Ventura County, California, in December 1999, and (iii) a $0.3 million net loss
on the sale of other non-core properties.  Gain on sale of assets for 1998 was
$5.8 million.  This gain on sale of assets includes a $4.1 million gain on the
sale of the Company's interest in the Sansinena field in California in the third
quarter of 1998 and a $1.7 million gain on the sale of the Company's interest in
the Coke field in Chapel Hill, Texas in the first quarter of 1998.  The net gain
on sale of assets for 1997 was $1.4 million, which is comprised of:  (i) a $1.4
million gain on the sale of  the Company's interest in Second Bayou, Weeks
Island, Louisiana; (ii) a $2.3 million gain on the Company's interest in the
Benedum Plant System; (iii) a $1.6 million loss on the sale of the Company's
interest in the South Timbalier field;  and (iv) a $0.7 million loss on the sale
of other non-core properties.

   Interest and other income for the year ended December 31, 1999 includes
$2.4 million associated with interest earned on the $100.0 million in proceeds
from the sale of the East Texas natural gas properties funded into an escrow
account to provide "like-kind exchange" tax treatment in the event the Company
acquired domestic producing oil and gas properties in the first half of 1999.
The escrow account was liquidated in June 1999, in connection with the Company's
June 1999 acquisition of certain California oil and gas properties from Texaco,
Inc. and the repayment of a portion of bank debt.  Also included in interest and
other income in 1999 is $0.6 million related to the sale of an unconsolidated
subsidiary.

Expenses

   Lease operating expenses ("LOE") for 1999 totaled $127.2 million, as
compared to $134.7 million and $120.0 million for 1998 and 1997, respectively.
The 6% decrease in LOE from 1998 to 1999 is primarily due to the Company's sale
of the East Texas natural gas assets in January 1999.  Even though total LOE
decreased in 1999, LOE per barrel of oil equivalent ("BOE") increased 11% from
1998 to 1999.  This increase relates to two main factors:  (i) the East Texas
assets that were sold in January 1999 had relatively low LOE/BOE rates, and (ii)
the cost of natural gas used in the Company's thermal operations in California
increased.   The annual LOE increase of 12% in 1998, as compared to 1997, is
generally reflective of higher production and costs associated with the
California Properties, which constituted 77% and 73% of total production in 1998
and 1997, respectively.  In  1998, the Company experienced an increase in
workovers of $11.2 million as compared to the same period in 1997, as well as
poor weather conditions in the first quarter of 1998 in California that caused
landslides and power outages, which resulted in $2.3 million of incremental,
unusual costs.

   Gas plant operating expenses in 1999 increased 6% as compared to 1998 as a
result of higher ad valorem taxes.  Gas plant operating expenses in 1998
decreased 76% from 1997, due to the sale of the Company's investment in the
Benedum Plant System in May 1997.

   Pipeline and other operating expenses for 1999 totaled $0.3 million, as
compared to $2.0 million and $5.2 million in 1998 and 1997, respectively.  The
86% decrease in 1999 and the 61% decrease in 1998 are primarily due to the sale
of the Company's interests in the Richfield Gas Storage facility in February
1998 and Bright Star Gathering, Inc. in July 1998.

   Exploration costs, including geological and geophysical (G&G) costs, dry
hole costs and delay rentals, were $14.0 million, $16.6 million and $11.1
million for the years ended December 31, 1999, 1998 and 1997, respectively.
Exploration costs for the year ended 1999 included:  $8.1 million of dry hole
costs ($7.2 million of which relates to onshore California), $3.6 million of G&G
costs ($2.1 of which relates to Ghana), $0.8 million of delay rentals and $1.5
million of other exploration costs.  Exploration costs for the

                                       30
<PAGE>

                             NUEVO ENERGY COMPANY

year ended 1998 included: $13.0 million of dry hole costs ($7.3 million of which
relates to Ghana), $2.1 million of G&G costs ($1.5 million of which relates to
Ghana), $0.9 million of delay rentals and $0.6 million of other exploration
costs. Exploration costs for the year ended 1997 included: $9.3 million of dry
hole costs, $0.7 million of G&G costs, $1.0 million of delay rentals and $0.1
million of other exploration costs.

   Depreciation, depletion and amortization decreased 5% in 1999 as compared
to 1998.  This decrease is primarily due to the impairment of oil and gas
properties of $60.8 million recognized in the fourth quarter of 1998, which
reduced the capitalized costs to be depleted in 1999.  Also, the East Texas
properties were depleted for the first six months in 1998.  The Company
discontinued depleting these assets in the third quarter of 1998, when it was
decided to sell these properties.  The 5% decrease was partially offset by
higher international depletion due to increased production.  Depreciation,
depletion and amortization in 1998 decreased 17% from 1997.  The decrease in
1998 is primarily due to the year-end 1997 impairment of $30.0 million related
to the excess of capitalized costs over future net revenues, as well as the
reclassification of the East Texas properties to assets held for sale as of July
1, 1998, at which point the properties were no longer depleted.

   The Company recorded provisions for impairment of oil and gas properties
in 1998 and 1997 in the amounts of $68.9 million ($60.8 million of fair value
impairments plus $8.1 million of unproved leasehold cost impairments) and $30.0
million, respectively.  These impairments were recorded as a result of declines
in the price of oil, which caused capitalized costs to be in excess of future
net revenues.  No such impairment was recognized during 1999.

   In December 1997, the Company recorded a $23.9 million provision for
impairment on assets held for sale, in connection with its plans to dispose of
its non-core gas gathering, pipeline and gas storage assets during 1998,
including all such assets except its California gas plants.  (See Note 4 to the
Notes to Consolidated Financial Statements.)  A positive revision to this charge
was made in the fourth quarter of 1998 in the amount of $3.7 million to reflect
the estimated current fair market value of the Illini pipeline.

   General and administrative expenses ("G&A") were up $4.5 million in 1999
versus 1998.  The 33% increase is mainly comprised of a $1.9 million increase in
bonuses paid to employees, as no bonuses were paid in 1998, and a $1.9 million
increase in the market value of the Company's obligation for the executive
compensation plan. G&A decreased 22% from 1997 to 1998 due to no employee
bonuses in 1998 and a $1.7 million severance expense incurred in the third
quarter of 1997 associated with the resignation of the Company's President and
Chief Executive Officer. These decreases were offset in part by non-recurring
costs incurred in 1998 associated with outside engineering costs and third-party
consulting studies associated with the re-negotiation of the Company's
outsourcing agreements.

   Interest expense for 1999 increased slightly from 1998, however, the
components of interest expense changed from year to year.  The Company issued
$100.0 million of 8 7/8% Senior Subordinated Notes in June 1998, which were
exchanged for 9 1/2% Senior Subordinated Notes in July 1999. This increase was
significantly offset by lower interest expense on the Company's bank debt as a
result of lower average borrowings outstanding during 1999. Interest expense
increased 19% from 1997 to 1998, primarily as a result of additional borrowings
under the Company's Credit Facility and the issuance in June 1998 of $100.0
million of 8 7/8% Notes.

   Other expense in 1999 includes $3.1 million in third-party charges incurred
in connection with the July 1999 exchange offer (see Note 10 to the Notes to
Consolidated Financial Statements), $1.6 million relating to the fraud discussed
below, $1.3 million for scientific information technology consulting, and other
miscellaneous charges.  In March 1999, the Company discovered that a non-officer
employee had fraudulently authorized and diverted for personal use Company funds
totaling $5.9 million, $4.3 million in 1998 and the remainder in 1999, that were
intended for international exploration. The Board of Directors engaged a
Certified Fraud Examiner to conduct an in-depth review of the fraudulent
transactions.  The investigation confirmed that only one employee was involved
in the matter and that all misappropriated funds were identified.  The Company
has reviewed and, where appropriate, strengthened its internal control
procedures.  The Company is attempting to recoup the loss, however, there is no
certainty that any of the funds will be recovered.

   Dividends on the TECONS were $6.6 million in 1999, 1998 and 1997.  The
TECONS pay dividends at a rate of 5.75% and were issued in December 1996.  (See
Note 9 to the Notes to Consolidated Financial Statements.)

                                       31
<PAGE>

                             NUEVO ENERGY COMPANY


  An income tax benefit of $5.4 million was recognized in 1999, compared to a
benefit of $32.6 million in 1998 and $6.7 million in 1997.  The Company's
effective income tax rate was  (20.5)%, (25.7)% and (38.8)% in 1999, 1998 and
1997, respectively. At December 31, 1998, the Company determined that it was
more likely than not that a portion of the deferred tax assets would not be
realized and the valuation allowance was increased by $16.9 million to a total
valuation allowance of $17.6 million. At December 31, 1999, however, the Company
determined that it was more likely than not that most of the deferred tax assets
would be realized, based on commodity prices at year-end 1999, and the valuation
allowance was decreased by $15.9 million.

Extraordinary Item

  In June 1997, the Company recorded an extraordinary loss on the early
extinguishment of its 12 1/2% Notes in the amount of $3.0 million, net of the
related tax benefit of $2.0 million. No extraordinary items were recorded in
1999 or 1998.

Net Income (Loss)

  Net income of $31.4 million was reported in 1999, as compared to a net loss of
$94.3 million in 1998 and $13.7 million in 1997.

Capital Resources and Liquidity

  Since its inception, the Company has grown and diversified its operations
through a series of disciplined, low-cost acquisitions of oil and gas properties
and the subsequent exploitation and development of these properties.  The
Company has complemented these efforts with strategic divestitures and an
opportunistic exploration program, which provides exposure to prospects that
have the potential to add substantially to the growth of the Company.  The
funding of these activities has historically been provided by operating cash
flows, bank financing, private and public placements of debt and equity
securities, property divestitures and joint ventures with industry participants.
Net cash provided by operating activities was $24.0 million, $35.8 million, and
$165.5 million in 1999, 1998 and 1997, respectively.  The Company invested
$125.9 million, $157.4 million and $195.1 million in oil and gas properties in
1999, 1998 and 1997, respectively.  Additionally, the Company spent $10.2
million, $2.8 million and $1.7 million on gas plant and other facilities in
1999, 1998 and 1997, respectively.  In June 1999, the Company acquired oil and
gas properties located onshore and offshore California for $61.4 million from
Texaco, Inc.  To purchase these assets, the Company used funds from a $100.0
million interest-bearing escrow account that was created with proceeds from the
Company's January 1999 sale of its East Texas natural gas assets.  Following the
Texaco transaction, the $41.0 million remaining in the escrow account, which
included $2.4 million of interest income, was used to repay a portion of
outstanding bank debt in early July 1999.

  The Company believes its working capital, cash flow from operations and
available financing sources are sufficient to meet its obligations as they
become due and to finance its exploration and development programs.  The Company
had an unused commitment under the Credit Facility of $219.0 million at December
31, 1999.  The Borrowing Base was redetermined in connection with the Company's
sale of its East Texas natural gas assets.  As a result of this sale and the low
oil price environment in early 1999, the Borrowing Base was reduced to $200.0
million effective January 6, 1999.  In October 1999, the Borrowing Base was
increased to $300.0 million, as a result of the significant increase in
commodity prices and the inclusion of recently acquired oil and gas assets in
California.  At December 31, 1999, maturities of long-term debt for the next
five years totaled $81.8 million.

Outlook

  The Company's revenues, cash flows, results of operations and liquidity are
highly dependent on oil and gas prices, as is its ability to acquire financing
for its operations.  Approximately 85% of the Company's production for 1999 was
oil.  Oil prices during 1998 and the first part of 1999 were very low compared
to historical prices.  As a result, the Company's 1998 revenues, earnings and
cash flows were materially reduced compared to 1997, even though production
levels increased during 1998.  During 1999, crude oil prices increased
significantly and, in March 2000, reached a ten-year high.

                                       32
<PAGE>

                             NUEVO ENERGY COMPANY


   During 1999, the Company formalized its policies regarding the management of
oil price risk to ensure the Company's ability to optimally manage its portfolio
of investment opportunities. For 2000, the Company has entered into swap
contracts on 16,500 barrels of oil per day ("BOPD"), at an average West Texas
Intermediate ("WTI") price of $17.94 per barrel. The Company has also entered
into collars on an additional 16,500 BOPD, with a floor of $16.00 per barrel and
ceiling of $21.21 per barrel. This production is hedged based on a fixed NYMEX
price. As a result of the TOSCO contract, (see Note 13 to the Notes to
Consolidated Financial Statements), which fixes the price of the Company's
California production at approximately 72% of the NYMEX price effective January
1, 2000, these hedge transactions have the effect on a price basis of hedging
substantially all of the Company's current production for the year 2000. Also
for the year 2000, the Company has entered into basis swaps on 3,000 BOPD of its
production in the Congo, hedging the basis differential between No. 6 fuel oil
and WTI at an average differential of $1.88 per barrel. At December 31, 1999,
the market value of the hedge positions was a loss of approximately $35.7
million. A 10% increase in the underlying commodity prices would increase this
loss by $18.8 million.

   For 2001, the Company has entered into swap arrangements on 26,000 BOPD for
the first quarter at an average WTI price of $19.52, for the second quarter on
25,000 BOPD at an average WTI price of $19.54, and for the third quarter on
20,000 BOPD at an average WTI price of $21.22. At December 31, 1999, the market
value of these swaps was a gain of $0.5 million.

   The Company set a base level capital spending budget for 2000 of
approximately $110.0 million, plus up to an additional $30.0 million depending
on the level of crude oil prices.   In the Company's 2000 base level capital
budget, approximately $77.0 million is allocated to exploitation and development
projects and approximately $33.0 million is directed to exploration and business
development.  Exploitation spending is anticipated to consist of $74.0 million
in California, $1.0 million in the Gulf Coast region, and $2.0 million
internationally.  If the crude oil forward strip remains above $20.00 per BBL,
the California exploitation budget will increase to approximately $104.0
million.  Exploration spending is planned to be allocated $11.0 million in
California, and $8.0 million internationally. The remaining $14.0 million is
allocated to business development and other capital projects.

   The Company plans to sell certain of its surface real estate assets in
Orange County, California, during 2000 to help fund the 2000 capital program.
In addition, the Company believes its working capital, cash provided by
operating activities, property divestitures, project financing resources and the
Credit Facility are sufficient to meet these capital commitments.

   Estimates of future net cash flows from proved reserves of oil, gas,
condensate and natural gas liquids were made in accordance with SFAS No. 69,
"Disclosures about Oil and Gas Producing Activities."  (See Note 17 to the Notes
to Consolidated Financial Statements).  The estimates are based on realized
prices at year-end 1999 of $18.97 per barrel of oil (including hedge effect) and
$2.31 per MCF of gas.  Significant changes can occur in these estimates based on
prices currently in effect.  The results of these disclosures should not be
construed to represent the fair market value of the Company's oil and gas
properties.  A market value determination would include many additional factors
including: (i) anticipated future increases or decreases in oil and gas prices
and production and development costs; (ii) an allowance for return on
investment; (iii) the value of additional reserves, not considered proved at the
present, which may be recovered as a result of further exploration and
development activities; and (iv) other business risks.

   Inflation has not had a material impact on the Company and is not expected to
have a material impact on the Company in the future.

Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities".  This
statement, as amended by SFAS No. 137, establishes standards of accounting for
and disclosures of derivative instruments and hedging activities.  This
statement requires all derivative instruments to be carried on the balance sheet
at fair value and is effective for the Company beginning January 1, 2001;
however, early adoption is permitted.  The Company has not yet determined the
impact of this statement on its financial condition or results of operations or
whether it will adopt the statement early.

                                       33
<PAGE>

                             NUEVO ENERGY COMPANY


Contingencies and Other Matters

   The Company has been named as a defendant in the Lopez case.  The plaintiffs
allege, among other things, underpayment of royalties and that their production
was improperly commingled with gas produced from an adjoining lease.  See "Legal
Proceedings" and Note 14 to the Notes to Consolidated Financial Statements.  The
Company, along with the other defendants in this case, denies these allegations
and is vigorously contesting these claims.  Management does not believe that the
outcome of this matter will have a material adverse impact on the Company's
operating results, financial condition or liquidity.

   The Company has been named as a defendant in certain other lawsuits
incidental to its business. Management does not believe that the outcome of such
litigation will have a material adverse impact on the Company's operating
results or financial condition. However, these actions and claims in the
aggregate seek substantial damages against the Company and are subject to the
inherent uncertainties in any litigation. The Company is defending itself
vigorously in all such matters.

   In March 1999, the Company discovered that a non-officer employee had
fraudulently authorized and diverted for personal use Company funds totaling
$5.9 million that were intended for international exploration. The Board of
Directors engaged a Certified Fraud Examiner to conduct an in-depth review of
the fraudulent transactions.  The investigation confirmed that only one employee
was involved in the matter and that all misappropriated funds were identified.
The Company has reviewed and, where appropriate, strengthened its internal
control procedures.  The Company is attempting to recoup the loss, however,
there is no certainty that any of the funds will be recovered.

   In September 1997, there was a spill of crude oil into the Santa Barbara
Channel from a pipeline that connects the Company's Point Pedernales field with
shore-based processing facilities.  The volume of the spill was estimated to be
163 barrels of oil.  The costs of the clean-up and the cost to repair the
pipeline either have been or are expected to be covered by insurance held by the
Company, less the Company's deductibles of $120,000.  Repairs were completed by
the end of 1997, and production recommenced in December 1997.  Additionally, the
Company has exposure to certain costs that may not be recoverable from
insurance, including certain fines, penalties, and damages.  Such costs are not
quantifiable at this time, but are not expected to be material to the Company's
operating results, financial condition or liquidity.

   The Company's international investments involve risks typically associated
with investments in emerging markets such as an uncertain political, economic,
legal and tax environment and expropriation and nationalization of assets.  In
addition, if a dispute arises in its foreign operations, the Company may be
subject to the exclusive jurisdiction of foreign courts or may not be successful
in subjecting foreign persons to the jurisdiction of the United States.  The
Company attempts to conduct its business and financial affairs so as to protect
against political and economic risks applicable to operations in the various
countries where it operates, but there can be no assurance that the Company will
be successful in so protecting itself.  A portion of the Company's investment in
the Congo is insured through political risk insurance provided by OPIC.

   The Company and its partners underwent a tax examination related to their
ownership interests in the Yombo field offshore Congo for the years 1994 though
1997.  In June 1999, the Company and its partners settled this tax assessment
for a total of $1.0 million, of which the Company's share was $400,000.

   In connection with their respective acquisitions of two subsidiaries (each
a "Congo subsidiary"), owning interests in the Yombo field offshore Congo, the
Company and a wholly-owned subsidiary of CMS NOMECO Oil & Gas Co. ("CMS") agreed
with the seller of the subsidiaries not to claim certain tax losses ("dual
consolidated losses") incurred by such subsidiaries prior to the acquisitions.
Pursuant to the agreement, the Company and CMS may be liable to the seller for
the recapture of dual consolidated losses utilized by the seller in years prior
to the acquisitions if certain triggering events occur, including (i) a
disposition by either the Company or CMS of its respective Congo subsidiary,
(ii) either Congo subsidiary's sale of its interest in the Yombo field, (iii)
the acquisition of the Company or CMS by another consolidated group or (iv) the
failure of the Company or CMS's Congo subsidiary to continue as a member of its
respective consolidated group.  A triggering event will not occur, however, if a
subsequent purchaser enters into certain agreements specified in the
consolidated return regulations intended to

                                       34
<PAGE>

                             NUEVO ENERGY COMPANY


ensure that such dual consolidated losses will not be claimed. The Company and
CMS have agreed among themselves that the party responsible for the triggering
event shall indemnify the other for any liability to the seller as a result of
such triggering event. The Company's potential direct liability could be as much
as $48.5 million if a triggering event with respect to the Company occurs, and
the Company believes that CMS's liability (for which the Company would be
jointly liable with an indemnification right against CMS) could be as much as
$64.1 million. The Company does not expect a triggering event to occur with
respect to it or CMS and does not believe the agreement will have a material
adverse effect upon the Company.

   During 1997, a new government was established in the Congo. Although the
political situation in the Congo has not to date had a material adverse effect
on the Company's operations in the Congo, no assurances can be made that
continued political unrest in West Africa will not have a material adverse
effect on the Company and its operation in the Congo in the future.

   In 1996, the previous Congo government requested that the convention
governing the Marine I Exploitation Permit be converted to a Production Sharing
Agreement ("PSA"). Preliminary discussions were held with the government in
early 1997. Nuevo is under no obligation to convert to a PSA, and its existing
convention is valid and protected by law. The Company's position is that any
conversion to a PSA would have no detrimental impact to Nuevo, otherwise, Nuevo
will not agree to any such conversion. In late 1997, a new government was
established in the Congo. The new government has recently begun discussions with
Nuevo and its partner concerning the conversion to a PSA.

Contingent Payment and Price Sharing Agreements

   In connection with the acquisition of the properties located in California
from Unocal in 1996, the Company is obligated to make a contingent payment for
the years 1998 through 2004 if oil prices exceed thresholds set forth in the
agreement with Unocal. The contingent payment will equal 50% of the difference
between the actual average annual price received on a field-by-field basis
(capped by a maximum price) and a minimum price, less taxes, multiplied by the
actual number of barrels of oil sold during the respective year. The minimum
price of $17.75 per Bbl under the agreement (determined based on near month of
delivery of WTI crude oil on the NYMEX) is escalated at 3% per year and the
maximum price of $21.75 per Bbl on the NYMEX is escalated at 3% per year.
Minimum and maximum prices will be netted down to the field level using a fixed
differential equal to approximately the differential between actual sales prices
and NYMEX prices in effect in 1995 ($4.34 per Bbl weighted average for all the
properties acquired from Unocal). The Company accumulates credits to offset the
contingent payment when prices are $.50 per Bbl or more below the minimum price.
The Company accumulated $30.8 million in price credits as of December 31, 1999,
which will be used to reduce future amounts owed under the contingent payment.

   In connection with the acquisition of the Congo properties in 1995, the
Company entered into a price sharing agreement with the seller. Under the terms
of the agreement, if the average price received for the oil production during
the year is greater than the benchmark price established by the agreement, then
the Company is obligated to pay the seller 50% of the difference between the
benchmark price and the actual price received, for all the barrels associated
with this acquisition. The benchmark price for 1999 was $14.79 per Bbl, and the
benchmark price for 2000 is $15.19 per Bbl. The benchmark price increases each
year, based on the increase in the Consumer Price Index.  For 2000, the effect
of this agreement is that Nuevo only owns upside above $15.19 per Bbl on
approximately 44% of its Congo production.

   The Company acquired a 12% working interest in the Point Pedernales oil field
from Unocal in 1994 and the remainder of its interest from Torch in 1996.  The
oil price on these properties is capped at $9.00 per Bbl, with the excess over
the realized price, if any, shared among the Company and the original owners
from whom Torch acquired its interest.  For 2000, the effect of this agreement
is that Nuevo only owns upside above $9.00 per Bbl on approximately 28% of the
Point Pedernales production.

                                       35
<PAGE>

                             NUEVO ENERGY COMPANY

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk, including adverse changes in commodity
prices and interest rates.

Commodity Price Risk - The Company produces and sells crude oil, natural gas and
natural gas liquids.  As a result, the Company's operating results can be
significantly affected by fluctuations in commodity prices caused by changing
market forces.  The Company reduces its exposure to price volatility by hedging
its production through swaps, options and other commodity derivative
instruments.  The Company uses hedge accounting for these instruments, and
settlements of gains or losses on these contracts are reported as a component of
oil and gas revenues and operating cash flows in the period realized.  These
agreements expose the Company to counterparty credit risk to the extent that the
counterparty is unable to meet its settlement commitments to the Company.

   During 1999, the Company formalized its policies regarding the management of
oil price risk to ensure the Company's ability to optimally manage its portfolio
of investment opportunities. For 2000, the Company has entered into swap
contracts on 16,500 barrels of oil per day ("BOPD"), at an average West Texas
Intermediate ("WTI") price of $17.94 per barrel. The Company has also entered
into collars on an additional 16,500 BOPD, with a floor of $16.00 per barrel and
ceiling of $21.21 per barrel. This production is hedged based on a fixed NYMEX
price. As a result of the TOSCO contract, (see Note 13 to the Notes to
Consolidated Financial Statements), which fixes the price of the Company's
California production at approximately 72% of the NYMEX price effective January
1, 2000, these hedge transactions have the effect on a price basis of hedging
substantially all of the Company's current production for the year 2000. Also
for the year 2000, the Company has entered into basis swaps on 3,000 BOPD of its
production in the Congo, hedging the basis differential between No. 6 fuel oil
and WTI at an average differential of $1.88 per barrel. At December 31, 1999,
the market value of the hedge positions was a loss of approximately $35.7
million. A 10% increase in the underlying commodity prices would increase this
loss by $18.8 million.

   For 2001, the Company has entered into swap arrangements on 26,000 BOPD for
the first quarter at an average WTI price of $19.52, for the second quarter on
25,000 BOPD at an average WTI price of $19.54, and for the third quarter on
20,000 BOPD at an average WTI price of $21.22. At December 31, 1999, the market
value of these swaps was a gain of $0.5 million. These agreements expose the
Company to counterparty credit risk to the extent that the counterparty is
unable to meet its settlement commitments to the Company.

   Interest Rate Risk - The Company may enter into financial instruments such as
interest rate swaps to manage the impact of changes in interest rates.  In 1999,
the Company entered into a swap agreement, with a notional amount of $16.4
million, which hedges the price at which the Company may repurchase a portion of
its fixed rate debt and effectively converts such debt to a floating rate
exposure for a period of 364 days.  This agreement is not held for trading
purposes.  As the swap provider is a major financial institution, the Company
does not anticipate non-performance by the provider. In addition, the swap
arrangement also effectively hedges the price at which these notes can be
repurchased by the Company.  At December 31, 1999, the Company recorded a
positive market adjustment of $131,000 related to the fair value of the notes.

The Company's exposure to changes in interest rates primarily results from its
short-term and long-term debt with both fixed and floating interest rates.  The
following table presents principal amounts (stated in thousands) and the related
average interest rates by year of maturity for the Company's debt obligations at
December 31, 1999:
<TABLE>
<S>                              <C>      <C>    <C>    <C>        <C>           <C>         <C>
                                                                                               Fair
                                                                                               Value
                                  2000    2001   2002      2003    Thereafter     Total      Liability
                                  ----    ----   ----   -------    ----------    --------    ---------

Long-term debt, including
 current maturities:
Variable rate                    $ 750      --     --   $81,000            --    $ 81,750     $ 81,750
Average interest rate              5.8%     --     --      7.13%           --        7.12%

Fixed rate                          --      --     --        --      $259,750    $259,750     $256,972
Average interest rate               --      --     --        --           9.5%        9.5%
</TABLE>

                                       36
<PAGE>

                             NUEVO ENERGY COMPANY



Item 8.  Financial Statements and Supplementary Data




                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES



                                                                   Page
                                                                  Number
                                                                  ------



Independent Auditors' Report......................................   38

Financial Statements:

Consolidated Balance Sheets as of December 31, 1999
   and 1998.......................................................   39

Consolidated Statements of Operations for the Years Ended
   December 31, 1999, 1998 and 1997 (Restated)....................   40

Consolidated Statements of Changes in Stockholders'
   Equity for the Years Ended December 31, 1999,
   1998 and 1997 (Restated).......................................   41

Consolidated Statements of Cash Flows for the Years Ended
   December 31, 1999, 1998 and 1997 (Restated)....................   42

Notes to Consolidated Financial Statements........................   43

                                       37
<PAGE>

                             NUEVO ENERGY COMPANY


                          INDEPENDENT AUDITORS' REPORT




The Board of Directors
Nuevo Energy Company:

  We have audited the accompanying consolidated balance sheets of Nuevo Energy
Company and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Nuevo Energy
Company and subsidiaries as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.



                                                      /s/ KPMG LLP

Houston, Texas
February 10, 2000

                                       38
<PAGE>

                             NUEVO ENERGY COMPANY


                          CONSOLIDATED BALANCE SHEETS

                   (Amounts in Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                                                                       December 31,
                                                                                          ---------------------------------------
                                                                                               1999                     1998
                                                                                          --------------           --------------
<S>                                                                                       <C>                      <C>
                                    ASSETS
                                    ------
CURRENT ASSETS:
  Cash and cash equivalents......................................................            $   10,288               $    7,403
  Accounts receivable............................................................                45,004                   25,096
  Product inventory..............................................................                 4,610                    5,998
  Assets held for sale...........................................................                    --                  120,055
  Prepaid expenses and other.....................................................                 6,389                    2,700
                                                                                             ----------               ----------
     Total current assets........................................................                66,291                  161,252
                                                                                             ----------               ----------
PROPERTY AND EQUIPMENT, at cost:
  Land...........................................................................                51,017                   51,038
  Oil and gas properties (successful efforts method).............................             1,002,779                  959,348
  Gas plant facilities...........................................................                12,140                   17,112
  Other facilities...............................................................                11,874                    6,696
                                                                                             ----------               ----------
                                                                                              1,077,810                1,034,194
  Accumulated depreciation, depletion and amortization...........................              (429,349)                (417,622)
                                                                                             ----------               ----------
                                                                                                648,461                  616,572
                                                                                             ----------               ----------
DEFERRED TAX ASSETS, net.........................................................                24,005                   27,534
OTHER ASSETS.....................................................................                21,273                   12,327
                                                                                             ----------               ----------
                                                                                             $  760,030               $  817,685
                                                                                             ==========               ==========
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------
CURRENT LIABILITIES:
  Accounts payable...............................................................            $   20,492               $   24,393
  Accrued interest...............................................................                 2,353                    4,161
  Accrued drilling costs.........................................................                13,242                    8,380
  Accrued lease operating costs..................................................                13,956                    4,694
  Other accrued liabilities......................................................                10,557                    4,843
  Current maturities of long-term debt...........................................                   750                    3,152
                                                                                             ----------               ----------
     Total current liabilities...................................................                61,350                   49,623
                                                                                             ----------               ----------
LONG-TERM DEBT, NET OF CURRENT MATURITIES........................................               340,750                  419,150
OTHER LONG-TERM LIABILITIES......................................................                 9,292                    2,034
COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED SECURITIES OF
 NUEVO FINANCING I...............................................................               115,000                  115,000
CONTINGENCIES (NOTE 14)
STOCKHOLDERS' EQUITY:
  Preferred stock, $1.00 par value, 10,000,000 shares authorized; 7% Cumulative
   Convertible Preferred Stock, none issued and outstanding at December 31, 1999
   and 1998......................................................................                    --                       --
  Common stock, $0.01 par value, 50,000,000 shares authorized, 20,437,371 and
   20,308,462 shares issued at December 31, 1999 and 1998, respectively..........                   204                      203
  Additional paid-in capital.....................................................               357,855                  355,600
  Treasury stock, at cost, 2,430,074 and 473,876 shares, at December 31, 1999
   and 1998, respectively........................................................               (49,605)                 (19,335)
  Stock held by benefit trust, 75,904 and 47,759 shares, at December 31, 1999
   and 1998, respectively........................................................                (3,184)                  (1,732)
  Deferred stock compensation....................................................                  (216)                      --
  Accumulated deficit............................................................               (71,416)                (102,858)
                                                                                             ----------               ----------
      Total stockholders' equity.................................................               233,638                  231,878
                                                                                             ----------               ----------
                                                                                             $  760,030               $  817,685
                                                                                             ==========               ==========
</TABLE>
                See Notes to Consolidated Financial Statements.

                                       39
<PAGE>

                             NUEVO ENERGY COMPANY

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                 (Amounts in Thousands, Except per Share Data)

<TABLE>
<CAPTION>
                                                                                            Year Ended December 31,
                                                                             ------------------------------------------------------
                                                                                 1999                 1998                1997*
                                                                             ------------         ------------         ------------
<S>                                                                          <C>                  <C>                  <C>
REVENUES:
  Oil and gas revenues..............................................            $239,306            $ 240,010             $331,973
  Gas plant revenues................................................               2,968                2,665               14,826
  Pipeline and other revenues.......................................                   4                2,700                5,772
  Gain on sale of assets, net.......................................              85,294                5,768                1,372
  Interest and other income.........................................               4,663                1,560                3,335
                                                                                --------            ---------             --------
                                                                                 332,235              252,703              357,278
                                                                                --------            ---------             --------
COSTS AND EXPENSES:
  Lease operating expenses..........................................             127,164              134,704              120,042
  Gas plant operating expenses......................................               3,385                3,202               13,356
  Pipeline and other operating costs................................                 286                2,028                5,243
  Exploration costs.................................................              14,017               16,562               11,082
  (Revision of) provision for impairment on assets held for sale....                  --               (3,740)              23,942
  Provision for impairment of oil and gas properties................                  --               68,904               30,000
  General and administrative expenses...............................              18,137               13,636               17,396
  Outsourcing fees..................................................              14,129               14,458               14,410
  Depreciation, depletion and amortization..........................              80,652               85,036              102,158
  Interest expense..................................................              33,110               32,471               27,357
  Dividends on Guaranteed Preferred Beneficial Interests in
  Company's Convertible Debentures (TECONS).........................               6,613                6,613                6,613

  Other expense.....................................................               8,659                5,726                3,019
                                                                                --------            ---------             --------
                                                                                 306,152              379,600              374,618
                                                                                --------            ---------             --------
Income (loss) before income taxes, minority interest and
  extraordinary item................................................              26,083             (126,897)             (17,340)

Income tax benefit..................................................              (5,359)             (32,625)              (6,656)
Minority interest in loss of subsidiary.............................                  --                   --                   (8)
                                                                                --------            ---------             --------
Income (loss) before extraordinary item.............................              31,442              (94,272)             (10,676)
Extraordinary loss on early extinguishment of debt, net of income
 tax benefit of $2,037..............................................                  --                   --                3,024
                                                                                --------            ---------             --------
Net income (loss)...................................................            $ 31,442            $ (94,272)            $(13,700)
                                                                                ========            =========             ========

Earnings (loss) per Common share -- Basic:
 Income (loss) before extraordinary item (net of dividends on
  preferred stock)..................................................               $1.62               $(4.76)            $  (0.54)

 Extraordinary loss on early extinguishment of debt, net of income
  tax benefit.......................................................                  --                   --                (0.15)
                                                                                --------            ---------             --------
  Net income (loss).................................................               $1.62               $(4.76)            $  (0.69)
                                                                                ========            =========             ========

Weighted average Common shares outstanding..........................              19,418               19,795               19,796
                                                                                ========            =========             ========

Earnings (loss) per Common share -- Diluted:
 Income (loss) before extraordinary item............................               $1.61               $(4.76)            $  (0.54)
 Extraordinary loss on early extinguishment of debt, net of income
  tax benefit.......................................................                  --                   --                (0.15)
                                                                                --------            ---------             --------
  Net income (loss).................................................               $1.61               $(4.76)            $  (0.69)
                                                                                ========            =========             ========
Weighted average Common and dilutive potential Common shares
 outstanding........................................................              19,571               19,795               19,796
                                                                                ========            =========             ========

</TABLE>
---------------
* Restated
                See Notes to Consolidated Financial Statements.

                                       40
<PAGE>

                             NUEVO ENERGY COMPANY

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                             (Amounts in Thousands)

<TABLE>
<CAPTION>

                            Common Stock      Additional                Stock held                       Retained        Total
                          -----------------    Paid-In      Treasury    by Benefit    Deferred Stock     Earnings    Stockholders'
                           Shares    Amount    Capital       Stock         Trust       Compensation     (Deficit)        Equity
                          --------   ------   ----------   ----------   -----------   ---------------   ----------   --------------
<S>                       <C>        <C>      <C>          <C>          <C>           <C>               <C>          <C>
January 1, 1997........     19,852     $199     $340,126   $  --        $  --                 $   --    $   5,114         $345,439
                           =======     ====     ========   =========    ==========    ==============    =========         ========
Exercise of stock
 options and related
 tax benefit...........        386        3       11,332          --            --                --           --           11,335
Stock put options......         --       --        1,630          --            --                --           --            1,630
Employee stock awards..         --       --        1,208          --            --                --           --            1,208
Purchase of Treasury
 Shares................         --       --           --     (21,173)           --                --           --          (21,173)
Stock held by benefit
 trust.................         --       --           --       1,244        (1,244)               --           --               --
Net loss*..............         --       --           --          --            --                --      (13,700)         (13,700)
                           -------     ----     --------    --------       -------    --------------    ---------         --------
December 31, 1997*.....     20,238      202      354,296     (19,929)       (1,244)               --       (8,586)         324,739
                           =======     ====     ========    ========       =======    ==============    =========         ========
Exercise of stock
 options and related
 tax benefit...........         70        1        1,304          --            --                --           --            1,305
Stock held by benefit
 trust.................         --       --           --         488          (488)               --           --               --
Sale of Treasury Shares         --       --           --         106            --                --           --              106
Net loss...............         --       --           --          --            --                --      (94,272)         (94,272)
                           -------     ----     --------    --------       -------    --------------    ---------         --------
December 31, 1998......     20,308      203      355,600     (19,335)       (1,732)               --     (102,858)         231,878
                           =======     ====     ========    ========       =======    ==============    =========         ========
Exercise of stock
 options and related
 tax benefit...........        129        1        1,810          --            --                --           --            1,811
Stock held by benefit
 trust.................         --       --           --       1,850        (1,850)               --           --               --
Issuance of warrants
 and other.............         --       --          120          --            --                --           --              120
Withdrawal from
 benefit trust.........         --       --           --          --           398                --           --              398
Purchase of Treasury
 Shares................         --       --           --     (32,120)           --                --           --          (32,120)
Deferred Stock
 compensation..........         --       --          325          --            --              (216)          --              109
Net income.............         --       --           --          --            --                --       31,442           31,442
                           -------     ----     --------    --------       -------    --------------    ---------         --------
December 31, 1999......     20,437     $204     $357,855    $(49,605)      $(3,184)           $(216)    $ (71,416)        $233,638
                           =======     ====     ========    ========       =======    ==============    =========         ========
</TABLE>

---------------
* Restated





                See Notes to Consolidated Financial Statements.

                                       41
<PAGE>

                             NUEVO ENERGY COMPANY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Amounts in Thousands)
<TABLE>
<CAPTION>
                                                                                          Year Ended December 31,
                                                                          --------------------------------------------------------
                                                                               1999                  1998                1997*
                                                                          --------------         ------------        -------------
<S>                                                                       <C>                    <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)...............................................             $  31,442            $ (94,272)           $ (13,700)
 Adjustments to reconcile net income (loss) to net cash provided
  by operating activities:
     Depreciation, depletion and amortization....................                80,652               85,036              102,158
     Dry hole costs..............................................                 8,051               12,962                9,311
     Amortization of debt financing costs........................                 1,696                1,643                1,513
     Amortization of deferred revenue............................                    --               (1,625)              (3,203)
     (Revision of) provision for impairment on assets held for                       --               (3,740)              23,942
      sale.......................................................
     Provision for impairment of oil and gas properties..........                    --               68,904               30,000
     Gain on sale of assets, net.................................               (85,294)              (5,768)              (1,372)
     Loss on early extinguishment of debt........................                    --                   --                5,061
     Stock awards................................................                   109                   --                1,208
     Deferred taxes..............................................                (6,559)             (32,520)              (9,249)
     Appreciation (depreciation) of deferred compensation                           801               (1,138)                  --
      liability..................................................
     Debt modification costs.....................................                 3,064                   --                   --
     Other.......................................................                   120                   --                   (8)
                                                                              ---------            ---------            ---------
                                                                                 34,082               29,482              145,661
  Changes in assets and liabilities, net of acquisition effects:
     Accounts receivable.........................................               (20,461)              13,051                  578
     Gas imbalances..............................................                   (92)                 333                   20
     Accounts payable............................................                (4,527)               6,634                1,663
     Accrued liabilities.........................................                17,901               (5,813)              13,719
     Other.......................................................                (2,879)              (7,854)               3,821
                                                                              ---------            ---------            ---------
        NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES..........                24,024               35,833              165,462
                                                                              ---------            ---------            ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to oil and gas properties............................              (125,919)            (157,352)            (195,108)
  Proceeds from sale of gas plant................................                    --                   --               24,992
  Proceeds from sales of properties..............................               234,312               11,830                2,385
  Additions to gas plant and other facilities....................               (10,247)              (2,813)              (1,747)
                                                                              ---------            ---------            ---------
        NET CASH FLOWS PROVIDED BY (USED IN)
          INVESTING ACTIVITIES...................................                98,146             (148,335)            (169,478)
                                                                               ---------            ---------            ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings.......................................               142,590              240,900              234,000
  Debt issuance and modification costs...........................                (8,053)              (3,360)                  --
  Payments of long-term debt.....................................              (223,392)            (128,254)            (217,503)
  Proceeds from exercise of stock options........................                 1,690                1,305                6,074
  Premium on early extinguishment of debt........................                    --                   --               (3,440)
  Proceeds from sale of stock put options........................                    --                   --                1,630
  Proceeds from sale of treasury stock...........................                    --                  106                   --
  Purchase of treasury shares....................................               (32,120)                  --              (21,173)
                                                                              ---------            ---------            ---------
        NET CASH FLOWS (USED IN) PROVIDED
          BY FINANCING ACTIVITIES................................               (119,285)            110,697                 (412)
                                                                              ---------            ---------            ---------
Net increase (decrease) in cash and cash equivalents.............                 2,885               (1,805)              (4,428)
Cash and cash equivalents at beginning of year...................                 7,403                9,208               13,636
                                                                              ---------            ---------            ---------
Cash and cash equivalents at end of year.........................             $  10,288            $   7,403            $   9,208
                                                                              =========            =========            =========
</TABLE>
---------------
* Restated
                See Notes to Consolidated Financial Statements.

                                       42
<PAGE>

                             NUEVO ENERGY COMPANY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  ORGANIZATION

   Nuevo Energy Company ("Nuevo") was formed as a Delaware corporation on March
2, 1990, to acquire the businesses of certain public and private partnerships
(collectively "Predecessor Partnerships").  On July 9, 1990, the plan of
consolidation ("Plan of Consolidation") was approved by limited partners owning
a majority of units of limited partner interests in the partnerships whereby the
net assets of the Predecessor Partnerships, which were subject to such Plan of
Consolidation, were exchanged for Common Stock of Nuevo ("Common Stock").  All
references to the "Company" include Nuevo and its majority and wholly-owned
subsidiaries, unless otherwise indicated or the context indicates otherwise.

   The Company is primarily engaged in the exploration for, and the acquisition,
exploitation, development and production of crude oil and natural gas.  The
Company's principal oil and gas properties are located domestically onshore and
offshore California and the onshore Gulf Coast region; and internationally
offshore West Africa.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles of Consolidation

   The consolidated financial statements include the accounts of Nuevo and its
majority and wholly-owned subsidiaries.  The Company's 48.5% general partner
interest in Richfield Gas Storage Partnership was pro rata consolidated through
February 1998, at which time the Company's interest was sold.  The consolidated
financial statements also include Bright Star Gathering, Inc., which was 80%
owned by the Company until it was sold in July 1998.  NuStar Joint Venture and
its 66.7% investment in the Benedum Plant System, of which the Company owned a
95% interest, was pro rata consolidated through May 2, 1997, at which time the
Company's interest was sold.  Minority interests have been deducted from results
of operations and stockholders' equity in the appropriate periods.  All
significant intercompany accounts and transactions have been eliminated in
consolidation.

 Change in Accounting Method

   Effective January 1, 1998, the Company elected to convert from the full cost
method to the successful efforts method of accounting for its investments in oil
and gas properties.  The Company believes that the successful efforts method of
accounting is preferable, as it will provide a fair presentation of the
Company's development activities in its core California business and the
drilling success of its selective exploration activities, and reflect an
impairment in the carrying value of its oil and gas properties only when there
has been a permanent decline in their fair value.  Accordingly, all prior year
financial statements have been restated to conform with successful efforts
accounting.  The effect, after tax, of the change in accounting method as of
December 31, 1997, was a reduction to retained earnings of $64.1 million,
primarily attributable to a decrease in net property and equipment and the
deferred tax liability of $99.2 million and $38.0 million, respectively.  The
change in accounting method resulted in a decrease in net income of $32.5
million ($1.64 per share - basic and diluted) during 1997.

 Oil and Gas Properties

   The Company utilizes the successful efforts method of accounting for its
investments in oil and gas properties.  Under successful efforts, oil and gas
lease acquisition costs and intangible drilling costs associated with
exploration efforts that result in the discovery of proved reserves and costs
associated with development drilling, whether or not successful, are capitalized
when incurred.  When a proved property is sold, ceases to produce or is
abandoned, a gain or loss is recognized.  When an entire interest in an unproved
property is sold for cash or cash equivalent, gain or loss is recognized, taking
into consideration any recorded impairment.  When a partial interest in an
unproved property is sold, the amount received is treated as a reduction of the
cost of the interest retained.

                                       43
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


   Unproved leasehold costs are capitalized pending the results of exploration
efforts.  Significant unproved leasehold costs are reviewed periodically and a
loss is recognized to the extent, if any, that the cost of the property has been
impaired.  An impairment of unproved leasehold costs of $8.1 million was
recognized as of December 31, 1998.  No such impairment was recognized for the
years ended December 31, 1999 or 1997.  Exploration costs, including geological
and geophysical expenses, exploratory dry holes and delay rentals, are charged
to expense as incurred.

   Costs of productive wells, development dry holes and productive leases are
capitalized and depleted on a unit-of-production basis over the life of the
remaining proved reserves.  Capitalized drilling costs are depleted on a unit-
of-production basis over the life of the remaining proved developed reserves.
Estimated costs (net of salvage value) of dismantlement, abandonment and site
remediation are computed by the Company's independent reserve engineers and are
included when calculating depreciation and depletion using the unit-of-
production method.

   The Company reviews proved oil and gas properties on a depletable unit basis
whenever events or circumstances indicate that the carrying value of those
assets may not be recoverable.  For each depletable unit determined to be
impaired, an impairment loss equal to the difference between the carrying value
and the fair value of the depletable unit is recognized.  Fair value, on a
depletable unit basis, is estimated to be the present value of the undiscounted
expected future net revenues computed by application of estimated future oil and
gas prices, production and  expenses, as determined by management, to estimated
future production of oil and gas reserves over the economic life of the
reserves.  If the carrying value exceeds the undiscounted future net revenues,
an impairment is recognized equal to the difference between the carrying value
and the discounted estimated future net revenues of that depletable unit.  The
Company considers all proved reserves and commodity pricing based on market
information available at year-end in its estimate of future net revenues.  Fair
value impairments of $60.8 million and $30.0 million were recognized as of
December 31, 1998 and 1997, respectively; no such impairment was recognized
during 1999.

   Interest costs associated with non-producing leases and exploration and
development projects are capitalized only for the period that activities are in
progress to bring these projects to their intended use.  The capitalization
rates are based on the Company's weighted average cost of funds used to finance
expenditures.

   Any reference to oil and gas reserve information in the Notes to Consolidated
Financial Statements is unaudited.

  Environmental Liabilities

   Environmental expenditures that relate to current or future revenues are
expensed or capitalized as appropriate.  Expenditures that relate to an existing
condition caused by past operations, and do not contribute to current or future
revenue generation, are expensed.  Liabilities are recorded when environmental
assessments and/or clean-ups are probable, and the costs can be reasonably
estimated.  Generally, the timing of these accruals coincides with the Company's
commitment to a formal plan of action.

  Gas Plant and Other Facilities

   Gas plant and other facilities include the costs to acquire certain gas plant
and other facilities and to secure rights-of-way.  Capitalized costs associated
with gas plant and other facilities are amortized primarily over the estimated
useful lives of the various components of the facilities utilizing the straight-
line method.  The estimated useful lives of such assets range from three to
thirty years.  The Company reviews these assets for impairment whenever events
or changes in circumstances indicate that their carrying amounts may not be
recoverable.

  Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities".  This statement, as amended by
SFAS No. 137, establishes standards of accounting for and disclosures of
derivative

                                       44
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


instruments and hedging activities. This statement requires all derivative
instruments to be carried on the balance sheet at fair value and is effective
for the Company beginning January 1, 2001, however, early adoption is permitted.
The Company has not yet determined the impact of this statement on its financial
condition or results of operations or whether it will adopt the statement early.

  Comprehensive Income

   Comprehensive income includes net income and all changes in other
comprehensive income including, among other things, foreign currency translation
adjustments, and unrealized gains and losses on certain investments in debt and
equity securities.  There are no differences between comprehensive income (loss)
and net income (loss) for the periods presented.

  Gas Balancing Positions

   The Company uses the entitlement method for recording sales of natural gas.
Under the entitlement method, revenue is recorded based on the Company's net
revenue interest in production.  Deliveries of natural gas in excess of the
Company's net revenue interests are recorded as liabilities and under-deliveries
are recorded as assets.  Production imbalances are recorded at the lower of the
sales price in effect at the time of production or the current market value.
Substantially all such amounts are anticipated to be settled with production in
future periods.

  Derivative Financial Instruments

   The Company utilizes derivative financial instruments to reduce its exposure
to changes in the market prices of crude oil and natural gas.  Commodity
derivatives utilized as hedges include futures, swap and option contracts, which
are used to hedge crude oil and natural gas prices.  Basis swaps are sometimes
used to hedge the basis differential between the derivative financial instrument
index price and the commodity field price.  In order to qualify as a hedge,
price movements in the underlying commodity derivative must be highly correlated
with the hedged commodity.  Settlement of gains and losses on price swap
contracts are realized monthly, generally based upon the difference between the
contract price and the average closing New York Mercantile Exchange ("NYMEX")
price and are reported as a component of oil and gas revenues and operating cash
flows in the period realized.

   Gains and losses on option and futures contracts that qualify as a hedge of
firmly committed or anticipated purchases and sales of oil and gas commodities
are deferred on the balance sheet and recognized in income and operating cash
flows when the related hedged transaction occurs.  Premiums paid on option
contracts are deferred in other assets and amortized into oil and gas revenues
over the terms of the respective option contracts.  Gains or losses attributable
to the termination of a derivative financial instrument are deferred on the
balance sheet and recognized in revenue when the hedged crude oil and natural
gas is sold.  There were no such deferred gains or losses at December 31, 1999
or 1998.  Gains or losses on derivative financial instruments that do not
qualify as a hedge are recognized in income currently.

   As a result of hedging transactions, oil and gas revenues were reduced by
$44.9 million in 1999, increased by $0.6 million in 1998 and reduced by $6.0
million in 1997.

  Earnings per Share ("EPS")

   Basic EPS is computed by dividing income available to common stockholders by
the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or
other contracts to issue Common Stock were exercised or converted into Common
Stock or resulted in the issuance of Common Stock that then shared in the
earnings of the entity.  For the year ended December 31, 1999, the Company's
potentially dilutive securities included dilutive stock options.  For the years
ended December 31, 1998 and 1997, the Company did not have any potentially
dilutive securities, as net losses were incurred during these periods.
Potential dilution may also occur in future periods due to the Company-Obligated
Mandatorily Redeemable Convertible Preferred Securities of Nuevo Financing I
("TECONS").

                                       45
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



  Stock-Based Compensation

   The Company applies the intrinsic value method for accounting for stock and
stock-based compensation described by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees".  Had the Company applied the
fair value method described by SFAS No. 123, "Accounting for Stock-Based
Compensation", it would have incurred compensation expense for stock-based
compensation in 1999, 1998 and 1997.  (See Note 8 for the SFAS No. 123 pro forma
effects on income and earnings per share.)

  Income Taxes

   Deferred taxes are accounted for under the asset and liability method of
accounting for income taxes.  Under this method, deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities.  The effect on deferred taxes of a change in tax rates is
recognized in income in the period the change occurs.

  Statements of Cash Flows

   For cash flow presentation purposes, the Company considers all highly liquid
money market instruments with an original maturity of three months or less to be
cash equivalents.  Interest paid in cash, net of amounts capitalized, for 1999,
1998 and 1997 was $33.5 million, $31.6 million and $28.2 million, respectively.
Net amounts paid (refunded) in cash for income taxes for 1999, 1998 and 1997
were $2,250,000, $1,332,000 and ($45,000), respectively.

  Product Inventory

   Inventory relating to quantities of processed fuel oil and natural gas
liquids in storage as of the balance sheet date is carried at current market
pricing. Fuel oil in inventory is stated at year end market prices less
transportation costs; the Company recognizes changes in the market value of
inventory from one period to the next as oil revenues.

  Use of Estimates

   In order to prepare these financial statements in conformity with generally
accepted accounting principles, management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities, as well as reserve
information, which affects the depletion calculation.  Actual results could
differ from those estimates.

  Reclassifications

   Certain reclassifications of prior period amounts have been made to conform
to the current presentation.

3.  ACQUISITIONS

   In June 1999, the Company acquired oil and gas properties located onshore and
offshore California for $61.4 million from Texaco, Inc.  To purchase these
assets, the Company used funds from a $100.0 million interest-bearing escrow
account that provided "like-kind exchange" tax treatment for the purchase of
domestic oil and gas producing properties.  The escrow account was created with
proceeds from the Company's January 1999 sale of its East Texas natural gas
assets (see discussion in Note 4).  Following the Texaco transaction, the $41.0
million remaining in the escrow account, which included $2.4 million of interest
income, was used to repay a portion of outstanding bank debt in early July 1999.
The acquired properties had estimated net proved reserves at June 30, 1999, of
33.7 million barrels of oil equivalent ("BOE") and are either additional
interests in the Company's existing properties or are located near its existing
properties.  The acquisition included interests in Cymric, East Coalinga, Dos
Cuadras, Buena Vista Hills and other fields the Company operates.

                                       46
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



   In April 1998, the Company acquired a third party's interest in the Marine I
Permit in the Republic of Congo, West Africa ("Congo") for $7.8 million.  This
acquisition increased the Company's net working interest in the Congo from
43.75% to 50.0%.

4.    DIVESTITURES

   On December 31, 1999, the Company completed the sale of its interest in 13
onshore fields and a gas processing plant located in Ventura County, California,
to Vintage Petroleum, Inc., for approximately $33.0 million.  The effective date
of the sale was September 1, 1999.  Accordingly, the Company reclassified these
properties to assets held for sale and discontinued depleting and depreciating
these assets during the third quarter of 1999.  Revenues less costs for the
period September 1, 1999, through December 31, 1999, and other adjustments
resulted in a price of $29.6 million at closing on December 31, 1999. A portion
of the proceeds, $4.5 million, was deposited in escrow to address possible
remediation issues.  All or any portion of the funds not used in remediation
shall be delivered to the Company.  The remainder of the proceeds from the sale
were used to repay a portion of the Company's outstanding bank debt.  The assets
accounted for approximately 3% of Nuevo's September 1, 1999 estimated proved
reserves.  Production from the properties for the year ended December 31, 1999,
averaged 2,510 barrels of oil equivalent per day.

   On January 6, 1999, the Company completed the sale of its East Texas natural
gas assets to an affiliate of Samson Resources Company for an adjusted sales
price of approximately $191.0 million.  Of the proceeds, $100.0 million was set
aside to fund an escrow account, as discussed in Note 3.  The remainder of the
proceeds were used to repay outstanding senior bank debt.  The Company realized
an $80.2 million adjusted pre-tax gain on the sale of the East Texas natural gas
assets resulting in the realization of $14.6 million of the Company's deferred
tax asset.  A $5.2 million gain on settled hedge transactions was realized in
connection with the closing of this sale in 1999.  The effective date of the
sale was July 1, 1998.  The Company reclassified these assets to assets held for
sale and discontinued depleting these assets during the third quarter of 1998.
Estimated net proved reserves associated with these properties totaled
approximately 329.0 billion cubic feet of natural gas equivalent at January 1,
1999.

   During the third quarter of 1998, the Company sold its interest in the
Sansinena field in California, and recorded a gain on the sale of $4.1 million.
During the first quarter of 1998, the Company sold its interest in the Coke
field in Chapel Hill, Texas, and recorded a $1.7 million gain on this sale.

   In December 1997, the Company announced its intention to dispose of the
remainder of its non-core gas gathering, pipeline and storage assets during
1998.  Such assets included: the Company's 48.5% interest in the Richfield Gas
Storage facility, which was sold in February 1998 at its approximate carrying
value; an 80% interest in Bright Star Gathering, Inc., which was sold in July
1998 at its approximate carrying value; and the Illini pipeline, which was sold
in November 1999 at its approximate carrying value.  The Company recorded a non-
cash, pre-tax charge to fourth quarter 1997 earnings of $23.9 million,
reflecting the estimated loss on the disposition of these assets.  A positive
revision to this charge was made in the fourth quarter of 1998 in the amount of
$3.7 million to reflect the estimated current fair value of the Illini pipeline.
The Company's results of operations included the operating results from these
assets through the disposition date, as applicable; however, these assets were
not depreciated subsequent to 1997.  The Company retained its remaining two
California gas plants, as these plants are strategic assets for the Company's
oil and gas activities in California.

   In May 1997, Nuevo Liquids, a wholly-owned subsidiary of the Company, sold
its 95% interest in the NuStar Joint Venture, which held the Company's
investment in the Benedum Plant System, for proceeds of $25.0 million.  The
effective date of the sale was January 1, 1997.  Proceeds from the sale were
used to reduce outstanding debt under the Company's revolving credit facility,
as well as project debt related to the Benedum Gas Plant in the amount of $5.9
million.  The Company recorded a pre-tax gain of $2.3 million relating to the
sale.

   During the first quarter of 1997, the Company sold its interest in the Second
Bayou field in Cameron Parish, Louisiana and recorded a gain of $1.4 million.
During the third quarter of 1997, the Company recognized a loss of $1.6 million
on the sale of South Timbalier Block 8.  In addition, the Company disposed of
several non-core properties at a combined net loss of $679,000.

                                       47
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


5.  PRODUCTION PAYMENTS

   In April 1994, the Company entered into a four-year commitment for a $30.0
million volumetric production payment for the development of certain infill
drilling locations in the Oak Hill field in East Texas.  The proceeds from this
agreement financed the capital expenditures for well drilling, fracturing and
completing and for surface facility installations.  Each advance under the
production payment obligated the Company to deliver a fixed volume of natural
gas, based upon prevailing market conditions at the time of the advance.  During
1994, the Company received $18.4  million, committing the Company to deliver
10.7 BCF of natural gas through December 1998.  As of December 31, 1998, the
Company had fulfilled its obligation under this commitment.

6.  OUTSOURCING SERVICES

   Torch Energy Advisors Incorporated ("Torch"), the Company's outside service
provider, is primarily in the business of providing management and advisory
services relating to oil and gas assets for institutional and public investors
and maintains a large technical, operating, accounting and administrative staff.

   In early 1999, Nuevo signed new outsourcing agreements with Torch and its
subsidiaries, effective January 1, 1999, to provide the following services:  (i)
oil and gas administration (accounting, information technology and land
administration); (ii) human resources; (iii) corporate administration (legal,
graphics, support, and corporate insurance); (iv) crude oil marketing; (v)
natural gas marketing; (vi) land leasing, and (vii) field operations.  Each of
the new agreements is stand alone, with different terms ranging from one to four
years.  In addition, the Company executed a Master Services Agreement with
Torch, which contains the overall terms and conditions governing each individual
service agreement.  Several functions that were previously outsourced, such as
mergers and acquisitions and internal audit, were brought in-house during 1999.

   Prior to January 1, 1999, the Company's outsourcing services were governed by
an agreement with Torch (the "Torch Agreement") whereby Torch administered
certain business activities of the Company for a monthly fee. The Torch
Agreement required Torch to administer the business activities of the Company
for a monthly fee equal to the sum of one-twelfth of 2% on the first $250
million of assets and one-twelfth of 1% on assets in excess of $250 million,
excluding certain gas plant facilities and cash, plus 2% of monthly operating
cash flows (as defined) during the period in which the services were rendered.
In addition, the Torch Agreement contained a provision whereby 20% of the
overhead fees on Torch operated properties were credited against the monthly fee
paid to Torch, as well as a provision whereby the monthly fee was credited for
one-twelfth of $900,000. For the years ended December 31, 1999, 1998 and 1997,
outsourcing fees paid to Torch amounted to $14.1 million, $14.5 million and
$14.4 million, respectively.

   A subsidiary of Torch markets oil, natural gas and natural gas liquids from
certain oil and gas properties and gas plants in which the Company owns an
interest.  In 1999, 1998 and 1997, such marketing fees were $1.2 million, $2.0
million and $2.9 million, respectively.

   Torch operates certain oil and gas interests owned by the Company.  The
Company is charged, on the same basis as other third parties, for all customary
expenses and cost reimbursements associated with these activities.  Operator's
fees charged for these activities for the years ended December 31, 1999, 1998
and 1997, were $25.1 million, $20.5 million and $22.4 million, respectively.

7.  RELATED PARTY TRANSACTIONS

   A broker's fee of 30,000 warrants was granted to a company, of which a
director of the Company is a partner, for services associated with the
acquisition of the Unocal Properties.  These warrants were exercised in the
first quarter of 1997.

   Included in general and administrative expenses for 1997 was a $1.7 million
severance payment to the Company's former President and Chief Executive Officer.

                                       48
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


8.  STOCKHOLDERS' EQUITY

  Common and Preferred Stock

   The Certificate of Incorporation of the Company authorizes the issuance of up
to 50,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock,
the terms, preferences, rights and restrictions of which are established by the
Board of Directors of the Company.  All shares of Common Stock have equal voting
rights of one vote per share on all matters to be voted upon by stockholders.
Cumulative voting for the election of directors is not permitted.  Certain
restrictions contained in the Company's loan agreements limit the amount of
dividends that may be declared.  Under the terms of the most restrictive
indenture of the 9  1/2% Senior Subordinated Notes due 2008 described in Note
10, the Company and its restricted subsidiaries had $25.7 million available for
the payment of dividends and share repurchases at December 31, 1999.  The
Company also had unrestricted liquidity available through its unrestricted
subsidiaries at December 31, 1999.

   On December 23, 1996, the Company and United Investors Management Company
("United") and The 1818 Fund, L.P. ("The 1818 Fund") closed the offering of
2,138,605 shares of Common Stock (the "Shares").  United sold 1,275,000 Shares
and The 1818 Fund sold 863,605 shares.  The price to the public of the Shares
was $47.50 per share.  All of the Shares sold by United were outstanding and 112
of the Shares sold by The 1818 Fund were outstanding prior to the offering.  The
remaining 863,493 Shares sold by The 1818 Fund were issued upon conversion of
the remaining 11,220 shares of 7% Preferred Stock of the Company.  The Company
did not receive any proceeds from the issuance of these shares.  As a result of
this conversion by The 1818 Fund of its shares of 7% Preferred Stock, there are
no longer any shares of the 7% Preferred Stock outstanding.

   During April 1996, the Company partially financed the acquisition of the
majority of its California properties with the proceeds from the sale to the
public of 5,109,200 shares of Common Stock.  The purchase of the Point
Pedernales field offshore California in Federal waters was financed by the
issuance to Torch of 1,275,000 shares of the Company's Common Stock.

  EPS Computation

   SFAS No. 128, "Earnings per Share", requires a reconciliation of the
numerator (income) and denominator (shares) of the basic EPS computation to the
numerator and denominator of the diluted EPS computation.  In 1998 and 1997,
weighted average potential dilutive common shares of 331,000 and 670,000 are not
included in the calculation of diluted loss per share due to their anti-dilutive
effect.  The Company's reconciliation is as follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                                                  -------------------------------------------------------------
                                                        1999                 1998                  1997*
                                                  -----------------   -------------------   -------------------
                                                   Income    Shares      Loss      Shares      Loss      Shares
                                                  --------   ------   ----------   ------   ----------   ------

<S>                                               <C>        <C>      <C>          <C>      <C>          <C>
Earnings (loss) before extraordinary item per
 Common share -- Basic.........................    $31,442   19,418    $(94,272)   19,795    $(10,676)   19,796

Effect of dilutive securities:
Stock options..................................         --      153          --        --          --        --
                                                   -------   ------    --------    ------    --------    ------
Earnings (loss) before extraordinary item per
 Common share -- Diluted.......................    $31,442   19,571    $(94,272)   19,795    $(10,676)   19,796
                                                   =======   ======    ========    ======    ========    ======

</TABLE>
_______________
* Restated

  Treasury Stock Repurchases

  Since December 1997, the Board of Directors of the Company authorized the open
market repurchase of up to 3,616,600 shares of outstanding Common Stock at times
and at prices deemed appropriate by management.  As of December 31, 1999, the
Company had repurchased 1,999,100 shares of its Common Stock in open market
transactions at an average purchase price, including commissions, of $16.50 per
share.  As of March 22, 2000, the

                                       49
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


Company had repurchased 2,610,600 shares at an average purchase price of $16.75
per share, including commissions.

   In March 1997, the Board of Directors authorized the open market repurchase
of up to 1,000,000 shares of outstanding Common Stock during 1997, at times and
prices deemed attractive by management.  During April 1997, the Company
repurchased 500,000 shares of Common Stock in open market transactions, at an
average purchase price of $38.94 per share, plus 42,491 shares acquired from the
cancellation of warrants issued during 1996.

  Put Options

   In May 1997, the Company sold put options on its Common Stock to a third
party.  The options gave the purchaser the right to sell to the Company 500,000
shares of its Common Stock at prices ranging from $40.26 to $41.04 per share
through December 31, 1997.  The contract gave the Company the choice of net
cash, net shares, or physical settlement.  Any repurchased shares would have
been treated as Treasury Stock.  The Company generated $1.6 million in option
premium from these transactions, which is reflected in additional paid-in
capital on the balance sheet.  As of December 31, 1997, 400,000 of these options
had expired with the Company's share prices above the strike price, and 100,000
of these options were settled on December 31, 1997, for a nominal amount of net
cash.

  Shareholder Rights Plan

   In March 1997, the Company adopted a Shareholder Rights Plan to protect the
Company's shareholders from coercive or unfair takeover tactics.  Under the
Shareholder Rights Plan, each outstanding share and each share of subsequently
issued Common Stock has attached to it one Right.  Generally, in the event a
person or group ("Acquiring Person") acquires or announces an intention to
acquire beneficial ownership of 15% or more of the outstanding shares of Common
Stock without the prior consent of the Company, or the Company is acquired in a
merger or other business combination, or 50% or more of its assets or earning
power is sold, each holder of a Right will have the right to receive, upon
exercise of the Right, that number of shares of common stock of the acquiring
company, which at the time of such transaction will have a market price of two
times the exercise price of the Right.  The Company may redeem the Right for
$.01 at any time before a person or group becomes an Acquiring Person without
prior approval.  The Rights will expire on March 21, 2007, subject to earlier
redemption by the Board of Directors of the Company.

   On January 10, 1999, the Company amended the Shareholder Rights Plan to
provide that if the Company receives and consummates a transaction pursuant to a
Qualifying Offer, the provisions of the Shareholder Rights Plan are not
triggered.  In general, a Qualifying Offer is an all cash, fully-funded tender
offer for all outstanding Common Shares by a person who, at the commencement of
the offer, beneficially owns less than five percent of the outstanding Common
Shares.  A Qualifying Offer must remain open for at least 120 days, must be
conditioned on the person commencing the Qualifying Offer acquiring at least 75%
of the outstanding Common Shares and the per share consideration must exceed the
greater of (1) 135% of the highest closing price of the Common Shares during the
one-year period prior to the commencement of the Qualifying Offer or (2) 150% of
the average closing price of the Common Shares during the 20 day period prior to
the commencement of the Qualifying Offer.

  Executive Compensation Plan

   During July 1997, the Board of Directors of the Company adopted a plan to
encourage senior executives to personally invest in the shares of the Company,
and to regularly review executives' ownership versus targeted ownership
objectives.  These incentives include a deferred compensation plan (the "Plan")
that gives key executives the ability to defer all or a portion of their
salaries and bonuses and invest in Common Stock of the Company at a discount to
market prices or make other investments at the employee's discretion.  Stock
acquired at a discount will be held in a benefit trust and restricted for a two-
year period.  The stock held in the benefit trust is accounted for as a
liability of the Company and is marked-to-market, with any necessary adjustment
to general and administrative expense.  The Company recorded total expenses
related to deferred compensation of $1.7 million in 1999, a net benefit of $0.6
million in 1998 and expenses of $0.8 million in 1997.  The Plan does not permit

                                       50
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


investment in a diversified equity portfolio until and unless targeted levels of
Common Stock ownership in the Company are achieved and maintained.  Target
levels of ownership are based on multiples of base salary and are administered
by the Compensation Committee of the Board of Directors. The Plan applies to all
executives at a level of Vice-President and above.

  Director Compensation

   In May 1999, the Compensation Committee of the Board of Directors implemented
changes to the compensation of the Company's non-employee directors based on a
Towers Perrin report.  Non-employee directors may elect to receive all or part
of the annual cash retainer of $30,000 in restricted shares of the Company's
Common Stock at a 33% increase in value.  The election must be made in
increments of 25% ($7,500).  Therefore, for each $7,500 of compensation for
which the election is exercised, the director would receive $9,975 in restricted
stock.  Each non-employee director also receives a semi-annual grant of 1,750
ten-year options to purchase the Company's Common Stock at the market price of
the stock on the date of the grant.  Non-employee directors also receive a semi-
annual grant of 1,250 restricted shares of the Company's common stock.  All
restricted shares are subject to a three-year restricted period.  Directors have
the option of deferring delivery of restricted shares beyond the three-year
period.

  Stock Incentive Plan

   In 1990, the Company established its 1990 Stock Option Plan with respect to
its Common Stock; in 1993, the Board of Directors adopted the Nuevo Energy
Company 1993 Stock Incentive Plan; and in 1999, the Board of Directors adopted
the Nuevo Energy Company 1999 Stock Incentive Plan (collectively, the "Stock
Incentive Plans").  The purpose of the Stock Incentive Plans is to provide
directors and key employees of the Company performance incentives and to provide
a means of encouraging stock ownership in the Company by such persons.

   The total maximum number of shares subject to options under the Stock
Incentive Plans is 5,000,000 shares.  Options are granted under the Stock
Incentive Plans on the basis of the optionee's contribution to the Company.  No
option may exceed a term of more than ten years.  Options granted under the
Stock Incentive Plans may be either incentive stock options or options that do
not qualify as incentive stock options.  The Company's compensation committee is
authorized to designate the recipients of options, the dates of grants, the
number of shares subject to options, the option price, the terms of payment upon
exercise of the options, and the time during which the options may be exercised.
Options granted are exercisable, in full, six months following the date of the
grant.

   A summary of activity in the stock option plans during the three years ended
1999 is set forth below:

<TABLE>
<CAPTION>
                                                                                             Weighted-
                                                                                              Average
                                                                    Options               Exercise Price
                                                               ------------------        -----------------
<S>                                                            <C>                  <C>  <C>
Outstanding at January 1, 1997..............................       1,766,138                    $24.24
  Granted...................................................         652,875                    $41.89
  Exercised.................................................        (328,550)                   $18.59
  Canceled..................................................          (1,000)                   $47.88
                                                                   ---------
Outstanding at December 31, 1997............................       2,089,463                    $30.61
  Granted...................................................       1,124,800 *                  $16.27
  Exercised.................................................         (70,925)                   $18.35
  Canceled..................................................        (466,975)*                  $36.19
                                                                   ---------
Outstanding at December 31, 1998............................       2,676,363                    $23.94
  Granted...................................................         481,225                    $16.02
  Exercised.................................................        (128,909)                   $14.16
  Canceled..................................................        (411,500)                   $25.52
                                                                   ---------
Outstanding at December 31, 1999............................       2,617,179                    $22.72
                                                                   =========
</TABLE>

                                       51
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



   *Reflects the cancellation and re-issuance of 401,850 non-executive employee
stock options on December 14, 1998.

   The Company had 2,202,454 options and 1,756,263 options exercisable at
December 31, 1999 and 1998, respectively.  Detail of stock options outstanding
and options exercisable at December 31, 1999 follows:

<TABLE>
<CAPTION>
                                                        Outstanding                               Exercisable
                                      ------------------------------------------------   -----------------------------
                                                         Weighted-         Weighted-                       Weighted-
                                                          Average           Average                         Average
                                                         Remaining         Exercise                        Exercise
     Range of Exercise Prices            Number         Life (Years)         Price          Number           Price
-----------------------------------   -------------   ----------------   -------------   -------------   -------------
<S>                                   <C>             <C>                <C>             <C>             <C>
$10.31 to $13.69...................         711,025              8.74           $11.33         711,025          $11.33
$15.50 to $19.63...................         769,204              7.39           $16.80         354,479          $17.77
$20.38 to $29.88...................         489,450              6.91           $23.19         489,450          $23.19
$34.00 to $47.88...................         647,500              7.66           $41.94         647,500          $41.94
                                          ---------                                          ---------
  Total............................       2,617,179                                          2,202,454
                                          =========                                          =========
</TABLE>

   The weighted-average fair value of options granted during 1999, 1998 and
1997, was $11.38, $7.55 and $12.89, respectively.  The fair value of each option
grant is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions: expected stock price
volatility of 55.7% in 1999, 50.9% in 1998 and 35.2% in 1997; risk free interest
of 6% in 1999, 5% in 1998, and 5.75% in 1997, and average expected option lives
of five years in 1999 and 1998 and three years in 1997.  Had compensation
expense for stock-based compensation been determined based on the fair value at
the date of grant, the Company's net income, earnings available to Common
Stockholders and earnings per share would have been reduced to the pro forma
amounts indicated below (amounts in thousands, except per share data):
<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                                            -----------------------------------------------
                                                                                1999             1998            1997*
                                                                            -------------   --------------   --------------
<S>                                                         <C>             <C>             <C>              <C>
Net income (loss)........................................   As reported           $31,442       $ (94,272)        $(13,700)
                                                            Pro forma             $24,673       $(103,434)        $(16,315)
Earnings (loss) per Common share -- Basic................   As reported           $  1.62       $   (4.76)        $  (0.69)
                                                            Pro forma             $  1.27       $   (5.23)        $  (0.82)
Earnings (loss) per Common share -- Diluted..............   As reported           $  1.61       $   (4.76)        $  (0.69)
                                                            Pro forma             $  1.26       $   (5.23)        $  (0.82)
</TABLE>

______________
* Restated

9.  COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED SECURITIES
    OF NUEVO FINANCING I

   On December 23, 1996, the Company and Nuevo Financing I, a statutory business
trust formed under the laws of the state of Delaware, (the "Trust"), closed the
offering of 2,300,000 Term Convertible Securities, Series A, ("TECONS") on
behalf of the Trust.  The price to the public of the TECONS was $50.00 per
TECONS.  Distributions on the TECONS began to accumulate from December 23, 1996,
and are payable quarterly on March 15, June 15, September 15, and December 15,
at an annual rate of $2.875 per TECONS.  Each TECONS is convertible at any time
prior to the close of business on December 15, 2026, at the option of the holder
into shares of Common Stock at the rate of .8421 shares of Common Stock for each
TECONS, subject to adjustment.  The sole asset of the Trust as the obligor on
the TECONS is $115.0 million aggregate principal amount of 5.75% Convertible
Subordinated Debentures of the Company due December 15, 2026.

                                       52
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


10.    LONG-TERM DEBT

   Long-term debt is comprised of the following at December 31, 1999 and 1998
(amounts in thousands):

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

<S>                                                                           <C>                 <C>
9 1/2% Senior Subordinated Notes due 2008 (a)..............................           $257,310    $         --
8 7/8% Senior Subordinated Notes (a) (b)...................................                 --             100,000
9 1/2% Senior Subordinated Notes due 2006 (a) (c)..........................              2,440             160,000
OPIC credit facility (at 5.8% and 5.55% at December 31, 1999 and 1998,
 respectively, plus a guaranty fee of 2.75%) (d)...........................                750               3,902

Bank credit facility (at 7.13% and 5.94% at December 31, 1999 and 1998,
 respectively) (e).........................................................             81,000             158,400
                                                                                      --------            --------
   Total debt..............................................................            341,500             422,302
Less current maturities....................................................               (750)             (3,152)
                                                                                      --------            --------
Long-term debt.............................................................           $340,750            $419,150
                                                                                      ========            ========
</TABLE>
_______

(a)  In July 1999, the Company authorized a new issuance of $260.0 million of
     9 1/2% Senior Subordinated Notes due June 1, 2008 ("9 1/2% Notes").  The
     Company offered to exchange the new notes for its outstanding $160.0
     million of 9 1/2% Senior Subordinated Notes due 2006 ("Old 9 1/2% Notes")
     and $100.0 million of 8 7/8% Senior Subordinated Notes due 2008 ("8 7/8%
     Notes").  In August 1999, the Company received tenders to exchange
     $157,460,000 of its Old 9 1/2% Notes and $99,850,000 of the 8 7/8% Notes.
     In connection with the exchange offers, the Company solicited consents to
     proposed amendments to the indentures under which the old notes were
     issued.  These amendments streamline the Company's covenant structure and
     provide the Company with additional flexibility to pursue its operating
     strategy.  The exchange was accounted for as a debt modification.  As such,
     the consideration that the Company paid to the holders of the Old 9 1/2%
     Notes who tendered in the exchange offer (equal to 3% of the outstanding
     principal amount of the Old 9 1/2% Notes exchanged) was accounted for as
     deferred financing costs.  Also in connection with this exchange offer, the
     Company incurred a total of $3.1 million in third-party fees during the
     third and fourth quarters of 1999, which are included in other expense.

     Interest on the 9 1/2% Notes accrues at the rate of 9 1/2% per annum and is
     payable semi-annually in arrears on June 1 and December 1. The 9 1/2% Notes
     are redeemable, in whole or in part, at the option of the Company, on or
     after June 1, 2003, under certain conditions. The Company is not required
     to make mandatory redemption or sinking fund payments with respect to the
     9 1/2% Notes. The indenture contains covenants that, among other things,
     limit the Company's ability to incur additional indebtedness, limit
     restricted payments, limit issuances and sales of capital stock by
     restricted subsidiaries, limit dispositions of proceeds of asset sales,
     limit dividends and other payment restrictions affecting restricted
     subsidiaries, and restrict mergers, consolidations or sales of assets. The
     9 1/2% Notes are not currently guaranteed by Nuevo's subsidiaries but are
     required to be guaranteed by any subsidiary that guarantees pari passu or
     subordinated indebtedness. The 9 1/2% Notes are unsecured general
     obligations of the Company, and are subordinated in right of payment to all
     existing and future senior indebtedness of the Company. In the event of a
     defined change in control, the Company will be required to make an offer to
     repurchase all outstanding 9 1/2% Notes at 101% of the principal amount
     thereof, plus accrued and unpaid interest to the date of redemption.

(b)  In June 1998, the Company issued $100.0 million, 8 7/8 % Notes.  In August
     1999, most of the 8 7/8 % Notes, except for $150,000, were exchanged for
     9 1/2% Notes.  The remaining $150,000 were retired in December 1999.  No
     significant costs were incurred in connection with this early retirement of
     debt.

(c)  In April 1996, the Company financed a portion of the purchase price of the
     Unocal Properties with proceeds from the sale to the public of a principal
     amount of $160.0 million, Old 9 1/2% Notes.  In August 1999, most of the
     Old 9 1/2% Notes, except for $2,540,000, were exchanged for 9 1/2% Notes.
     In October 1999, the Company purchased $100,000 of the remaining Old
     9 1/2% Notes. No significant costs were incurred in connection with

                                       53
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

     the early retirement of the $100,000 notes. Interest on the Old 9 1/2%
     Notes accrues at the rate of 9 1/2% per annum and is payable semi-annually
     in arrears on April 15 and October 15. The Old 9 1/2% Notes are redeemable,
     in whole or in part, at the option of the Company, on or after April 15,
     2001, under certain conditions. The Company is not required to make
     mandatory redemption or sinking fund payments with respect to the Old
     9 1/2% Notes. The Old 9 1/2% Notes were guaranteed by certain of Nuevo's
     subsidiaries until February 1998, at which time such subsidiaries were
     released as guarantors. The Old 9 1/2% Notes are unsecured general
     obligations of the Company, and are subordinated in right of payment to all
     existing and future senior indebtedness of the Company.

(d)  In February 1995, in connection with the purchase of the stock of Amoco
     Congo Production Company, the Company negotiated with the Overseas Private
     Investment Corporation ("OPIC") and an agent bank for a non-recourse credit
     facility in the amount of $25.0 million.  The security for such facility is
     the assets and stock of the Nuevo Congo Company ("NCC").  The credit
     facility expired in June 1999.  The initial drawdown on the facility was
     $8.8 million to finance a portion of the purchase price.  A portion of the
     remaining outstanding commitment, $6.0 million, was drawn down in January
     1996 to fund the first phase of the development drilling program in the
     Congo.  The interest rate associated with such credit facility is the
     London Interbank Offered Rate ("LIBOR") plus 20 basis points and a guaranty
     fee of 2.75% of the outstanding loan balance, payable quarterly.  At
     December 31, 1999, the interest rate was 5.8%, plus the guarantee fee of
     2.75%.  The loan agreement requires a sixteen-quarter repayment period and
     will be fully paid in April 2000.

(e)  Nuevo's Amended and Restated Credit Agreement, (the "Agreement"), dated
     June 30, 1999, provides for secured revolving credit availability of up to
     $400.0 million (subject to a semi-annual borrowing base determination) from
     a bank group led by Bank of America, N.A. and Morgan Guaranty Trust Company
     of New York, until its expiration on April 1, 2003.

     The borrowing base determination establishes the maximum borrowings that
     may be outstanding under the credit facility, and is determined by a two-
     thirds vote of the banks (three-fourths in the event of an increase in the
     borrowing base), each of which bases its judgement on (i) the present value
     of the Company's oil and gas reserves based on its own assumptions
     regarding future prices, production, costs, risk factors and discount
     rates, and (ii) on projected cash flow coverage ratios calculated under
     varying scenarios. If amounts outstanding under the credit facility exceed
     the borrowing base, as redetermined from time to time, the Company would be
     required to repay such excess over a defined period of time.

     During 1999, the borrowing base was reduced from $380.0 million to $200.0
     million in January 1999, reflecting the January sale of the Company's East
     Texas natural gas reserves, and also reflecting a significant decline in
     projected oil prices since the previous determination. The borrowing base
     was subsequently increased in October 1999, to $300.0 million, as a result
     of the significant increase in commodity prices and the inclusion of
     recently acquired oil and gas properties in California (see Note 3).

     Amounts outstanding under the credit facility bear interest at a rate equal
     to the London Interbank Offered Rate ("LIBOR") plus an amount which
     increases as borrowing base utilization increases. At December 31, 1999 the
     Company's interest rate under the credit facility was LIBOR plus .625%, or
     7.13%. Outstanding borrowings under this facility at December 31, 1999 were
     $81.0 million.

     The Credit Agreement has customary covenants including, but not limited to,
     covenants with respect to the following matters: (i) limitations on certain
     restricted payments and investments; (ii) limitations on guarantees and
     indebtedness; (iii) limitations on prepayments of subordinated and certain
     other indebtedness; (iv) limitations on mergers and consolidations, on
     certain types of acquisitions and on the issuance of certain securities by
     subsidiaries; (v) limitations on liens; (vi) limitations on sales of
     properties; (vii) limitations on transactions with affiliates; (viii)
     limitations on derivative contracts; and (ix) limitations on debt in
     subsidiaries. The Company is also required to maintain certain financial
     ratios and conditions, including without limitation an EBITDAX (earnings
     before interest, taxes, depreciation, depletion, amortization and

                                       54
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


     exploration expenses) to fixed charge coverage ratio and a funded debt to
     capitalization ratio. As a result of reduced revenues in 1998 due to
     falling oil prices, the Company obtained amendments for relief from the
     EBITDAX fixed charge coverage test through March 31, 2000. The Company was
     in compliance with all covenants of the Agreement at December 31, 1999, and
     does not anticipate any issues of non-compliance arising in the foreseeable
     future.

     In June 1997, the Company redeemed its 12 1/2% Senior Subordinated Notes at
     a total cost of $78.0 million, representing $75.0 million face value of the
     debt plus a 4% premium of $3.0 million. In addition to the premium, the
     Company wrote off approximately $2.0 million of unamortized discount and
     deferred financing costs. The redemption resulted in an extraordinary loss
     on early extinguishment of debt in the amount of $3.0 million, net of the
     related tax benefit of $2.0 million. The Company used proceeds from its
     bank facility to fund the redemption.

     The amount of scheduled debt maturities during the next five years and
     thereafter is as follows (amounts in thousands):

                2000.................................   $    750
                2001.................................         --
                2002.................................         --
                2003.................................     81,000
                2004.................................         --
                Thereafter...........................    259,750
                                                        --------
                  Total debt.........................   $341,500
                                                        ========

  Based upon the quoted market price, the fair value of the 9 1/2% Notes was
  estimated to be $254.6 million at December 31, 1999, the fair value of the Old
  9 1/2% Notes was estimated to be $2.4 million and $160.2 million at
  December 31, 1999 and 1998, respectively, and the fair value of the 8 7/8%
  Notes was estimated to be $90.6 million at December 31, 1998. For the OPIC
  credit facility and other debt, for which no quoted prices are available,
  management believes the carrying value of the debt materially represents the
  fair value of the debt at December 31, 1999 and 1998.

                                       55
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


11.  CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

  NCC is a U.S. corporation with foreign branch operations in the Congo. The
functional currency of NCC is the U.S. Dollar and its income is taxed in the
United States.  The Company's Congo investment involves risks typically
associated with investments in emerging markets such as an uncertain political,
economic, legal and tax environment, and expropriation and nationalization of
assets.  The Company's investment is insured through political risk insurance
provided by OPIC.

  The OPIC credit facility, discussed in Note 10, requires the Company to
provide consolidating financial statements that separately show NCC.  Also shown
separately is Nuevo Congo LTD. ("NCL") which is the company that holds Nuevo's
additional interest in the Yombo field in the Congo (see Note 3) that was
acquired in 1998.  These condensed consolidating financial statements are
presented below:

                      CONDENSED CONSOLIDATED BALANCE SHEET

                            AS OF DECEMBER 31, 1999
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        Nuevo              NCC               NCL            Consolidated
                                                   ---------------   ---------------   ----------------   -----------------
<S>                                                <C>               <C>               <C>                <C>
Total current assets............................          $ 50,408           $13,893           $ 1,990             $ 66,291
Net property and equipment......................           588,416            49,175            10,870              648,461
Deferred tax assets, net........................            23,348               657                --               24,005
Total other assets..............................            21,273                --                --               21,273
                                                          --------           -------           -------             --------
  Total assets..................................          $683,445           $63,725           $12,860             $760,030
                                                          ========           =======           =======             ========

Total current liabilities.......................          $ 25,589           $36,500           $  (739)            $ 61,350
Long-term debt..................................           340,750                --                --              340,750
Other long-term liabilities.....................             9,292                --                --                9,292
Mandatorily Redeemable Convertible Preferred
 Securities of Nuevo Financing I................           115,000                --                --              115,000

Total stockholders' equity......................           192,814            27,225            13,599              233,638
                                                          --------           -------           -------             --------
  Total liabilities and stockholders' equity....          $683,445           $63,725           $12,860             $760,030
                                                          ========           =======           =======             ========
</TABLE>


                      CONDENSED CONSOLIDATED BALANCE SHEET

                            AS OF DECEMBER 31, 1998
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        Nuevo              NCC               NCL           Consolidated
                                                   ---------------   ---------------   ---------------   -----------------
<S>                                                <C>               <C>               <C>               <C>
Total current assets............................          $145,906           $12,870           $ 2,476            $161,252
Net property and equipment......................           568,509            39,112             8,951             616,572
Deferred tax assets, net........................            27,059               475                --              27,534
Total other assets..............................            12,308                19                --              12,327
                                                          --------           -------           -------            --------
  Total assets..................................          $753,782           $52,476           $11,427            $817,685
                                                          ========           =======           =======            ========

Total current liabilities.......................          $ 18,006           $31,163           $   454            $ 49,623
Long-term debt..................................           418,400               750                --             419,150
Other long-term liabilities.....................             2,034                --                --               2,034
Mandatorily Redeemable Convertible Preferred
 Securities of Nuevo Financing I................           115,000                --                --             115,000

Total stockholders' equity......................           200,342            20,563            10,973             231,878
                                                          --------           -------           -------            --------
  Total liabilities and stockholders' equity....          $753,782           $52,476           $11,427            $817,685
                                                          ========           =======           =======            ========
</TABLE>

                                       56
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1999
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        Nuevo               NCC                NCL            Consolidated
                                                   ----------------   ----------------   ---------------   ------------------
<S>                                                <C>                <C>                <C>               <C>
Revenues........................................          $301,135            $26,460             $4,640            $332,235
Expenses........................................           284,161             19,879              2,112             306,152
                                                          --------            -------             ------            --------
Income before income taxes......................            16,974              6,581              2,528              26,083
Income tax benefit..............................            (5,177)              (182)                --              (5,359)
                                                          --------            -------             ------            --------
Net income......................................          $ 22,151            $ 6,763             $2,528            $ 31,442
                                                          ========            =======             ======            ========
</TABLE>


                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                        FOR YEAR ENDED DECEMBER 31, 1998
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                        Nuevo               NCC                NCL            Consolidated
                                                   ----------------   ----------------   ---------------   ------------------
<S>                                                <C>                <C>                <C>               <C>
Revenues........................................         $ 236,758            $14,607             $1,338           $ 252,703
Expenses........................................           362,103             16,279              1,218             379,600
                                                         ---------            -------             ------           ---------
(Loss) income before income taxes...............          (125,345)            (1,672)               120            (126,897)
Income tax benefit..............................           (31,935)              (690)                --             (32,625)
                                                         ---------            -------             ------           ---------
Net (loss) income...............................         $ (93,410)           $  (982)            $  120           $ (94,272)
                                                         =========            =======             ======           =========
</TABLE>



                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1997
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       Nuevo*             NCC*           Consolidated*
                                                                  ----------------   ---------------   ------------------
<S>                                                               <C>                <C>               <C>
Revenues.......................................................          $334,446            $22,832            $357,278
Expenses.......................................................           358,079             16,531             374,610
                                                                         --------            -------            --------
(Loss) income before income taxes and extraordinary item.......           (23,633)             6,301             (17,332)
Income tax (benefit) expense...................................            (6,883)               227              (6,656)
                                                                         --------            -------            --------
(Loss) income before extraordinary item........................           (16,750)             6,074             (10,676)
Extraordinary loss on early extinguishment of debt, net of tax
 benefit.......................................................             3,024                 --               3,024
                                                                         --------            -------            --------
Net (loss) income..............................................          $(19,774)           $ 6,074            $(13,700)
                                                                         ========            =======            ========
</TABLE>

_____________
* Restated

                                       57
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 1999
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           Nuevo               NCC                NCL            Consolidated
                                                      ----------------   ----------------   ----------------   -----------------
<S>                                                   <C>                <C>                <C>                <C>
Cash flows from operating activities:
  Net (loss) income................................         $  22,151           $  6,763            $ 2,528           $  31,442
  Non-cash adjustments.............................            (5,594)             7,595                639               2,640
  Change in assets and liabilities.................           (12,436)             4,036             (1,658)            (10,058)
                                                            ---------           --------            -------           ---------
     Net cash provided by operating activities.....             4,121             18,394              1,509              24,024
                                                            ---------           --------            -------           ---------
Cash flows from investing activities:
  Additions to oil and gas properties..............          (105,515)           (17,840)            (2,564)           (125,919)
  Proceeds from sale of properties.................           234,312                 --                 --             234,312
  Additions to other properties and other..........           (10,247)                --                 --             (10,247)
                                                            ---------           --------            -------           ---------
     Net cash provided by (used in) investing
      activities...................................           118,550            (17,840)            (2,564)             98,146
                                                            ---------           --------            -------           ---------


Cash flows from financing activities:
  Proceeds from borrowings.........................           142,590                 --                 --             142,590
  Payments of long-term debt.......................          (220,240)            (3,152)                --            (223,392)
  Other............................................           (38,483)                --                 --             (38,483)
                                                            ---------           --------            -------           ---------
     Net cash used in financing activities.........          (116,133)            (3,152)                --            (119,285)
                                                            ---------           --------            -------           ---------
Net increase (decrease) in cash & cash equivalents.             6,538             (2,598)            (1,055)              2,885
Cash and cash equivalents at beginning of year.....               600              5,339              1,464               7,403
                                                            ---------           --------            -------           ---------
Cash and cash equivalents at end of year...........         $   7,138           $  2,741            $   409           $  10,288
                                                            =========           ========            =======           =========
</TABLE>


                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 1998
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           Nuevo              NCC                NCL           Consolidated
                                                      ---------------   ----------------   ---------------   -----------------
<S>                                                   <C>               <C>                <C>               <C>
Cash flows from operating activities:
  Net (loss) income................................        $ (93,410)          $   (982)          $   120           $ (94,272)
  Non-cash adjustments.............................          119,473              4,281                --             123,754
  Change in assets and liabilities.................           (8,015)            14,923              (557)              6,351
                                                           ---------           --------           -------           ---------
     Net cash provided by (used in) operating
      activities...................................           18,048             18,222              (437)             35,833
                                                           ---------           --------           -------           ---------


Cash flows from investing activities:
  Additions to oil and gas properties..............         (137,430)           (10,971)           (8,951)           (157,352)
  Proceeds from sale of properties.................           11,830                 --                --              11,830
  Additions to other properties and other..........           (2,813)                --                --              (2,813)
                                                           ---------           --------           -------           ---------
       Net cash used in investing activities.......         (128,413)           (10,971)           (8,951)           (148,335)
                                                           ---------           --------           -------           ---------

Cash flows from financing activities:
  Proceeds from borrowings.........................          240,900                 --                --             240,900
  Payments of long-term debt.......................         (124,551)            (3,703)               --            (128,254)
  Contribution to (from) Nuevo.....................          (10,852)                --            10,852                  --
  Other............................................           (1,949)                --                --              (1,949)
                                                           ---------           --------           -------           ---------
     Net cash provided by (used in) financing
      activities...................................          103,548             (3,703)           10,852             110,697
                                                           ---------           --------           -------           ---------

Net increase (decrease) in cash & cash equivalents.           (6,817)             3,548             1,464              (1,805)
Cash and cash equivalents at beginning of year.....            7,417              1,791                --               9,208
                                                           ---------           --------           -------           ---------
Cash and cash equivalents at end of year...........        $     600           $  5,339           $ 1,464           $   7,403
                                                           =========           ========           =======           =========
</TABLE>

                                       58
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                      For the Year Ended December 31, 1997

                             (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                         Nuevo*              NCC*           Consolidated*
                                                                     ---------------   ----------------   -----------------
<S>                                                                  <C>               <C>                <C>
Cash flows from operating activities:
  Net (loss) income...............................................        $ (19,774)          $  6,074           $ (13,700)
  Non-cash adjustments............................................          155,749              3,612             159,361
  Change in assets and liabilities................................           12,846              6,955              19,801
                                                                          ---------           --------           ---------
     Net cash provided by operating activities....................          148,821             16,641             165,462
                                                                          ---------           --------           ---------

Cash flows from investing activities:
  Additions to oil and gas properties.............................         (182,261)           (12,847)           (195,108)
  Proceeds from sale of properties................................           27,377                 --              27,377
  Additions to other properties and other.........................           (1,747)                --              (1,747)
                                                                          ---------           --------           ---------
       Net cash used in investing activities......................         (156,631)           (12,847)           (169,478)
                                                                          ---------           --------           ---------

Cash flows from financing activities:
  Proceeds from borrowings........................................          234,000                 --             234,000
  Payments of long-term debt......................................         (213,800)            (3,703)           (217,503)
  Other...........................................................          (16,909)                --             (16,909)
                                                                          ---------           --------           ---------
     Net cash provided by (used in) financing activities..........            3,291             (3,703)               (412)
                                                                          ---------           --------           ---------
Net (decrease) increase in cash and cash equivalents..............           (4,519)                91              (4,428)
Cash and cash equivalents at beginning of year....................           11,936              1,700              13,636
                                                                          ---------           --------           ---------
Cash and cash equivalents at end of year..........................        $   7,417           $  1,791           $   9,208
                                                                          =========           ========           =========
</TABLE>


12.  INCOME TAXES

  Income tax (benefit) expense is summarized as follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                 ---------------------------------------------------------
                                                                     1999                  1998                  1997*
                                                                 -------------         -------------         -------------
<S>                                                              <C>                   <C>                   <C>
Current
 Federal................................................              $ 1,012              $   (105)              $   135
  State.................................................                  188                    --                   421
                                                                      -------              --------               -------
                                                                        1,200                  (105)                  556
                                                                      -------              --------               -------
Deferred
  Federal...............................................               (8,457)              (24,172)               (7,449)
  State.................................................                1,898                (8,348)               (1,800)
                                                                      -------              --------               -------
                                                                       (6,559)              (32,520)               (9,249)
                                                                      -------              --------               -------
   Total income tax benefit.............................              $(5,359)             $(32,625)              $(8,693)
                                                                      =======              ========               =======
</TABLE>

  A deferred tax benefit related to the exercise of employee stock options of
approximately $0.2 million and $5.3 million was allocated directly to additional
paid-in capital in 1999 and 1997, respectively.  A current tax benefit of $2.0
million was allocated to the extraordinary loss in 1997.

_________
*Restated

                                       59
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


  Total income tax benefit differs from the amount computed by applying the
Federal income tax rate to income (loss) before income taxes, minority interest
and extraordinary item.  The reasons for these differences are as follows:


<TABLE>
<CAPTION>
                                                                                          Year Ended December 31
                                                                          ------------------------------------------------------
                                                                              1999                 1998                1997*
                                                                          ------------         ------------         ------------

<S>                                                                       <C>                  <C>                  <C>
Statutory Federal income tax rate................................                35.0%               (35.0)%              (35.0)%
(Decrease) increase in tax rate resulting from:
  State income taxes, net of Federal benefit.....................                 5.2                 (4.3)                (4.0)
  Non-realization of tax benefits related to provision for
   impairment on assets held for sale............................                  --                   --                  3.6

     (Decrease) increase in valuation allowance..................               (60.8)                13.4                   --
     Nondeductible travel and entertainment and other............                 0.1                  0.2                 (3.4)
                                                                              -------              -------              -------
                                                                                (20.5)%              (25.7)%              (38.8)%
                                                                              =======              =======              =======
</TABLE>

_____________
* Restated

  The tax effects of temporary differences that result in significant portions
of the deferred income tax assets and liabilities and a description of the
financial statement items creating these differences are as follows (amounts in
thousands):

<TABLE>
<CAPTION>
                                                                                      As of December 31,
                                                                               ---------------------------------
                                                                                   1999                1998
                                                                               -------------       -------------
<S>                                                                            <C>                 <C>
Net operating loss carryforwards......................................            $ 41,814            $ 45,610
Alternative minimum tax credit carryforwards..........................               2,066               1,054
State income taxes....................................................                  --               1,520
Capital loss carryforwards............................................               2,426               2,365
                                                                                  --------            --------
  Total deferred income tax assets....................................              46,306              50,549
  Less: valuation allowance...........................................              (1,777)            (17,646)
                                                                                  --------            --------
  Net deferred income tax assets......................................              44,529              32,903
                                                                                  --------            --------
Property and equipment................................................             (19,881)             (5,369)
State income taxes....................................................                (643)                 --
                                                                                  --------            --------
  Total deferred income tax liabilities...............................             (20,524)             (5,369)
                                                                                  --------            --------
Net deferred income tax asset.........................................            $ 24,005            $ 27,534
                                                                                  ========            ========
</TABLE>

  At December 31, 1999, the Company had a net operating loss carryforward for
regular tax of approximately $119.5 million, which will expire in 2018.  The
alternative minimum tax credit carryforward of $2.1 million does not expire and
may be applied to reduce regular income tax to an amount not less than the
alternative minimum tax payable in any one year.  At December 31, 1998, the
Company determined that it was more likely than not that a portion of the
deferred tax assets would not be realized and the valuation allowance was
increased by $16.9 million to a total valuation allowance of $17.6 million. At
December 31, 1999, however, the Company determined that it was more likely than
not that most of the deferred tax assets would be realized, based on current
projections of taxable income due to higher commodity prices at year-end 1999,
and the valuation allowance was decreased by $15.9 million to a total valuation
allowance of $1.8 million.

                                       60
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


13.  INDUSTRY SEGMENT INFORMATION

  The Company's operations are concentrated primarily in two segments:
exploration and production of oil and natural gas, and gas plant and other
facilities.
<TABLE>
<CAPTION>
                                                                                          As of and For the Year Ended
                                                                                                  December 31,
                                                                             ------------------------------------------------------
                                                                                 1999                 1998                1997*
                                                                             ------------         ------------         ------------
<S>                                                                          <C>                  <C>                  <C>
                                                                                            (Amounts in thousands)
Sales to unaffiliated customers:
  Oil and gas -- East...............................................            $ 13,282            $  46,885             $ 61,456
  Oil and gas -- West...............................................             195,397              177,315              247,723
  Oil and gas -- Foreign............................................              30,627               15,810               22,794
  Gas plant, pipeline and other facilities..........................               2,972                5,365               20,598
                                                                                --------            ---------             --------
    Total sales.....................................................             242,278              245,375              352,571
      Gain on sale of assets, net...................................              85,294                5,768                1,372
      Interest and other income.....................................               4,663                1,560                3,335
                                                                                --------            ---------             --------
    Total revenues..................................................            $332,235            $ 252,703             $357,278
                                                                                ========            =========             ========

Operating profit (loss) before income taxes:
  Oil and gas -- East (2)...........................................            $ 81,171            $  22,608             $ 24,745
  Oil and gas -- West...............................................              17,716              (67,677)              40,369
  Oil and gas -- Foreign............................................               5,208              (12,849)               6,172
  Gas plant, pipeline and other facilities (1)......................              (1,242)               3,063              (22,478)
                                                                                --------            ---------             --------
                                                                                 102,853              (54,855)              48,808
  Unallocated corporate expenses....................................              37,047               32,958               32,170
  Interest expense..................................................              33,110               32,471               27,357
  Dividends on TECONS...............................................               6,613                6,613                6,613
                                                                                --------            ---------             --------
  Operating profit (loss) before income taxes.......................            $ 26,083            $(126,897)            $(17,332)
                                                                                ========            =========             ========

Identifiable assets:
  Oil and gas -- Domestic...........................................            $566,256            $ 748,695             $671,603
  Oil and gas -- Foreign............................................              82,074               40,700               40,139
  Gas plant and other facilities....................................              12,297               14,893               17,387
                                                                                --------            ---------             --------
                                                                                 660,627              804,288              729,129
  Corporate assets and investments..................................              99,403               13,397               75,157
                                                                                --------            ---------             --------
    Total...........................................................            $760,030            $ 817,685             $804,286
                                                                                ========            =========             ========

Capital expenditures:
  Oil and gas -- East...............................................            $  5,941            $  36,597             $ 32,857
  Oil and gas -- West...............................................             100,130               96,179              148,927
  Oil and gas -- Foreign............................................              24,570               30,498               14,111
  Gas plant and other facilities....................................              10,247                2,813                1,747
                                                                                --------            ---------             --------
                                                                                $140,888            $ 166,087             $197,642
                                                                                ========            =========             ========
Depreciation, depletion and amortization:
  Oil and gas -- East...............................................            $  7,805            $  10,391             $ 14,252
  Oil and gas -- West...............................................              62,219               68,164               81,011
  Oil and gas -- Foreign............................................               9,177                4,971                3,385
  Gas plant and other facilities....................................                 666                  812                2,830
                                                                                --------            ---------             --------
                                                                                $ 79,867            $  84,338             $101,478
                                                                                ========            =========             ========
</TABLE>
_________
*  Restated

(1)  Gas plant and other facilities operations for 1998 include a positive
     revision to a prior period charge of $3.7 million and for 1997 include a
     charge for $23.9 million to record an impairment on assets held for sale
     and a $2.3 million gain on sale.  See Note 4.
(2)  Includes gain on sale of the East Texas natural gas asset of $80.2 million
     for the year ended 1999.

                                       61
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


     In 1999, 1998 and 1997, the Company had one customer that accounted for
79%, 60%, and 62% of oil and gas revenues, respectively.  In 1999 and 1998, the
Company had another customer that accounted for 12% and 10% of oil and gas
revenues, respectively.

     In February 2000, the Company entered into a 15-year contract, effective
January 1, 2000, to sell all of its current and future California crude oil
production to Tosco Corporation.  The contract provides pricing based on a fixed
percentage of the NYMEX crude oil price for each type of crude oil that Nuevo
produces in California.  While the contract does not reduce the Company's
exposure to price volatility, it does effectively eliminate the basis
differential risk between the NYMEX price and the field price of the Company's
California oil production.

14. CONTINGENCIES AND OTHER MATTERS

   The Company has been named as a defendant in the lawsuit Gloria Garcia Lopez
and Husband, Hector S. Lopez, Individually, and as successors to Galo Land &
Cattle Company v. Mobil Producing Texas & New Mexico, et al. currently pending
in the 79th Judicial District Court of Brooks County, Texas (the "Lopez Case").
The plaintiffs, based on pleadings and deposition testimony, allege: i)
underpayment of royalties and claim damages, on a gross basis against all
working interest owners, of $56.5 million, including interest for the period
from 1985 to date; ii) that their production was improperly commingled with gas
produced from an adjoining lease, resulting in damages, including interest, of
$40.8 million, on a gross basis; (iii) failure to develop, claiming damages and
interest of $106.3 million (gross) for interest in the alleged failure to
develop; and iv) numerous other claims, including claims for drainage, breach of
the implied covenant to reasonably develop the lease, conversion, fraud,
emotional distress, lease termination and exemplary damages, that may result in
unspecified damages.  Nuevo's working interest in these properties is 20%.  The
Company, along with the other defendants in this case, denies these allegations
and is vigorously contesting these claims.  Management does not believe that the
outcome of this matter will have a material adverse impact on the Company's
operating results, financial condition or liquidity.

  The Company has been named as a defendant in certain other lawsuits incidental
to its business.  Management does not believe that the outcome of such
litigation will have a material adverse impact on the Company's operating
results or financial condition.  However, these actions and claims in the
aggregate seek substantial damages against the Company and are subject to the
inherent uncertainties in any litigation.  The Company is defending itself
vigorously in all such matters.

  In March 1999, the Company discovered that a non-officer employee had
fraudulently authorized and diverted for personal use Company funds totaling
$5.9 million, $4.3 million in 1998 and the remainder in 1999, that were intended
for international exploration. The Board of Directors engaged a Certified Fraud
Examiner to conduct an in-depth review of the fraudulent transactions.  The
investigation confirmed that only one employee was involved in the matter and
that all misappropriated funds were identified.  The Company has reviewed and,
where appropriate, strengthened its internal control procedures.  The Company is
attempting to recoup the loss, however, there is no certainty that any of the
funds will be recovered.

  In September 1997, there was a spill of crude oil into the Santa Barbara
Channel from a pipeline that connects the Company's Point Pedernales field with
shore-based processing facilities.  The volume of the spill was estimated to be
163 barrels of oil.  The costs of the clean- up and the cost to repair the
pipeline either have been or are expected to be covered by insurance held by the
Company, less the Company's deductibles of $120,000.  Repairs were completed by
the end of 1997, and production recommenced in December 1997.  Additionally, the
Company has exposure to certain costs that may not be recoverable from
insurance, including certain fines, penalties, and damages.  Such costs are not
quantifiable at this time, but are not expected to be material to the Company's
operating results, financial condition or liquidity.

  The Company's international investments involve risks typically associated
with investments in emerging markets such as an uncertain political, economic,
legal and tax environment and expropriation and nationalization of assets.  In
addition, if a dispute arises in its foreign operations, the Company may be
subject to the exclusive jurisdiction of foreign courts or may not be successful
in subjecting foreign persons to the jurisdiction of the United States.  The
Company attempts to conduct its business and financial affairs so as to protect
against political

                                       62
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


and economic risks applicable to operations in the various countries where it
operates, but there can be no assurance that the Company will be successful in
so protecting itself. A portion of the Company's investment in the Congo is
insured through political risk insurance provided by OPIC.

  The Company and its partners underwent a tax examination related to their
ownership interests in the Yombo field offshore Congo for the years 1994 through
1997.   In June 1999, the Company and its partners settled this tax assessment
for a total of $1.0 million, of which the Company's share was $400,000.

  In connection with their respective acquisitions of two subsidiaries (each a
"Congo subsidiary") owning interests in the Yombo field offshore Congo, the
Company and a wholly-owned subsidiary of CMS NOMECO Oil & Gas Co.  ("CMS")
agreed with the seller of the subsidiaries not to claim certain tax losses
("dual consolidated losses") incurred by such subsidiaries prior to the
acquisitions.  Pursuant to the agreement, the Company and CMS may be liable to
the seller for the recapture of dual consolidated losses utilized by the seller
in years prior to the acquisitions if certain triggering events occur, including
(i) a disposition by either the Company or CMS of its respective Congo
subsidiary, (ii) either Congo subsidiary's sale of its interest in the Yombo
field, (iii) the acquisition of the Company or CMS by another consolidated group
or (iv) the failure of the Company or CMS's Congo subsidiary to continue as a
member of its respective consolidated group.  A triggering event will not occur,
however, if a subsequent purchaser enters into certain agreements specified in
the consolidated return regulations intended to ensure that such dual
consolidated losses will not be claimed.  The Company and CMS have agreed among
themselves that the party responsible for the triggering event shall indemnify
the other for any liability to the seller as a result of such triggering event.
The Company's potential direct liability could be as much as $48.5 million if a
triggering event with respect to the Company occurs, and the Company believes
that CMS's liability (for which the Company would be jointly liable with an
indemnification right against CMS) could be as much as $64.1 million.  The
Company does not expect a triggering event to occur with respect to it or CMS
and does not believe the agreement will have a material adverse effect upon the
Company.

  During 1997, a new government was established in the Congo.  Although the
political situation in the Congo has not to date had a material adverse effect
on the Company's operations in the Congo, no assurances can be made that
continued political unrest in West Africa will not have a material adverse
effect on the Company and its operations in the Congo in the future.

15.  FINANCIAL INSTRUMENTS

  During 1999, the Company formalized its policies regarding the management of
oil price risk to ensure the Company's ability to optimally manage its portfolio
of investment opportunities. For 2000, the Company has entered into swap
contracts on 16,500 barrels of oil per day ("BOPD"), at an average West Texas
Intermediate ("WTI") price of $17.94 per barrel. The Company has also entered
into collars on an additional 16,500 BOPD, with a floor of $16.00 per barrel and
ceiling of $21.21 per barrel. This production is hedged based on a fixed NYMEX
price. As a result of the TOSCO contract, (see Note 13 to the Notes to
Consolidated Financial Statements), which fixes the price of the Company's
California production at approximately 72% of the NYMEX price effective January
1, 2000, these hedge transactions have the effect on a price basis of hedging
substantially all of the Company's current production for the year 2000. Also
for the year 2000, the Company has entered into basis swaps on 3,000 BOPD of its
production in the Congo, hedging the basis differential between No. 6 fuel oil
and WTI at an average differential of $1.88 per barrel. At December 31, 1999,
the market value of the hedge positions was a loss of approximately $35.7
million.

  For 2001, the Company has entered into swap arrangements on 26,000 BOPD for
the first quarter at an average WTI price of $19.52, for the second quarter on
25,000 BOPD at an average WTI price of $19.54, and for the third quarter on
20,000 BOPD at an average WTI price of $21.22. At December 31, 1999, the market
value of these swaps was a gain of $0.5 million. These agreements expose the
Company to counterparty credit risk to the extent that the counterparty is
unable to meet its settlement commitments to the Company.

  The Company entered into a swap arrangement with a major financial institution
that effectively converts the interest rate on $16.4 million notional amount of
the 9  1/2% Notes to a variable LIBOR-based rate through February 25, 2000.
Based on LIBOR rates in effect at December 1, 1999, this amounted to a net
reduction in the

                                       63
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



carrying cost of the 9 1/2% Notes from 9.5% to 7.09%, or 241 basis points. In
addition, the swap arrangement also effectively hedges the price at which these
Notes can be repurchased by the Company. At December 31, 1999, the Company
recorded a positive market adjustment of $131,000 related to the fair value of
the notes.

Determination of Fair Values of Financial Instruments

  Fair value for cash, short-term investments, receivables and payables
approximates carrying value.  The following table details the carrying values
and approximate fair values of the Company's other investments, derivative
financial instruments and long-term debt at December 31, 1999 and 1998.


<TABLE>
<CAPTION>
                                                                 December 31, 1999                  December 31, 1998
                                                          --------------------------------   --------------------------------
                                                             Carrying        Approximate        Carrying        Approximate
                                                              Value          Fair Value          Value          Fair Value
                                                          --------------   ---------------   --------------   ---------------
<S>                                                       <C>              <C>               <C>              <C>
Other investments......................................         $     78         $     78          $     80         $     80
Derivative Instruments:
     Option premium....................................               --               --               292              241
       Commodity price swaps...........................               --          (35,244)               --           (2,636)
Long-term debt (see Note 10)...........................          340,750          337,972           419,150          409,938
TECONS.................................................          115,000           62,675           115,000           71,875
</TABLE>

16.  CONTINGENT PAYMENT AND PRICE SHARING AGREEMENTS

  In connection with the acquisition of the properties located in California
from Unocal in 1996, the Company is obligated to make a contingent payment for
the years 1998 through 2004 if oil prices exceed thresholds set forth in the
agreement with Unocal. The contingent payment will equal 50% of the difference
between the actual average annual price received on a field-by-field basis
(capped by a maximum price) and a minimum price, less taxes, multiplied by the
actual number of barrels of oil sold during the respective year. The minimum
price of $17.75 per Bbl under the agreement (determined based on near month of
delivery of WTI crude oil on the NYMEX) is escalated at 3% per year and the
maximum price of $21.75 per Bbl on the NYMEX is escalated at 3% per year.
Minimum and maximum prices will be netted down to the field level using a fixed
differential equal to approximately the differential between actual sales prices
and NYMEX prices in effect in 1995 ($4.34 per Bbl weighted average for all the
properties acquired from Unocal). The Company accumulates credits to offset the
contingent payment when prices are $.50 per Bbl or more below the minimum
price. The Company accumulated $30.8 million in price credits as of December
31, 1999, which will be used to reduce future amounts owed under the contingent
payment.

  In connection with the acquisition of the Congo properties in 1995, the
Company entered into a price sharing agreement with the seller. Under the terms
of the agreement, if the average price received for the oil production during
the year is greater than the benchmark price established by the agreement, then
the Company is obligated to pay the seller 50% of the difference between the
benchmark price and the actual price received, for all the barrels associated
with this acquisition. The benchmark price for 1999 was $14.79 per Bbl, and the
benchmark price for 2000 is $15.19 per Bbl. The benchmark price increases each
year, based on the increase in the Consumer Price Index.  For 2000, the effect
of this agreement is that Nuevo only owns upside above $15.19 per Bbl on
approximately 44% of its Congo production.

  The Company acquired a 12% working interest in the Point Pedernales oil field
from Unocal in 1994 and the remainder of its interest from Torch in 1996.  The
oil price on these properties is capped at $9.00 per Bbl, with the excess over
the realized price, if any, shared among the Company and the original owners
from whom Torch acquired its interest.  For 2000, the effect of this agreement
is that Nuevo only owns upside above $9.00 per Bbl on approximately 28% of the
Point Pedernales production.

                                       64
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



17.   SUPPLEMENTAL INFORMATION - (UNAUDITED)

 Oil and Gas Producing Activities:

  Included herein is information with respect to oil and gas acquisition,
exploration, development and production activities, which is based on estimates
of year-end oil and gas reserve quantities and estimates of future development
costs and production schedules.  Reserve quantities and future production as of
December 31, 1999 are based primarily on reserve reports prepared by the
independent petroleum engineering firm of Ryder Scott Company.  Reserve
quantities and future production for previous years are based primarily upon
reserve reports prepared by Ryder Scott Company.  These estimates are inherently
imprecise and subject to substantial revision.

  Estimates of future net cash flows from proved reserves of gas, oil,
condensate and natural gas liquids ("NGL") were made in accordance with SFAS No.
69, "Disclosures about Oil and Gas Producing Activities".  The estimates are
based on realized prices at year-end 1999, of $18.97 per BBL (including hedge
effect) and $2.31 per thousand cubic feet of gas ("MCF"), and are adjusted for
the effects of hedging and contractual agreements with Unocal and Amoco in
connection with the California and Congo property acquisitions (see Note 16).
Estimated future cash inflows are reduced by estimated future development and
production costs based on year-end cost levels, assuming continuation of
existing economic conditions, and by estimated future income tax expense.  Tax
expense is calculated by applying the existing statutory tax rates, including
any known future changes, to the pre-tax net cash flows, less depreciation of
the tax basis of the properties and depletion allowances applicable to the gas,
oil, condensate and NGL production.  Because the disclosure requirements are
standardized, significant changes can occur in these estimates based upon oil
and gas prices currently in effect.  The results of these disclosures should not
be construed to represent the fair market value of the Company's oil and gas
properties.  A market value determination would include many additional factors
including: (i) anticipated future increases or decreases in oil and gas prices
and production and development costs; (ii) an allowance for return on
investment; (iii) the value of additional reserves, not considered proved at the
present, which may be recovered as a result of further exploration and
development activities; and (iv) other business risks.

                                       65
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



Costs incurred (amounts in thousands)-

  The following table sets forth the costs incurred in property acquisition and
development activities:

<TABLE>
<CAPTION>
                                                                                           Year Ended December 31,
                                                                             ----------------------------------------------------
                                                                                1999                1998                1997*
                                                                             -----------         -----------         ------------
<S>                                                                          <C>                 <C>                 <C>
Domestic
Property acquisition:
 Proved properties..................................................            $ 62,300            $    200            $ 10,206
 Unproved properties................................................                 520               1,320                  --
Exploration.........................................................               4,973              26,706              18,474
Development(1)......................................................              38,278             104,550             153,104
                                                                                --------            --------            --------
                                                                                $106,071            $132,776            $181,784
                                                                                ========            ========            ========

FOREIGN
Property acquisition:
 Proved properties..................................................         $        --            $  7,809         $        --
 Unproved properties................................................                 424               1,404                  --
Exploration.........................................................               3,742               9,204              10,887
Development.........................................................              20,404              12,081               3,224
                                                                                --------            --------            --------
                                                                                $ 24,570            $ 30,498            $ 14,111
                                                                                ========            ========            ========

Total
Property acquisition:
 Proved properties..................................................            $ 62,300            $  8,009            $ 10,206
 Unproved properties................................................                 944               2,724                  --
Exploration.........................................................               8,715              35,910              29,361
Development.........................................................              58,682             116,631             156,328
                                                                                --------            --------            --------
                                                                                $130,641            $163,274            $195,895
                                                                                ========            ========            ========

</TABLE>
(1)  Includes capitalized interest directly related to development activities of
     $0.3 million in 1999, $0.6 million in 1998 and $2.4 million in 1997.
__________
*  Restated

                                       66
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


Capitalized costs (amounts in thousands)-

The following table sets forth the capitalized costs relating to oil and gas
activities and the associated accumulated depreciation, depletion and
amortization:

<TABLE>
<CAPTION>
                                                                                             Year Ended December 31,
                                                                             -------------------------------------------------------
                                                                                 1999                  1998                1997*
                                                                             -------------         ------------         ------------
<S>                                                                          <C>                   <C>                  <C>
Domestic
Proved properties...................................................           $  898,032            $ 877,230            $ 903,096
Unproved properties.................................................               21,756               20,984               41,661
                                                                               ----------            ---------            ---------
 Total capitalized costs............................................              919,788              898,214              944,757
 Accumulated depreciation, depletion and amortization...............             (403,727)            (401,139)            (315,038)
                                                                               ----------            ---------            ---------
  Net capitalized costs.............................................           $  516,061            $ 497,075            $ 629,719
                                                                               ==========            =========            =========

FOREIGN
Proved properties...................................................           $   80,374            $  59,774            $  39,516
Unproved properties.................................................                2,618                1,360                   --
                                                                               ----------            ---------            ---------
 Total capitalized costs............................................               82,992               61,134               39,516
 Accumulated depreciation, depletion and amortization...............              (20,901)             (11,724)              (6,378)
                                                                               ----------            ---------            ---------
  Net capitalized costs.............................................           $   62,091            $  49,410            $  33,138
                                                                               ==========            =========            =========

TOTAL
Proved properties...................................................           $  978,406            $ 937,004            $ 942,612
Unproved properties.................................................               24,374               22,344               41,661
                                                                               ----------            ---------            ---------
 Total capitalized costs............................................            1,002,780              959,348              984,273
 Accumulated depreciation, depletion and amortization...............             (424,628)            (412,863)            (321,416)
                                                                               ----------            ---------            ---------
  Net capitalized costs.............................................           $  578,152            $ 546,485            $ 662,857
                                                                               ==========            =========            =========
</TABLE>
__________
*  Restated

                                       67
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


Results of operations for producing activities (amounts in thousands) --
<TABLE>
<CAPTION>
                                                                                            Year Ended December 31,
                                                                             ------------------------------------------------------
                                                                                 1999                 1998                1997*
                                                                             ------------         ------------         ------------
<S>                                                                          <C>                  <C>                  <C>
DOMESTIC
Revenues from oil and gas producing activities......................           $ 208,679            $ 224,200            $ 309,179
Production costs....................................................            (114,295)            (122,816)            (108,074)
Exploration costs...................................................             (10,643)              (5,137)              (9,813)
Depreciation, depletion and amortization............................             (71,475)             (78,555)             (95,263)
Provision for impairment of oil and gas properties..................                  --              (68,529)             (30,000)
Income tax (provision) benefit......................................              (2,515)              13,234              (26,449)
                                                                               ---------            ---------            ---------
Results of operations from producing activities (excluding
 corporate overhead and interest costs).............................           $   9,751            $ (37,603)           $  39,580
                                                                               =========            =========            =========
FOREIGN
Revenues from oil and gas producing activities......................           $  30,627            $  15,810            $  22,794
Production costs....................................................             (12,869)             (11,888)             (11,968)
Exploration costs...................................................              (3,374)             (11,425)              (1,269)
Depreciation, depletion and amortization............................              (9,177)              (4,971)              (3,385)
Provision for impairment of oil and gas properties..................                  --                 (375)                  --
Income tax (provision) benefit......................................              (1,067)               3,174               (2,469)
                                                                               ---------            ---------            ---------
Results of operations from producing activities (excluding
 corporate overhead and interest costs).............................           $   4,140           $  (9,675)           $   3,703
                                                                               =========            =========            =========
TOTAL
Revenues from oil and gas producing activities......................           $ 239,306            $ 240,010            $ 331,973
Production costs....................................................            (127,164)            (134,704)            (120,042)
Exploration costs...................................................             (14,017)             (16,562)             (11,082)
Depreciation, depletion and amortization............................             (80,652)             (83,526)             (98,648)
Provision for impairment of oil and gas properties..................                  --              (68,904)             (30,000)
Income tax (provision) benefit......................................              (3,582)              16,408              (28,918)
                                                                               ---------            ---------            ---------
Results of operations from producing activities (excluding
 corporate overhead and interest costs).............................           $  13,891            $ (47,278)           $  43,283
                                                                               =========            =========            =========
</TABLE>
__________
*  Restated

Per unit sales prices and costs:

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                           ---------------------------------------------------
                                                                              1999                1998                1997
                                                                           -----------         -----------         -----------
<S>                                                                        <C>                 <C>                 <C>
DOMESTIC
Average sales price:
  Oil (per barrel)................................................              $10.57              $ 9.10              $14.88
  Gas (per MCF)...................................................              $ 2.27              $ 2.00              $ 2.06
Average production cost per equivalent barrel.....................              $ 6.07              $ 5.33              $ 4.96
FOREIGN
Average sales price:
  Oil (per barrel)................................................              $16.69              $10.82              $14.66
Average production cost per equivalent barrel.....................              $ 7.01              $ 8.14              $ 7.70
TOTAL
Average sales price:
  Oil (per barrel)................................................              $11.21              $ 9.25              $14.86
  Gas (per MCF)...................................................              $ 2.27              $ 2.00              $ 2.06
Average production cost per equivalent barrel.....................              $ 6.15              $ 5.56              $ 5.14
</TABLE>

                                       68
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

  The Company's estimated total proved and proved developed reserves of oil and
gas are as follows:

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31,
                                              ----------------------------------------------------------------
                                                      1999                  1998                  1997
                                              --------------------   -------------------   -------------------
                                                Oil*        Gas        Oil*       Gas        Oil*       Gas
                                               (Mbbl)     (Mmcf)      (Mbbl)     (Mmcf)     (Mbbl)     (Mmcf)
                                              --------   ---------   --------   --------   --------   --------
<S>                                           <C>        <C>         <C>        <C>        <C>        <C>
DOMESTIC
Proved reserves at beginning of year.......   164,300     403,256    202,771    390,691    165,839    394,630
Revisions of previous estimates............    61,168      56,097    (41,399)    (8,953)    10,177     (5,105)
Extensions and discoveries.................    10,795      11,800     17,694     55,575     39,911     35,682
Production.................................   (15,892)    (17,620)   (17,345)   (32,521)   (15,854)   (35,625)
Sales of reserves in-place.................   (10,270)   (335,927)    (1,595)    (1,536)       (15)      (675)
Purchase of reserves in-place..............    29,089      27,519      4,174         --      2,713      1,784
                                              -------    --------    -------    -------    -------    -------
Proved reserves at end of year.............   239,190     145,125    164,300    403,256    202,771    390,691
                                              =======    ========    =======    =======    =======    =======
Proved developed reserves--
  Beginning of year........................   123,077     308,667    143,486    266,179    122,088    236,013
                                              =======    ========    =======    =======    =======    =======
  End of year..............................   174,846     112,204    123,077    308,667    143,486    266,179
                                              =======    ========    =======    =======    =======    =======
Foreign
Proved reserves at beginning of year.......    25,841          --     24,493         --     20,214         --
Revisions of previous estimates............     2,042          --       (420)        --     (1,313)        --
Extensions and discoveries.................        --          --         --         --      7,147         --
Production.................................    (1,835)         --     (1,461)        --     (1,555)        --
Sales of reserves in-place.................        --          --         --         --         --         --
Purchase of reserves in-place..............        --          --      3,229         --         --         --
                                              -------    --------    -------    -------    -------    -------
Proved reserves at end of year.............    26,048          --     25,841         --     24,493         --
                                              =======    ========    =======    =======    =======    =======
Proved developed reserves--
  Beginning of year........................    10,242          --      9,526         --     16,727         --
                                              =======    ========    =======    =======    =======    =======
  End of year..............................    13,749          --     10,242         --      9,526         --
                                              =======    ========    =======    =======    =======    =======
Total
Proved reserves at beginning of year.......   190,141     403,256    227,264    390,691    186,053    394,630
Revisions of previous estimates............    63,210      56,097    (41,819)    (8,953)     8,864     (5,105)
Extensions and discoveries.................    10,795      11,800     17,694     55,575     47,058     35,682
Production.................................   (17,727)    (17,620)   (18,806)   (32,521)   (17,409)   (35,625)
Sales of reserves in-place.................   (10,270)   (335,927)    (1,595)    (1,536)       (15)      (675)
Purchase of reserves in-place..............    29,089      27,519      7,403         --      2,713      1,784
                                              -------    --------    -------    -------    -------    -------
Proved reserves at end of year.............   265,238     145,125    190,141    403,256    227,264    390,691
                                              =======    ========    =======    =======    =======    =======
Proved developed reserves--
  Beginning of year........................   133,319     308,667    153,012    266,179    138,815    236,013
                                              =======    ========    =======    =======    =======    =======
  End of year..............................   188,595     112,204    133,319    308,667    153,012    266,179
                                              =======    ========    =======    =======    =======    =======
</TABLE>
__________
*  Includes estimated NGL reserves.

                                       69
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


Discounted future net cash flows (amounts in thousands) --

   The standardized measure of discounted future net cash flows and changes
therein are shown below:

<TABLE>
<CAPTION>
                                                                                            Year Ended December 31,
                                                                ------------------------------------------------------------------
                                                                     1999                     1998                     1997
                                                                ----------------         ----------------         ----------------
<S>                                                               <C>                      <C>                      <C>
Domestic
Future cash inflows...........................................    $ 4,823,952              $ 1,989,898              $ 3,566,450
Future production costs.......................................     (2,132,655)              (1,061,638)              (1,643,774)
Future development costs......................................       (357,708)                (289,686)                (329,997)
                                                                  -----------              -----------              -----------
Future net inflows before income tax..........................      2,333,589                  638,574                1,592,679
Future income taxes...........................................      (704,236)                       --                 (427,618)
                                                                  -----------              -----------              -----------
Future net cash flows.........................................      1,629,353                  638,574                1,165,061
10% discount factor...........................................       (739,181)                (360,611)                (454,023)
                                                                  -----------              -----------              -----------
Standardized measure of discounted future net cash flows......    $   890,172              $   277,963              $   711,038
                                                                  ===========              ===========              ===========
FOREIGN
Future cash inflows...........................................    $   469,327              $   260,627              $   360,959
Future production costs.......................................       (177,150)                (134,549)                (171,331)
Future development costs......................................        (46,750)                 (66,715)                 (59,985)
                                                                  -----------              -----------              -----------
Future net inflows before income tax..........................        245,427                   59,363                  129,643
Future income taxes...........................................        (66,971)                      --                  (39,243)
                                                                  -----------              -----------              -----------
Future net cash flows.........................................        178,456                   59,363                   90,400
10% discount factor...........................................        (61,455)                 (37,393)                 (36,653)
                                                                  -----------              -----------              -----------
Standardized measure of discounted future net cash flows......    $   117,001              $    21,970              $    53,747
                                                                  ===========              ===========              ===========
TOTAL
Future cash inflows...........................................    $ 5,293,279              $ 2,250,525              $ 3,927,409
Future production costs.......................................     (2,309,805)              (1,196,187)              (1,815,105)
Future development costs......................................       (404,458)                (356,401)                (389,982)
                                                                  -----------              -----------              -----------
Future net inflows before income tax..........................      2,579,016                  697,937                1,722,322
Future income taxes...........................................       (771,207)                      --                 (466,861)
                                                                  -----------              -----------              -----------
Future net cash flows.........................................      1,807,809                  697,937                1,255,461
10% discount factor...........................................       (800,636)                (398,004)                (490,676)
                                                                  -----------              -----------              -----------
Standardized measure of discounted future net cash flows......    $ 1,007,173              $   299,933              $   764,785
                                                                  ===========              ===========              ===========
</TABLE>

                                       70
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)




The following are the principal sources of change in the standardized measure of
discounted future net cash flows:

<TABLE>
<CAPTION>
                                                                                            Year Ended December 31,
                                                                 ------------------------------------------------------------------
                                                                     1999                     1998                     1997
                                                                 ----------------         ----------------         ----------------
<S>                                                               <C>                      <C>                      <C>
DOMESTIC
Standardized measure -- beginning of year.....................    $  277,963                $ 711,038               $  988,155
Sales, net of production costs................................       (94,384)                (101,383)                (201,198)
Purchases of reserves in-place................................       224,251                    2,278                   18,293
Net change in prices and production costs.....................       439,615                 (466,018)                (581,640)
Extensions, discoveries and improved recovery, net of future
 production and development costs.............................        59,873                   46,713                  180,146
Net changes in estimated future development costs.............        20,005                   79,410                   87,606
Revisions of quantity estimates...............................       276,965                  (86,459)                  33,358
Accretion of discount.........................................        27,796                   83,281                  125,138
Net change in income taxes....................................      (211,448)                 121,770                  141,452
Sales of reserves in-place....................................      (151,348)                    (356)                  (1,598)
Changes in production rates and other.........................        20,884                 (112,311)                 (78,674)
                                                                  ----------                ---------               ----------
Standardized measure -- end of year...........................    $  890,172                $ 277,963               $  711,038
                                                                  ==========                =========               ==========
FOREIGN
Standardized measure -- beginning of year.....................    $   21,970                $  53,747               $   74,794
Sales, net of production costs................................       (17,759)                  (3,923)                 (10,826)
Purchases of reserves in-place................................            --                    2,750                       --
Net change in prices and production costs.....................        59,641                  (56,690)                 (22,193)
Extensions, discoveries and improved recovery, net of future
 production and development costs.............................            --                       --                    5,486
Net changes in estimated future development costs.............        19,886                    8,990                   (6,212)
Revisions of quantity estimates...............................         8,479                     (750)                  (5,609)
Accretion of discount.........................................         2,197                    6,830                   10,720
Net change in income taxes....................................       (26,001)                  14,552                   17,857
Changes in production rates and other.........................        48,588                   (3,536)                 (10,270)
                                                                  ----------                ---------               ----------
Standardized measure -- end of year...........................    $  117,001                $  21,970               $   53,747
                                                                  ==========                =========               ==========
TOTAL
Standardized measure -- beginning of year.....................    $  299,933                $ 764,785               $1,062,949
Sales, net of production costs................................      (112,143)                (105,306)                (212,024)
Purchases of reserves in-place................................       224,251                    5,028                   18,293
Net change in prices and production costs.....................       499,256                 (522,708)                (603,833)
Extensions, discoveries and improved recovery, net of future
 production and development costs.............................        59,873                   46,713                  185,632
Net changes in estimated future development costs.............        39,891                   88,400                   81,394
Revisions of quantity estimates...............................       285,444                  (87,209)                  27,749
Accretion of discount.........................................        29,993                   90,111                  135,858
Net change in income taxes....................................      (237,449)                 136,322                  159,309
Sales of reserves in-place....................................      (151,348)                    (356)                  (1,598)
Changes in production rates and other.........................        69,472                 (115,847)                 (88,944)
                                                                  ----------                ---------               ----------
Standardized measure -- end of year...........................    $1,007,173                $ 299,933               $  764,785
                                                                  ==========                =========               ==========
</TABLE>

                                       71
<PAGE>

                             NUEVO ENERGY COMPANY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

SELECTED QUARTERLY FINANCIAL DATA (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED):


<TABLE>
<CAPTION>
                                                                     Quarter Ended (2)
                                                  --------------------------------------------------------
                                                  March 31,     June 30,    September 30,    December 31,
                                                     1999         1999           1999            1999
                                                  ----------   ----------   --------------   -------------
<S>                                               <C>          <C>          <C>              <C>
Revenues.......................................    $126,643     $ 52,860         $ 70,248        $ 82,484
Operating (loss) earnings......................    $(11,803)    $ (8,125)        $ 15,554        $ 21,943
Net income (loss) (4)..........................    $ 31,342     $(15,558)        $ (2,756)       $ 18,414
Earnings (loss) per Common share -- Basic......    $   1.58     $  (0.78)        $  (0.14)       $   1.00
Earnings (loss) per Common share -- Diluted....    $   1.58     $  (0.78)        $  (0.14)       $   0.99

                                                                      Quarter Ended (2)
                                                  -------------------------------------------------------
                                                  March 31,     June 30,    September 30,    December 31,
                                                     1998         1998           1998            1998
                                                  ----------   ----------   --------------   -------------
Revenues.......................................    $ 67,661     $ 61,512         $ 65,966        $ 57,564
Operating earnings (loss) (1)..................    $  4,011     $  3,317         $ (5,369)       $(66,858)
Net loss (1) (3)...............................    $ (6,582)    $ (7,622)        $(11,245)       $(68,823)
Loss per Common share -- Basic.................    $  (0.33)    $  (0.39)        $  (0.57)       $  (3.47)
Loss per Common share -- Diluted...............    $  (0.33)    $  (0.39)        $  (0.57)       $  (3.47)
</TABLE>
_________
(1)  Includes a fourth quarter charge of $68.9 million to record an impairment
     of oil and gas properties and a fourth quarter $3.7 million positive
     revision to a prior period impairment on assets held for sale.
(2)  Certain reclassifications of prior period amounts have been made to conform
     with the current presentation.
(3)  Includes a fourth quarter increase in the deferred tax asset valuation
     allowance of $16.9 million.
(4)  Includes a fourth quarter decrease in the deferred tax asset valuation
     allowance of $15.9 million.

                                       72
<PAGE>

                             NUEVO ENERGY COMPANY


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

None.

PART III

On March 29, 2000, the Company and Relational Investors, LLC agreed to terminate
that Letter Agreement of March 1, 1999, and release each other from future
obligations and duties set out therein, all of which is more particularly
described in Exhibit 99(i).

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

The information required by this item will be included in a definitive proxy
statement, pursuant to Regulation 14A, to be filed not later than 120 days after
December 31, 1999.  Such information is incorporated herein by reference.


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

The information required by this item will be included in a definitive proxy
statement, pursuant to Regulation 14A, to be filed not later than 120 days after
December 31, 1999.  Such information is incorporated herein by reference.


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

The information required by this item will be included in a definitive proxy
statement, pursuant to Regulation 14A, to be filed not later than 120 days after
December 31, 1999.  Such information is incorporated herein by reference.

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

The information required by this item will be included in a definitive proxy
statement, pursuant to Regulation 14A, to be filed not later than 120 days after
December 31, 1999.  Such information is incorporated herein by reference.

PART IV


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

(a)    1. and 2. Financial Statements:

See index to Consolidated Financial Statements and Supplemental Information in
Item 8, which information is incorporated herein by reference.

3. Exhibits

(3)  Articles of Incorporation and bylaws.

        3.1  Certificate of Incorporation of Nuevo Energy Company (Incorporated
             by reference from Exhibit 3.1 to Quarterly Report on Form 10-Q for
             the quarterly period ended June 30, 1999).

        3.2  Certificate of Amendment to the Certificate of Incorporation of
             Nuevo Energy Company (Incorporated by reference from Exhibit 3.2 to
             Quarterly Report on Form 10-Q for the quarterly period ended June
             30, 1999).

        3.3  Bylaws of Nuevo Energy Company (Incorporated by reference from
             Exhibit 3.3 to Quarterly Report on Form 10-Q for the quarterly
             period ended June 30, 1999) .

        3.4  Amendment to section 3.1 of the Bylaws of Nuevo Energy Company
             (Incorporated by reference from Exhibit 3.4 to Quarterly Report on
             Form 10-Q for the quarterly period ended June 30, 1999).

(4)  Instruments defining the rights of security holders, including indentures.

        4.1  Specimen Stock Certificate (Incorporated by reference to Exhibit
             4.1 to Registration Statement on Form S-4 (No. 33-33873) filed
             under the Securities Act of 1933).

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<PAGE>

                             NUEVO ENERGY COMPANY

       4.2  Indenture dated April 1, 1996 among Nuevo Energy Company as Issuer,
            various Subsidiaries as the Guarantors, and State Street Bank and
            Trust Company as the Trustee - 9  1/2% Senior Subordinated Notes due
            2006.  (Incorporated by reference from Form S-3 (No. 333-1504).

       4.3  Form of Amended and Restated Declaration of Trust dated December 23,
            1996, among the Company, as Sponsor, Wilmington Trust Company, as
            Institutional Trustee and Delaware Trustee, and Michael D. Watford,
            Robert L. Gerry, III and Robert M. King, as Regular Trustees.
            (Incorporated by reference from Exhibit 4.1 to Form 8-K filed on
            December 23, 1996).

       4.4  Form of Subordinated Indenture dated as of November 25, 1996,
            between the Company and Wilmington Trust Company, as Indenture
            Trustee.  (Incorporated by reference from Exhibit 4.2 to Form 8-K
            filed on December 23, 1996).

       4.5  Form of First Supplemental Indenture dated December 23, 1996,
            between the Company and Wilmington Trust Company, as Indenture
            Trustee.  (Incorporated by reference from Exhibit 4.3 to Form 8-K
            filed on December 23, 1996).

       4.6  Form of Preferred Securities Guarantee Agreement dated as of
            December 23, 1996, between the Company and Wilmington Trust Company,
            as Guarantee Trustee.  (Incorporated by reference from Exhibit 4.4
            to Form 8-K filed on December 23, 1996).

       4.7  Form of Certificate representing TECONS.  (Incorporated by reference
            from Exhibit 4.5 to Form 8-K filed on December 23, 1996).

       4.8  Shareholder Rights Plan, dated March 5, 1997, between Nuevo Energy
            Company and American Stock Transfer & Trust Company, as Rights Agent
            (incorporated by reference to Exhibit 1 to the Company's Form 8-A
            filed on April 1, 1997).

       4.9  Release and Termination of Subsidiary Guarantees with respect to the
            9  1/2% Senior Subordinated Notes due 2006.  (Incorporated by
            reference to Exhibit 4.11 of Form 10-K for the year ended December
            31, 1997.)

       4.10 Second Supplemental Indenture to the Indenture dated April 1, 1996,
            dated August 9, 1999 between Nuevo Energy Company and State Street
            Bank and Trust Company - 9  1/2% Senior Subordinated Notes due 2006
            (Incorporated by reference from Exhibit 4.10 to Registration
            Statement on Form S-4 (No. 333-90235) filed on November 3, 1999).

       4.11 Indenture, dated as of August 20, 1999 between Nuevo Energy Company
            and State Street Bank Trust Company, as Trustee (Incorporated by
            reference from Exhibit 4.11 to Registration Statement on Form S-4
            (No. 333-90235) filed on November 3, 1999).

       4.12 Registration Agreement dated August 20, 1999, between Nuevo
            Energy Company, Banc of America Securities LLC and Salomon Smith
            Barney Inc. (Incorporated by reference from Exhibit 4.12 to
            Registration Statement on Form S-4 (No. 333-90235) filed on November
            3, 1999).


(10)    Material Contracts.

       10.1 Second Restated Credit Agreement dated June 30, 1999 between Nuevo
            Energy Company (Borrower) and Bank of America N.A., formerly
            NationsBank, N.A. (Administrative Agent), Morgan Guaranty Trust
            Company of New York (Documentation Agent), Banc of America
            Securities LLC (Lead Arranger and Sole Book Manager) and certain
            lenders (Incorporated by reference from Exhibit 10.1 to Quarterly
            Report on Form 10-Q for the quarterly period ended June 30, 1999).

                                       74
<PAGE>

                             NUEVO ENERGY COMPANY


       10.2 1990 Stock Option Plan of the Company, as amended (Incorporated by
            reference from Exhibit 10.8 to Registration Statement on Form S-1
            dated July 13, 1992).

       10.3 1993 Stock Incentive Plan, as amended (Incorporated by reference
            from Exhibit 4.2 to Registration Statement on Form S-8
            (No. 333-21063) filed on February 4, 1997.

       10.4 1999 Stock Incentive Plan (Incorporated by reference from Exhibit
            99.1) to Registration Statement on Form S-8 (No, 333-87899) filed on
            September 28, 1999).

       10.5 Nuevo Energy Company Deferred Compensation Plan (Incorporated by
            reference from Exhibit 99 to Registration Statement on Form S-8
            (No. 333-51217) filed on April 28, 1998).

       10.6 Stock Purchase Agreement, dated as of June 30, 1994, among Amoco
            Production Company ("APC"), Walter International Inc. ("Walter"),
            Walter Congo Holdings, Inc. ("Walter Holdings"), Walter
            International Congo, Inc. (before the merger "Walter Congo" and
            after the merger "Old Walter Congo"), Nuevo, Nuevo Holding and The
            Nuevo Congo Company (before the merger, "Nuevo Congo" and after the
            merger, "Old Nuevo Congo"). (Incorporated by reference from Exhibit
            2.1 to Form 8-K dated March 10, 1995).

       10.7 Amendment to Stock Purchase Agreement dated as of September 19,
            1994, among APC, Walter Congo, Nuevo Congo, Walter Holdings, Nuevo
            Holding, Walter and Nuevo.  (Incorporated by reference from Exhibit
            2.2 to Form 8-K dated March 10, 1995).

       10.8 Second Amendment to Stock Purchase Agreement dated as of October
            15, 1994, among APC, Walter Congo, Nuevo Congo, Walter Holdings,
            Nuevo Holding, Walter and Nuevo.  (Incorporated by reference from
            Exhibit 2.3 to Form 8-K dated March 10, 1995).

       10.9 Third Amendment to Stock Purchase Agreement dated as of December
            2, 1994, among APC, Walter Congo, Nuevo Congo, Walter Holdings,
            Nuevo Holding, Walter and Nuevo.  (Incorporated by reference from
            Exhibit 2.4 to Form 8-K dated March 10, 1995.

      10.10 Fourth Amendment to Stock Purchase Agreement dated as of
            February 23, 1995, among APC, Walter Congo, Nuevo Congo, Walter
            Holdings, Nuevo Holding, Walter and Nuevo.  (Incorporated by
            reference from Exhibit 2.5 to Form 8-K dated March 10, 1995).

      10.11 Tax Agreement dated as of February 23, 1995, executed by APC,
            Amoco Congo Exploration Company ("ACEC"), Amoco Congo Production
            Company ("ACPC"), Walter, Walter Holdings, Walter Congo, Nuevo,
            Nuevo Holding and Nuevo Congo.  (Incorporated by reference from
            Exhibit 2.6 to Form 8-K dated March 10, 1995).

      10.12 Agreement and Plan of Merger executed by Nuevo Congo, Nuevo
            Holding and APC dated February 24, 1995. (Incorporated by reference
            from Exhibit 2.7 to Form 8-K dated March 10, 1995).

      10.13 Finance Agreement dated as of December 28, 1994, among Nuevo
            Holding, Nuevo Congo and The Overseas Private Investment Corporation
            ("OPIC").  (Incorporated by reference from Exhibit 2.8 to Form 8-K
            dated March 10, 1995).

      10.14 Subordination Agreement dated December 28, 1994, among Nuevo
            Congo, Nuevo Holding, Walter Congo, Walter Holdings and APC.
            (Incorporated by reference from Exhibit 2.9 to Form 8-K dated March
            10, 1995).

      10.15 Guaranty covering the obligations of Nuevo Congo and Walter
            Congo under the Stock Purchase Agreement dated February 24, 1995,
            executed by Walter and Nuevo.  (Incorporated by reference from
            Exhibit 2.10 to Form 8-K dated March 10, 1995).

                                       75
<PAGE>

                             NUEVO ENERGY COMPANY


      10.16 Inter-Purchaser Agreement dated as of December 28, 1994, among
            Walter, Old Walter Congo, Walter Holdings, Nuevo, Old Nuevo Congo
            and Nuevo Holding.  (Incorporated by reference from Exhibit 2.11 to
            Form 8-K dated March 10, 1995).

      10.17 Latent ORRI Contract dated February 25, 1995, among  Walter,
            Walter Holdings, Walter Congo, Nuevo, Nuevo Holding and Nuevo Congo.
            (Incorporated by reference from Exhibit 2.12 to Form 8-K dated March
            10, 1995).

      10.18 Latent Working Interest Contract dated February 25, 1995, among
            Walter, Walter Holdings, Walter Congo, Nuevo, Nuevo Holding and
            Nuevo Congo.  (Incorporated by reference form Exhibit 2.13 to Form
            8-K dated March 10, 1995).

      10.19 Asset Purchase Agreement dated as of February 16, 1996 between
            Nuevo Energy Company, the Purchaser, and Union Oil Company of
            California as Seller.  (Incorporated by reference from Exhibit 2.1
            to Form S-3 (No. 333-1504).

      10.20 Asset Purchase Agreement dated as of April 4, 1997, by and among
            Torch California Company and Express Acquisition Company, as
            Sellers, and Nuevo Energy Company, as Purchaser.  (Incorporated by
            reference from Exhibit 2.2 to Form S-3  (No. 333-1504)).

      10.21 Employment Agreement with Douglas L. Foshee. (Incorporated by
            reference to Exhibit 10.23 to Form 10-K for the year ended December
            31, 1997.)

      10.22 Employment Agreement with Robert M. King. (Incorporated by Reference
            from Exhibit 10.24 to Form 10-K for the year ended December 31,
            1998).

      10.23 Employment Agreement with Dennis Hammond. (Incorporated by reference
            to Exhibit 10.26 to Form 10-K for the year ended December 31, 1997.)

      10.24 Employment Agreement with Michael P. Darden. (Incorporated by
            reference from Exhibit 10.1 to Form 10-Q filed November 13, 1998).

      10.25 Purchase and sale agreement dated October 16, 1998 between Nuevo
            Energy Company (Seller) and Samson Lone Star Limited Partnership
            (Buyer). (Incorporated by reference from Exhibit 10.28 to Form 10-K
            for the year ended December 31, 1998).

      10.26 Master Services Agreement among the Company and Torch Energy
            Advisors Incorporated, Torch Operating Company, Torch Energy
            Marketing, Inc., and Novistar, Inc. dated January 1, 1999.
            (Incorporated by reference from Exhibit 10.29 to Form 10-K for the
            year ended December 31, 1998).

      10.27 Employment Agreement with Bruce Murchison dated June 1, 1999.
            (Incorporated by reference from Exhibit 10.27 to Form 10-Q for the
            quarter ended September 30, 1999).

      10.28 Employment Agreement with John P. McGinnis dated July 15, 1999.
            (Incorporated by reference from Exhibit 10.28 to Form 10-Q for the
            quarter ended September 30, 1999).

      10.29 Crude Oil Purchase Agreement dated February 4, 2000 between Nuevo
            Energy Company and Tosco Corporation. (Incorporated by reference
            from Exhibit 10.1 to Form 8-K dated March 23, 2000).


(21) Subsidiaries of the Registrant

(23) Consents of experts and counsel:

23.1    Consent of KPMG LLP

                                       76
<PAGE>

                             NUEVO ENERGY COMPANY


(b)    Reports on Form 8-K:

1.   A Current Report on Form 8-K, dated December 16, 1999, reporting Item 5.
     Other Events and Item 7. Financial Statements and Exhibits was filed on
     December 16, 1999.

2.   A Current Report on Form 8-K, dated December 20, 1999, reporting Item 5.
     Other Events and Item 7.  Financial Statements and Exhibits was filed on
     December 21, 1999.

(27) Financial Data Schedule

(99) Additional Exhibits

     (i) Termination of March 1, 1999 Letter Agreement, dated March 29, 2000,
         between the Company and Relational Investors, LLC.

                                       77
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                              NUEVO ENERGY COMPANY
                              --------------------
                                  (Registrant)

Date:           March 29, 2000        By: /s/Douglas L. Foshee
            ------------------           ---------------------
                                         Douglas L. Foshee
                                         Chairman of the Board of Directors,
                                         President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
is signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.


By: /s/ Douglas L. Foshee                       Date:   March 29, 2000
   -----------------------                           ---------------------
   Douglas L. Foshee
   Chairman of the Board of Directors,
   President and Chief Executive Officer
   (Principal Executive Officer)


By: /s/ Robert M. King                          Date:   March 29, 2000
   -----------------------                           ----------------------
   Robert M. King
   Senior Vice President and
   Chief Financial Officer
   (Principal Financial Officer)


By: /s/ Sandra D. Kraemer                       Date:   March 29, 2000
   ------------------------                          -----------------------
   Sandra D. Kraemer
   Controller (Principal Accounting Officer)


By: /s/ Robert L. Gerry III                     Date:   March 29, 2000
   ------------------------                          -----------------------
   Robert L. Gerry III
   Director



By:/s/ Gary R. Petersen                         Date:   March 29, 2000
   ------------------------                          -----------------------
   Gary R. Petersen
   Director


By: /s/ Thomas D. Barrow                        Date:   March 29, 2000
   ------------------------                          -----------------------
   Thomas D. Barrow
   Director


By:/s/ Isaac Arnold, Jr.                        Date:   March 29, 2000
   ------------------------                          -----------------------
   Isaac Arnold, Jr.
   Director


By: /s/ David Ross III                          Date:   March 29, 2000
   ------------------------                          -----------------------
   David Ross III
   Director


By: /s/ Robert W. Shower                        Date:   March 29, 2000
   ------------------------                          -----------------------
   Robert W. Shower
   Director


By: /s/ Charles M. Elson                        Date:   March 29, 2000
   ------------------------                          -----------------------
   Charles M. Elson
   Director


By: /s/ David H. Batchelder                     Date:   March 29, 2000
   ------------------------                          -----------------------
   David H. Batchelder
   Director