SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)

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

                  For the quarterly period ended June 30, 1997

                                   or

       [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
            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)

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

   SUITE 960, THREE POST OAK CENTRAL
        1990 POST OAK BOULEVARD
             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 of 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 [ ] No [X]

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

AS OF JUNE 30, 1997 THERE WERE 34,819,606 SHARES OF THE REGISTRANT'S COMMON
SHARES, NO PAR VALUE PER SHARE, OUTSTANDING.
<PAGE>
                                      INDEX

PART I.  FINANCIAL INFORMATION                                              PAGE
         (DEVELOPMENT STAGE ENTERPRISE)

      Consolidated Balance Sheets as of June 30, 1997 (unaudited)
       and December 31, 1996..............................................    2

      Consolidated Statements of Operations and Accumulated Deficit
      for the six months and three months ended June 30, 1997
      and 1996 and the Cumulative Total from Inception
      (February 3, 1995) to June 30, 1997 (unaudited)......................   3

      Statements of Consolidated Cash Flows for the six months ended
      June 30, 1997 and 1996 and the Cumulative Total from
      Inception (February 3, 1995) to June 30, 1997 (unaudited)............   4

      Notes to Consolidated Financial Statements (unaudited)...............   5

      Management's Discussion and Analysis of Financial Condition and
      Results of Operations................................................   7

PART II.  OTHER INFORMATION................................................  11

                                       1
<PAGE>
                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S>                                                                                              <C>                  <C>          
                                                                                                 June 30, 1997     December 31, 1996
                                                                                                 -------------        -------------
ASSETS                                                                                            (unaudited)
------
CURRENT
  Cash and cash equivalents ..............................................................       $   8,948,909        $  10,620,477
  Marketable securities ..................................................................              43,795               43,795
  Accounts receivable ....................................................................             109,117            1,241,430
  Prepaids and other .....................................................................               9,552                 --
                                                                                                 -------------        -------------
                                                                                                     9,111,373           11,905,702

EVALUATED OIL AND GAS INTERESTS, full-cost method ........................................           1,831,713            1,611,665
UNEVALUATED OIL AND GAS INTERESTS, full-cost method, net .................................         249,980,012          221,884,126
FIXED ASSETS, net of accumulated depreciation of $84,332 at June 30, 1997 ................              88,060               74,219
  and $68,733 at December 31, 1996
ORGANIZATION COSTS, net of accumulated depreciation of $102,536 at June 30, 1997
  and $80,272 at December 31, 1996 .......................................................               3,006               25,270
                                                                                                 -------------        -------------
TOTAL ASSETS .............................................................................       $ 261,014,164        $ 235,500,982
                                                                                                 -------------        -------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT
  Accounts payable .......................................................................       $     830,486        $   2,560,665
  Accrued compensation ...................................................................             509,000              245,000
                                                                                                 -------------        -------------
                                                                                                     1,339,486            2,805,665

DEFERRED INCOME TAXES ....................................................................          70,458,512           63,967,775
MINORITY INTEREST ........................................................................           2,124,170            1,060,433

STOCKHOLDERS' EQUITY
Share capital -
   Authorized unlimited common shares without par value and unlimited Class A
   preferred shares without par value; 34,819,606 issued and outstanding common
   shares at June 30, 1997
   and 13,315,796 at December 31, 1996 ...................................................         194,265,713            6,781,616

Preferred share subscriptions - 5,002,972 shares at December 31, 1996 ....................                --             45,652,120

Special warrant subscriptions - 14,274,171 warrants at December 31, 1996 .................                --            119,548,227

Deficit accumulated during development stage .............................................          (7,173,485)          (4,314,622)

Treasury stock, 29 shares held at June 30, 1997 and December 31, 1996 ....................                (232)                (232)
                                                                                                 -------------        -------------
Total Stockholders' Equity ...............................................................         187,091,996          167,667,109
                                                                                                 -------------        -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............................................       $ 261,014,164        $ 235,500,982
                                                                                                 =============        =============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)
         STATEMENTS OF CONSOLIDATED OPERATIONS AND ACCUMULATED DEFICIT
                                  (Unaudited)
<TABLE>
<CAPTION>
<S>                                                <C>              <C>              <C>              <C>              <C>         
                                                                                                                   Cumulative Total
                                                                                                                    from Inception
                                                          Six Months Ended                Three Months Ended      (February 3, 1995)
                                                   -----------------------------     -----------------------------          to
                                                  June 30, 1997   June 30,  1996    June 30, 1997    June 30,  1996   June 30, 1997
                                                  -------------   --------------    -------------    --------------    ------------
REVENUE

 Crude oil sales ..............................    $    436,333     $       --       $    116,837     $       --       $    670,015
 Interest income ..............................         234,568          132,182          120,080           86,763          728,550
                                                   ------------     ------------     ------------     ------------     ------------
                                                        670,901          132,182          236,917           86,763        1,398,565

EXPENSES

 Lease operating expenses .....................         231,155             --                732             --            483,659
 General and administrative ...................       3,281,260          892,391        2,371,855          599,612        6,804,571
 Depreciation and amortization ................          37,863           35,212           17,426           17,606          186,868
 Dry hole and abandonment costs ...............          16,952             --               --               --          1,144,668
 Geological and geophysical ...................          27,372            1,759           18,143            1,759           47,662
 Loss on sale of resource properties ..........            --               --               --               --             31,357
                                                   ------------     ------------     ------------     ------------     ------------
                                                      3,594,602          929,362        2,408,156          618,977        8,698,785

LOSS BEFORE INCOME TAXES ......................      (2,923,701)        (797,180)      (2,171,239)        (532,214)      (7,300,220)

INCOME TAX EXPENSE ............................           7,733              750             --               --             10,071
                                                   ------------     ------------     ------------     ------------     ------------
NET LOSS BEFORE MINORITY INTEREST .............      (2,931,434)        (797,930)      (2,171,239)        (532,214)      (7,310,291)

MINORITY INTEREST .............................          72,571             --             34,551             --            136,806
                                                   ------------     ------------     ------------     ------------     ------------
NET LOSS ......................................    $ (2,858,863)    $   (797,930)    $ (2,136,688)    $   (532,214)    $ (7,173,485)
                                                   ============     ============     ============     ============     ============
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE, beginning of period ........      (4,314,622)    ($ 2,119,985)    ($ 5,036,797)    ($ 2,385,701)            --

DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE, end of period ..............    $ (7,173,485)    $ (2,917,915)    $ (7,173,485)    $ (2,917,915)    $ (7,173,485)
                                                   ============     ============     ============     ============     ============
NET LOSS PER COMMON SHARE .....................    $      (0.10)    $      (0.06)    $      (0.07)    $      (0.04)    $      (0.48)
                                                   ============     ============     ============     ============     ============
WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING ...................      30,033,434       12,817,020       30,033,434       12,817,020       15,078,264
                                                   ============     ============     ============     ============     ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)
                     STATEMENTS OF CONSOLIDATED CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                              <C>                <C>               <C>
                                                                                                                   Cumulative Total
                                                                                                                    from Inception
                                                                                                                  (February 3, 1995)
                                                                                        Six Months Ended                    to
                                                                                 ------------------------------    
                                                                                June 30, 1997     June 30, 1996       June 30, 1997
                                                                                -------------     -------------       -------------
OPERATING ACTIVITIES

 Net loss .................................................................      $ (2,858,863)      $  (797,930)      $  (7,173,485)
 Add (subtract) items not requiring (providing) cash:
 Minority interest ........................................................           (72,571)             --              (136,806)
 Common stock contribution to 401(k) retirement plan ......................              --              78,750              78,750
 Dry hole and abandonment costs ...........................................            16,952              --             1,139,758
 Loss on sale of resource properties ......................................              --                --                31,357
 Depreciation and amortization ............................................            37,863            35,212             186,868
 Changes in working capital excluding changes to cash and cash equ
    Accounts receivable ...................................................         1,138,757               163             778,684
    Prepaids and other, net ...............................................            (9,552)           (7,177)             (9,552)
    Accounts payable ......................................................        (1,731,781)         (117,691)           (102,128)
    Accrued compensation ..................................................           264,000              --               509,000
                                                                                 ------------       -----------       -------------
Cash Flow Used in Operating Activities ....................................        (3,215,195)         (808,673)         (4,697,554)
                                                                                 ------------       -----------       -------------
INVESTING ACTIVITIES

 Exploration of oil and gas properties ....................................        (3,297,185)         (943,468)        (10,830,394)
 Proceeds from acquisition ................................................               194              --               630,420
 Proceeds from sale of property ...........................................              --                --                84,336
 Other asset additions ....................................................           (29,440)             (152)           (263,396)
                                                                                 ------------       -----------       -------------
Cash Flow Used in Investing Activities ....................................        (3,326,431)         (943,620)        (10,379,034)
                                                                                 ------------       -----------       -------------
FINANCING ACTIVITIES

 Proceeds from special warrants issued ....................................              --           5,095,548          12,108,917
 Proceeds from share capital issued .......................................         3,733,751           228,750          10,266,502
 Proceeds from additional paid-in capital contributed .....................              --                --                   999
 Contributions by minority interest .......................................         1,136,307              --             1,649,311
 Purchase of treasury stock ...............................................              --                (232)               (232)
                                                                                 ------------       -----------       -------------
Cash Flow Provided by Financing Activities ................................         4,870,058         5,324,066          24,025,497
                                                                                 ------------       -----------       -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......................        (1,671,568)        3,571,773           8,948,909

Cash and cash equivalents, beginning of period ............................        10,620,477         3,365,603                --
                                                                                 ------------       -----------       -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ..................................      $  8,948,909       $ 6,937,376       $   8,948,909
                                                                                 ============       ===========       =============
SUPPLEMENTAL DISCLOSURES
 Common stock granted pursuant to an agency
    agreement for a private placement .....................................      $       --         $      --         $     250,000
 Common stock issued pursuant to amalgamation .............................              --                --               170,116
 Common stock issued pursuant to acquisitions .............................        18,550,000              --           171,641,430
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>
                   SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

BASIS OF PRESENTATION

      Seven Seas Petroleum Inc. (a Yukon Territory, Canada corporation) was 
formed on February 3, 1995. Seven Seas Petroleum Inc. and its subsidiaries
(collectively referred to as "Seven Seas" or the "Company") are collectively a
development stage enterprise engaging in the acquisition, exploration, and
development of interests in oil and gas projects worldwide. The Company's
primary business operations to date have been the exploration and development of
its interests in Colombia, South America.

      The Company has yet to generate any significant revenue from oil and gas
sales and has no assurance of future revenues. The Company's principal asset is
its 57.7 percent participating interest in the Dindal Association Contract and
Rio Seco Association Contract (collectively, the "Association Contracts"). The
Association Contracts were issued by Empresa Colombiana de Petroleos
("Ecopetrol"), the National Oil Company of Colombia, in March 1993 and August
1995, respectively, and entitle the Company to engage in exploration,
development, and production activities in Colombia. As of June 30, 1997, three
wells have been drilled and completed on the Dindal Association Contract. Two of
the wells have been production tested by the Company and one was plugged and
abandoned as a dry hole prior to the Company acquiring an interest in the
Association Contracts. A fourth well, the El Segundo No. 1-S (formerly the El
Segundo No. 3), has been drilled to a total depth of 6,920 feet. Production and
reservoir testing on this well has commenced with results expected in late
September 1997. The Company commenced drilling its first well on the Rio Seco
Association Contract, the Tres Pasos No. 1 on September 10, 1997.

      Seven Seas is subject to several categories of risk associated with its
development stage activities. Oil and gas exploration and development is a
speculative business and involves a high degree of risk. The Company has
expended, and plans to expend, significant amounts of capital on the acquisition
and exploration of its properties, and most of such properties have not been
fully evaluated for hydrocarbon potential. The exploration and development of
current properties and any properties acquired in the future are expected to
require substantial amounts of additional capital which the Company may be
required to raise through debt or equity financings, which might involve
encumbering properties or entering into arrangements where certain costs of
exploration will be paid by others to earn an interest in the property. There
are risks that result because the Company has acquired, and intends to continue
to acquire, interests in properties outside of North America, in some cases in
countries that may be considered politically and economically unstable. Seven
Seas' success currently depends to a high degree on its activities in Colombia.

      The accompanying unaudited interim consolidated financial statements
include the accounts of the Company after elimination of intercompany balances
and transactions.

                                       5
<PAGE>
      The unaudited interim consolidated financial statements of the Company for
the periods indicated herein have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission and in
accordance with generally accepted accounting principles for interim financial
reporting. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments, consisting of normal
recurring accruals, necessary to present fairly the information in the
accompanying consolidated financial statements have been included. Interim
results are not necessarily indicative of the results of operations or cash flow
for a full year period. Certain amounts have been reclassified here to conform
to current period presentation.

1.  EARNINGS PER SHARE

      Net loss per share is computed using the weighted average number of shares
outstanding. No effect was given to common stock equivalents, as the effect
would be antidilutive.

      In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128") "Earnings per
Share." SFAS 128 establishes standards for computing and presenting earnings per
share ("EPS") and applies to entities with publicly held common stock or
potential common stock. This statement simplifies the standards for computing
and presenting EPS previously found in Accounting Principles Board Opinion No.
15, "Earnings Per Share," and makes them comparable to international EPS
standards. This statement is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods; earlier
application is not permitted. The statement requires restatement of all
prior-period EPS data presented. Considering the guidelines as prescribed by
SFAS 128, the Company's management believes that the adoption of this statement
will not have a material effect on EPS and thus pro forma EPS, as suggested for
all interim and annual periods prior to required adoption, have been omitted.

2.  NEW ACCOUNTING PRONOUNCEMENTS

      In June 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income" ("SFAS
130"). SFAS 130 establishes standards of reporting and display of comprehensive
income and its components. This statement is effective for fiscal years
beginning after December 15, 1997.

      In June 1997, the Financial Accounting Standards Board also issued
Statement of Financial Accounting Standards No. 131 ("SFAS 131") "Disclosures
about Segments of an Enterprise and Related Information." SFAS 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. This statement is
effective for financial statements issued for periods ending after December 15,
1997. The Company's management believes that the adoption of this statement will
not have a material effect on its consolidated results of operations, financial
position, or cash flows.

                                       6
<PAGE>
3.  SUBSEQUENT EVENT

      On August 7, 1997, the Company issued $25 million of Special Notes in a
private transaction to institutional and accredited investors. The net proceeds
after commissions and expenses were approximately $23.4 million. The Special
Notes are exchangeable by the holders into Convertible Debentures at any time
and will be automatically converted upon approval of a prospectus qualifying the
issuance of the Convertible Debentures. The Convertible Debentures will be
issued in denominations of $100, have a maturity date of August 7, 2003 and will
bear interest at a rate of 6 percent per annum. The Convertible Debentures are
convertible into Units of the Company, at a rate of $11.50 per Unit. Each Unit
consists of one share of common stock and a one-half common share purchase
warrant with each whole warrant exercisable for a period of one year from August
7, 1997 at $15.00 per share. These Convertible Debentures are common stock
equivalents (potentially 3,260,870 common shares) and are potentially dilutive
to future earnings, if the Company has net earnings in the future. The
Convertible Debentures are secured by a pledge of the shares of the subsidiaries
of the Company and are guaranteed by Seven Seas Petroleum Holdings Inc.


ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
            OF OPERATIONS

GENERAL

      INTRODUCTION.  Seven Seas Petroleum Inc. and its consolidated subsidiaries
(the "Company") are engaged in the exploration and development of oil and gas
properties outside North America. The Company, through its subsidiaries, owns
interests in prospective areas located in Colombia, Australia, and Papua New
Guinea, all of which are in the initial stages of exploration and development.
The Company's primary business strategy is to explore and develop its existing
interests in Colombia. The Company may also seek to acquire additional oil and
gas exploration opportunities in Colombia which management believes have
significant reserve potential. As a result of its focus on its Colombian
properties, the Company intends to divest or farmout it's oil and gas interests
in Australia and Papua New Guinea.

      The Company's principal asset is a 57.7 % interest in the Dindal
Association Contract and Rio Seco Association Contract (collectively, the
"Association Contracts") that relate to the oil and gas prospects located in the
Magdalena Basin in Colombia, approximately 90 kilometers northwest of Bogota.
The Association Contracts entitle the Company to engage in exploration,
development, and production activities in 106,000 acres located in the Magdalena
Basin.

      The Company's success currently depends to a high degree on its activities
in Colombia. This dependence is likely to be reflected in both the short-term
performance and the Company's long-term financial results. During September
1997, the Company commenced drilling the Tres Pasos No. 1-E well on the Rio Seco
Contract and was performing production and reservoir testing on the El Segundo
No. 1-S well (formerly the El Segundo No. 3).

                                       7
<PAGE>
RESULTS OF DEVELOPMENT STAGE OPERATION

      THREE MONTHS ENDED JUNE 30, 1997 AND 1996.  The Company reported net 
losses of $2,136,688 ($.07 per share) during the second quarter of 1997 as
compared to $532,214 ($.04 per share) during the same period in 1996. The
increase in net loss occurred principally as result of the expansion of the
exploration activities in Colombia, costs associated with listing the Company's
securities on the Toronto Stock Exchange, and additions to the Company's
professional staff as well as severance payments and related compensation costs
associated with former executives of the Company.

      The Company had oil sales revenues of $116,837 for the second quarter 1997
and did not sell any oil in the same period of 1996. All oil sales made to date
pertain solely to production testing of the El Segundo No. 1-E and the El
Segundo No. 1-N wells (formerly the El Segundo No. 1 and the El Segundo No. 2
wells). Although the Company intends to continue to sell oil resulting from
production tests; significant production is not expected until further
evaluation of the field through the drilling of additional wells and the
construction of producing facilities and pipelines.

      The Company received interest income of $120,080 for the second quarter of
1997 as compared to $86,763 received for the same period in 1996. The increase
was due to higher cash balances resulting from the private placements of the
Company's securities.

      SIX MONTHS ENDED JUNE 30, 1997 AND 1996. The Company reported net losses
of $2,858,863 ($.10 per share) during the first six months of 1997 as compared
to $797,930 ($.06 per share) during the same period in 1996. The increase in net
loss occurred principally as result of the expansion of the exploration
activities in Colombia, costs associated with listing the Company's securities
on the Toronto Stock Exchange, and additions to the Company's professional staff
as well as severance payments and related compensation costs associated with
former executives of the Company.

      The Company had oil sales revenues of $436,333 for the first six months of
1997. Oil production (net to the Company, including minority interest) totalled
30,748 barrels in the first six months of 1997. All oil sales were to Ecopetrol
and pertained to the production testing of the El Segundo No. 1-E and the El
Segundo No. 1-N wells (formerly the El Segundo No. 1 and the El Segundo No. 2
wells). The El Segundo No. 1-E was completed for production and reservoir
testing in February 1996. Production testing commenced in July 1996 after
receipt of a permit to transport produced oil by truck. Consequently, no oil
sales were made until the third quarter of 1996. The Company received an average
price $14.19 per barrel of oil produced during the six months ended June 30,
1997. Although the Company intends to continue to sell oil resulting from
production tests; significant production is not expected until further
evaluation and development of the field through the drilling of additional wells
and construction of producing facilities and pipelines.

      The Company incurred production costs of $231,155 during production 
testing of the El Segundo No. 1-N well (formerly the El Segundo No. 2 well) in
the first six months of 1997.

                                       8
<PAGE>
      The Company received interest income of $234,568 for the first six months
of 1997 as compared to the $132,182 received for the same period in 1996. The
increase was principally due to interest earned on the cash balances received
from the private placements of the Company's securities.

LIQUIDITY AND CAPITAL RESOURCES. The Company's activities have been funded
primarily by the proceeds from private placements of the Company's securities
from inception through August 1997, resulting in aggregate cash proceeds of
$47.5 million. In 1996, the Company acquired an additional 36.7% interest in the
Association Contracts in Colombia in exchange for the issuance of the Company's
securities valued at $153,091,430 in the aggregate. From inception through June
30, 1997, the Company expended $10,830,394 for the acquisition, exploration, and
development of its oil and gas properties including $9,074,937 with respect to
its interests in Colombia and approximately $1,755,457 with respect to its
interests in Australia, Papua New Guinea, Argentina, Turkey, and other
countries, of which $1,144,668 has been expensed through June 30, 1997. This
amount included $500,800 for the cost of an option to acquire a 5% participating
interest in three exploration blocks in North Africa. The Company declined to
exercise the option and expensed the cost. Additionally, the Company expensed
$622,006 associated with a dry hole in the San Jorge Basin, Argentina. The
Company's activities in North Africa and Argentina have been discontinued.

      COLOMBIA. The Company is required to drill a well on each of the Rio Seco 
and Dindal blocks by August and September 1997, respectively, at an estimated
cost of approximately $5.9 million, to fulfill its work commitments for the
current contract year. The Tres Pasos No. 1-E and the El Segundo No. 1-S
(formerly the El Segundo No. 3) are intended to fulfill these obligations. In
1997, the Company plans to drill at least two additional wells on the Dindal
block and to conduct seismic operations for an aggregate estimated cost of $7.7
million. The Company may also spend up to an additional $400,000 for operating
costs during the remainder of 1997. An exploratory well on the Company's
non-operated Tapir Block in Colombia, South America is scheduled to be drilled
in early 1998 at a cost to the Company of approximately $250,000.

      For the first six months of 1997 the Company had oil sales of $436,333
which pertained solely to production testing of the El Segundo No. 1-E and the
El Segundo No. 1-N wells (formerly the El Segundo No. 1 and the El Segundo No. 2
wells) in Colombia. The El Segundo No. 1-E was completed for production and
reservoir testing in February 1996. Production testing commenced in July 1996
after receipt of a permit to transport produced oil by truck. Consequently, no
oil sales were made until the third quarter of 1996. Although the Company
intends to continue to sell oil resulting from production tests; significant
production is not expected until further evaluation and development of the field
through the drilling additional of wells and construction of producing
facilities and pipelines. Although the Company has solicited proposals for
various pipeline options, the substance and timing of any decision regarding
appropriate pipeline and production facilities will depend on the results of the
evaluation and appraisal of the Company's discovery.

      AUSTRALIA AND PAPUA NEW GUINEA.  The Company has entered into a letter of 
intent with respect to the sale of its interests for $850,000 in Exploration
Permit 381 and Exploration Permit 408, both of which are located in the southern
Perth Basin, Western Australia. In addition, the Company would reserve a small
overriding royalty interest in each permit. Consummation of the transaction

                                       9
<PAGE>
contemplated by the letter of intent is subject to several conditions, including
approvals of third parties and governmental authorities. No assurance can be
given that the Company will complete the sale.

      The Company holds a 20% working interest in Block T27P, a 1.8 million acre
block in approximately 70 meters of water in the Bass Basin, the central of
three basins offshore southern Australia. The Bass Basin has been the site of a
series of gas and oil shows and discoveries, including the Yolla Field, which is
adjacent to Block T27P. The operator of the Bass Basin permit in Australia plans
to drill an exploratory well on a prospect located 10 kilometers north of Yolla
Field and has applied for a permit extension until a suitable drilling rig can
be contracted.

      The Company holds 100% of exploration permit PPL-182 in southern Papua New
Guinea. The permit covers an area of 1,200,000 acres located both onshore and
offshore the Fly River Delta and the Gulf of Papua. The cost of the first year
work program for the PPL-182 permit was completed at a total cost of
approximately $116,000. Based on the results of the first year program, the
Company has decided to proceed with the second year work program, subject to
divestiture or farmout. The second year program is expected to cost
approximately $500,000.

      WORKING CAPITAL. As of June 30, 1997 the Company had working capital of
approximately $7.8 million and realized an additional $23.4 million in cash
proceeds on August 7,1997 from a private placement of convertible debentures
described below under "-Convertible Debentures." Current funds on hand will not
be sufficient to meet all planned exploration and development costs. Therefore,
additional financing will be necessary to complete these projects prior to the
start-up of production and generation of cash flows from the Company's oil
discovery in Colombia in quantities sufficient to cover operating expenses
related thereto. In addition, it is anticipated that the Company's future
exploration activities with respect to its current properties and any additional
properties which may be acquired will require substantial amounts of additional
capital which may be required to be sourced through debt or equity financing,
encumbering properties or entering agreements whereby certain costs of
exploration will be paid by others to earn an interest in the property. The
Company does not anticipate that it will forfeit its interest in such property
within the next 18 months and will use the proceeds from the recently completed
$25 million offering of Special Notes to meet its current drilling obligations
and for general corporate purposes.

      CONVERTIBLE DEBENTURES. On August 7, 1997, the Company issued $25 million
of Special Notes in a private transaction with institutional and accredited
investors. Interest on the Special Notes is due and payable in arrears at a rate
of 6% per annum on December 31 and June 30 in each year until maturity,
commencing on December 31, 1997. The Special Notes are exchangeable for a like
principal amount of convertible redeemable debentures (the "Debentures") on or
before August 7, 1998. The Special Notes will be deemed to be exchanged upon the
earlier to occur of (i) the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") covering the resale of
the Debentures and compliance by the Company with certain Canadian securities
requirements and (ii) August 7, 1998. The Debentures are convertible into units
(the "Units") on the basis of one Unit for each $11.50 principal amount of
Debentures outstanding. Each Unit consists of one common share and a one-half
common share purchase warrant with each whole purchase warrant exercisable for a
period of one year from August 7, 1997 at $15.00 per share. These 

                                       10
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Convertible Debentures are common stock equivalents (potentially 3,260,870
common shares) and are potentially dilutive to future earnings, if the Company
has net earnings in the future. The Convertible Debentures are secured by a
pledge of shares of the subsidiaries of the Company and are guaranteed by Seven
Seas Petroleum Holdings Inc.

               DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

      This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1934, as amended (the
"Securities Act"). All statements other than statements of historical fact
included in this Form 10-Q, including without limitation, statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the planned capital expenditures, 1997 drilling
activities, the Company's financial position, business strategy, and other plans
and objectives for future operations, are forward-looking statements. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
will prove to have been correct.

PART II.    OTHER INFORMATION

Item 1.   Legal Proceedings

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

Item 2.   Changes in Securities

      None.

Item 3.   Defaults Upon Senior Securities

      None.

Item 4.   Submission of Matters to a Vote of Security Holders

      None.

Item 5.  Other Information

      None.

Item 6.  Exhibits and Reports on 8-K

      None

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Signatures
                                              Seven Seas Petroleum Inc.
Date:  December 11, 1997                By:   Herbert C. Williamson III
                                              Executive Vice President and 
                                               Chief Financial Officer
                                         
                                              Ray A. Housley
                                              Treasurer and Controller