<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-Q/A

                                Amendment No. 2
(Mark One)

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

                  For the quarterly period ended June 30, 2002

                                       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 No. 0-22483

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

                            SEVEN SEAS PETROLEUM INC.
             (Exact name of registrant as specified in its charter)

          CAYMAN ISLANDS                                73-1468669
 (State or other jurisdiction of                (I.R.S. Employer incorporation
       Identification No.)                            or organization)

SUITE 1700, 5555 SAN FELIPE HOUSTON, TEXAS                 77056
 (Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (713) 622-8218

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

         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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         As of August 13, 2002, there were 37,939,624 outstanding shares of the
registrant's ordinary shares (also called "common shares"), par value $0.001 per
share.



<PAGE>

                                EXPLANATORY NOTE

This amendment on Form 10-Q/A is being filed to give effect to the restatement
discussed in Footnote 14 to the unaudited consolidated financial statements.


                            SEVEN SEAS PETROLEUM INC.

                                      INDEX

PART I. FINANCIAL INFORMATION
<Table>
<Caption>
                                                                                          PAGE
                                                                                          ----
    Item 1. Financial Statements
   <S>     <C>                                                                           <C>
            Consolidated Balance Sheets as of June 30, 2002 (Unaudited)
            and December 31, 2001 (as restated) .......................................      3
            Consolidated Statements of Operations for the three months
            and six months ended June 30, 2002 (as restated) and 2001 (Unaudited) .....      4
            Consolidated Statements of Cash Flows for the six months ended June 30,
            2002 (as restated) and 2001 (Unaudited) ...................................      5
            Notes to Consolidated Financial Statements (Unaudited) ....................      6
    Item 2. Management's Discussion and Analysis of Financial Condition and
            Results of Operations .....................................................     13
    Item 3. Quantitative and Qualitative Disclosures about Market Risk ................     18
PART II. OTHER INFORMATION
    Item 6. Exhibits and Reports on Form 8-K ..........................................     19

</Table>



                                       2
<PAGE>


                                     PART I.
                              FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (Unaudited; In thousands, except share data)
<Table>
<Caption>
                                                                                     JUNE 30,            DECEMBER 31,
                                                                                       2002                 2001
                                                                                  -------------        -------------
                                                                                                      (as restated --
                                                                                                      see Footnote 14)
<S>                                                                               <C>                  <C>
                                    ASSETS
CURRENT ASSETS
    Cash and cash equivalents                                                     $      12,318        $      18,638
    Restricted cash and cash equivalents                                                  3,737                6,041
    Short-term investments                                                                   --                  121
    Restricted short-term investments                                                     1,145               10,563
    Accounts receivable, net of $278 and $749 allowance, respectively                     2,735                5,603
    Inventory                                                                               889                1,052
    Prepaids and other                                                                    1,360                2,064
                                                                                  -------------        -------------
Total Current Assets                                                                     22,184               44,082
Note receivable from related party                                                          200                  200
Long term investments                                                                       270                  283
Prepaid taxes                                                                             3,100                2,482
Land                                                                                        945                  945
Evaluated oil and gas interests, full-cost method, net of
       accumulated depletion of $136,763 at June 30, 2002
       and $5,014 at December 31, 2001                                                  114,585              183,021
Unevaluated oil and gas interests, full-cost method                                      34,922               70,616
Fixed assets, net of accumulated depreciation of $1,514 at
    June 30, 2002 and $1,336 at December 31, 2001                                           612                  754
Other assets, net of accumulated amortization of $2,992 at
    June 30, 2002 and $2,442 at December 31, 2001                                         2,927                3,469
Deferred tax asset                                                                          176                1,042
                                                                                  -------------        -------------
TOTAL ASSETS                                                                      $     179,921        $     306,894
                                                                                  =============        =============
              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                              $       9,942        $      11,211
    Interest payable                                                                      1,719                1,719
    Other accrued liabilities                                                             3,580                3,264
                                                                                  -------------        -------------
Total Current Liabilities                                                                15,241               16,194
Long-term debt                                                                          153,432              153,102
Long term payables                                                                        5,674                2,355
Deferred tax liability                                                                    5,640               27,040
COMMITMENTS AND CONTINGENCIES (NOTE 10)
STOCKHOLDERS' EQUITY/DEFICIT
Share capital-
    Authorized 200,000,000 shares par value $0.001 per share, of which
    150,000,000 shares are designated as ordinary shares and 50,000,000 are
    designated as Series A Junior Preferred shares; and 37,920,555 and
    37,858,530 issued and outstanding common shares at June 30, 2002 and
    December 31, 2001,
    Respectively                                                                        225,911              225,866
 Warrants outstanding                                                                     2,189                2,192
 Other comprehensive income (loss)                                                           --                  (45)
 Accumulated deficit                                                                   (228,166)            (119,810)
 Treasury stock, 29 shares held at June 30, 2002 and December 31, 2001                       --                   --
                                                                                  -------------        -------------
 Total Stockholders' Equity/Deficit                                                         (66)             108,203
                                                                                  -------------        -------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $     179,921        $     306,894
                                                                                  =============        =============

</Table>

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

                                       3
<PAGE>

                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           (Unaudited; In thousands, except share and per share data)

<Table>
<Caption>
                                                     THREE MONTHS ENDED JUNE 30,           SIX MONTHS ENDED JUNE 30,
                                                  --------------------------------       -------------------------------
                                                      2002                2001               2002               2001
                                                   ------------       ------------       ------------       ------------
                                                 (as restated --                        (as restated --
                                                 see Footnote 14)                       see Footnote 14)
<S>                                                 <C>              <C>                <C>                <C>
REVENUES
  Crude oil sales ...........................      $      5,851       $      1,217       $     13,460       $      4,611
  Interest income ...........................               135                158                309                400
                                                   ------------       ------------       ------------       ------------
                                                          5,986              1,375             13,769              5,011
EXPENSES
  Oil and gas operating expenses ............             1,048              1,074              2,343              2,106
  Depletion, depreciation and amortization ..             1,725                509              4,249              1,423
  Interest expense ..........................             2,818                201              5,564                385
  General and administrative ................             1,252              1,608              2,268              3,111
  Other expense .............................                34                 66                  7                135
  Writedown of proved oil and gas properties                 --                 --                 --                 --
                                                        128,228                 --            128,228                 --
                                                   ------------       ------------       ------------       ------------
                                                        135,105              3,458            142,659              7,160

NET LOSS BEFORE INCOME TAXES ................          (129,119)            (2,083)          (128,890)            (2,149)

INCOME TAX BENEFIT ..........................            20,534                 --             20,534                 --
                                                   ------------       ------------       ------------       ------------
NET LOSS ....................................      $   (108,356)      $     (2,083)      $   (108,356)      $     (2,149)
                                                   ============       ============       ============       ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE               (2.86)             (0.06)             (2.86)             (0.06)
                                                   ============       ============       ============       ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ..        37,905,990         37,856,073         37,882,337         37,846,409

</Table>

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




                                       4
<PAGE>



                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited; In thousands)

<Table>
<Caption>
                                                                           SIX MONTHS ENDED JUNE 30,
                                                                         -----------------------------
                                                                             2002             2001
                                                                         -----------       -----------
                                                                      (as restated --
                                                                      see Footnote 14)
<S>                                                                      <C>               <C>
OPERATING ACTIVITIES
     Net loss ....................................................        $(108,356)        $  (2,149)
     Add (subtract) items not requiring (providing) cash:
     Interest expense, non-cash ..................................            3,242                --
     Depletion, depreciation and amortization ....................            4,249             1,423
     Deferred income taxes .......................................          (20,534)               --
     Net realization of losses on hedging instruments ............            1,161                --
     Amortization of investments .................................               --              (141)
     Writedown of oil and gas properties .........................          128,228                --
     Changes in working capital excluding changes to cash and cash
     equivalents:
          Accounts receivable ....................................            2,868             5,376
          Interest receivable ....................................               --                55
          Inventory ..............................................              163              (195)
          Prepaids and other, net ................................             (411)               50
          Accounts payable .......................................           (2,684)             (932)
          Other accrued liabilities and other ....................              316               208
                                                                          ---------         ---------
          Cash flow Provided by Operating Activities .............            8,242             3,695
                                                                          ---------         ---------
INVESTING ACTIVITIES
          Exploration and development of oil and gas properties ..          (26,361)          (18,810)
          Proceeds from sale of investments ......................            9,539             8,043
          Other asset additions ..................................              (44)             (406)
                                                                          ---------         ---------
          Cash Flow Used in Investing Activities .................          (16,866)          (11,173)
                                                                          ---------         ---------
FINANCING ACTIVITIES
          Proceeds from share capital issued .....................               --                59
          Proceeds from issuance of long-term debt ...............               --             3,000
                                                                          ---------         ---------
          Cash Flow Provided by Financing Activities .............               --             3,059
                                                                                            ---------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS ......................           (8,624)           (4,419)
Cash and cash equivalents, beginning of period ...................           24,679            12,128
                                                                          ---------         ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .........................        $  16,055         $   7,709
                                                                          =========         =========
</Table>

         Supplemental disclosures of cash flow information:

         The Company incurred interest costs of $10.3 million and $7.0 million
for the six-month periods ended June 30, 2002 and 2001, respectively, and $4.7
million and $6.6 million of interest costs was capitalized during the respective
periods.

         Cash paid for interest for the six-month periods ended June 30, 2002
and 2001 was $6.9 million and $7.0 million, respectively.

         The Company paid $45,500 and $0 in income taxes during the six-month
periods ended June 30, 2002 and 2001, respectively.

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


                                       5
<PAGE>


                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. BASIS OF PRESENTATION:

         The accompanying unaudited consolidated financial statements of Seven
Seas Petroleum Inc. and Subsidiaries (collectively the "Company" or "Seven
Seas") have been prepared in accordance with instructions to Form 10-Q as
prescribed by the United States Securities and Exchange Commission (the "SEC").
In the opinion of management, all adjustments, consisting of normal recurring
accruals, necessary to present fairly the information in the accompanying
unaudited consolidated financial statements have been included. Interim period
results are not necessarily indicative of the results of operations or cash
flows for a full year period. The unaudited consolidated financial statements
included herein should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2001.

2. GENERAL:

         Seven Seas is an independent oil and gas company engaged in the
exploration and development of oil and gas properties located in Colombia, South
America. The Company's principal asset is a 57.7% interest (before participation
by Ecopetrol, the Colombian national oil company) in the Dindal and Rio Seco
association contracts.

         The Company is the operator of the Guaduas Oil Field, which is located
in an area defined by the Rio Seco and Dindal association contracts covering a
total of approximately 108,000 contiguous acres in central Colombia. The Guaduas
Oil Field is located in the capital state of Cundinamarca, approximately 60
miles northwest of Bogota. The Company's 57.7% working interest is distributed
among the following three wholly owned subsidiaries: 1) Seven Seas Petroleum
Colombia ("SSPC"), a Cayman Islands corporation with a 40.8% working interest,
2) Petrolinson S.A. ("Petrolinson"), a Panamanian corporation with a 6% working
interest, and 3) GHK Company Colombia ("GHK Colombia"), an Oklahoma corporation
with a 10.9% working interest. GHK Colombia is the operator for the Guaduas Oil
Field.

         As the operator of the Guaduas Oil Field, the Company exercises direct
supervision over all field operations, including drilling and production. The
other interest owners are Cimarrona LLC (9.4%) and Sociedad International
Petrolera S.A. ("Sipetrol"), the international exploration and production
subsidiary of the Chilean national oil company (32.9%). Collectively the Company
and the other interest owners are referred to as the "Associates".

GUADUAS OIL FIELD DEVELOPMENT

         In May 2000, Ecopetrol elected not to participate in the development of
the Guaduas Oil Field. The Associates elected to proceed on a sole-risk basis.
Sole-risk means that the Associates pay 100% of development costs and retain all
revenues from production after the 20% Colombian royalty deduction that is
administered by Ecopetrol on the government's behalf. Ecopetrol has the right to
start participating in the development at any time subject to the Associates'
right to recover 200% of the development costs spent since Ecopetrol's decision
not to participate plus certain exploration costs.

         As of June 30, 2002, the Company has spent $242.2 million to acquire
and $113.1 million to delineate the reserve potential of the Guaduas Oil Field.
The Company has participated in the drilling of fourteen exploratory and seven
development wells within the Dindal and Rio Seco association contract areas.
Fourteen wells have been productive and one well has been converted into a gas
injection well. All but one of the remaining six wells are temporarily
abandoned; one of these six wells has been plugged and abandoned. As of June 30,
2002, the Guaduas Oil Field had produced a cumulative volume of approximately
4.8 million (2.2 million net to Seven Seas) barrels of oil.

         In 2001 and 2002, the Company has drilled seven development wells and
constructed a 40-mile pipeline that connects the Guaduas Oil Field to
international oil markets via Colombia's existing pipeline infrastructure. The
Guaduas - La Dorada pipeline has an initial throughput capacity of approximately
25,000 barrels of oil per day ("BOPD"), expandable to approximately 40,000 BOPD
with additional investment. Seven Seas also constructed production facilities
for production of approximately 25,000 BOPD.


                                       6
<PAGE>


SUBTHRUST DINDAL PROSPECT - DEEP DINDAL ASSOCIATION CONTRACT

         The Subthrust Dindal Prospect is located below the producing zones of
the Guaduas Oil Field. In December 2001, the Company commenced drilling of the
Escuela 2 exploratory well to test this prospect. The Escuela 2 well was
originally programmed to reach a total measured depth of approximately 18,000
feet. Based on updated geological information, the targeted depth was later
extended to approximately 19,500 feet subject to drilling results and costs.

         As of August 12, 2002, the Escuela 2 exploration well has been drilled
to a total measured depth of 19,109 feet with estimated cumulative costs of
$19.1 million. As of August 9, 2002, the $15 million escrowed to drill and
complete the well has been spent.

         The Company believes that the geological information available at this
time indicates that the Escuela 2 is currently drilling in the lower Cretaceous
(Utica-Caballos) formation with potential reservoir rocks. Seven Seas also
believes it is likely that the Cambao fault has not been encountered. A review
of drilling samples and paleontological work is being carried out on a continual
basis to aid in the geological interpretation. When the well reaches its total
depth, the Company plans to run electric logs for further evaluation.

         As a result of a January 2001 farm-out agreement with its partners in
the Guaduas Oil Field, Seven Seas has a 100% working interest in the Deep Dindal
association contract, subject to an obligation to assign a portion of this
interest to its partners after the first well has been drilled. The Company will
pay all of the cost of drilling and testing the Subthrust Dindal Prospect.
Should the Escuela 2 be completed as a commercial well, the Company will be
obligated to assign either a collective 25.85% working interest to Cimarrona LLC
and Sipetrol, its partners in the Guaduas Oil Field, or a 9.4% working interest
to Cimarrona LLC and a 4.86% overriding royalty interest to Sipetrol.

         If the Escuela 2 is not completed as a commercial oil discovery, but
the results do provide justification for a second Subthrust Dindal Prospect
test, the Company will renegotiate the ownership participation in a second test
well. The Deep Dindal association contract requires that we drill an exploration
well during each of the two eighteen month exploration stages. The drilling of
the Escuela 2 satisfies the requirements of the first exploration stage, which
ends October 24, 2002.

3. CAPITAL AVAILABILITY AND LIQUIDITY:

         The late May 2002 commencement of gas injection activities allowed a
resumption of production from several significant wells that had been previously
shut-in or curtailed due to high gas-to-oil ratios. However, when the wells were
opened for production or were no longer curtailed, oil production rates did not
increase as anticipated. Production from the Guaduas Oil Field has averaged
approximately 7,500 BOPD gross (3,400 net to Seven Seas) during the second
quarter of 2002. This is approximately 2,600 BOPD (1,200 net to Seven Seas) less
than the first quarter average daily production of approximately 10,100 BOPD
(4,700 net to Seven Seas).

         Beginning in the second quarter and continuing forward, Guaduas Oil
Field production has been declining. The resulting reduction in cash flows and
an estimated $6 million in additional costs on the Escuela 2 over the budgeted
dry hole costs through August 12, 2002 have materially weakened the Company's
cash flow and working capital position. There is now a risk that the November
15, 2002 $6.9 million interest payment on the $110 million Senior Notes will not
be made.

         In light of the material reduction to the Company's June 30, 2002
proved reserves (see Footnote 4), the Company has begun discussions with its
secured debt holders ($22.5 million CHK Notes and $22.5 million Series A Notes
-- see Footnote 9). These discussions involve the Company's current financial
position and various go-forward scenarios that could include a sale of assets.

         The Company does not have a bank line of credit and its only source of
working capital is from operating cash flows. Therefore, the Company remains
dependent on Guaduas Oil Field production. If production is interrupted for an
extended period of time, or if prices decline for an extended period of time, or
if the Escuela 2 costs significantly exceed the current $19.1 million in
expenditures, cash reserves may decline to the point where the payment of the
semiannual interest on the $110 million Senior Notes would become uncertain. In
May 2002, the Company said that it "believes that at present oil prices,
revenues from current levels of production will continue to exceed operating
expenses, general and administrative costs, and debt interest payments." Due to
recent declines in production, the Company now believes that revenues from
current production are insufficient to cover the aforementioned costs.


                                       7
<PAGE>

4. OIL AND GAS PROPERTY:

         The Company follows the full-cost method of accounting for oil and
natural gas properties. If the net capitalized costs of oil and gas properties
in a cost center exceed an amount equal to the sum of the present value of
estimated future net revenues from proved oil and gas reserves in the cost
center and the lower of cost or fair value of properties not being amortized,
both adjusted for income tax effects, such excess is charged to expense.
Capitalized costs associated with the acquisition and evaluation of unproved
properties are excluded from amortization until it is determined whether proved
reserves can be assigned to such properties or until the value of the properties
is impaired.

         In June 2002 the Company recorded an impairment to oil and gas
properties of $128.2 million, or $101.2 million after tax. Deferred tax
liabilities of $27.0 million were reversed as part of this transaction. This
write-down was caused primarily by a 66% volumetric downward revision in the
Company's proved oil reserves, but was partially offset by a favorable realized
crude oil price as of June 30, 2002 versus December 31, 2001, the date of the
previous reserve report.

         Based on Ryder Scott Company Petroleum Consultants' ("Ryder Scott")
report as of June 30, 2002, the Company's proved reserves are approximately 16.3
million barrels of oil. This represents a 31.3 million barrel reduction (66%)
compared with the previously reported 47.6 million barrels of oil as of December
31, 2001. The present value, discounted continually over the expected life of
the production at 10% per annum, (the "SEC PV10") is approximately $136.3
million or $136.0 million less (50%) than the December 31, 2001 SEC PV10 of
$272.3 million.

         The June 30, 2002 66% reserve reduction is attributable to lower oil
production rates, lower production pressures, and the occurrence of rapid gas
encroachment in structurally higher wells in the Guaduas Oil Field. Ryder Scott
eliminated proved reserves located in the structurally higher portion of the
producing reservoir.

         As of June 30, 2002, unevaluated oil and gas interests amount to $34.9
million primarily comprised of $15 million of Deep Dindal association contract
acquisition costs and $17.7 million of Escuela 2 drilling costs. The unevaluated
costs are $35.7 million lower than the $70.6 million reported as of December 31,
2001. The reduction is primarily attributable to $52.5 million of unevaluated
acquisition costs and associated capital interest costs related to the
development of Dindal and Rio Seco probable reserves. These costs have been
transferred to evaluated properties as of June 30, 2002. Based on recent
production data from the Guaduas Oil Field, it is no longer likely that the
Company will drill the wells previously scheduled to test these areas of
unproved reserves. Additionally, the Company's current financial position, as
discussed in Footnote 3, precludes committing the necessary capital resources to
continue evaluating these unproved reserves.

5. INCOME TAXES:

         Seven Seas changed its domicile from Canada to the Cayman Islands in
early 2001. The Company does not believe there is any further tax liability in
Canada or the US. All remaining deferred tax liabilities relate to Colombia.

         As of June 30, 2002, the Company incurred a ceiling test impairment
totaling $128.2 million, or $101.2 million after tax. All $27.0 million in
deferred taxes have been reversed as part of the ceiling test impairment.

         The Company recognized $6.5 million in additional net deferred tax
liabilities, inclusive of deferred assets comprised mostly of $5.3 million in
Colombian NOLs, for the first six months of 2002. This was the result of
temporary differences created between the book basis and tax basis of the
Company's assets and liabilities. The deferred tax assets (relating to Colombia)
are netted against the deferred tax liabilities (relating to Colombia) on the
Company's books. This results in a June 30, 2002 net deferred tax liability of
$5.6 million.

         The Company believes that the $5.3 million in Colombian NOLs are fully
realizable. The Company's subsidiaries operating in Colombia are projected to
show profits from a Colombian subsidiaries' tax perspective in 2003 and forward.
The Colombian subsidiaries' books do not reflect significant costs associated
with the parent entities' books. These costs are primarily the interest on the
Company's debt, corporate G&A, and acquisition costs.


                                       8
<PAGE>
         Of the Company's three operating subsidiaries, GHK Colombia, a US
company, is the only entity that could potentially have a tax obligation outside
of Colombia. GHK Colombia receives a US tax credit for taxes paid in Colombia,
however timing differences could possibly occur that could create a US tax
payment obligation. For purposes of the deferred tax presentation, we have
estimated that GHK Colombia does not have any US deferred tax liabilities, and
we have also estimated that any US deferred tax assets and any NOLs have a full
valuation allowance.

         Of the Company's two other operating subsidiaries, one is domiciled in
the Cayman Islands and one in Panama. Both jurisdictions are tax free, thus the
Company has recognized no tax liabilities related to either jurisdiction.

         The Company capitalizes interest costs related to its Unevaluated Oil &
Gas Properties. The debt and associated interest costs are held by the parent, a
Cayman entity. The interest costs are not pushed down to the Colombian
subsidiaries books, thus no deferred tax liability related to capitalized
interest costs are created.

OTHER TAXES

         Under Colombian laws, an entity must pay a tax on their income tax
returns of at least 6% of the entity's net equity. Certain entities can be
exempted from paying this minimum tax during the first four operating years as
defined by Colombian law. Seven Seas' believes that its subsidiaries operating
in Colombia qualify under the aforementioned exemption. Accordingly, Seven Seas
has not recorded a liability related to the presumptive tax in 2002.

         Colombian law provides for a tax on foreign entities that repatriate
profits from Colombia. The tax is referred to as a remittance tax and is
assessed at 7% on all profits withdrawn from the country. An entity can avoid
paying the tax by reinvesting profits in Colombia for five years. The Company's
subsidiaries operating in Colombia have generated substantially no commercial
profits to date and thus no liability has been created on the books. The Company
has used the income tax rate of 35% to calculate any deferred tax liability, and
has assumed no remittance tax effect on any deferred tax calculation.


6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

DEVELOPMENT STAGE OPERATIONS

         Since the Company's inception through the second quarter of 2001, Seven
Seas was considered a development stage enterprise. The financial statements as
of December 31, 2000 were presented including all necessary disclosures to
identify the Company as a "Development Stage Enterprise". In July 2001, the
Company began regular oil deliveries into the newly constructed Guaduas - La
Dorada Pipeline. Accordingly, the development stage enterprise classification
and related financial statement disclosures were no longer required beginning
with the third quarter 2001 interim reporting period.

CAPITALIZED COSTS

         The Company follows the full-cost method of accounting for oil and
natural gas properties. Under this method, all costs incurred in the
acquisition, exploration and development, including unproductive wells, are
capitalized in separate cost centers for each country. Such capitalized costs
include association contract and concession acquisition, geological, geophysical
and other exploration work, drilling, completing and equipping oil and gas
wells, constructing production facilities and pipelines, certain general and
administrative expenses, and interest applicable to unevaluated property costs
and other related costs.

         We capitalized general and administrative costs of $0.8 million for the
six-month periods ending June 30, 2002 and 2001, respectively. The Company
capitalized interest costs of $4.7 million and $6.6 million for the six-month
period ended June 30 2002 and 2001, respectively.


                                       9
<PAGE>

OTHER ASSETS

         Included in other assets are costs associated with the issuance of
long-term debt. These costs are being amortized ratably over the life of the
notes. Total debt issuance costs for the Senior Notes amounted to $4.2 million,
of which $1.8 million has not been amortized as of June 30, 2002. Total debt
issuance costs for the $45 Million Notes amounted to $1.7 million, of which $1.1
million remains unamortized as of June 30, 2002. See Footnote 9 for additional
information on the notes.

PREPAIDS AND OTHER

         Prepaids and other includes $1.1 million of Colombian withholding taxes
as of June 30, 2002. Prepaid taxes consist of $3.1 million in Value Added Tax
credits that can be applied against future income tax payable.

REVENUE RECOGNITION

         The Company records revenue using the entitlement method or, simply
stated, presents only its share of revenues. Any oil received and sold by the
Company in excess of its share is recorded as a liability. As of September 30,
2001, the Company and its partners began to make up 261,987 barrels owed to
Ecopetrol (151,166 net to Seven Seas valued at $3.4 million). During the first
quarter of 2002, the Company and its partners satisfied all make up obligations
by delivering to Ecopetrol the remaining 104,821 barrels (60,482 barrels net to
Seven Seas valued at $1.2 million) owed to them.

         The Company recorded a $1.1 million liability in Accounts Payable for
49,000 barrels of oil relating to pipeline sales in excess of the Company's
entitled volumes. The Company expects that the pipeline imbalance will be
settled in the third quarter of 2002.

         The Company sells substantially all of its production to Hocol, S.A.

7. CASH AND CASH EQUIVALENTS:

         The Company considers highly liquid investments with maturity of three
months or less as cash equivalents. The following table sets forth the Company's
cash and cash equivalents (in thousands):

<Table>
<Caption>
                                                   JUNE 30          DECEMBER 31
                                                     2002               2001
                                                   --------         -----------
<S>                                               <C>               <C>
       Cash ............................           $  5,679           $ 14,549
       Cash Equivalents ................             10,376             10,130
                                                   --------           --------
         Total Cash and Cash Equivalents           $ 16,055           $ 24,679
                                                   ========           ========
</Table>

         As of June 30, 2002, the Company had working capital of $6.9 million.
This amount includes unrestricted cash and cash equivalents of $12.3 million.
The restricted cash and restricted short-term investments total $4.9 million and
are comprised of the following escrow balances: Escuela 2 - $3.6 million, Senior
Notes interest - $1.1 million and Colombian reforestation - $0.2 million. All
restricted balances have corresponding current liabilities with the exception of
the Colombian reforestation escrow amounts. During the second quarter of 2002,
working capital decreased by $12.8 million primarily because of drilling
operations. Our remaining non-discretionary cash commitments for 2002 are
limited to the November semi-annual interest payments on the Senior Notes
totaling $6.9 million. The CHK Notes limits additional indebtedness to $1.0
million (see Footnote 9). Continuing operations and drilling activities for the
year must be funded from operational cash flows. All Escuela 2 restricted funds
had been expended as of August 14, 2002.

8. DERIVATIVE INSTRUMENTS:

         Effective January 1, 2001, Seven Seas adopted Statement of Financial
Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities". SFAS 133 establishes accounting and reporting standards
requiring that all derivative instruments be recorded on the balance sheet as
either an asset or liability measured at fair value and requires that changes in
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Hedge accounting treatment allows unrealized gains and losses
on cash flow hedges to be deferred into other comprehensive income (for the
effective portion of the hedge) until such time as the forecasted transaction
occurs. Effectiveness is monitored quarterly and any ineffectiveness is reported
in revenues in the statement of consolidated statement of operations.

         On November 9, 2001, the Company acquired financial put options that
established a monthly average WTI floor price of $20.00 per barrel on 3,750
barrels of crude oil per day beginning January 1, 2002, and continuing for six
months. The put options were acquired for $1,161,000 from a major commercial
bank as a cash flow hedge to ensure the required funds would be available to
fully


                                       10
<PAGE>

execute the Company's 2002 exploration and development program in the
event of a further oil price decline. As of June 30, 2002, all of the put
options have been settled. Revenues for the first six-months reflect a
$1,161,000 reduction related to the cash flow hedges settled in the first six
months of 2002 and a $30,000 gain related to the settlement of the January put
options.

<Table>
<Caption>
ROLL-FORWARD OF OTHER COMPREHENSIVE INCOME (IN THOUSANDS):
----------------------------------------------------------
<S>                                                               <C>
    Balance at December 31, 2001                                  $     (45)
    Change in fair value of derivative instruments                   (1,116)
    Realization of losses on hedging instruments                      1,161
                                                                  ---------
    Balance at June 30, 2002                                      $      --
                                                                  ---------
</Table>

9. DEBT AND LONG-TERM OBLIGATIONS:

$45 MILLION FINANCING

CHESAPEAKE SENIOR NOTE ISSUANCE

         On July 23, 2001, Chesapeake Energy Corporation purchased $22.5 million
of senior secured notes ("CHK Notes") with detachable warrants to purchase
12,619,500 shares of Seven Seas common stock at approximately $1.78 per share.
The CHK Notes will bear interest at 12% per annum, compounded quarterly, and
interest will be accrued for the first two years.

SHAREHOLDER RIGHTS OFFERING

         The Company offered its non-Canadian shareholders of record as of
October 8, 2001, in the form of a shareholder rights offering ("Rights
Offering"), $22.5 million of Series A senior secured notes ("Series A Notes")
with detachable warrants to purchase 12,619,500 shares at approximately $1.78
per share. The Series A Notes will bear interest at 12% annum, compounded
quarterly, and interest will accrue for the first two years. As of June 30,
2002, the combined accrued interest on the CHK Notes and Series A Notes is $5.3
million and is classified on the balance sheet as long-term payable. Accrued
interest will be due at maturity on November 7, 2004. Shareholders purchased
approximately $2 million of Series A Notes with warrants to purchase
approximately 1.1 million shares at an exercise price of $1.78. The remainder of
the Series A Notes were purchased by a group of qualified investors led by
Robert A. Hefner III, the Company's Chairman and Chief Executive Officer.

CHESAPEAKE NOTE COVENANTS

         Pursuant to the Company's agreement under the CHK Notes, $15 million of
the total proceeds from the $45 million financing were escrowed for the drilling
of the Escuela 2 exploration well to test the Subthrust Dindal Prospect, located
below the Guaduas Oil Field. Additionally, for the first two years or until the
CHK Notes are redeemed, if the redemption occurs before July 23, 2003, the
Company will escrow monthly 1/6 of its semi-annual $6.9 million interest payment
on its $110 million Senior Notes.

         The CHK Note covenants preclude the Company from incurring additional
indebtedness in excess of $1,000,000 excluding trade debt incurred in the
ordinary course of business. Also, the Company agreed to secure payment of the
CHK Notes and the Series A Notes by pledging to Chesapeake, as collateral agent,
all of the Company's right, title and interest in and to all of the capital
stock and equity of the subsidiaries of the Company and all dividends,
distributions, proceeds and products thereof or there from.

DISCOUNT ON $45 MILLION NOTES

         The $22.5 million CHK Notes and the $22.5 million Series A Notes are
collectively referred to as the "$45 Million Notes". The $45 Million Notes were
issued along with detachable warrants to purchase shares of common stock. Based
on an independent valuation, the fair market valuation of the detachable
warrants at the date of issuance was determined to be $2.2 million, and the $45
Million Notes were valued at $42.8 million, representing a $2.2 million
discount. The discount is amortized to interest expense over the life of the $45
Million Notes in order to reduce the discount to zero by the due date of the $45
Million Notes. During the first half of 2002, $0.3 million of imputed interest
expense was recognized in the Consolidated Statements of Operations. Cumulative
imputed interest from inception amounts to $0.6 million as of June 30, 2002.


                                       11
<PAGE>

$110 MILLION SENIOR NOTES

         The Company issued $110 million aggregate principal amount of 12-1/2%
notes due 2005 ("Senior Notes") in a private transaction on May 7, 1998 that was
not subject to registration requirements of the Securities Act of 1933. The
Senior Notes mature May 15, 2005. Interest payments of approximately $6.9
million are due on May 15 and November 15 of each year.

10. COMMITMENTS AND CONTINGENCIES:

POPULAR ACTION SUIT

         In February 2002, the Company was served notice of a popular action
suit before the Guaduas Equity Court. The Peoples' Committee for the
Environmental Protection of Guaduas, a local, non-governmental organization,
filed this claim. The plaintiffs are requesting that the courts take the
following actions: a) suspend oil activity on the upper part of the San
Francisco River Basin because that area is a forest reserve and b) suspend the
underground waters concession GHK Colombia has over the El Hoyon aquifer. If the
court decided in favor of the plaintiff's claims, the Company's Escuela 2
drilling operations would cease or become impaired.

         On April 29, 2002, the Company appeared before the Guaduas Equity Court
stating that the Company has obtained a proper environmental license from the
competent environmental authority to conduct oil exploration activities, drill
the Escuela 2 well in the San Francisco River Basin and use the aquifer water.
The Company also contends that the drilling activities do not affect the basin,
which is an argument that is supported by independent third party studies and
served as the basis to obtain the environmental permit to drill the Escuela 2
well in that area. The purpose of the Court hearing was to gather information.
The Guaduas Equity Court took no actions; however, the Court did acknowledge
that the Colombian Ministry of Environment is a party to this suit. Based on
this acknowledgement, the Company has requested a change of venue to the
Administrative Court in Bogota.

         On July 29, 2002, a court ordered inspection of the Escuela 2 drilling
operations was completed by a court-appointed panel of three experts. The
experts' findings will be presented to the court in approximately 45 days.

         The Company's management and Colombian counsel believe that it is
unlikely the Court will render these adverse rulings.

HEIRS OF NICOLAS BELTRAN FRANCO

         Two of the Company's subsidiaries, Petrolinson and GHK Colombia, along
with the former owner of Petrolinson, Norman Rowlinson and the heirs of Howard
Thomas Corrigan, are defendants in a lawsuit that was filed in Santa Fe de
Bogota, Colombia in 1998. The plaintiffs, who are the heirs of Nicolas Beltran
Franco, have two claims. First, they claim that a de facto company existed
between Nicolas Beltran Franco and the defendants concerning the Dindal and Rio
Seco association contract areas. Second, they claim that before the Dindal and
Rio Seco association contracts were executed, the de facto company conducted
exploration works in the Dindal and Rio Seco association contract areas. The
plaintiffs claim they have the right to participate in income earned from the
Dindal and Rio Seco association contract areas. None of the plaintiffs are party
to the association contracts. However, they are seeking 50% of the income
generated by the de facto company they claim existed. It is not clear what
percentage of the Dindal and Rio Seco association contract areas are covered by
the plaintiffs' claims.

         The Company's management and Colombian counsel believe that it is
unlikely the Court will render these adverse rulings.

11. NEW ACCOUNTING PRONOUNCEMENTS:

         In April 2002 the Financial Accounting Standards Board ("FASB") issued
SFAS No. 145, "Rescission of FASB Statements No. 4, No. 44, and No. 64,
Amendment to FASB Statement No. 13 and Technical Corrections." SFAS 145
streamlines the reporting of debt extinguishments and requires that only gains
and loses from extinguishments meeting the criteria in Accounting Principles
Board Opinion 30 would be classified as extraordinary. Thus, gains and losses
arising from extinguishments that are part of a company's recurring operations
would not be reported as an extraordinary item. SFAS 145 is effective for fiscal
years beginning after May 15, 2002 with earlier adoption encouraged. The Company
does not expect the adoption of SFAS 145 to have a material impact on its
financial position, results of operations or cash flows.

         SFAS 146, "Accounting for Costs Associated with Exit or Disposal
Activities" was issued in June 2002 and addresses accounting and processing for
costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force ("EITF") Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit and Activity (including Certain
Costs Incurred in a Restructuring)." SFAS 146 requires that a liability for a
cost associated with an exit or disposal liability be recognized when the
liability is incurred. Under Issue 94-3, a liability for an exit cost was
recognized at the date of an entity's commitment to an


                                       12
<PAGE>
exit plan. Under SFAS 146, fair value is the objective for initial measurement
of the liability. SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002, with early application encouraged. The
Company does not expect the adoption of SFAS 146 to have a material impact on
its financial position, results of operations or cash flows.

         SFAS 143, Accounting for Asset Retirement Obligations, requires
entities to record the fair value of a liability for an assets retirement
obligation in the period in which it is incurred and a corresponding increase in
the carrying amount of the related long-lived asset and is effective for fiscal
years beginning after June 15, 2002. The Company does not expect the adoption of
SFAS 143 to have a material impact on its financial position, results of
operations or cash flows.

         The FASB is currently considering numerous proposals for the adoption
of new accounting pronouncements. We cannot predict whether any of these
proposal will be adopted, and if adopted what effect these proposals, including
the proposal to require the reporting of stock options grants as a compensation
expense, may have on the Company's financial statements.

12. RELATED PARTY TRANSACTIONS:

         On March 31, 2002, the Company amended a $200,000 unsecured loan to
Larry A. Ray, President and Chief Operating Officer. The new terms provide for
an interest rate of 2.69% with a due date of September 3, 2003. The original
$200,000 loan was made on November 1, 1997 at a 6.06% interest rate and was due
on November 1, 2002. The recently enacted Sarbanes-Oxley Act of 2002 prohibits
any further renewal of the loan.

13. SUBSEQUENT EVENTS:

         On August 11, 2002, the Government of Colombia declared a "state of
emergency" for 90 days, extendable for another 90 days thereafter. In order to
finance a military build-up to combat ongoing guerilla activity, the Government
placed a 1.2% tax on all businesses with net assets greater than $60,000. It is
too early to estimate the tax effect of this pronouncement.

14. RESTATEMENT:

         In the previously filed Form 10-Q for the quarterly period ended June
30, 2002, the Company reflected a $22.1 million adjustment to the balance sheet
as of December 31, 2001 presented therein, which had reduced both oil and gas
properties and deferred tax liability, but had no effect on the previously
reported 2001 results of operations.

         Subsequent to the issuance of the Company's previously filed Form 10-Q,
the Company's management determined that the $22.1 million adjustment
represented changes in its estimate of deferred tax liabilities that should have
been recorded during the period ended June 30, 2002 rather than as an adjustment
to the balance sheet as of December 31, 2001 previously presented. As a result,
the Company has determined to amend the previously filed Form 10-Q to properly
reflect the change in its deferred tax liability estimate during the period
ended June 30, 2002 rather than as an adjustment to the December 31, 2001
balance sheet.

         As of June 30, 2002, the Company recomputed the ceiling test
calculation with the revised deferred tax balances resulting in a $128.2 million
ceiling test impairment (compared to $106.1 million previously reported) before
tax and $101.2 million after tax (compared to $106.1 million previously
reported). All $27.0 million in deferred taxes related to acquisition costs were
reversed as part of the ceiling test impairment.

         As a result, the accompanying consolidated balance sheet as of December
31, 2001 and the consolidated statements of operations and cash flows for the
three- and six-month periods ended June 30, 2002 have been restated from the
amounts previously reported. The restatement had no effect on net loss or net
loss per share for any period presented.

         A summary of the significant effects of the restatement is as follows
(in thousands):

<Table>
<Caption>
                                          As previously
                                            reported          As restated
                                          -------------       -----------
<S>                                       <C>                <C>
As of December 31, 2001:
Evaluated oil and gas interests, net       $ 160,924          $  183,021
Deferred tax liability                         4,943              27,040
</Table>

<Table>
<Caption>

                                                 Three Months                              Six Months
                                          -------------------------------     -------------------------------
                                          As previously                       As previously
                                            reported          As restated       reported          As restated
                                          -------------       -----------     -------------       -----------
<S>                                       <C>                 <C>             <C>                 <C>

For the period ended June 30, 2002:
Impairment of proved oil and
  gas properties                           $  106,131          $  128,228       $  106,131        $  128,228
Net loss before income taxes                 (107,022)           (129,119)        (106,793)         (128,890)
Income tax (benefit) expense                    1,563             (20,534)           1,563           (20,534)
</Table>


<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussion and analysis gives effect to the restatement
discussed in Footnote 14 and should be read in conjunction with the unaudited
consolidated financial statements included elsewhere and with the Company's
Annual Report on Form 10-K for the year ended December 31, 2001.

                                    OVERVIEW

         Our principal asset is a 57.7% interest (before participation by
Ecopetrol, the Colombian national oil company) in the Dindal and Rio Seco
association contracts, which cover the area in which the Guaduas Oil Field is
located. As of June 30, 2002, the Ryder Scott Company Petroleum Consultants
("Ryder Scott") estimated Seven Seas' net proved reserves attributable to the
delineation of 7,445 acres of the Guaduas Oil Field were 16.3 million barrels of
oil with a present value discounted continually over the expected life of the
production at 10% per annum (the "SEC PV10") of $136.3 million based upon second
quarter ending oil prices. As the operator of the field, we exercise direct
supervision over all field operations, including drilling and production. The
other interest owners are Cimarrona (9.4%), and Sipetrol (32.9%). In May 2000,
Ecopetrol elected not to participate in the development of the Guaduas Oil
Field. Together with our partners, we elected to proceed with field development
on a sole-risk basis, meaning we pay 100% of the costs and receive 100% of the
revenues from production less a fixed 20% Colombian government royalty. After we
have recovered 200% of the development costs and certain exploration costs,
Ecopetrol will have the right to become a 50% working interest partner in the
project.


                                       13
<PAGE>


                               RECENT DEVELOPMENTS

PROVED RESERVES

         Ryder Scott's recently completed report on the Guaduas Oil Field's
proved reserves, as of June 30, 2002, estimates proved reserves at 16.3 million
barrels of oil. This represents an approximate 31.3 million barrel reduction
(66%) compared to Ryder Scott's December 31, 2001 report which estimated proved
reserves of 47.6 million barrels of oil. The SEC PV10 is approximately $136.3
million, or $136.0 million less (50%) than the December 31, 2001 SEC PV10 of
$272.3 million. The SEC PV10 decline was partially offset by higher oil prices
as of June 30, 2002.

         The 66% reduction in reserve volume is attributable to lower oil
production rates, lower production pressures, and the occurrence of rapid gas
encroachment in structurally higher wells in the Guaduas Oil Field. Ryder Scott
eliminated proved reserves located in the structurally higher portion of the
producing reservoir in the revised report as of June 30, 2002.

         The Company's proved reserves as of June 30, 2002, and December 31,
2001, are listed in the below table. These reserves consist entirely of crude
oil in Colombia.

         Proved developed and undeveloped reserves (in barrels):

<Table>
<Caption>
                               JUNE, 30 2002      DECEMBER 31, 2001
                               ---------------  --------------------
<S>                              <C>                 <C>
   Beginning of year......       47,587,599          47,991,956
   Production.............         (735,200)           (938,969)
   Revision of estimate         (30,601,342)            534,612
                                ------------         -----------
   End of period..........       16,251,057          47,587,599
                                ============         ===========
   Proved undeveloped .           2,007,052          20,121,866
                                ------------         -----------
   Proved developed.......       14,244,005          27,465,733
                                ============         ===========
</Table>

    DEVELOPMENT DRILLING PROGRAM

         At the beginning of the third quarter of 2002, the Company elected to
suspend further development drilling in the Guaduas Oil Field pending a
reassessment of recently drilled wells, current production data, and the results
of planned production enhancement efforts on existing wells. The last three
development wells had average initial production rates of approximately 700
BOPD.

         Sipetrol proposed drilling an eighth development well, the El Segundo
2-N. Because a drilling rig was currently on location, the Company had limited
time to evaluate the proposal and ultimately declined to participate. The
Company's future participation in the revenues from the El Segundo 2-S will be
subject to Sipetrol recovering 300% of our share of drilling costs from net
operating revenues.

         A recap of initial and June 2002 production rates for the seven wells
completed as part of our 2001/2002 development drilling program is as follows:

<Table>
<Caption>
                                                        INITIAL PRODUCTION     PRODUCTION RATE (JUNE
      WELL                    COMPLETION DATE                TEST BOPD               2002) BOPD
     ------                   ---------------           ------------------     ---------------------
<S>                           <C>                          <C>                         <C>

El Segundo 5-S ..........     May 2001                      1,800-2,900                Shut-in
Tres Pasos 5-W ..........     September 2001                  700-1,000                    400
El Segundo 5-E ..........     October 2001                        2,400                  1,800
Tres Pasos 6-N ..........     January 2002                        3,000                  1,200
Tres Pasos 6-E ..........     March 2002                          1,000                    250
Tres Pasos 7-W ..........     May 2002                              600                    500
El Segundo 5-N ..........     June 2002                             500                    500
</Table>

PRODUCTION OPERATIONS

         At the end of May 2002 the Company commenced gas injection operations
and a study directed towards reconfiguration of several electric submersible
pumps in an attempt to optimize oil production. The Company is also implementing
a workover program to enhance production from existing wells consisting of
hydraulic fracture treatments and cement squeezes to curtail water and/or gas
production. The impact of these operations may not be known for several months.


         The Company has injected at rates of up to 4,900 MCF/D or approximately
80% of the planned injection volume. However, due to possible gas encroachment
in certain parts of the reservoir, the Company now believes that current
production rates, which averaged approximately 7,500 BOPD gross (3,400 net to
Seven Seas) for the second quarter, will not be improved by gas injection. July
2002 production averaged 6,700 BOPD gross (3,100 net to Seven Seas). Production
declines have recently diminished.


                                       14
<PAGE>

EXPLORATION DRILLING

         The Subthrust Dindal Prospect is located below the producing zones of
the Guaduas Oil Field. In December 2001, the Company commenced drilling of the
Escuela 2 exploratory well to test this prospect. The Escuela 2 well was
originally programmed to reach a total measured depth of approximately 18,000
feet. Based on updated geological information, the targeted depth was later
extended to approximately 19,500 feet subject to drilling results and costs.

         As of August 12, 2002, the Escuela 2 exploration well has been drilled
to a total measured depth of 19,109 feet with estimated cumulative costs of
$19.1 million. As of August 9, 2002, the $15 million escrowed to drill and
complete the well has been spent.

         The Company believes that the geological information available at this
time indicates that the Escuela 2 is currently drilling in the lower Cretaceous
(Utica-Caballeros) formation with potential reservoir rocks. Seven Seas also
believes it is likely that the Cambao fault has not been encountered. A review
of drilling samples and paleontological work is being carried out on a continual
basis to aid in the geological interpretation. When the well reaches its total
depth, the Company plans to run electric logs for further evaluation.

ASSOCIATION CONTRACTS

         In July 2002, Ecopetrol granted an extension to August 31, 2002 for
purposes of completing an exploration well on the Aguachica Prospect to satisfy
the terms of the Rosablanca Association Contract. Because of delays related to
political uncertainty and security issues in the surrounding area, the Company
has requested at least a drilling extension of at least one month from
Ecopetrol.

         In April 2002, Ecopetrol granted a four-month extension to August 23,
2002 for the Company to comply with its obligations under the first stage of the
Cristales Association Contract exploration period. The Company plans to request
an extension for additional time to complete and evaluate this first stage work
program. Participation in the second year of the association contract requires
an approximate $2.5 million expenditure.

                              OUR CURRENT STRATEGY

         Our strategy for 2002 is currently being reassessed. Beginning in the
second quarter and continuing forward, Guaduas Oil Field production has been
declining. The resulting reduction in cash flows and an estimated $6 million in
additional costs on the Escuela 2 over the budgeted dry hole costs through
August 12, 2002, have materially weakened the Company's cash flow and working
capital position. There is now a risk that the November 15, 2002 $6.9 million
interest payment on the $110 million Senior Notes will not be made.

         The Company has elected to suspend development drilling operations
pending a complete review of all geological, geophysical, and reservoir
engineering data. The Company is currently implementing a well workover program
in an effort to increase production from existing wells. Additionally, the
decision whether to drill the Santa Fe #1 well, an exploratory test of our
Aguachica prospect, has been delayed due to political uncertainty and security
issues in the surrounding area (the prospect is located in the northern part of
the country, approximately 220 miles northwest of Bogota). The Company has
requested a drilling extension of at least one month from Ecopetrol.

         In light of the material reduction to the Company's June 30, 2002
proved reserves (see Notes to Consolidated Financial Statements - Footnote 4),
the Company has begun discussions with our secured debt holders ($22.5 million
CHK Notes and $22.5 million Series A Notes). These discussions involve the
Company's current financial position and various go-forward scenarios that could
include a sale of assets.

         The Company does not have a bank line of credit and our only source of
working capital is from operating cash flows. Therefore, the Company remains
dependent on Guaduas Oil Field production. If production is interrupted for an
extended period of time, or if prices decline for an extended period of time, or
if the Escuela 2 costs significantly exceed the current $19.1 million in
expenditures, cash reserves may decline to the point where the payment of the
semiannual interest on the $110 million Senior Notes would become uncertain. In
May 2002, the Company said that it "believes that at present oil prices,
revenues from current levels of production will continue to exceed operating
expenses, general and administrative costs, and debt interest payments." Due to
recent declines in production, the Company now believes that revenues from
current production are insufficient to cover the aforementioned costs.


                                       15
<PAGE>

DEVELOPMENT

         Our 2001/2002 nine well development drilling program has been suspended
after the successful completion of the first seven wells. Additionally, an
existing well has been converted to a gas injection well as part of our gas
injection program. Sipetrol proposed an additional development well, the El
Segundo 2-S. Because a drilling rig was currently on-location, the Company had
limited time to evaluate the proposal and ultimately declined to participate.
The Company's future participation in the revenues from El Segundo 2-S will be
subject to Sipetrol recovering 300% of our share of drilling costs from future
net operating revenues.

EXPLORATION

         On December 6, 2001, we commenced drilling the Escuela 2 subthrust
exploratory test. Refer to previous comments under "Recent
Developments-Exploration Drilling."

         By August 31, 2002, we are committed to drill an exploratory well to
test the Aguachica prospect under the Rosablanca association contract. The
proposed Santa Fe 1 well is planned to a projected depth of 3,500 feet at a
total gross cost of approximately $1.0 million. We will incur 100% of these
costs. Due to political uncertainty and security issues in the surrounding area,
Seven Seas is requesting an extension of at least one month to drill the well.

                         LIQUIDITY AND CAPITAL RESOURCES

WORKING CAPITAL

         As of June 30, 2002, the Company had working capital of $6.9 million.
The working capital amount includes unrestricted cash and cash equivalents of
$12.3 million as of June 30, 2002. Restricted cash and short-term investments
totaling $4.9 million are comprised of the following escrow balances: Escuela2 -
$3.6 million, Senior Notes interest - $1.1 million and Colombian reforestation -
$0.2 million. All restricted balances are offset by current liabilities with the
exception of the Colombian reforestation escrow amounts. During the second
quarter of 2002, working capital decreased by $12.8 million primarily because of
drilling operations. Our remaining non-discretionary cash commitments for 2002
are limited to the November semi-annual interest payments on the Senior Notes
totaling $6.9 million. The CHK Notes limits additional indebtedness to $1.0
million. Continuing operations and drilling activities for the year must be
funded from operational cash flows.

         During the six-month periods ending June 30, 2002 and 2001, cash flows
provided by operating activities were $8.2 million and $3.7 million,
respectively.

EQUITY AND FINANCING ACTIVITIES

         As of June 30, 2002, we had 37,920,555 outstanding common shares, par
value of $0.001 per share, of which none are restricted.

                              RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2002 AND 2001

         For the three months ended June 30, 2002 (the "Current Quarter"), we
incurred a net loss of $108.6 million or $2.86 per common share, including a
non-cash writedown of oil and gas properties of $128.2 million. This compares to
a net loss of $2.1 million, or $0.06 per common share during the three months
ended June 30, 2001 (the "Prior Quarter").

         Crude oil sales in the Current Quarter increased by $4.7 million to
$5.9 million as compared to the Prior Quarter largely because of the July 2001
commencement of pipeline operations and the ongoing development drilling
program. The Current Quarter had total sales of 286,469 barrels at an average
price of $22.08 per barrel. The Prior Quarter had total sales of 60,331 barrels
at an average price of $19.89 per barrel. The effect of the put option
settlement during the second quarter 2002 resulted in a $0.6 million decrease in
revenues for the Current Quarter.

         Oil production in the Current Quarter and Prior Quarter were 313,700
barrels and 113,400 barrels respectively.


                                       16
<PAGE>

         Depletion, depreciation and amortization costs increased by $1.2
million to $1.7 million in the Current Quarter as compared to $0.5 million in
the Prior Quarter. The increase is primarily the result of increased production
and the amortization associated with the $45 million notes.

         Operating expenses in the Current Quarter and Prior Quarter were $1.0
million and $1.1 million, respectively.

         General and administrative costs were $1.3 million and $1.6 million for
the Current Quarter and Prior Quarter respectively. The $0.3 million decrease is
primarily attributable to a decline in consulting and legal expenses.

         Interest expense increased by $2.6 million to $2.8 million in the
Current Quarter as compared to Prior Quarter. The $2.6 million increase is the
result of $1.6 million of additional interest expense associated with $45
Million Notes and the year-end reduction of unevaluated property costs that
resulted in a $0.8 million reduction in capitalized interest costs, and $0.2
million imputed interest on warrants.

         A net tax benefit of $20.5 million was recognized for the Current
Quarter. A benefit of $27.0 million was recognized as a result of the reversal
of the deferred tax liability in association with the writedown of oil and gas
property. Approximately $6.5 million in tax expense was recorded in the Current
Quarter relating to changes in the Company's net deferred tax liability. There
was no income tax expense in the Prior Quarter.

SIX MONTHS ENDED JUNE 30, 2002 AND 2001

         For the six-month period ended June 30, 2002 (the "Current Period"), we
incurred a net loss of $108.4 million, or $2.86 per common share, including a
non-cash writedown of oil and gas properties of $128.2 million. This compares to
a net loss of $2.1 million, or $0.06 per common share during the six-month
period ended June 30, 2001 (the "Prior Period").

         Crude oil sales in the Current Period increased by $8.9 million to
$13.5 million as compared to the Prior Period largely because of the July 2001
commencement of pipeline operations and the ongoing development drilling
program. The Current Period had total sales of 735,171 barrels at an average
price of $19.85 per barrel. The Prior Period had total sales of 224,062 barrels
at an average price of $20.53 per barrel. The effect of the put option
settlement during the second quarter 2002 resulted in a $1.1 million reduction
in net income.

         Oil production in the Current Period and Prior Period were 735,200
barrels and 280,100 barrels respectively.

         Depletion, depreciation and amortization costs increased $2.8 million
to $4.2 million in the Current Period as compared to $1.4 million in the Prior
Period. The increase is primarily the result of increased production and the
amortization on the $45 Million Notes.

         Operating expenses in the Current Period and Prior Period was $2.3
million and $2.1 million, respectively. The $0.2 million increase is related to
increased production.

         General and administrative costs were $2.3 million and $3.1 million for
the Current Period and Prior Period respectively. The $0.8 million decrease is
largely attributable to significant legal and consulting expenses relating to
the Company's change in domicile from Canada to the Cayman Islands incurred in
the prior period.

         Interest expense increased by $5.2 million to $5.6 million in the
Current Period compared to Prior Period. The $5.2 million increase is the result
of $2.9 million of additional interest expense associated with the $45 Million
Notes, the $2.0 million reduction in capitalized interest costs related to
unevaluated property, and $0.3 million in imputed interest on warrants.

         A net tax benefit of $20.5 million was recognized for the Current
Period. A benefit of $27.0 million was recognized as a result of the reversal of
the deferred tax liability in association with the writedown of oil and gas
property. Approximately $6.5 million in tax expense was recorded in the Current
Period relating to changes in the Company's net deferred tax liability. There
was no income tax expense in the Prior Period.



                                       17
<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are exposed to market risk, including adverse changes in commodity
prices, interest rates and foreign currency exchange rates as discussed below.
For a more thorough discussion of risks, refer to the Annual Report 10-K for the
year ended December 31, 2001.

COMMODITY RISK

         The market prices for oil and natural gas historically have been
volatile and are likely to continue to be volatile in the future. Oil and
natural gas prices may fluctuate in response to relatively minor changes in
supply of and demand for oil and natural gas, market uncertainty and a variety
of additional factors that are beyond our control. Decreases in oil and natural
gas prices will adversely affect our future revenues, results of operations and
cash flows. Additionally, decreases in oil and natural gas prices may impede our
ability to raise additional capital.


INTEREST RATE RISK

         We consider our interest rate risk exposure to be minimal as a result
of a fixed interest rate on the $110 million 12 -1/2% Senior Notes and 12%
Chesapeake Note and Series A Notes. We currently have no open interest rate swap
agreements.

FOREIGN CURRENCY EXCHANGE RATE RISK

         We conduct business in a foreign currency and are subject to foreign
currency exchange rate risk on cash flows related to certain sales, expenses and
capital expenditures. However, because predominately all transactions in our
existing foreign operations are denominated in U.S. dollars, the U.S. dollar is
the functional currency for all operations.


                                       18
<PAGE>



ITEM 6. EXHIBITS & REPORTS ON FORM 8-K

         (a) Exhibits

EXHIBIT NUMBER                        DESCRIPTION
--------------                        -----------

(3)      Articles of Incorporation and By-laws

         (A)      Certificate of Continuance to the Cayman Islands, incorporated
                  by reference to Exhibit 3(A) in the Company's annual report on
                  Form 10-K for the year ended December 31, 2000

         (B)      Memorandum of Association, incorporated by reference to
                  Exhibit 3(B) in the Company's annual report on Form 10-K for
                  the year ended December 31, 2000

         (C)      Articles of Association, incorporated by reference to Exhibit
                  3(C) in the Company's annual report on Form 10-K for the year
                  ended December 31, 2000

(4)      Instruments Defining the Rights of Security Holders, Including
         Indentures

         (A)      Resolution of Board of Directors authorizing Series A Junior
                  Participating Preferred Stock of the Company, incorporated by
                  reference to Exhibit 4 in the Company's current report on Form
                  8-K filed March 19, 2002

         (B)      Form of Stock Certificate of the Company, incorporated by
                  reference to Exhibit 4(A) in the Company's annual report on
                  Form 10-K for the year ended December 31, 2001

         (C)      Description of Capital Stock of the Company, incorporated by
                  reference to Exhibit 4(B) in the Company's annual report on
                  Form 10-K for the year ended December 31, 2001

         (b) Reports on Form 8-K. The Company filed the following:

(1)      Current Report on Form 8-K dated May 3, 2002 reporting production rates
         of the Guaduas Oil Field.

(2)      Current Report on Form 8-K dated July 3, 2002 announcing the suspension
         of further development drilling in the Guaduas Oil Field pending
         certain reassessments.

         Current Report on Form 8-K dated July 19, 2002 reporting a change in
         independent public accountants from Arthur Andersen LLP to Deloitte &
         Touche LLP.

(3)      Current Report on Form 8-K dated July 24, 2002 announcing a
         re-evaluation of the Guaduas Oil Field's proved reserves resulting in a
         material downward revision in the Company's net proved reserves of 47.6
         million barrels of oil as of December 31, 2001.


                                       19
<PAGE>



                                   SIGNATURES

                                   SEVEN SEAS PETROLEUM INC.

Date: November  19, 2002           By: /s/ LARRY A. RAY
                                       -------------------------------------
                                       Larry A. Ray,
                                       President and Chief Operating Officer



                                   By: /s/ RONALD A. LEFAIVE
                                       -------------------------------------
                                       Ronald A. Lefaive,
                                       Chief Financial Officer and
                                       Vice President - Finance



                                       20
<PAGE>
                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                            (18 U.S.C. SECTION 1350)

The undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

    In connection with the accompanying Quarterly Report of Seven Seas Petroleum
(the "Company") on Form 10Q for the period ended June 30, 2002 (the "Report"),
I, Robert A. Hefner, III, Chairman and Chief Executive Officer of the Company,
hereby certify that to my knowledge:

    1. The Quarterly Report on Form 10-Q/A for the Quarter ended June 30, 2002
(the "Periodic Report") of Seven Seas Petroleum (the "Company") fully complies
with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d); and

    2. The information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.

    Dated this 19th day of November, 2002.


    /s/ ROBERT A. HEFNER, III
    -------------------------------------------------
    Robert A. Hefner, III
    Chairman and Chief Executive Officer

The above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C 1350) and is not being filed as part of the
Form 10-Q/A or as a separate disclosure document.


The undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

        In connection with the accompanying Quarterly Report of Seven Seas
    Petroleum (the "Company") on Form 10Q/A for the period ended June 30, 2002
    (the "Report"), I, Ronald A. Lefaive, Chief Financial Officer and Vice
    President-Finance of the Company, hereby certify that to my knowledge:

        1. The Quarterly Report on Form 10-Q/A for the Quarter ended June 30,
    2002 (the "Periodic Report") of Seven Seas Petroleum (the "Company") fully
    complies with the requirements of Section 13(a) and 15(d) of the Securities
    Exchange Act of 1934 (15 U.S.C. 78m or 78o(d); and

        2. The information contained in the Periodic Report fairly presents, in
    all material respects, the financial condition and results of operation of
    the Company.

    Dated this 19th day of November, 2002.


    /s/ RONALD A. LEFAIVE
    -------------------------------------------------
    Ronald A. Lefaive
    Chief Financial Officer-Vice President Finance

The above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C 1350) and is not being filed as part of the
Form 10-Q/A or as a separate disclosure document.