<PAGE>   1

                                   FORM 10-Q

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549-1004

(Mark One)

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

                 For the quarterly period ended March 31, 1997

                                       OR

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


                         Commission file number 1-13916

                       UNION PACIFIC RESOURCES GROUP INC.
             (Exact name of registrant as specified in its charter)

            UTAH                                       13-2647483
     (State or other jurisdiction of                (I.R.S. Employer
      incorporation or organization)                Identification No.)

                      801 CHERRY STREET, FORT WORTH, TEXAS
                    (Address of principal executive offices)

                                     76102
                                   (Zip Code)

                                 (817) 877-6000
              (Registrant's telephone number, including area code)


         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 
      ---          --- 

         As of April 30, 1997, there were 253,778,984 shares of the
registrant's common stock outstanding.
<PAGE>   2
                       UNION PACIFIC RESOURCES GROUP INC.
                                     INDEX


<TABLE>
<CAPTION>
                                                                                                 Page Number
                                                                                                 -----------
<S>                                                                                              <C>
                                      PART I.  FINANCIAL INFORMATION
                                      ------------------------------


ITEM 1:  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

         CONDENSED STATEMENTS OF CONSOLIDATED INCOME - For the
           Three Months Ended March 31, 1996 and 1997 . . . . . . . . . . . . . . . . . . . .           1

         CONDENSED STATEMENTS OF CONSOLIDATED FINANCIAL POSITION -
           At December 31, 1996 and March 31, 1997  . . . . . . . . . . . . . . . . . . . . .       2 - 3

         CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS - For the
           Three Months Ended March 31, 1996 and 1997 . . . . . . . . . . . . . . . . . . . .           4

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . .       5 - 7

         INDEPENDENT ACCOUNTANTS' REPORT    . . . . . . . . . . . . . . . . . . . . . . . . .           8


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      9 - 15



                                      PART II.  OTHER INFORMATION
                                      ---------------------------


ITEM 1:  LEGAL PROCEEDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     16 - 17

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  . . . . . . . . . . . . . . . .          17

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . .     18 - 19

SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          20
</TABLE>
<PAGE>   3
PART I.  FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       UNION PACIFIC RESOURCES GROUP INC.

                  CONDENSED STATEMENTS OF CONSOLIDATED INCOME
               For the Three Months Ended March 31, 1996 and 1997
                      (Millions, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         1996           1997
                                                                       --------        -------
<S>                                                                    <C>             <C>
Operating revenues: (Note 2)
   Oil and gas operations:
      Producing properties  . . . . . . . . . . . . . . . . . . .      $  232.0        $ 370.0
      Plants, pipelines and marketing   . . . . . . . . . . . . .         114.2          124.7
      Other oil and gas revenues  . . . . . . . . . . . . . . . .          12.3            4.6            
                                                                       --------        -------            
         Total oil and gas operations . . . . . . . . . . . . . .         358.5          499.3
   Minerals . . . . . . . . . . . . . . . . . . . . . . . . . . .          31.2           32.4
                                                                       --------        -------
         Total operating revenues . . . . . . . . . . . . . . . .         389.7          531.7
                                                                       --------        -------

Operating expenses:
   Production . . . . . . . . . . . . . . . . . . . . . . . . . .          62.8           73.1
   Exploration, including exploratory dry holes . . . . . . . . .          29.7           42.8
   Plants, pipelines and marketing  . . . . . . . . . . . . . . .          60.6           76.6
   Minerals . . . . . . . . . . . . . . . . . . . . . . . . . . .           1.6            1.3
   Depreciation, depletion and amortization . . . . . . . . . . .         123.7          133.0
   General and administrative . . . . . . . . . . . . . . . . . .          14.0           18.5
                                                                       --------        -------
         Total operating expenses . . . . . . . . . . . . . . . .         292.4          345.3
                                                                       --------        -------

Operating income  . . . . . . . . . . . . . . . . . . . . . . . .          97.3          186.4
Other income (expense) - net  . . . . . . . . . . . . . . . . . .           2.0           (3.0)
Interest expense  . . . . . . . . . . . . . . . . . . . . . . . .         (13.0)         (10.7)
                                                                       --------        -------
Income before income taxes  . . . . . . . . . . . . . . . . . . .          86.3          172.7
Income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .         (27.1)         (55.5)
                                                                       --------        -------

Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . .      $   59.2        $ 117.2
                                                                       ========        =======

Earnings per share  . . . . . . . . . . . . . . . . . . . . . . .      $   0.24        $  0.47
                                                                       ========        =======
Weighted average shares outstanding . . . . . . . . . . . . . . .         249.9          251.0
Cash dividends per share  . . . . . . . . . . . . . . . . . . . .      $   0.05        $  0.05
</TABLE>





 See the notes to the condensed consolidated financial statements (unaudited).





                                     - 1 -
<PAGE>   4
                       UNION PACIFIC RESOURCES GROUP INC.

            CONDENSED STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
                    At December 31, 1996 and March 31, 1997
                             (Millions of Dollars)
<TABLE>
<CAPTION>
                                                                         December 31,          March 31,     
                                                                             1996                 1997       
                                                                         ------------        ------------ 
                                                                                              (Unaudited)    
<S>                                                                       <C>                 <C>
ASSETS

Current assets:
   Cash and temporary investments . . . . . . . . . . . . . . . . . . .    $  118.9            $  200.2
   Accounts receivable - net  . . . . . . . . . . . . . . . . . . . . .       351.6               282.2
   Inventories  . . . . . . . . . . . . . . . . . . . . . . . . . . . .        29.4                28.2
   Other current assets . . . . . . . . . . . . . . . . . . . . . . . .        86.4                27.1
                                                                           --------            --------
          Total current assets  . . . . . . . . . . . . . . . . . . . .       586.3               537.7
                                                                           --------            --------
                                                                                              
Properties (successful efforts method):                                                       
   Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     6,190.0             6,448.5
   Accumulated depreciation, depletion and amortization . . . . . . . .    (3,217.6)           (3,375.7)
                                                                           --------            -------- 
          Total properties - net  . . . . . . . . . . . . . . . . . . .     2,972.4             3,072.8
Intangible and other assets . . . . . . . . . . . . . . . . . . . . . .        90.2                84.8
                                                                           --------            --------
                                                                                              
Total assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $3,648.9            $3,695.3
                                                                           ========            ========
</TABLE>





 See the notes to the condensed consolidated financial statements (unaudited).





                                     - 2 -
<PAGE>   5
                       UNION PACIFIC RESOURCES GROUP INC.

            CONDENSED STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
                    At December 31, 1996 and March 31, 1997
                             (Millions of Dollars)
<TABLE>
<CAPTION>
                                                                      December 31,         March 31,       
                                                                          1996               1997        
                                                                      ------------        -----------  
                                                                                          (Unaudited)    
<S>                                                                   <C>                 <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable  . . . . . . . . . . . . . . . . . . . . . .      $  407.4            $  404.2     
    Accrued taxes payable   . . . . . . . . . . . . . . . . . . .         134.1               134.1     
    Other current liabilities   . . . . . . . . . . . . . . . . .          71.3                83.2     
                                                                       --------            --------     
          Total current liabilities . . . . . . . . . . . . . . .         612.8               621.5     
                                                                       --------            --------     
                                                                                                        
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . .         670.9               571.3     
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . .         434.7               462.8     
Retiree benefits obligations  . . . . . . . . . . . . . . . . . .         151.4               152.1     
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . .           4.9                11.1     
Other long-term liabilities (Note 4)  . . . . . . . . . . . . . .         259.9               252.5     
Shareholders' equity: (Note 3)                                                                          
    Common stock, no par value;                                                                         
      Authorized shares--400,000,000                                                                    
      Issued shares--250,058,019 and 253,936,901    . . . . . . .            --                  --     
    Paid-in surplus   . . . . . . . . . . . . . . . . . . . . . .         872.9               983.8     
    Unearned Employee Stock Ownership Plan  . . . . . . . . . . .            --              (106.1)    
    Retained earnings   . . . . . . . . . . . . . . . . . . . . .         674.4               779.1     
    Unearned compensation   . . . . . . . . . . . . . . . . . . .         (17.5)              (15.4)    
    Deferred foreign exchange adjustment  . . . . . . . . . . . .         (12.0)              (13.3)    
    Treasury stock, at cost;                                                                            
      Shares--154,417 and 158,467   . . . . . . . . . . . . . . .          (3.5)               (4.1)  
                                                                       --------            --------  
          Total shareholders' equity  . . . . . . . . . . . . . .       1,514.3             1,624.0     
                                                                       --------            --------     
                                                                                                        
Total liabilities and shareholders' equity  . . . . . . . . . . .      $3,648.9            $3,695.3     
                                                                       ========            ========     
</TABLE>





 See the notes to the condensed consolidated financial statements (unaudited).





                                     - 3 -
<PAGE>   6
                       UNION PACIFIC RESOURCES GROUP INC.

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
               For the Three Months Ended March 31, 1996 and 1997
                             (Millions of Dollars)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                              1996             1997
                                                                             ------           -------
<S>                                                                         <C>              <C>
Cash flows provided by operations:

   Net income   . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $ 59.2           $ 117.2

   Non-cash charges to income:
      Depreciation, depletion and amortization  . . . . . . . . . . . .       123.7             133.0
      Deferred income taxes   . . . . . . . . . . . . . . . . . . . . .         7.4              28.1
      Other non-cash charges - net    . . . . . . . . . . . . . . . . .         7.6               5.3
   Changes in current assets and liabilities  . . . . . . . . . . . . .        18.1             138.6
                                                                             ------           -------
                                                                                              
          Cash provided by operations . . . . . . . . . . . . . . . . .       216.0             422.2
                                                                             ------           -------
                                                                                              
Cash flows from investing activities:                                                         
                                                                                              
   Capital and exploratory expenditures   . . . . . . . . . . . . . . .      (138.3)           (284.0)
   Proceeds from sales of assets  . . . . . . . . . . . . . . . . . . .        22.7               1.3
   Other investing activities - net   . . . . . . . . . . . . . . . . .         --               (0.9)
                                                                             ------           ------- 
                                                                                              
          Cash used by investing activities . . . . . . . . . . . . . .      (115.6)           (283.6)
                                                                             ------           ------- 
                                                                                              
Cash flows from financing activities:                                                         
                                                                                              
   Dividends paid   . . . . . . . . . . . . . . . . . . . . . . . . . .       (12.4)            (12.5)
   Advances to Union Pacific Corporation  . . . . . . . . . . . . . . .       (89.8)             --
   Debt repayments  . . . . . . . . . . . . . . . . . . . . . . . . . .        --               (99.6)
   Other financings - net   . . . . . . . . . . . . . . . . . . . . . .         1.2              54.8
                                                                             ------           -------
                                                                                              
          Cash used by financing activities . . . . . . . . . . . . . .      (101.0)            (57.3)
                                                                             ------           ------- 
                                                                                              
Net change in cash and temporary investments  . . . . . . . . . . . . .        (0.6)             81.3
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . . .        27.6             118.9
                                                                             ------           -------
                                                                             
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . .      $ 27.0           $ 200.2
                                                                             ======           =======
</TABLE>





 See the notes to the condensed consolidated financial statements (unaudited).





                                     - 4 -
<PAGE>   7
                       UNION PACIFIC RESOURCES GROUP INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.  RESPONSIBILITIES FOR FINANCIAL STATEMENTS - The condensed consolidated
    financial statements of Union Pacific Resources Group Inc. and subsidiaries
    (the "Company") have been prepared by management and are unaudited.  Such
    unaudited interim financial statements reflect all adjustments (including
    normal recurring adjustments) that are, in the opinion of management,
    necessary for a fair presentation of the financial position and operating
    results of the Company for the interim periods; however, such condensed
    statements do not include all of the information and footnotes required by
    generally accepted accounting principles to be included in a full set of
    financial statements.  The report of Deloitte & Touche LLP commenting on
    their review accompanies the condensed consolidated financial statements and
    is included in Part I, Item 1 in this report.  The Condensed Statement of
    Consolidated Financial Position at December 31, 1996 is derived from the
    audited financial statements as of December 31,1996.  The condensed
    consolidated financial statements should be read in conjunction with the
    consolidated financial statements and notes thereto contained in the
    Company's Annual Report on Form 10-K for the year ended December 31, 1996.
    The results of operations for the three months ended March 31, 1997 are not
    necessarily indicative of the results for the full year ending December 31,
    1997.

    The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of certain assets and
    liabilities and disclosure of contingent assets and liabilities at the date
    of the financial statements and the reported amounts of revenues and
    expenses during each reporting period.  Management believes its estimates
    and assumptions are reasonable; however, such estimates and assumptions are
    subject to a number of risks and uncertainties which may cause actual
    results to differ materially from the Company's estimates.


2.  PRICE RISK MANAGEMENT - The Company uses hydrocarbon-based derivative
    financial instruments from time to time to reduce risks associated with
    hydrocarbon price volatility.  While the use of these hedging arrangements
    may limit the downside risk of adverse price movements, it may also limit
    future gains from favorable movements.  Hedging generally is accomplished
    pursuant to exchange-traded futures contracts or master swap agreements
    based on standard forms.  Hedging gains and losses are deferred and
    recognized at delivery of the commodity.   At March 31, 1997, the Company
    had margin requirements totaling $7.3 million.  Such requirements were met
    with $4.6 million in cash deposits and $2.7 million in unrealized gains on
    open contracts.  Deferred gains on other derivative positions, primarily
    representing settled April 1997 hedges deferred as of March 31, 1997, were
    $4.6 million. Such margin deposits and deferred gains or losses are included
    in other current assets in the Company's Statements of Consolidated
    Financial Position.

    The Company is exposed to credit losses in the event of nonperformance by
    its counterparties.   At March 31, 1997, the Company's largest credit risk
    associated with any single counterparty, represented by the net fair value
    of open contracts with such counterparty, was approximately $2.4 million.

    At March 31, 1997, the Company had near-term futures contracts and price
    swaps for May through December 1997 with respect to notional natural gas
    volumes of 850 MMcfd at $1.94/Mcf.  The unrecognized mark-to-market gain
    associated with such contracts, representing the price the Company would
    receive to close such contracts at the reporting date, was $13.8 million.
    Also, at March 31, 1997, the Company had near-term crude oil price swap
    contracts for April through June 1997 with respect to notional crude oil





                                     - 5 -
<PAGE>   8
    volumes of 25 MBbld at $20.35/Bbl, and for July through September 1997 with
    respect to notional crude oil volumes of 15 Mbbld at $20.03/Bbl.  At the
    reporting date, these swaps had an unrecognized mark-to-market loss of $0.4
    million.  Additionally, the Company has simultaneously purchased crude oil
    put options (floor) and sold crude oil call options (ceiling), the
    combination of the two having the effect of establishing minimum and
    maximum prices the Company would receive for crude oil.   At March 31,
    1997, the Company's purchase and sale of such options had established a
    minimum price of $19.17/Bbl (including net premium paid) and a maximum
    price of $24.67/Bbl (including net premium received) with respect to 25.0
    Mbbld of crude oil for April through September 1997; and a minimum price of
    $18.97/Bbl and a maximum price of $24.47/Bbl with respect to 40 Mbbld for
    October through December 1997.  The value of these options at March 31,
    1997, was $5.9 million, representing the fair market value of such options
    given current market prices using an option pricing model.

    Previously, the Company had sold near-term futures contracts and price
    swaps for January through December 1998 with respect to notional natural
    gas volumes of 37 Mmcfd at $2.21/Mcf.  Subsequently, these positions have
    been offset by purchasing corresponding quantities of futures contracts and
    price swaps for the same delivery periods.  The unrecognized gain
    associated with these contracts is $0.7 million and will be recorded during
    1998.

    At March 31, 1997, the Company had outstanding long-term fixed price sales
    contracts relating to 73.7 Bcf of natural gas for delivery through December
    31, 2008.   The Company's marketing subsidiary, Union Pacific Fuels, Inc.,
    enters into long-term financial contracts that, in combination with these
    long-term fixed price sales agreements, secure a margin on the
    corresponding volume positions.  At March 31, 1997, long-term fixed price
    sales commitments for which corresponding financial positions had not been
    entered into totaled 63.4 Bcf at an average price of $2.97/Mcf, with a fair
    value of $27.3 million.  The remaining  commitments for 10.3 Bcf had been
    offset with financial contracts for similar volumes.  The unrecognized
    mark-to-market present value related to such hedged commitments at March
    31, 1997, was $0.7 million, consisting of a $0.7 million gain on the
    long-term physical fixed price sales commitments and a break even position
    on the corresponding financial contracts.

    At March 31, 1997, the Company had a total unrecognized mark-to-market
    present value gain of $48.0 million related to the financial and fixed
    price sales contracts described above.  Such gain comprises  a $28.0
    million net gain on contracts for physical delivery and a $20.0 million net
    gain on financial contracts.

3.  COMMON STOCK - Effective January 2, 1997, the Company  instituted  an
    employee stock ownership plan ("ESOP").  The ESOP purchased 3.7 million
    shares or $107.3 million of newly issued common stock (the "ESOP Shares")
    from the Company, which will be used to fund the Company's matching
    obligations under its 401(k) Thrift Plan.  All regular employees of the
    Company were eligible to participate in the ESOP upon its effective date.

    The ESOP Shares, which are held in trust, were purchased with the proceeds
    from a 30-year loan from the Company.  Such shares initially have been
    pledged as collateral for the loan.  As loan payments are made, shares are
    released from collateral, based on the proportion of debt service paid.
    Principal and interest requirements are $8.7 million annually, and will be
    funded with dividends paid on the unallocated ESOP Shares and with cash
    contributions from the Company.  Principal or interest prepayments may be
    made to ensure that the Company's minimum obligation is met.

    Shares held by the ESOP are included in the computation of earnings per
    share as such ESOP Shares are released from collateral.  Such releases of
    ESOP Shares have been allocated to participants' accounts and





                                     - 6 -
<PAGE>   9
    have been charged to compensation expense at the fair market value of the
    shares on the date of the employer match.  Dividends on allocated ESOP
    Shares have been recorded as a reduction of retained earnings; dividends on
    unallocated ESOP Shares have been recorded as a reduction of the principal
    or accrued interest on the loan.

    On February 2, 1997, the Board of Directors authorized the repurchase of up
    to $50 million in shares of common stock of the Company in any fiscal year.


4.  COMMITMENTS AND CONTINGENCIES - The Company is subject to Federal, state,
    provincial and local environmental laws and regulations and currently is
    participating in the investigation and remediation of a number of sites.
    Where the remediation costs reasonably can be determined, and where such
    remediation is probable, the Company has recorded a liability.  Management
    does not expect future environmental obligations to have a material impact
    on the results of operations, financial condition or cash flows of the
    Company.

    In the last ten years, the Company has disposed of significant pipeline,
    refining and producing property assets.  In disposition agreements in
    connection therewith, the Company has made certain representations and
    warranties relating to the assets sold and provided certain indemnities
    with respect to liabilities associated with such assets.  The Company has
    been advised of possible claims which may be asserted by the purchasers of
    certain of the disposed assets for alleged breaches of such representations
    and warranties and under certain indemnities.  Certain claims related to
    compliance with environmental laws remain pending.  In addition, some of
    the representations, warranties and indemnities related to some of the
    disposed assets continue to survive under such disposition agreements.
    Further claims may be made against the Company under such disposition
    agreements or otherwise.  While no assurance can be given as to the actual
    outcome of these claims, the Company does not expect these matters to have
    a materially adverse effect on its results of operations, cash flows, or
    financial condition.

    There are lawsuits pending against the Company and certain of its
    subsidiaries which are described in Part I, Item 3 - Legal Proceedings in
    the Company's 1996 Annual Report on Form 10-K and in Part II, Item 1 -
    Legal Proceedings in this report.  While the Company intends to defend
    vigorously against the foregoing lawsuits and any similar lawsuits, if such
    suits ultimately are resolved against the Company on a widespread basis,
    damage awards and a loss of future revenue could result which, in the
    aggregate, could be material.

    The Company is a defendant in a number of other lawsuits and is involved in
    governmental proceedings arising in the ordinary course of business in
    addition to those described above.  The Company also has entered into
    commitments and provided guarantees for specific financial and contractual
    obligations of its subsidiaries and affiliates.  The Company does not
    expect that these lawsuits, commitments or guarantees will have a
    materially adverse effect on its results of operations or financial
    condition.





                                     - 7 -
<PAGE>   10

                        INDEPENDENT ACCOUNTANTS' REPORT


To the Board of Directors and Shareholders of
Union Pacific Resources Group Inc.
Fort Worth, Texas

We have reviewed the accompanying condensed statement of consolidated financial
position of Union Pacific Resources Group Inc. (the "Company") as of March 31,
1997, and the related condensed statements of consolidated income and cash
flows for the three-month periods ended March 31, 1996 and 1997.  These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters.  It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial position of Union Pacific
Resources Group Inc. as of December 31, 1996, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
year then ended (not presented herein); and in our report dated January 29,
1997, we expressed an unqualified opinion on those consolidated financial
statements.  In our opinion, the information set forth in the accompanying
condensed statement of consolidated financial position as of December 31, 1996
is fairly stated, in all material respects, in relation to the statement of
consolidated financial position from which it has been derived.




DELOITTE & TOUCHE LLP
Fort Worth, Texas

April 16, 1997





                                     - 8 -
<PAGE>   11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

                       UNION PACIFIC RESOURCES GROUP INC.

                             RESULTS OF OPERATIONS

            QUARTER ENDED MARCH 31, 1996 COMPARED TO MARCH 31, 1997

OVERVIEW
<TABLE>
<CAPTION>
                                                                          Three Months Ended March 31,
                                                                          ----------------------------
                                                                              1996            1997   
                                                                              ----            ----
                                                                              (Millions of dollars)

  <S>                                                                      <C>             <C>
     Selected financial data:                               
         Total operating revenues . . . . . . . . . . . . . . . .           $ 389.7         $ 531.7
         Total operating expenses . . . . . . . . . . . . . . . .             292.4           345.3
         Operating income . . . . . . . . . . . . . . . . . . . .              97.3           186.4
         Net income . . . . . . . . . . . . . . . . . . . . . . .              59.2           117.2
</TABLE>


OPERATING INCOME increased for the first quarter 1997 by $89.1 million (92%)
over the first quarter 1996, as a result of higher product price realizations
(up 37% to $2.53/Mcfe) and higher volumes (up 16% to 1,882.8 MMcfed). This
increase was partially offset by lower marketing income related to lower gas
margins and by cost increases associated with expanded exploration activity.
Concerns over tight natural gas supply related to low storage inventories and
cooler temperatures supported prices during the first quarter 1997. Volume
growth has been achieved primarily through drilling and ethane recovery.

NET INCOME of $117.2 million for the first quarter 1997 was up by $58.0 million
(98%) from the same period in 1996, as improved operating results were offset by
increased income taxes.


<TABLE>
<CAPTION>
                                                                          Three Months Ended March 31,
                                                                          ----------------------------
                                                                             1996            1997
                                                                             ----            ----
                                                                             (Millions of dollars)
    <S>                                                                   <C>             <C>
      Operating income:
         Oil and gas operations . . . . . . . . . . . . . . . . .          $ 82.8          $ 175.2
         Minerals . . . . . . . . . . . . . . . . . . . . . . . .            29.5             30.6
         General and administrative . . . . . . . . . . . . . . .           (15.0)           (19.4)
</TABLE>





                                     - 9 -
<PAGE>   12
OIL AND GAS OPERATIONS

OPERATING REVENUES

<TABLE>
<CAPTION>
                                                                      Three Months Ended March 31,
                                                                      ----------------------------
                                                                         1996             1997
                                                                         ----             ----
                                                                         (Millions of dollars)
  <S>                                                                 <C>              <C>
     Operating revenues:
         Producing properties . . . . . . . . . . . . . . . . . .      $ 232.0          $ 370.0
         Plants, pipelines and marketing  . . . . . . . . . . . .        114.2            124.7
         Other oil and gas revenues . . . . . . . . . . . . . . .         12.3              4.6
</TABLE>

PRODUCING PROPERTY REVENUES increased by $138.0 million (59%).  Production
volume increases of 236.2 Mmcfed (17%) added $31.4 million to revenues, while
higher product prices of $0.70/Mcfe (38%) added $106.6 million to revenues.

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31,
                                                                    ----------------------------
                                                                        1996            1997
                                                                        ----            ----
      <S>                                                            <C>              <C>
      Production volumes - producing properties:
         Natural gas (Mmcfd)  . . . . . . . . . . . . . . . . . .       930.5          1,118.2
         Natural gas liquids (Mbbld)  . . . . . . . . . . . . . .        24.7             30.8
         Crude oil (Mbbld)  . . . . . . . . . . . . . . . . . . .        49.5             51.4
         Total (Mmcfed) . . . . . . . . . . . . . . . . . . . . .     1,375.7          1,611.9
</TABLE>

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31,
                                                                    ----------------------------
                                                              1996        1997       1996         1997     
                                                              ----        ----       ----         ----     
                                                             (without Hedging)        (with Hedging)       
      <S>                                                  <C>         <C>         <C>          <C>        
      Average product price realizations -                                                                    
       producing properties:                                                                                  
         Natural gas (per Mcf)  . . . . . . . . . . . .     $  1.73     $  2.54     $  1.59     $  2.41   
         Natural gas liquids (per Bbl)  . . . . . . . .        9.68       13.23        9.68       13.20   
         Crude oil (per Bbl)  . . . . . . . . . . . . .       17.54       20.83       16.70       19.51   
         Average (per Mcfe) . . . . . . . . . . . . . .        1.97        2.68        1.85        2.55   
</TABLE>

Natural gas volumes increased by 187.7 Mmcfd (20%) to 1,118.2 Mmcfd with
increases from drilling successes in the Austin Chalk (89.5 Mmcfd), West Texas
(25.1 Mmcfd), and Gulf Onshore/Offshore  (17.5 Mmcfd),  and elimination of
preferential distribution of Section 29 partnership volumes (57.2 Mmcfd).

Natural gas liquids (NGL) volumes from producing properties increased by 6.1
Mbbld (25%) to 30.8 Mbbld primarily due to ethane recovery in the Rockies (4.7
Mbbld).

Crude oil volumes were 1.9 Mbbld higher as a result of property acquisitions 
and drilling in the Austin Chalk and the Gulf Onshore/Offshore. This volume
increase was partially offset by production declines in Plains/Canada.

PLANTS, PIPELINES AND MARKETING REVENUES for the first quarter 1997 increased 
by $10.5 million (9%). Higher plant product prices of $0.55/Mcfe (30%)
contributed $13.4 million toward higher plant revenues.   Pipeline revenues
increased by $10.3 million to $52.7 million primarily due to increased prices
and throughput at an Austin Chalk pipeline ($18.2 million), partially offset by
reclassification of certain sales from pipeline revenue to plant





                                     - 10 -
<PAGE>   13
revenue ($8.1 mm).  Marketing revenues decreased by $15.8 million to $9.2
million primarily due to lower gas margins.

<TABLE>
<CAPTION>
                                                                          Three Months Ended March 31,
                                                                          --------------------------- 
                                                                              1996             1997
                                                                              ----             ----
      <S>                                                                    <C>              <C>
      Sales volumes - plants:
         Natural gas (Mmcfd)  . . . . . . . . . . . . . . . . . . . . .        25.0             21.4
         Natural gas liquids (Mbbld)  . . . . . . . . . . . . . . . . .        38.1             41.6
         Total (Mmcfed) . . . . . . . . . . . . . . . . . . . . . . . .       253.6            270.9

      Average product price realizations - plants:
         Natural gas (per Mcf)  . . . . . . . . . . . . . . . . . . . .      $ 1.72           $ 2.81
         Natural gas liquids (per Bbl)  . . . . . . . . . . . . . . . .       11.13            14.12
         Average (per Mcfe) . . . . . . . . . . . . . . . . . . . . . .        1.84             2.39
</TABLE>

Natural gas volumes decreased by 3.6 Mmcfd (14%) due to ethane recovery at a
Rockies plant and weather-related  plant throughput decreases at an East/South
Texas plant.

Natural gas liquids  volumes increased by 3.5 Mbbld (9%) as a result of
reclassification of certain volumes from pipelines to plants.

OTHER OIL AND GAS REVENUES in the first period of 1997 were lower by $7.7 
million (63%) primarily due to the absence of the 1996 gain on the sale of the 
West Texas Eastern shelf property and a 1996 take-or-pay reserve release.

  OPERATING EXPENSES
<TABLE>
<CAPTION>
                                                                           Three Months Ended March 31,
                                                                           ----------------------------
                                                                               1996           1997
                                                                               ----           ----
                                                                              (Millions of dollars)
     <S>                                                                     <C>              <C>
     Operating expenses:
         Production . . . . . . . . . . . . . . . . . . . . . . . . .        $ 62.8           $ 73.1
         Exploration  . . . . . . . . . . . . . . . . . . . . . . . .          29.7             42.8
         Plants, pipelines and marketing  . . . . . . . . . . . . . .          60.6             76.6
         Depreciation, depletion and amortization . . . . . . . . . .         123.7            133.0
</TABLE>

PRODUCTION EXPENSES increased by $10.3 million (16%), largely due to higher
production taxes and higher lease operating costs.  An increase of $4.5 million
in production taxes was incurred as a result of greater producing property 
revenues. Lease operating costs were up $5.0 million due to workover costs in 
the Rockies and the Austin Chalk. Production expenses on a per unit basis were 
flat at $0.50/Mcfe.

EXPLORATION EXPENSES increased by $13.1 million (44%), primarily attributable to
increased dry hole and surrendered lease expense.  The dry hole expense was up
$4.2 million due to increases in exploratory drilling in East/South Texas and in
the Gulf Onshore/Offshore.  The surrendered lease expense was up $7.9 million
reflecting increased leasing activity in East/South Texas and Austin Chalk.
Geological and geophysical expenses were up $1.2 million with increased seismic
costs in East/South Texas.

OPERATING EXPENSES FOR PLANTS, PIPELINES AND MARKETING increased by $16.0
million to $76.6 million primarily due to increased plants and pipelines gas
purchase costs caused by higher gas prices.  Other operating expenses were
down $3.1 million due to lower lease payments.





                                     - 11 -
<PAGE>   14
DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A) increased by $9.3 million (8%)
to $133.0 million primarily as a result of higher producing property volumes
($17.2 million), offset by a favorable unit of production rate ($8.6 million). 
In addition, writedowns to fair value were recorded in 1997 relating to Yellow
Creek ($2.7 million), and in 1996 relating to an offshore property in the Gulf
of Mexico ($5.0 million). Costs on a unit of production basis, adjusted for
write-downs, decreased by $0.04/Mcfe to $0.78/Mcfe.

  OIL AND GAS OPERATING INCOME

Total oil and gas operating income for the first quarter 1997 increased by 
$92.4 million (112%) to $175.2 million. Higher producing property operating
income of $98.4 million was partially offset by decreased plants, pipelines and
marketing operating income of $6.0 million.

GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative expenses
increased by $4.5 million (32%) to $18.5 million principally reflecting employee
stock ownership program expense. On a per unit basis, general and administrative
expenses increased by $0.01/Mcfe to $0.11/Mcfe.

INTEREST AND OTHER INCOME - NET - Interest expense decreased by $2.3 million to
$10.7 million, while other income/expense decreased by $5.0 million to a net
expense of $3.0 million.  The decrease in interest expense was attributable to
lower interest rates achieved through debt restructuring in October 1996.  The
other income/expenses change primarily reflects the writeoff of mine development
costs ($3.6 million) in 1997 and the absence of a 1996 gain on the sale of land
in Corpus Christi, Texas ($4.4 million).

INCOME TAXES - Income taxes increased by $28.4 million to $55.5 million
resulting from higher income before taxes and a higher effective tax rate.  The
effective tax rate for 1997 was 32.1% (including Section 29 tax credits of $4.8
million) compared with 31.4% in 1996 (including $3.9 million of Section 29 tax
credits).

                        LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of cash during the first three months of 1997 was
its cash from operations. Cash outflows included capital expenditures for oil
and gas operations, repayment of commercial paper and dividends.  Cash flows
provided by operations for the first quarter of 1997 increased 95% to  $422.2
million compared to the $216.0 million cash from operations during the first
quarter 1996.  Increased cash operating income from producing properties,
primarily resulting from higher prices, contributed to the increased cash flows
from operations.   In addition, favorable working capital changes reflect a
reduction in accounts receivable ($69.4 million) during the first quarter 1997
resulting from the collection of accounts receivable which were recorded at the
end of the prior quarter when prices were higher than the end of the first 
quarter 1997. Reductions in other current assets, associated with the Company's
hedging activities ($52.6 million), further contributed to the favorable working
capital change.

Capital and exploratory expenditures for the first three months of 1997 were
$284.0 million, an increase of $145.7 million (105%) compared to the first
three months of 1996.  Capital and exploratory expenditures are summarized as
follows:





                                     - 12 -
<PAGE>   15
<TABLE>
<CAPTION>
                                                                         Three Months Ended March 31,
                                                                         ----------------------------
                                                                             1996             1997 
                                                                            ------           ------
                                                                             (Millions of dollars)
     <S>                                                                    <C>              <C>
     Capital and exploratory expenditures:
         Exploration and production . . . . . . . . . . . . . . . . .       $ 122.0          $ 247.8
         Plants, pipelines and marketing  . . . . . . . . . . . . . .          15.9             31.1
         Minerals and other . . . . . . . . . . . . . . . . . . . . .            .4              5.1
                                                                            -------          -------
         Total  . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 138.3          $ 284.0
                                                                            =======          =======
</TABLE>

Exploration and production capital spending was up by $125.8 million (103%) as
a result of higher lease acquisition activity of $50.4 million, primarily in 
East/South Texas ($36.1 million) and Austin Chalk ($6.1 million).  Higher
property acquisitions of $28.1 million, primarily in the Cotton Valley Reef area
in East/South Texas ($16.3 million) and Austin Chalk ($7.0 million) further
contributed to increased spending.

The Company's total debt at March 31, 1997 of $571.3 million compares to
December 31, 1996 total debt of $670.9 million.  During the first quarter of
1997, the Company repaid $99.6 million of commercial paper outstanding, all of
which was issued in 1996.  Commercial paper was classified as long-term debt
based on the Company's intent and ability to maintain these short-term
borrowings on a long-term basis either through the continued issuance of
commercial paper and/or through new long-term financings, or by using its
currently available bank credit facility.

The Company has a $600 million revolving credit agreement which expires in
August 2001.  Borrowings under the agreement, at the Company's election, bear
interest either at a spread over London Interbank Offered Rate or at a spread
over domestic certificate of deposit rates, in each case depending on the
Company's senior debt rating.  The Company is required to pay facility fees on
the aggregate amount of the commitment ranging from .06% to .15% also depending
on the Company's senior debt rating.  There are no outstanding borrowings under
the revolving credit agreement at March 31, 1997.

The Company has filed a registration statement providing for the issuance, from
time to time, of up to $900 million of common stock, preferred stock,
warranties and debt securities (collectively, the "Securities"), in amounts, at
prices and on terms to be determined by market conditions at the time of each
offering. Currently, no securities have been issued under such registration 
statement.

The Company paid a $0.05 per share ($12.5 million) quarterly cash dividend on
its outstanding shares of common stock in January 1997.   In addition, on
February 6, 1997 and April 3, 1997, the Board of Directors declared a cash
dividend of $0.05 per share payable in the second and third quarter of 1997,
respectively.

The Company has spent $284.0 million in capital and exploratory expenditures
during the first three months of 1997 and currently expects to spend
approximately $1.0 billion in total capital and exploratory expenditures during
1997.  Such capital spending is expected to focus on drilling, lease
acquisitions, gas value chain assets and property purchases.  The extent and
timing of such expected spending, however, may be affected by changes in
business and operating conditions as well as by the timing and availability of
investment opportunities.  The Company expects to remain one of the most active
drillers in the United States in 1997 based on the number of active drilling
rigs.  Drilling is expected to concentrate in the Austin Chalk, Gulf
Onshore/Offshore, West Texas and East/South Texas.  The Company also expects to
increase its total annual sales volumes in 1997 by approximately 10% over 1996
levels while increasing its hydrocarbon reserves. This sales volume growth will
be achieved through drilling, property purchases and plant expansion.





                                     - 13 -
<PAGE>   16
This sales volume growth is anticipated primarily in the Austin Chalk, Gulf 
Onshore/Offshore and West Texas.  The Company will continue to aggressively
pursue acquisition opportunities and expansion of its plants, pipelines and
marketing business. The Company also plans to evaluate international venture
opportunities where its technological expertise and experience can be utilized.

Cash from operations and available financing should adequately enable the
Company to fund its future capital expenditures, dividends and working capital
requirements.

                          FORWARD LOOKING INFORMATION

Certain information included in this report contains, and other materials filed
or to be filed by the Company with the Securities and Exchange Commission (as
well as information included in oral statements or other written statements
made or to be made by the Company) contain or will contain, or include, forward
looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as
amended.  Such forward looking statements may be or may concern, among other
things, capital expenditures, drilling activity, acquisitions and dispositions,
development activities, cost savings, production efforts and volumes,
hydrocarbon reserves, hydrocarbon prices, hedging activities and the results
thereof, liquidity, regulatory matters, competition and the Company's ability
to realize significant improvements with the change to a more adaptive
corporate culture.  Such forward looking statements generally are accompanied
by words such as "estimate," "expect," "predict," "anticipate," "goal,"
"should," "assume," "believe" or other words that convey the uncertainty of
future events or outcomes.

Such forward looking information is based upon management's current plans,
expectations, estimates and assumptions and is subject to a number of risks and
uncertainties that could significantly affect current plans, anticipated
actions, the timing of such actions and the Company's financial condition and
results of operations.  As a consequence, actual results may differ materially
from expectations, estimates or assumptions expressed in or implied by any
forward looking statements made by or on behalf of the Company.  The risks and
uncertainties include generally the volatility of oil, gas prices and
hydrocarbon-based financial derivative prices; basis risk and counterparty
credit risk in executing hydrocarbon price risk management activities;
economic, political, judicial and regulatory developments; competition in the
oil and gas industry as well as competition from other sources of energy; the
economics of producing certain reserves; demand and supply of oil and gas; the
ability to find or acquire and develop reserves of natural gas and crude oil;
and the actions of customers and competitors.  Additionally, unpredictable or
unknown factors not discussed herein could have material adverse effects on
actual results related to matters which are the subject of forward looking
information.  The Company does not intend to update these cautionary
statements.

With respect to expected capital expenditures and drilling activity, additional
factors such as the extent of the Company's success in acquiring oil and gas
properties and in identifying prospects for drilling, the availability of
acquisition opportunities which meet the Company's objectives as well as
competition for such opportunities, exploration and operating risks, the
success of management's cost reduction efforts and the availability of
technology may affect the amount and timing of such capital expenditures and
drilling activity.  With respect to expected growth in production and sales
volumes and estimated reserve quantities, factors such as the extent of the
Company's success in finding, developing and producing reserves, the timing of
capital spending and acquisition programs, uncertainties inherent in estimating
reserve quantities and the availability of technology may affect such
production volumes and reserve estimates.  With respect to liquidity, factors
such as the state of domestic capital markets, credit availability from banks
or other lenders and the Company's results of operations may affect
management's plans or ability to incur additional indebtedness.  With respect
to cash flow, factors such as changes in oil and gas prices, the Company's
success in acquiring producing properties,





                                     - 14 -
<PAGE>   17
environmental matters and other contingencies, hedging activities, the
Company's credit rating and debt levels, and the state of domestic capital
markets may affect the Company's ability to generate expected cash flows.  With
respect to contingencies, factors such as changes in environmental and other
governmental regulation, and uncertainties with respect to legal matters may
affect the Company's expectations regarding the potential impact of
contingencies on the operating results or financial condition of the Company.
Certain factors, such as changes in oil and gas prices and underlying demand
and the extent of the Company's success in exploiting its current reserves and
acquiring or finding additional reserves may have pervasive effects on many
aspects of the Company's business in addition to those outlined above.





                                     - 15 -
<PAGE>   18
PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In August 1994, the surface owners (McCormick, et al.) of portions of five
sections of Colorado land that are subject to mineral reservations made by the
Company's predecessor in title brought suit against the Company in the state
District Court, Weld County, Colorado, to quiet title to minerals, including
crude oil (in some of the lands) and natural gas.  In September 1994, the case
was removed to Federal court (the U. S. District Court for the District of
Colorado), where the Company filed a motion for summary judgment asking the
court to rule as a matter of law that it owns the oil and gas and all minerals
that are part of a severed mineral estate. In February, 1997 the Federal court
remanded the case back to the state court. The Company's motion for summary
judgment is scheduled for hearing in the state court on May 23, 1997.  No trial
date currently is set.  Similar claims were made under identical mineral
reservations by Utah and Wyoming surface owners in cases litigated in the
Federal courts of Utah and Wyoming between 1979 and 1987. In those cases, the
Federal courts held as a matter of law that, under the laws of Utah and Wyoming,
these mineral reservations unambiguously reserved oil and gas to Union Pacific
Railroad Company and its successors.  These holdings were affirmed by the United
States Court of Appeals for the Tenth Circuit.  While the Company believes that
the rule of law applied by the Federal courts in Utah and Wyoming also should be
applied under Colorado law, there are Colorado court decisions that could
provide a basis for an alternative interpretation.  The value of the disputed
reserves in the properties subject to the lawsuit is estimated to be
approximately $5 million.  Approximately 400,000 acres of other lands in Weld
County, Colorado, are subject to mineral reservations that are in the same form
as the reservations at issue in the present suit.  An adverse interpretation of
the reservations at issue is likely to implicate the mineral title in these
other lands as well.  In addition, over two million acres of lands elsewhere in
Colorado are subject to the same forms of mineral reservations.  Depending on
the grounds of an adverse decision in the case, title to minerals held by the
Company in some or all of these lands also could be affected, which might have
the effect of significantly reducing the Company's interest in the Las Animas
area of southeastern Colorado and the Denver-Julesburg Basin in eastern
Colorado.

The Company is a defendant in three suits now pending in Fayette County (filed
August 1995, 155th District Court), Lee County (filed August 1995, 235th
District Court) and Harris County (filed August 1995, transferred from Calhoun
County to 11th District Court), Texas, in which the plaintiffs allege that the
Company underpaid their royalties for crude oil production in Texas. 
Plaintiffs seek certification as a class action in each suit. Plaintiffs
include the Texas General Land Office in the Fayette County suit, Lee County in
the Lee County suit, and Martin, et al., in the Harris County suit. Generally,
the allegations are premised upon plaintiffs' theory that the defendants
(including the Company) use "posted prices" to determine the amounts payable as
royalties for crude oil production. Plaintiffs allege that the defendants "set"
these posted prices, that posted prices are consistently below "market value,"
and that this practice has resulted in the underpayment of royalties to
plaintiffs.  In addition to the allegations couched in terms of breaches of
contract and/or implied covenants, the Lee County case also alleges that the
Company has engaged (and conspired WITH others) in discriminatory practices in
the sales of crude oil in violation of numerous state statutes.  Further, the
Harris County case: (i)  adds claims with respect to natural gas, including
claims that the Company discriminated against plaintiffs in the sale of natural
gas and natural gas liquids, in the deductions for transportation and other
services and in the prices used to account to the plaintiffs for their
royalties; and (ii) adds claims (regarding both crude and gas) for alleged
breaches of alleged fiduciary duties and intentional misrepresentation.

The Company is also one of the defendants in an antitrust suit filed in
September 1996 in state court, (the Circuit Court of Escambia County, Alabama)
against a number of crude oil producers alleging that the use of posted prices
by defendants to pay royalties on crude oil produced in the United States
arises from a combination, conspiracy or agreement designed to fix, depress and
maintain such crude prices at artificially low levels.  The plaintiffs
(Lovelace, et al.) allege that such practices violate the Alabama antitrust
laws and the antitrust laws of every other state.





                                     - 16 -
<PAGE>   19
The plaintiffs obtained, on an ex parte basis, a "conditional" certification of
a class consisting of all working and royalty interest owners of crude oil
produced in the United States since 1986 who have been paid by defendants based
on posted prices.  The suit was removed to Federal court on October 17, 1996,
but then was remanded back to the state court on April 1, 1997. Defendants have 
filed a motion to vacate the conditional class certification order and all 
parties anticipate a full hearing on the class certification issue.  The date 
of such hearing, as well as the timing and scope of anticipated motions to 
dismiss and discovery, are presently under consideration by the Court as part 
of a case scheduling order.

Union Pacific Corporation has been named as a defendant in a suit brought in
state District Court, Salt Lake County, Utah in March 1996.  Though not named in
the suit, the Company believes that it may ultimately be named as a defendant in
place of Union Pacific Corporation.  Plaintiffs (Burton, et al.) allege that the
defendants have underpaid royalty or overriding royalty payments on crude oil
and condensate. The claims are similar to those in the Texas cases described
above. Plaintiffs argue that posted prices are less than the "best and highest
prices reasonably available and less than the full fair market value received
by defendants" for the crude oil upon which the royalties are paid to
plaintiffs. Like the Texas cases, the plaintiffs seek certification of a
plaintiff class, which in this case is a class defined as "all persons to whom
Defendants have underpaid royalty or overriding royalty payments on crude oil
during the period January 1, 1986 to the present."

None of these suits described above articulate a theory of recovery or a
specific amount of damages.  This litigation activity against the Company and
others in the oil and gas industry suggests that more suits of this type may be
filed against the Company including, perhaps, suits by other types of interest
owners and suits in jurisdictions other than those set forth above.  The
Company intends to defend vigorously against the foregoing, as well as any
similar suits.  If such suits ultimately are resolved against the Company on a
widespread basis, however, damage awards and a loss of future revenue could
result which, in the aggregate, could be materially adverse to the Company.

The Company is a defendant in a number of lawsuits and is involved in
governmental proceedings arising in the ordinary course of business in addition
to those described above, including contract claims, personal injury claims and
environmental claims.  While the Company cannot predict the outcome of such
litigation and other proceedings, it does not expect those matters to have a
materially adverse effect on its results of operations or financial condition.

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

On May 7, 1997, the Annual Meeting of the Shareholders of the Company was held
in Fort Worth, Texas for the purpose of electing a Board of Directors and voting
on the proposals described below.  There was no solicitation in opposition to
management's nominees for director as listed in the proxy statement.

Each of the directors nominated by the Board (which number constitutes the
entire Board of the Company) and listed in the proxy statement was elected with
the votes as follows:





                                     - 17 -
<PAGE>   20
<TABLE>
<CAPTION>
         Nominee                            Shares For         Shares Withheld
         -------                           ------------        ---------------
     <S>                                    <C>                    <C>
     H. Jesse Arnelle                       215,274,901            641,488
     Lynne V. Cheney                        215,279,315            637,074
     Preston M. Geren III                   215,324,010            592,379
     Lawrence M. Jones                      215,326,404            589,985
     Drew Lewis                             214,987,441            928,948
     Claudine B. Malone                     215,275,927            640,462
     Jack L. Messman                        215,310,131            606,258
     John W. Poduska, Sr., Ph.D.            215,321,898            594,491
     Samuel K. Skinner                      215,300,025            616,364
     James R. Thompson                      215,303,731            612,658
</TABLE>

The Company's 1995 Stock Option and Retention Stock Plan, as amended and
restated, which was originally adopted in September 1995 and provides for the
grant of non-qualified stock options, incentive stock options, stock
appreciation rights and awards of retention stock, was approved by the
following vote: 204,603,335 shares for; 9,950,887 shares against; and 1,362,166
shares abstaining.   The amendments would allow the Company's officers to
transfer stock options to members of their immediate families and would exclude
Rollover Options and Rollover Retention Stock from the calculation of the 10%
limitation applicable to the grant of stock options and awards of Retention
Stock to individual participants.

The Company's Executive Incentive Plan, as amended and restated, was approved by
the following vote: 209,438,906 shares for; 4,868,704 shares against; and
1,608,778 shares abstaining.  The Executive Incentive Plan, is a bonus program
designed to tie executive pay specifically to Company performance and to provide
supplementary annual cash compensation to the Company's key employees in order
to motivate and retain them and to assist the Company in attaining its financial
and strategic objectives.

Amendments to the Executive Incentive Plan would apply to three features: 
(1) the timing of participant deferral elections; (2) the application of
specific percentage limitations with respect to awards to certain executives,
and (3) the Compensation and Corporate Governance Committee's right to
accelerate the payment of deferral awards in cases of undue hardship.

The Company's 1995 Directors Stock Option Plan, as amended and restated, would 
(1) increase the number of authorized shares from 200,000 to 1,000,000; 
(2) substantially change the manner in which options are granted and become
exercisable; and (3) allow for the transfer of options to immediate family
members, was approved with the following vote: 191,589,407 shares for;
22,198,971 share against; and 2,128,010 shares abstaining.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)    EXHIBITS

10.1   1995 Stock Option and Retention Stock Plan, as amended and restated
       (June 1, 1997)
 
10.2   Executive Incentive Plan, as amended and restated (June 1, 1997)

10.3   1995 Directors Stock Option Plan, as amended and restated (March 5, 1997)

10.4   Deferred Compensation Plan for the Board of Directors, as amended and
       restated (June 1, 1997)

11     Computation of earnings per share

12     Computation of ratio of earnings to fixed charges





                                     - 18 -
<PAGE>   21
15     Awareness letter of Deloitte & Touche LLP dated as of May 14, 1997

27     Financial data schedule

(b)    REPORTS ON FORM 8-K

None





                                     - 19 -
<PAGE>   22
                                   SIGNATURE


    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Dated: May 14, 1997



                                        
                                        UNION PACIFIC RESOURCES GROUP INC.
                                        (Registrant)
                                        
                                        
                                        /s/ Morris B. Smith              
                                        ----------------------------------
                                        Morris B. Smith,
                                        Vice President and Chief Financial
                                          Officer
                                        (Chief Financial Officer and
                                          Duly Authorized Officer)





                                     - 20 -
<PAGE>   23
                       UNION PACIFIC RESOURCES GROUP INC.

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit No.                                Description
-----------                                -----------
<S>           <C>
  10.1        1995 Stock Option and Retention Stock Plan, as amended and
              restated (June 1, 1997)

  10.2        Executive Incentive Plan, as amended and restated
              (June 1, 1997)

  10.3        1995 Directors Stock Option Plan, as amended and restated
              (March 5, 1997)

  10.4        Deferred Compensation Plan for the Board of Directors, as
              amended and restated (June 1, 1997)

  11          Computation of earnings per share

  12          Computation of ratio of earnings to fixed charges

  15          Awareness letter of Deloitte & Touche LLP dated as of 
              May 14, 1997

  27          Financial data schedule
</TABLE>