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U.S. Securities and Exchange Commission
Washington DC 20549



(Mark One)

| |  |                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------
| |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2000

| |  |                                                                                       
| |  | --------------------------------------------------------------------------------------
| |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934    
| |  | For the transition period from _________________________ to __________________________

Commission file number: 33-95156

Wolverine Energy 1998-1999(A) Development Company, L.L.C.,

Wolverine Energy 2001(B) Development Company, L.L.C.,
Wolverine Energy 1998-1999(C) Development Company, L.L.C.,
Wolverine Energy 1998-1999(D) Development Company, L.L.C.,
Wolverine Energy 1998-1999(E) Development Company, L.L.C.,
Wolverine Energy 1998-1999(F) Development Company, L.L.C.,
Wolverine Energy 1998-1999(G) Development Company, L.L.C.,
Wolverine Energy 1998-1999(H) Development Company, L.L.C.,
Wolverine Energy 1998-1999(I) Development Company, L.L.C.,and Wolverine Energy 1998-1999(J) Development Company, L.L.C.
(Name of small business issuer in its charter)

|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Michigan                                                       |  | 38-3435348 (Program A)           
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer Identification No.)

|                                                           
|-----------------------------------------------------------
|4660 South Hagadorn Road, Suite 230, East Lansing, MI 48823
|(Address of principal executive offices) (Zip Code)        

Issuers telephone number:    517-351-4444

Securities registered under Section 12(b) of the Exchange Act:

|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which
registered
|                   
|                    |  |                                          
|                   
|                    |  |                                          

Securities registered under Section 12(g) of the Exchange Act:

|                
|----------------
|                
|(Title of Class)
|                
|                
|(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports),





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and (2) has been subject to such filing requirements for the past 90 days.

Yes      No

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.

State issuers revenues for its most recent fiscal year: Wolverine Energy
1998-1999(A) Development Company, L.L.C.  $12,057.

State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.)

NOTE:  If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

There is no active trading market for registrants equity securities.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.)
into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (Securities
Act).



| |      
| | -----
| | None.

Transitional Small Business Disclosure Format (check one):

|    |   
|--- | --
|Yes | No

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Item 1. Description of Business

A registration statement with respect to all of the named registrant
companies (together, the Companies and individually a Company), became
effective on September 4, 1998. Wolverine Energy, L.L.C. (the Manager) will
serve as the manager for each of the Companies.

Wolverine Energy 1998-1999(A) Development Company, L.L.C. (Program A)
was formed as a Michigan limited liability company on June 3, 1998. It was not
activated until December 31, 1999. On December 31, 1999, all investments in
Program A were accepted and Program A was closed to new investors. Program A
has 171 investors and has capitalization of $2,959,536 (including the Managers
capital contribution).

Program A has invested in 36 net natural gas wells predominately in the
Independence Prospect, which is located in the Cherokee Basin in Montgomery
County, Kansas. These wells are all pre-existing wells that were re-entered
during 1999 and 2000. All of the wells were in production by the end of the
year 2000. Program A accrued a turnkey price of $1,937,629 payable to the
manager for the 36 net well interests. Of this amount, $1,875,590 has been
paid, and $62,039 is still owed to the Manager.

Spartan Energy, Ltd. and the Manager have created CB Gas Managers, L.L.C.
(formerly Kansas Operating, L.L.C.), to serve as operator of the Independence
Prospect. CB Gas Managers, L.L.C. is owned as follows: Spartan Energy  50
percent; the Manager or its affiliates  40 percent; and Federated Oil and Gas
Properties, Inc. (Federated)  10 percent. Personnel from the Manager and
Spartan Energy jointly manage CB Gas Managers, L.L.C., which provides
supervision of day-to-day production activities, marketing the gas, collection
of revenues and payment of expenses. CB Gas Managers, L.L.C. is paid $75 per
month per well for these services. It has hired Black Rain Energy to perform
field operations, including rework of the wells, online production functions
and maintenance.

Program A does not currently have any gas customers under contract for the
Independence Prospect. Gas is currently being sold on the spot market, which
to date has been satisfactory to the Manager in terms of sales volume and
price.

There is extensive competition in the marketing of domestically-produced
natural gas. Decreases in domestic industry production capability and
increases in energy consumption can bring about shortages in energy supplies.
This, in turn, can result in substantial competition in markets historically
served by domestic natural gas resources both with alternate sources of energy,
such as residential fuel oil, and among domestic gas suppliers. This
competition can result in increases in gas prices, extensive efforts by
producers to increase gas production and delays in producing and marketing gas
after it is discovered. Among the effects of this competition and the
deregulation of the natural gas industry and gas prices by the Congress and the
Federal Energy Regulatory Commission (FERC) is that gas prices tend to be
determined by competitive market forces with attendant volatility and
unpredictability. Changes in government regulations relating to the
production, transportation and marketing of natural gas has, at times, resulted
in the abandonment by many pipeline companies of long-term contracts for the
purchase of natural gas, and may spur the development by gas

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producers of their own marketing programs to take advantage of new
regulations requiring pipelines to transport gas for regulated fees, and an
increasing tendency to rely on short-term sales contracts priced at spot market
prices. Competitors in this market include other producers, gas pipelines and
their affiliated marketing companies, independent marketers, and providers of
alternate energy supplies, such as residential fuel oil.

The marketing of any gas produced by the wells in which Program A has
invested will be affected by a number of factors that are beyond the Managers
control and whose exact effect cannot be accurately predicted. These factors
include crude oil imports, the availability and cost of adequate pipeline and
other transportation facilities, the marketing of competitive fuels (such as
coal and nuclear energy), and other matters affecting the availability of a
ready market, such as fluctuating supply and demand.

Members of the Organization of Petroleum Exporting Countries establish
prices and production quotas for petroleum products from time to time with the
intent of reducing global supplies and maintaining or increasing certain price
levels. Political events, especially in the Middle East, have in the past
caused sharp fluctuations in oil prices, which may or may not continue.
Certain large users of fuel oil and other oil products have or may acquire the
capacity to use natural gas instead. Further, market and governmental
incentives may induce users to substitute natural gas for other fuels. These
factors may increase demand for natural gas. Decreases in oil prices, if they
occur, may result in decreases in gas prices because of substitution back to
oil.

Market conditions for the sale of natural gas were very strong during the
last three quarters of 2000. At one point in 2000, prices spiked to $8.00 per
mcf. However, the Companys average selling price for all of 2000 was
approximately $3.25 per mcf.

The State of Kansas controls gas production through regulations
establishing the spacing of wells, limiting the number of days in a given month
during which a well can produce and otherwise limiting the rate of allowable
production. Through regulations enacted to protect against waste, conserve
natural resources and prevent pollution, local, state and Federal environmental
controls will also affect operation of the wells. These regulations could
necessitate spending funds on environmental protection measures, rather than on
drilling, completion and production operations. If any penalties or
prohibitions are imposed on the wells, their owner and operators for violating
these regulations, Program As financial performance could be adversely
affected. All required Permits have already been obtained from the State of
Kansas for the wells in which Program A has invested.

The Federal Energy Regulatory Commission (FERC) regulates certain sales of
natural gas, operating as an independent agency that combines most of the
functions of the former Federal Power Commission with the prior authority of
the Interstate Commerce Commission over interstate transportation of oil. In
particular, FERC has regulatory jurisdiction over interstate gas pipelines that
will purchase or transport gas from the Independence Prospect.

Because the Manager is an independent gas industry operative, it does
not deal directly with FERC. The only exception is that the Manager must deal
with FERC for any wells the Manager seeks to have certified for a Section 29
tax credit. Nonetheless, FERCs activities frequently impact to

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some degree the prices at which natural gas can be sold. In the Managers
experience, natural gas prices are highly volatile, with FERC policies being
only one of many factors affecting price.

A number of legislative proposals have been advanced from time to time
which, if put into effect, could significantly affect the oil and gas industry.
The various proposals have involved, among other things, revision of leasing
and operating practices relating to Outer Continental Shelf lands, revision of
the NGPA (including both proposals to remove all price and certificate controls
on natural gas and proposals to extend or impose the NGPA price ceilings), and
imposition of a windfall profit tax on natural gas sales and restriction of
certain uses of natural gas. Other proposals would provide purchasers with
market-out options in existing and future gas purchase contracts, eliminate
or limit the operation of indefinite price escalator clauses (e.g., pricing
provisions which allow prices to escalate by means of reference to prices being
paid by other purchasers of natural gas or prices for competing fuels).
Arguments for effecting the latter two proposals by regulatory action have been
pressed on the FERC by various proponents at various times. It is impossible
to predict what legislation or regulatory changes may result from such
proposals or the effect of such changes on the Company.

The free trade agreement between Canada and the United States has eased
restrictions on imports of Canadian gas to the United States. Additionally,
the passage in November 1993 of the North American Free Trade Agreement (NAFTA)
has had some impact on the American gas industry, by eliminating trade and
investment barriers in the United States, Canada and Mexico. In addition, a
number of new pipeline projects have been proposed to the FERC which could
substantially increase the availability of Canadian gas to certain U.S.
markets. Such imports could have an adverse effect on both the price and
volume of gas sales from Company wells.

The accelerating deregulation of natural gas and electricity transmission
has caused, and will continue to cause, a convergence of the gas and electric
industries. Demand for natural gas by the electric power sector is expected to
increase modestly through the next decade. Increased competition in the
electric industry, coupled with the enforcement of stringent environmental
regulations, may lead to an increased reliance on natural gas by the electric
industry.

The federal government and various state governments have adopted laws and
regulations regarding the control and contamination of the environment that may
affect the operations of the wells. Governments may from time to time suspend
or curtail operations when considered to be detrimental to the ecology or to
jeopardize public safety. Owners of interests in projects may be subject to
federal or state regulations which impose absolute liability for the cost of
clean-up of pollution resulting from its operations. Owners may also be subject
to possible legal liability for pollution damages. If other participants in a
property do not bear these costs, and to the extent that insurance does not
cover those risks, a Company could be solely liable for all such costs.

Because of the various risks associated with natural gas well operations
and production, including potential liability for pollution remediation or
damages, the Manager has obtained three policies to insure the Manager and all
affiliated entitles. Program A is a named insured to the policies. These
policies are currently underwritten by Charter Insurance and

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Consulting out of Atlanta Georgia. The general liability policy provides
$1,000,000 single limit coverage for bodily injury and property damage arising
from oil and gas operations, $1,000,000 annual aggregate coverage for products
and completed operations, and $2,000,000 annual general aggregate coverage.
The second policy provides $1,000,000 single limit and annual aggregate
coverage for sudden and gradual pollution liability. The third policy is a
$10,000,000 excess liability policy.

Program A does not have any of its own employees. It relies exclusively
on the services of the Manager and the Managers employees. At December 31,
2000, the Manager and its subsidiaries and affiliates had a total of 10 full
time employees.

Item 2. Description of Property

As indicated at Item 1, Program A has invested in 36 net natural gas
wells, predominently in the Independence Prospect, which is located in the
Cherokee Basin in Montgomery County, Kansas. Program A owns an 80 percent net
revenue interest in these wells. Program A does not own any other significant
properties.

The Cherokee Basin is located in eastern Kansas and northeastern Oklahoma.
Pennsylvanian Coals have been commercially mined from the Cherokee Basin for
over 100 years. In addition, many oil wells were drilled, starting in the
early 1900s, to the Bartlesville oil and gas formation at depths of 1,200 to
2,000 feet. These drillings passed through several productive coal seams at
depths of 600 to 1,000 feet with no understanding of their natural gas content.
Thousands of these wells were drilled and produced oil in the target
reservoirs until the reservoirs were considered depleted in the 1950s.

In the early 1980s, a large oil exploration effort began in the Cherokee
Basin. These wells were drilled to the Bartlesville formation. The
development theory for producing these oil wells proved unsuccessful, and most
of the wells were depleted or abandoned because of poor economics. A high
percentage of the leases and depleted wells were given back to the landowners
through agreements or by reversion for non-production.

Montgomery County lies in the Cherokee Basin west of the coal mining
district, where coals are shallow. Depths to the coals in the Independence
Prospect are from around 450 feet to no deeper than 900 feet. Testing in the
area showed potential for coal bed methane gas flows when drilled through on
the way to the deeper Bartlesville Sandstone oil play.

The Managers research suggests that coal bed methane gas development in
Montgomery County beginning in the 1980s was economical when the wells were
completed properly, but that most of the fracture treatments were not
appropriate for the area. There are five coal zones above the Bartlesville
formation. Three of these zones exhibit strong methane gas production
potential. The Manager has focused exclusively on re-entry of existing wells
that were drilled to the Bartlesville formation, and in each case, will also
tap into at least two coal zones above the Bartlesville formation.

Each of the wells in which Program A has invested is currently drilled to
one coal seam, but not the same seam. There are three different seams
accessible in the Independence Prospect. Depending upon the lease in question,
each well is drilled to one of these three seams. The seam

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selected for each well is the seam that the Manager believes is most likely to
have the largest volume available in that location, to more efficiently drain
the reservoir. Once the reservoir in a given seam is depleted, the Manager
currently expects that it will complete to another seam from the same wellbore,
to provide additional production from one well.

During the year 2000, Program A sold 2,847 mcf of gas production, had
average production costs of approximately $2.50 per mcf, and had an average
sale price of approximately $3.25 per mcf. Production continues to be delayed
due to pipeline mechanical restraints and capacity limitations.

With additional gas production coming on line in the Independence Prospect
over the last year, the current pipelines are short on capacity. The Manager
is addressing the transportation issues of line capacity, compression needs and
additional pipeline taps to accommodate additional gas line production through
its participation in CB Pipeline, L.L.C. (formerly Kansas Pipeline, L.L.C.),
which is owned 50 percent by affiliates of the Manager and 50 percent by
Spartan Energy, Ltd. CB Pipeline, L.L.C. will service all of the wells in the
Independence Prospect.

CB Pipeline, L.L.C. recently acquired the Great Eastern Pipeline. This
pipeline provides gas transportation to the Williams tap sales point for
production from wells that are located in the Independence Prospect. Since CB
Pipeline, L.L.C. acquired the Great Eastern Pipeline, it has engaged in a
systematic improvement program of the pipeline. These changes are designed to
reduce line pressure, thereby reducing the limitation of the overall system to
handle the production generated from the wells owned by Program A. At this
time, one compressor has been changed-out and a second larger compressor
located at the Williams Tap is scheduled to be replaced in about June 2001.
Work has been recently hampered to some extent by shortages in the supply of
labor and parts in the gas industry.

The current restrictions in the pipeline system have caused a delay in the
planned improvements and adjustments to the wells owned by Program A because
additional production could not be moved. With the pipeline improvements
initiated, average production from the wells owned by Program A should rise
over the following few months. The rate of production increases and ultimate
average well production levels can not be accurately projected at this time.

The Manager leases space for its executive offices located at 4660 South
Hagadorn Road, Suite 230, East Lansing, Michigan 48823. The East Lansing
office focuses primarily on fund raising activities, including broker-dealer
relations. The Manager also has a leased office in Traverse City, Michigan,
which is responsible for all field accounting and field operations work, and
works directly with project operators.

Item 3. Legal Proceedings

The Manager is the subject of an enforcement action by the State of North
Carolina, Department of Secretary of State, with respect to the sale of an
interest in Program A to one resident of North Carolina at a time when the
interest was not registered with the State of North Carolina, File No.
01-001-RF. The Manager has agreed to enter into a Consent Decree to cease and
desist from offering or selling unregistered securities in the State of North
Carolina unless the security or transaction is exempt from registration

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and to make a rescission offer to the North Carolina investor. The terms of
the rescission offer are currently under review by the State of North Carolina.

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

No matter was submitted to a vote of security holders in 2000.

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Item 5. Market for Common Equity and Related Matters

There is no public trading market for Program As membership interests
(Interests). Program A has 170 Interestholders of record.

During the year 2000, Program A distributed $37.71 per unit of membership
interests (a unit represents a $1,000 investment), excluding a distribution on
the Managers five percent membership interest. The Manager waived its right to
participation in the distributions. The total amount distributed was $106,003.
Most of the amount distributed came from advances from the Manager, and not
from revenues on the sale of gas.

Program A has not sold any Interests that were not registered under the
Securities Act of 1933, as amended.

Item 6. Managements Discussion and Analysis

This discussion should be read in conjunction with the financial
statements, accompanying notes and supplemental information.

PROGRAM A -YEAR ENDED DECEMBER 31, 2000

Results of Operations

Program As net loss for 2000 was $34,369 compared with a net loss of
$68,156 for 1999. The primary factor in the year-to-year change was a decrease
in Management fees ($53,109) partially offset by increased professional fees
($9,085) and depreciation expense ($12,017).

The Manager is entitled to receive an administrative cost allowance once
production has commenced. Program As operating agreement allows the Manager
to waive or defer the administrative cost allowance. The Manager has elected
to waive all administrative cost allowances earned from Program A during 2000.
Accordingly, no liability has been booked for this expense.

Program As natural gas sales increased to $9,253 from $884 but operating
expenses increased to $9,924 from $795 resulting in a net loss of $671 for the
period compared to a profit of $89 in 1999.

During the year, production volumes were lower than expected because of
mechanical restraints in the pipeline system. As described at Item 2,
subsequent to year-end, CB Pipeline, L.L.C., which is an affiliate of the
Manager, acquired an equity position in the pipeline used by Program A in order
to have an impact on pipeline improvements. The level of revenues from
operations will increase as wells continue to dewater and pipeline improvements
are implemented.

Liquidity and Capital Resources

In 2000, Program As cash flow from operations was ($11,728) compared to
($67,621) in 1999. At December 31, 2000, Program As short-term debt was
$132,263, compared to $425,459 at December 31, 1999. Of this amount, $62,039
and $328,583, respectively, was owed to the Manager as a balance due on the

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turnkey price for the per share of the Well interests. Another $67,725 was
owed by Program A to the Manager for advances made to permit Program A to make
distributions to investors. These advances are payable on demand. Debt as a
percent of debt-plus-equity was 5.1 percent at December 31, 2000 and 14.2
percent at December 31, 1999. Program A does not have any line of credit or
similar debt facility.

THE MANAGER  YEAR ENDED DECEMBER 31, 2000

Results of Operations

Net income for 2000 was $731,742 compared with $743,804 in 1999. The
primary reason for the slight decrease in net income was the increase in cost
of goods sold. Cost of goods sold increased from $3,099,095 to $12,586,444.
Calculated as a percentage of turnkey revenue, cost of goods sold was 58.5
percent of turnkey revenue in 1999 and 82.46 percent of turnkey revenue in
2000.

Total revenues from the turnkey sale of net gas well interests to
affiliated natural gas investment entities increased from $5,299,072 in 1999 to
$15,282,098 in 2000, an increase of $9,983,026 or 188.4 percent. The natural
gas investment programs organized by the Manager have not begun to generate
sufficient gas production to result in meaningful levels of distributions of
operating profits to have been made to the Manager. Therefore, the Manager has
not recognized a meaningful level of operating profits from its interests in
such programs.

Total turnkey expenses and related costs increased 406.1 percent from
1999, while corresponding turnkey revenues increased 188.4 percent, causing a
decrease in turnkey profit margin from 41.5 percent to 17.6 percent. General
and administrative expenses for 2000 increased by 33.5 percent, reflecting the
higher level of capital raising activity at the affiliated natural gas
investment programs in 2000 compared to 1999, and the cumulative effect on the
level of administrative expenses of the addition of new capital in 2000 to the
capital already under management at the end of 1999 without reduction for
return of capital to investors.

Depreciation and amortization expense decreased from $18,494 in 1999 to
$6,191 in 2000. Interest expense increased $3,912 in 2000, from $115,045 to
$118,957. Although average borrowings outstanding during 2000 were lower than
in 1999, interest rate increases caused the increase in interest expense.

Liquidity and Capital Resources

In 2000, cash flow from operating activities amounted to $3,787,872,
compared with $923,408 in 1999. In 2000, the Manager advanced $973,217 to
related entities. The amounts are due on demand.

Total short- and long-term debt, including amounts outstanding under the
Managers line of credit, trade payables, amounts due to operators and related
parties and other accounts payable, was $8,739,394 at year-end 2000, compared
with $2,729,501 at year-end 1999. Debt as a percent of debt-plus-equity was
88.9 percent at December 31, 2000, down from 74.4 percent at year-end 1999.

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Working capital was $(67,259) at year-end 2000, compared with $51,702 at
year-end 1999. At year-end 2000, the Managers current ratio was 0.99-to-1.
Cash Distributions paid in 2000 totaled $572,731, compared to $515,077 in 1999.
At December 31, 2000, bank lines of credit available were $325,000, all of
which were supported by commitment fees. As of December 31, 2000, there were no
outstanding amounts owed on the line of credit.

Working Interests Held For Sale And Capital Expenditures

Inasmuch as the Manager engages in the raising of capital for investment
in natural gas development, it has not engaged directly in capital investment
in natural gas development or production activities, except with respect to the
portion of the capital invested in sponsored investment programs. Insofar as
the Manager incurs contingent liability for turnkey development of natural gas
development projects, if development costs exceed budgeted costs by more than
the anticipated turnkey profit to the Manager, it may be required to make a
capital investment in such project(s) in the amount of such excess, though such
investment is not anticipated. As such, the Manager has not made a capital
investment in any natural gas development project in excess of its capital
contribution as Manager of the affiliated investment vehicle, which amount
totaled $310,526 in 2000 and an aggregate of $1,625,792 as of the end of 2000.
The Manager has received distributions and accrued unrealized losses with
respect to these interests in the total amount of $210,299, leaving a net
recorded capital contribution of $1,415,493. The Manager anticipates that it
will make similar investments in affiliated natural gas investment vehicles in
2001 and does not anticipate, nor has it provided for, making any investment as
a result of actual development expenses of such a project exceeding budgeted
costs by more than the anticipated turnkey profit to the Manager.

The Manager does, however, utilize its capital to acquire working
interests for subsequent resale to affiliated investment vehicles. The amount
of working interests held for sale was $853,656 at December 31, 1999 and
$593,177 at December 31, 2000. These amounts consist of actual land costs and
estimated development, drilling and completion expenses for working interests
in wells held by the Manager and anticipated to be sold to one or more
affiliated investment vehicles pursuant to a turnkey drilling contract. The
decrease in these amounts from 1999 to 2000 reflects differences related to the
timing of the sale of such interests to affiliated investment vehicles. None
of the working interests held for sale by the Manager at December 31, 2000,
will be available for purchase by Program A.

It is anticipated that the Managers 2001 internal capital expenditures
budget will be financed primarily by funds generated internally and through
borrowings under the Managers line of credit. Amounts payable by the Manager
to make its scheduled capital contribution to affiliated natural gas investment
programs will likewise be financed internally by the Manager. The Manager
anticipates that it will make payments for natural gas project development
costs from turnkey payments from the affected affiliated natural gas investment
program. To the extent that such payments exceed anticipated amounts, the
Manager may finance them from internally generated capital or from borrowings
under its lines of credit. The planned expenditure level is subject to
adjustment as dictated by changing economic conditions and the success of the
affiliated natural gas investment vehicles in raising capital in 2001. The
Manager does not anticipate raising additional capital for its own account for
the next twelve months or for the foreseeable future beyond that time frame.

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Environmental Protection and Remediation Costs

The Manager maintains insurance coverage for environmental pollution
resulting from the sudden or accidental release of pollutants. Various
deductibles per occurrence could apply, depending on the type of incident
involved. Coverage for other types of environmental obligations is not
generally provided, except when required by regulation or contract. The
financial statements do not reflect any recovery from claims under prior or
current insurance coverage. The Manager has not provided in its accounts for
any future costs of environmental pollution or environmental remediation
obligations. Such costs, if any, in excess of applicable insurance coverage
cannot be reasonably estimated at this time due to uncertainty of timing, the
magnitude of contamination, future technology for prevention and remediation,
regulatory changes and other factors. Although such future costs could be
significant, they are not expected to be material in relation to the Managers
liquidity or financial position.

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Item 7. Financial Statements





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|                                                               |                                         |  |  |  |  |  |  | 
|-------------------------------------------------------------- | --------------------------------------- |  |  |  |  |  |  | 
|PART I                                                        
|PART II                                                       
|FINANCIAL REPORT WITH ADDITIONAL INFORMATION DECEMBER 31, 2000
|                                                               | INDEPENDENT AUDITORS REPORT           
|                                                               | BALANCE SHEET                          
|                                                               | STATEMENT OF OPERATIONS                
|                                                               | STATEMENT OF CHANGES IN MEMBERS EQUITY
|                                                               | STATEMENT OF CASH FLOWS                
|NOTES TO FINANCIAL STATEMENTS DECEMBER&NBSP;31, 2000 AND 1999 
|                                                               | ADDITIONAL INFORMATION                 
|SUPPLEMENTARY INFORMATION                                     
|FINANCIAL REPORT DECEMBER 31, 2000                            
|                                                               | INDEPENDENT AUDITORS REPORT           
|                                                               | BALANCE SHEET                          
|                                                               | STATEMENT OF OPERATIONS                
|                                                               | STATEMENT OF MEMBERS EQUITY           
|                                                               | STATEMENT OF CASH FLOWS                
|NOTES TO FINANCIAL STATEMENTS DECEMBER&NBSP;31, 2000 AND 1999 
|                                                               | ADDITIONAL INFORMATION                 
|ESTIMATES OF NATURAL GAS RESERVES                             
|PART III                                                      
|SIGNATURES                                                    
|EXHIBIT INDEX                                                 



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Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---



|                       |                                                                                                                       |     
|---------------------- | --------------------------------------------------------------------------------------------------------------------- | ----
|Report Letter          | F-14                                                                                                                 
|                      
|                      
|                      
|                      
|Financial Statements  
|                      
|                      
|                      
|                      
|                       | Balance Sheet                                                                                                         | F-15
|                      
|                      
|                      
|                      
|                       | Statement of Operations                                                                                               | F-16
|                      
|                      
|                      
|                      
|                       | Statement of Changes in Members Equity                                                                               | F-17
|                      
|                      
|                      
|                      
|                       | Statement of Cash Flows                                                                                               | F-18
|                      
|                      
|                      
|                      
|                       | Notes to Financial Statements                                                                                         | F-19
|                      
|                      
|                      
|                      
|Report Letter          | F-23                                                                                                                 
|                      
|                      
|                      
|                      
|Additional Information
|                      
|                      
|                      
|                      
|                       | Supplementary Information:
Costs Incurred in Gas Property Acquisition, Exploration, and
       Development Activities | F-25
|                      
|                      
|                      
|                      
|                       | Estimates of Natural Gas Reserves                                                                                     | F-43

F-14



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##### Table of Contents






To the Members
Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

We have audited the accompanying balance sheet of Wolverine Energy 1998-1999(A)
Development Company, L.L.C. (a Michigan limited liability corporation) as of
December 31, 2000 and 1999, and the related statements of operations, changes
in members equity, and cash flows for the years ended. These financial
statements are the responsibility of the LLCs management. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wolverine Energy 1998-1999 (A)
Development Company, L.L.C. at December 31, 2000 and 1999, and the results of
its operations and its cash flows for the years then ended.

|                                      |  |                       
|------------------------------------- |  | ----------------------
|                                      |  | Plante & Moran, L.L.P.
|                                     
|                                     
|                                     
|                                     
|April 18, 2001
East Lansing, Michigan

F-15



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Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

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|                       |                                             |                                 |                                       |          |   |             |           |           |      |           |  | 
|---------------------- | ------------------------------------------- | ------------------------------- | ------------------------------------- | -------- | - | ----------- | --------- | --------- | ---- | --------- |  | 
|                       |                                             |                                 |                                       |          |   | December 31 |          
|                       |                                             |                                 |                                       |          |   |             |          
|                       |                                             |                                 |                                       |          |   | 2000        |           |           | 1999 |          
|                       |                                             |                                 |                                       |          |   |             |           |           |      |          
|                       |                                             |                                 |                                       | ASSETS  
|                      
|                      
|                      
|                      
|Current Assets        
|                      
|                      
|                      
|                      
|                       | Cash and cash equivalents                   |                                 | $                                     |         |   |             | $         | 410,928   |     
|                      
|                      
|                      
|                      
|                       | Accounts receivable                         |                                 |                                       |         |   |             |           | 10,624    |     
|                       |                                             |                                 |                                       |          |   |            
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                       |                                             |                                 | Total current assets                  |          |   |            |           |           |      | 421,552   | 
|                      
|                      
|                      
|                      
|Property and Equipment
|                      
|                      
|                      
|                      
|                       | Wells and related equipment and facilities  |                                 |                                       | 2,581,01 |   |             |           | 109,600   |     
|                      
|                      
|                      
|                      
|                       | Wells in progress (Note 2)                  |                                 |                                       |         |   |             |           | 2,471,491 |     
|                      
|                      
|                      
|                      
|                       | Less accumulated depreciation and depletion |                                 |                                       | (12,552) |   |             |           | (535)     |     
|                       |                                             |                                 |                                       |          |   |            
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                       |                                             |                                 | Net carrying amount                   |          |   | 2,568,539   |           |           |      | 2,580,556 | 
|                       |                                             |                                 |                                       |          |   |            
|                       |                                             |                                 | Total assets                          |          | $ | 2,568,539   |           |           | $    | 3,002,108 | 
|                       |                                             |                                 |                                       |          |   |            
|                       |                                             | LIABILITIES AND MEMBERS EQUITY
|                      
|                      
|                      
|                      
|Current Liabilities   
|                      
|                      
|                      
|                      
|                       | Bank overdraft                              |                                 | $                                     | 2,499    |   |             | $         |          |     
|                      
|                      
|                      
|                      
|                       | Accounts payable  related party (Note 3)   |                                 |                                       | 62,039   |   |             |           | 328,583   |     
|                      
|                      
|                      
|                      
|                       | Advances from related party (Note 3)        |                                 |                                       | 67,725   |   |             |           |          |     
|                      
|                      
|                      
|                      
|                       | Accrued commissions                         |                                 |                                       |         |   |             |           | 96,876    |     
|                       |                                             |                                 |                                       |          |   |            
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                       |                                             |                                 | Total current liabilities             |          |   | 132,263     |           |           |      | 425,459   | 
|                      
|                      
|                      
|                      
|Members Equity        |                                             |                                 | 2,436,276                             |          |   |             | 2,576,649 |          
|                       |                                             |                                 |                                       |          |   |            
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                      
|                       |                                             |                                 | Total liabilities and members equity |          | $ | 2,568,539   |           |           | $    | 3,002,108 | 
|                       |                                             |                                 |                                       |          |   |            



See Notes to Financial Statements.

F-16



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Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

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|         |                                            |                |          |                        |        |   |          |        |        | 
|-------- | ------------------------------------------ | -------------- | -------- | ---------------------- | ------ | - | -------- | ------ | ------ | 
|         |                                            |                |          | Year Ended December 31 |       
|         |                                            |                |          |                        |       
|         |                                            |                |          | 2000                   |        |   | 1999     |       
|         |                                            |                |          |                        |        |   |          |       
|Revenue 
|        
|        
|        
|        
|         | Gas sales (Note 2)                         |                | $        | 9,253                  |        |   | $        | 884    |       
|        
|        
|        
|        
|         | Interest income                            |                |          | 2,804                  |        |   |          | 2,275  |       
|         |                                            |                |          |                        |        |  
|         |                                            | Total revenue  |          |                        | 12,057 |   |          |        | 3,159  | 
|        
|        
|        
|        
|Expenses
|        
|        
|        
|        
|         | Management fees                            |                |          |                       |        |   |          | 53,109 |       
|        
|        
|        
|        
|         | Professional and other organizational fees |                |          | 24,485                 |        |   |          | 15,400 |       
|        
|        
|        
|        
|         | Depreciation, depletion and amortization   |                |          | 12,017                 |        |   |          |       |       
|        
|        
|        
|        
|         | Insurance expense and other                |                |          |                       |        |   |          | 2,011  |       
|        
|        
|        
|        
|         | Well operating expense                     |                |          | 9,924                  |        |   |          | 795    |       
|         |                                            |                |          |                        |        |  
|         |                                            | Total expenses |          |                        | 46,426 |   |          |        | 71,315 | 
|         |                                            |                |          |                        |        |  
|Net Loss |                                            | $              | (34,369) |                        |        | $ | (68,156) |       
|         |                                            |                |          |                        |        |  

See Notes to Financial Statements.

F-17



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##### Table of Contents



Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---






|                                   |  |   |           | 
|---------------------------------- |  | - | --------- | 
|Members Equity January 1, 1999   |  | $ | 644,067   | 
|                                  
|                                  
|                                  
|                                  
|Member contributions               |  |   | 2,231,301 | 
|                                  
|                                  
|                                  
|                                  
|Syndication costs                  |  |   | (230,563) | 
|                                  
|                                  
|                                  
|                                  
|Net loss                           |  |   | (68,156)  | 
|                                   |  |   |          
|                                  
|                                  
|                                  
|                                  
|Members Equity December 31, 1999 |  |   | 2,576,649 | 
|                                  
|                                  
|                                  
|                                  
|Member distributions               |  |   | (106,004) | 
|                                  
|                                  
|                                  
|                                  
|Net loss                           |  |   | (34,369)  | 
|                                   |  |   |          
|                                  
|                                  
|                                  
|                                  
|Members Equity December 31, 2000 |  | $ | 2,436,276 | 
|                                   |  |   |          

See Notes to Financial Statements.

F-18



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##### Table of Contents



Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

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|                                                     |                                          |                                                     |           |                        |           |   |         |             |           |  
|---------------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | --------- | ---------------------- | --------- | - | ------- | ----------- | --------- | -
|                                                     |                                          |                                                     |           | Year Ended December 31 |          
|                                                     |                                          |                                                     |           |                        |          
|                                                     |                                          |                                                     |           | 2000                   |           |   | 1999    |            
|                                                     |                                          |                                                     |           |                        |           |   |         |            
|Cash Flows from Operating Activities                
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash received from customers             |                                                     | $         | 19,877                 |           |   | $       | 884         |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash paid to suppliers and related party |                                                     |           | (34,409)               |           |   |         | (70,780)    |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Interest received                        |                                                     |           | 2,804                  |           |   |         | 2,275       |          
|                                                     |                                          |                                                     |           |                        |           |  
|                                                     |                                          | Net cash used in operating
activities (Note 4)      |           |                        | (11,728   | ) |         |             | (67,621   | )
|                                                    
|                                                    
|                                                    
|                                                    
|Cash Flows from Investing Activities                
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Advances on wells in process             |                                                     |           | (264,045)              |           |   |         | (1,651,454) |          
|                                                    
|                                                    
|                                                    
|                                                    
|Cash Flows from Financing Activities                
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Capital contributions from members       |                                                     |           |                       |           |   |         | 2,220,677   |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Capital distributions to members         |                                                     |           | (106,004)              |           |   |         |            |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Syndication costs paid                   |                                                     |           | (96,876)               |           |   |         | (162,262)   |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Advances from related party (Note 3)     |                                                     |           | 67,725                 |           |   |         |            |          
|                                                     |                                          |                                                     |           |                        |           |  
|                                                     |                                          | Net cash provided by (used
in) financing activities |           |                        | (135,155) |   |         |             | 2,058,415 |  
|                                                     |                                          |                                                     |           |                        |           |  
|Net Increase (Decrease) in Cash and Cash Equivalents |                                          |                                                     | (410,928) |                        |           |   | 339,340 |            
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and Cash Equivalents                           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Beginning of period                      |                                                     |           | 410,928                |           |   |         | 71,588      |          
|                                                     |                                          |                                                     |           |                        |           |  
|End of period                                        |                                          | $                                                   |          |                        |           | $ | 410,928 |            
|                                                     |                                          |                                                     |           |                        |           |  

See Notes to Financial Statements.

F-19



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##### Table of Contents



Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---




Notes to Financial StatementsDecember 31, 2000 and 1999

Note 1  Nature of Business and Significant Accounting Policies



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Wolverine Energy 1998-1999 (A) Development Company, L.L.C. (the LLC)
was organized on May 30, 1998 under the laws of the State of Michigan
to engage in oil and gas exploration, drilling, production, and sales
of natural gas at properties located throughout the United States.
During 2000 and 1999, the LLC advanced monies for drilling at
developed properties located in Kansas. The LLC was in the development
stage during 1999.                                                                  
|
| | Cash and Cash Equivalents The LLC considers all liquid investments
purchased with an original maturity date of three months or less to be
cash and cash equivalents.                                                                                                                                                                                                                                                                                                                                        
|
| | Turnkey Agreements The LLC enters into contracts with the general
member to drill oil and gas wells. Under the terms of the contracts,
the general member manages the drilling of the wells and the LLC pays
a fixed cost per well working interest. The LLC advances funds to the
general member in order to finance the drilling activity.                                                                                                                                                                
|
| | Wells in Process The Company uses the successful efforts method of
accounting for its oil and gas working interests. Costs to acquire the
working interests, which includes the LLCs proportionate share of
acquisition, drilling, and completion costs are capitalized.
Capitalized costs of acquiring the working interests are depreciated
and depleted by the unit-of-production method once the wells are
completed. Costs to acquire working interests that do not find proven
reserves are expensed.
|
| | Income Taxes No provision for federal income taxes has been included
in the financial statements since all income and expenses of the LLC
are allocated to the members in their respective federal income tax
returns.                                                                                                                                                                                                                                                                                      
|
| | Fair Value of Financial Instruments The fair value of short-term
financial instruments, including cash and cash equivalents, accounts
receivable, and accounts payable, approximate their carrying amounts
in the financial statements due to the short maturity of such
instruments.                                                                                                                                                                                                                       
|
| | Syndication Costs and expenses incurred by the LLC in connection
with syndication have been charged to members equity.                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.                                           

F-20



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##### Table of Contents



Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---

Notes to Financial Statements
December 31, 2000 and 1999

Note 2  Status of Wells in Process



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of December 31, 1999, approximately 70 percent of the wells the
Company owns an interest in were drilled, with the remaining 30
percent being completed during the first three months of 2000. The
wells are connected to a pipeline that is experiencing mechanical
restraints and capacity limitations that affects the amount of gas
that can flow from the wells. Subsequent to year-end, the general
member, who manages the Companys operations acquired a pipeline which
is anticipated to alleviate the capacity limitations. As of December
31, 2000 certain wells were still experiencing mechanical restraints
and capacity limitations.

Note 3  Related Party Transactions



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The LLC acquires working interests in oil and gas properties.
Wolverine Energy, L.L.C. (WELLC) serves as manager for the LLC and, as
such, has full and exclusive discretion in the management and control
of the LLC. The operating agreement provides that investor
interestholders pay approximately 95 percent of the cost of acquiring
the working interests and the manager pays the remaining 5 percent of
such costs. Intangible drilling costs are allocated 100 percent to the
investor interestholders. Revenues from sales of production are
allocated approximately 90 percent to the investor interestholders and
10 percent to the manager, until such time that the investor
interestholders have recovered their investment in the LLC.
Thereafter, revenues are allocated approximately 70 percent to the
investor interestholders and 30 percent to the manager.
|
| | During 1999, the LLC incurred $1,937,629, in costs under turnkey
agreements to WELLC. Of this amount, $62,039 and $328,583,
respectively, is included in accounts payable at December 31, 2000 and
1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | In connection with the sponsorship of the LLC, WELLC is entitled to
management fees of 2.5 percent from investor interestholder
subscriptions, which are expensed when incurred. During 1999, the LLC
paid WELLC $53,109, respectively, in management fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | WELLC advanced $67,725 to the LLC during 2000. The amounts are due on
demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-21



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##### Table of Contents



Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---

Notes to Financial Statements
December 31, 2000 and 1999

Note 4  Cash Flows



| |                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During 1999, the LLC acquired working interests in oil and gas wells
that the drilling was still in process at year-end. Accounts payable
includes $62,089 and $328,583 of these acquisition costs at December
31, 2000 and 1999, respectively.
|
| | The LLC received capital contributions totaling $2,231,301, during
1999 and incurred syndication costs related to those contributions
totaling $230,563, of which $96,876 are accrued at December 31, 1999.                                    
|
| | The following reconciles net loss to net cash from operating
activities:                                                                                                                                                                       

|                                                                        |                                 |                                       |          |        |          |   |          |   |          | 
|----------------------------------------------------------------------- | ------------------------------- | ------------------------------------- | -------- | ------ | -------- | - | -------- | - | -------- | 
|                                                                        |                                 |                                       |          | 2000   |          |   | 1999     |  
|                                                                        |                                 |                                       |          |        |          |   |          |  
|Net loss                                                                |                                 | $                                     | (34,369) |        |          | $ | (68,156) |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Adjustments to reconcile net loss to net cash from operating activities
|                                                                        | Depreciation and depletion      |                                       | 12,017   |        |          |   | 535      |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Decrease in accounts receivable |                                       |          | 10,624 |          |   |          |  |         
|                                                                        |                                 |                                       |          |        |          |  
|                                                                        |                                 | Net cash used in operating activities |          | $      | (11,728) |   |          | $ | (67,621) | 
|                                                                        |                                 |                                       |          |        |          |  

F-22



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##### Table of Contents
















---















F-23



---



##### Table of Contents



To the Members
Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

The Costs Incurred in Gas Property Acquisition, Exploration, and Development
Activities and Estimates of Natural Gas Reserves on pages 10 and 11 are not a
required part of the basic financial statements of Wolverine Energy
1998-1999(A) Development Company, L.L.C. (a Michigan limited liability
corporation), but constitute additional supplementary information required by
the Financial Accounting Standards Board. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding
the methods of measurement and presentation of the supplementary information.
However, we did not audit the information and express no opinion on it.

|                                      |  |                       
|------------------------------------- |  | ----------------------
|                                      |  | Plante & Moran, L.L.P.
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|April 18, 2001
East Lansing, Michigan

F-24



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##### Table of Contents






Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---

Supplementary Information (Unaudited)December 31, 2000

COSTS INCURRED IN GAS PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT
ACTIVITIES

|                           |  |                        |   |  |      |   |           | 
|-------------------------- |  | ---------------------- | - |  | ---- | - | --------- | 
|                           |  | Year Ended December 31 |  
|                           |  |                        |  
|                           |  | 2000                   |   |  | 1999 |  
|                           |  |                        |   |  |      |  
|Property Acquisition Costs |  | $                      |  |  |      | $ | 1,937,629 | 
|                           |  |                        |   |  |      |  

ESTIMATES OF NATURAL GAS RESERVES

The following estimates of proven developed natural gas reserve quantities and
related standardized measure of discounted net cash flow are estimates prepared
by an independent petroleum engineer as of December 31, 2000. They do not
purport to reflect realizable values or fair market values of the LLCs
reserves. The LLC emphasizes that reserve estimates are inherently imprecise
and that estimates of new discoveries are more imprecise than those of
producing oil and gas properties. Accordingly, these estimates are expected to
change as future information becomes available.

Proven reserves are estimated reserves of natural gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Proven developed reserves are those expected to be recovered
through existing wells, equipment and operating methods.

The standardized measure of discounted future net cash flows is computed by
applying year-end prices of gas to the estimated future production of proven
gas reserves, less estimated future expenditures to be incurred in developing
and producing the proven reserves, less estimated future severance tax expenses
and assuming continuation of existing economic conditions. The estimated future
net cash flows are then discounted using a rate of 10 percent per year to
reflect the estimated timing of the future cash flows.

F-25



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##### Table of Contents



Wolverine Energy 1998-1999 (A) Development Company, L.L.C.

---

Supplementary Information (Unaudited) (Continued)
December 31, 2000

ESTIMATES OF NATURAL GAS RESERVES (Continued)

|                                                          |                                                                                          |  |           |             | 
|--------------------------------------------------------- | ---------------------------------------------------------------------------------------- |  | --------- | ----------- | 
|Proven, developed gas reserves (MCF):                    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|January 1, 2000                                           |                                                                                          |  | 2,154,593 |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Revisions of previous estimates                                                          |  |           | (411,412)   | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Production                                                                               |  |           | (3,644)     | 
|                                                          |                                                                                          |  |          
|December 31, 2000                                         |                                                                                          |  | 1,739,537 |            
|                                                          |                                                                                          |  |          
|Standardized measure of discounted future net cash flows:
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Future cash inflows                                                                      |  |           | 12,330,113  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Future production costs                                                                  |  |           | (3,847,017) | 
|                                                          |                                                                                          |  |          
|                                                          | Future net cash flows                                                                    |  |           | 8,483,096   | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | 10% annual discount for estimated timing of cash flows                                   |  |           | (4,049,927) | 
|                                                          |                                                                                          |  |          
|                                                          | Standardized measure of discounted future
net cash flows relating to proven gas reserves |  | $         | 4,433,169   | 
|                                                          |                                                                                          |  |          

The following reconciles the change in the standardized measure of discounted
future net cash flows for the year ended December 31, 2000:

|                                              |  |            |  |  | 
|--------------------------------------------- |  | ---------- |  |  | 
|Beginning of year                             |  | $2,265,760 | 
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|Sale of gas produced, net of production costs |  |           | 
|Net changes in prices and production costs    |  | 2,624,374  | 
|Revisions of previous estimates               |  | (456,965)  | 
|                                              | 
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|End of year                                   |  | $4,433,169 | 
|                                              | 

F-26



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##### Table of Contents


























F-27



---



##### Table of Contents



Wolverine Energy, L.L.C.

---





|                             |                                   |     
|---------------------------- | --------------------------------- | ----
|Independent Auditors Report | F-28                             
|                            
|Financial Statements        
|                            
|                             | Balance Sheet                     | F-29
|                            
|                             | Statement of Operations           | F-30
|                            
|                             | Statement of Members Equity      | F-31
|                            
|                             | Statement of Cash Flows           | F-32
|                            
|                             | Notes to Financial Statements     | F-33
|                            
|Report Letter                | F-41                             
|                            
|Additional Information      
|                            
|                             | Estimates of Natural Gas Reserves | F-42



F-28



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##### Table of Contents






Wolverine Energy, L.L.C.

---



To the Member
Wolverine Energy, L.L.C.

We have audited the accompanying balance sheet of Wolverine Energy, L.L.C. (a
Michigan limited liability corporation) as of December 31, 2000 and 1999, and
the related statements of operations, members equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wolverine Energy, L.L.C. at
December 31, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.

May 2, 2001

F-29



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##### Table of Contents






Wolverine Energy, L.L.C.

---



|                                        |                                                   |                           |                                       |           |           |             |           |          |           |           |  | 
|--------------------------------------- | ------------------------------------------------- | ------------------------- | ------------------------------------- | --------- | --------- | ----------- | --------- | -------- | --------- | --------- |  | 
|                                        |                                                   |                           |                                       |           |           | December 31 |          
|                                        |                                                   |                           |                                       |           |           |             |          
|                                        |                                                   |                           |                                       |           |           | 2000        |           |          | 1999      |          
|                                        |                                                   |                           |                                       |           |           |             |           |          |           |          
|Assets                                 
|                                       
|                                       
|                                       
|                                       
|Current Assets                         
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                         |                           | $                                     | 1,892,051 |           |             | $         | 584,002  |          
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts receivable:                             
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   | Related entities (Note 5) |                                       |           | 5,732,370 |             |           |          | 945,997   |          
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   | Other                     |                                       |           | 176,876   |             |           |          | 32,067    |          
|                                       
|                                       
|                                       
|                                       
|                                        | Working interests and land leases held for resale |                           |                                       | 593,177   |           |             |           | 853,656  |          
|                                       
|                                       
|                                       
|                                       
|                                        | Prepaid expenses                                  |                           |                                       | 14,001    |           |             |           | 22,130   |          
|                                        |                                                   |                           |                                       |           |           |            
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   |                           | Total current assets                  |           |           | 8,408,475   |           |          |           | 2,437,852 | 
|                                       
|                                       
|                                       
|                                       
|Equipment                              
|                                       
|                                       
|                                       
|                                       
|                                        | Office equipment                                  |                           |                                       | 45,465    |           |             |           | 70,507   |          
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated depreciation                          |                           |                                       | (33,922)  |           |             |           | (58,430) |          
|                                        |                                                   |                           |                                       |           |           |            
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   |                           | Net carrying amount                   |           |           | 11,543      |           |          |           | 12,077    | 
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|Investments in Related Entities(Note 2) |                                                   |                           | 1,415,493                             |           |           |             | 1,212,698 |         
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|Other Assets                            |                                                   |                           |                                      |           |           |             | 3,980     |         
|                                        |                                                   |                           |                                       |           |           |            
|                                        |                                                   |                           | Total assets                          |           | $         | 9,835,511   |           |          | $         | 3,666,607 | 
|                                        |                                                   |                           |                                       |           |           |            
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|Liabilities and Members Equity        
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|Current Liabilities                    
|                                       
|                                       
|                                       
|                                       
|                                        | Line of credit (Note 3)                           |                           | $                                     |          |           |             | $         | 325,000  |          
|                                       
|                                       
|                                       
|                                       
|                                        | Current portion of long-term debt (Note 4)        |                           |                                       | 105,000   |           |             |           | 307,500  |          
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable:                                
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   | Trade                     |                                       |           | 195,271   |             |           |          | 220,645   |          
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   | Operators                 |                                       |           | 8,175,463 |             |           |          | 1,519,385 |          
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   | Related party (Note 5)    |                                       |           |          |             |           |          | 3,009     |          
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   | Other                     |                                       |           |          |             |           |          |          |          
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued expenses                                  |                           |                                       |          |           |             |           | 10,611   |          
|                                        |                                                   |                           |                                       |           |           |            
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   |                           | Total current liabilities             |           |           | 8,475,734   |           |          |           | 2,386,150 | 
|                                       
|                                       
|                                       
|                                       
|Long-term Debt(Note 4)                  |                                                   |                           | 263,660                               |           |           |             | 343,351   |         
|                                       
|                                       
|                                       
|                                       
|Members Equity                         |                                                   |                           | 1,096,117                             |           |           |             | 937,106   |         
|                                        |                                                   |                           |                                       |           |           |            
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                        |                                                   |                           | Total liabilities and members equity |           | $         | 9,835,511   |           |          | $         | 3,666,607 | 
|                                        |                                                   |                           |                                       |           |           |            

See Notes to Financial Statements.

F-30



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##### Table of Contents






Wolverine Energy, L.L.C.

---



|                                   |                            |                |            |                        |            |   |           |           |           | 
|---------------------------------- | -------------------------- | -------------- | ---------- | ---------------------- | ---------- | - | --------- | --------- | --------- | 
|                                   |                            |                |            | Year Ended December 31 |           
|                                   |                            |                |            |                        |           
|                                   |                            |                |            | 2000                   |            |   | 1999      |          
|                                   |                            |                |            |                        |            |   |           |          
|                                  
|                                  
|                                  
|                                  
|Revenue(Note 5)                   
|                                  
|                                  
|                                  
|                                  
|                                   | Turnkey revenue            | $              | 15,282,098 |                        |            | $ | 5,299,072 |          
|                                  
|                                  
|                                  
|                                  
|                                   | Organizational fees        |                |            | 379,590                |            |   |           | 304,057   |          
|                                  
|                                  
|                                  
|                                  
|                                   | Other income               |                |            | 65,658                 |            |   |           | 91,768    |          
|                                   |                            |                |            |                        |            |  
|                                   |                            | Total revenue  |            |                        | 15,727,346 |   |           |           | 5,694,897 | 
|                                  
|                                  
|                                  
|                                  
|Expenses                          
|                                  
|                                  
|                                  
|                                  
|                                   | Costs of sales             |                |            | 12,586,444             |            |   |           | 3,099,095 |          
|                                  
|                                  
|                                  
|                                  
|                                   | General and administrative |                |            | 2,301,429              |            |   |           | 1,723,358 |          
|                                   |                            |                |            |                        |            |  
|                                   |                            | Total expenses |            |                        | 14,887,873 |   |           |           | 4,822,453 | 
|                                   |                            |                |            |                        |            |  
|Operating Income                   |                            |                | 839,473    |                        |            |   | 872,444   |          
|                                  
|                                  
|                                  
|                                  
|Loss from Related Entities(Note 2) |                            |                | (107,731   | )                      |            |   | (128,640  | )        
|                                   |                            |                |            |                        |            |  
|                                  
|                                  
|                                  
|                                  
|Net Income                         |                            | $              | 731,742    |                        |            | $ | 743,804   |          
|                                   |                            |                |            |                        |            |  

See Notes to Financial Statements.

F-31



---



##### Table of Contents






Wolverine Energy, L.L.C.

---



|                                   |  |   |           | 
|---------------------------------- |  | - | --------- | 
|Members Equity January 1, 1999   |  | $ | 708,379   | 
|                                  
|                                  
|                                  
|                                  
|Net income                         |  |   | 743,804   | 
|                                  
|                                  
|                                  
|                                  
|Distributions to member            |  |   | (515,077) | 
|                                   |  |   |          
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|Members Equity December 31, 1999 |  |   | 937,106   | 
|                                  
|                                  
|                                  
|                                  
|Net income                         |  |   | 731,742   | 
|                                  
|                                  
|                                  
|                                  
|Distributions to member            |  |   | (572,731) | 
|                                   |  |   |          
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|Members Equity December 31, 2000 |  | $ | 1,096,117 | 
|                                   |  |   |          

See Notes to Financial Statements.

F-32



---



##### Table of Contents






Wolverine Energy, L.L.C.

---



|                                             |                                                             |   |           |                        |  |   |         |             | 
|-------------------------------------------- | ----------------------------------------------------------- | - | --------- | ---------------------- |  | - | ------- | ----------- | 
|                                             |                                                             |   |           | Year Ended December 31
|                                             |                                                             |   |           |                       
|                                             |                                                             |   |           | 2000                   |  |   | 1999   
|                                             |                                                             |   |           |                        |  |   |        
|Cash Flows from Operating Activities         |                                                             |  
|                                            
|                                            
|                                            
|                                            
|                                             | Cash received from customers and related parties            |   | $         | 11,769,381             |  |   | $       | 5,084,324  
|                                            
|                                            
|                                            
|                                            
|                                             | Cash paid to operators, employees and suppliers             |   |           | (7,866,464)            |  |   |         | (4,052,175)
|                                            
|                                            
|                                            
|                                            
|                                             | Cash paid for interest                                      |   |           | (115,045)              |  |   |         | (108,741)  
|                                             |                                                             |   |           |                        |  |  
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                             | Net cash provided by operating activities (Note 6)          |   |           | 3,787,872              |  |   |         | 923,408    
|                                            
|                                            
|                                            
|                                            
|Cash Flows from Investing Activities        
|                                            
|                                            
|                                            
|                                            
|                                             | Purchase of equipment                                       |   |           | (16,158)               |  |   |         | (10,994)   
|                                            
|                                            
|                                            
|                                            
|                                             | Cash paid for investments in limited liability corporations |   |           | (310,526)              |  |   |         | (186,880)  
|                                             |                                                             |   |           |                        |  |  
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                             | Net cash used in investing activities                       |   |           | (326,684)              |  |   |         | (197,874)  
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Cash Flows from Financing Activities        
|                                            
|                                            
|                                            
|                                            
|                                             | Payments on long-term debt                                  |   |           | (607,191)              |  |   |         | (80,496)   
|                                            
|                                            
|                                            
|                                            
|                                             | Advances to related parties                                 |   |           | (973,217)              |  |   |         |           
|                                            
|                                            
|                                            
|                                            
|                                             | Distributions to member                                     |   |           | (572,731)              |  |   |         | (515,077)  
|                                             |                                                             |   |           |                        |  |  
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                             | Net cash used in financing activities                       |   |           | (2,153,139)            |  |   |         | (595,573)  
|                                             |                                                             |   |           |                        |  |  
|Net Increase in Cash and Cash Equivalents    |                                                             |   | 1,308,409 |                        |  |   | 129,961
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Cash and Cash Equivalents Beginning of year |                                                             |   | 584,002   |                        |  |   | 454,041
|                                             |                                                             |   |           |                        |  |  
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Cash and Cash Equivalents End of year       |                                                             | $ | 1,892,051 |                        |  | $ | 584,002
|                                             |                                                             |   |           |                        |  |  

See Notes to Financial Statements.

F-33



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##### Table of Contents






Wolverine Energy, L.L.C.

---

Notes to Financial StatementsDecember 31, 2000 and 1999

Note 1  Nature of Business and Significant Accounting Policies



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Wolverine Energy, L.L.C. (WELLC) acquires working interests in natural
gas prospects throughout the United States, forms oil and gas entities
and sells them the interests on a turnkey basis. WELLC is responsible
for managing the operations of the entities                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Working Interests and Land Leases Held for Resale WELLC has acquired
certain oil and gas working interests and land leases for the purpose
of selling these interests to oil and gas entities. Such working
interests and land leases held for resale are recorded at cost, but
are periodically reviewed to determine if the market value of the
working interests and land leases have been impaired. If impairment
exists, a loss is recognized by recording an impairment allowance.
Abandonments of working interests and land leases held for resale are
charged to expense. As of December 31, 2000 and 1999, no reserve for
impairment has been recorded.
|
| | Investments in Related Entities Investments in related entities are
accounted for under the equity method since WELLC has significant
influence over the management of these entities. WELLC is the manager
of the oil and gas entities and makes initial capital contributions in
accordance with provisions in the respective placement memorandum
governing the activities of the particular entity. Income or losses
are allocated to the investment accounts according to WELLCs
ownership interest in the entities, and distributions received are
deducted from the investment accounts.                                                                 
|
| | Turnkey Drilling Revenue WELLC enters into contracts with affiliated
entities to sell them oil and gas working interests under turnkey
drilling agreements. Under the terms of the agreements, the entities
pay a fixed price for acquisition, drilling, and completion costs and
receives working interests in the wells. WELLC agrees to monitor the
well operators obligation to conduct the drilling and completion of
each well. Turnkey revenue is recognized when the related services
have been performed (working interests have been sold) and
substantially all future obligations have been settled.                                                

F-34



---



##### Table of Contents



Wolverine Energy, L.L.C.

---

Note 1  Nature Of Business and Significant Accounting Policies (Continued)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cost of Sales The Company acquires oil and gas working interests for
resale that require the Company to pay a pro rata portion of all costs
to drill and complete a well. The Company sells these oil and gas
working interests in the wells at a fixed price, generally before the
drilling is completed. Actual costs to drill and complete a well may
exceed the sales price. The Company has the burden of paying all costs
in excess of the turnkey price. Included in accounts payable at
December 31, 2000 and 1999, and cost of sales, is the estimated total
cost that the Company will be required to pay on working interests
that have been sold. Due to uncertainties inherent in the estimation
process, it is at least reasonably possible that the Company may incur
expenses in excess of the amount recorded. Management is of the
opinion that any adjustment of the amount recorded would not have a
material adverse effect on the financial statements.
|
| | Organizational Fees In connection with the organization and offering
stage of related oil and gas entities WELLC receives an organizational
fee ranging from 1.0 to 2.5 percent from investor subscriptions, which
is credited to income as earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Equipment Equipment is recorded at cost. Depreciation is computed
using straight-line and accelerated methods over the estimated useful
lives of the assets. Costs of maintenance and repairs are charged to
expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Income Taxes No provision for federal income taxes has been included
in the financial statements since all income and expenses of the LLC
are allocated to the member for inclusion in his respective income tax
return.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-35



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##### Table of Contents



Wolverine Energy, L.L.C.

---

Note 2  Affiliated Oil and Gas Entities



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | WELLC sponsors the formation of entities, typically limited liability
corporations, for the purpose of conducting oil and gas exploration,
development, and production activities on oil and gas properties.
WELLC serves as manager of these entities and, as such, has full and
exclusive discretion in the management and control. The turnkey
drilling and operating agreements that WELLC enters into with the
entities provide that the entities pay for the drilling costs of the
wells at an agreed-upon price per well. Profits from oil and gas
properties are allocated based on the working interest ownership
percentage of the properties.
|
| | WELLC holds the following investment interest in the entities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                                                            |  |      |      |   |      |  |      |  
|----------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                                                            |  | 2000 |      |   | 1999 | 
|                                                            |  |      |      |   |      | 
|Wolverine Antrim Development 1995, LLC                      |  |      | 18.9 | % |      |  | 18.9 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development 1996-1, LLC                    |  |      | 12.8 | % |      |  | 12.8 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development 1996-2, LLC                    |  |      | 14.5 | % |      |  | 14.5 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development 1997-1, LLC                    |  |      | 14.8 | % |      |  | 14.8 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development 1997-2, LLC                    |  |      | 14.5 | % |      |  | 14.5 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development 1998-1, LLC                    |  |      | 12.5 | % |      |  | 12.5 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Energy 1998-1999 (A) Development Company, LLC     |  |      | 10.0 | % |      |  | 10.0 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Development 1999-1, LLC                           |  |      | 11.5 | % |      |  | 11.5 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development Spotted Horse Prospect, LLC    |  |      | 5.0  | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development Spotted Horse Prospect #2, LLC |  |      | 1.0  | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development Spotted Horse Prospect #3, LLC |  |      | 1.0  | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Antrim Development Spotted Horse Prospect #4, LLC |  |      | 1.0  | %
|                                                           
|                                                           
|                                                           
|                                                           
|Wolverine Development 2000-1A, LLC                          |  |      | 1.0  | %

F-36



---



##### Table of Contents



Wolverine Energy, L.L.C.

---

Note 2  Affiliated Oil and Gas Entities (Continued)



| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Following is a summary of the financial position and results of
operations of entities whose investments are accounted for under the
equity method of accounting:

|                    |                              |   |            |            |  |      |             |            | 
|------------------- | ---------------------------- | - | ---------- | ---------- |  | ---- | ----------- | ---------- | 
|                    |                              |   | 2000       |            |  | 1999 |            
|                    |                              |   |            |            |  |      |            
|Current assets      |                              | $ | 1,764,207  |            |  |      | 1,278,327   |           
|                   
|                   
|                   
|                   
|Other assets (net)  |                              |   | 32,477,769 |            |  |      | 18,498,425  |           
|                    |                              |   |            |            |  |     
|                    | Total assets                 |   | $          | 34,241,976 |  |      | $           | 19,776,752 | 
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|Current liabilities |                              | $ | 2,629,644  |            |  | $    | 1,226,593   |           
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|Equity              |                              |   | 31,612,332 |            |  |      | 18,550,159  |           
|                    |                              |   |            |            |  |     
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                    | Total liabilities and equity |   | $          | 34,241,976 |  |      | $           | 19,776,752 | 
|                    |                              |   |            |            |  |     
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|Net loss            |                              | $ | (609,858)  |            |  | $    | (1,849,753) |           
|                    |                              |   |            |            |  |     

Note 3  Line of Credit



| |                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The line of credit to a bank is unsecured and due on demand. The line
of credit bears interest at 1.5 percent above the New York Citibank
prime rate (effective rate of 10 percent at December 31, 1999).
WELLCs credit limit is $325,000. The line of credit is guaranteed by
the member. As of December 31, 2000 there were no outstanding amounts
owed on the line of credit.

F-37



---



##### Table of Contents



Wolverine Energy, L.L.C.

---

Note 4  Long-term Debt



| |                                          
| | -----------------------------------------
| | Long-term debt consists of the following:

|                                                                                                                                                                                                                                                                                                                        |                      |   |         |         |  |   |         |         |  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | - | ------- | ------- |  | - | ------- | ------- |  | 
|                                                                                                                                                                                                                                                                                                                        |                      |   |         | 2000    |  |   | 1999    |        
|                                                                                                                                                                                                                                                                                                                        |                      |   |         |         |  |   |         |        
|Notes payable to unrelated parties
due in monthly installments of
$2,500, with any remaining balance
due January 2003. The note bears
an interest rate of 14 percent.
The note is collateralized by
certain investments of the Company
and is guaranteed by the member.                                                 |                      | $ | 200,000 |         |  | $ | 200,000 |        
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|Note payable to an unrelated
company, due in monthly interest
payments of $3,083, at a rate of
prime plus 10 percent for an
effective rate of 18.5 percent at
December 31, 1999. The note is
collateralized by all assets of the
Company and is guaranteed by the
member. The balance of the note
was paid during 2000. |                      |   |        |         |  |   | 200,000 |        
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|Note payable to bank, due in
monthly installments of $502,
including interest at a rate of
15.95 percent. The note is
collateralized by equipment. The
balance of the note was paid during
2000.                                                                                                                        |                      |   |        |         |  |   | 7,191   |        
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|Note payable to bank, due in
monthly payments of $6,250 plus
interest at a rate of prime plus
1.5 percent for an effective rate
of 10.5 percent at December 31,
2000. The note is collateralized
by all assets of the Company and is
guaranteed by the member. Final
payment is due April 2003.                         |                      |   | 168,660 |         |  |   | 243,660 |        
|                                                                                                                                                                                                                                                                                                                        |                      |   |         |         |  |   |         |        
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                        | Total                |   |         | 368,660 |  |   |         | 650,851 | 
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                        | Less current portion |   |         | 105,000 |  |   |         | 307,500 | 
|                                                                                                                                                                                                                                                                                                                        |                      |   |         |         |  |   |         |        
|                                                                                                                                                                                                                                                                                                                        | Long-term portion    |   | $       | 263,660 |  |   | $       | 343,351 | 
|                                                                                                                                                                                                                                                                                                                        |                      |   |         |         |  |   |         |        

F-38



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##### Table of Contents



Wolverine Energy, L.L.C.

---

Note 4  Long-term Debt (Continued)



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Minimum principal payments on long-term debt to maturity as of
December 31, 2000, are as follows:

|      |  |   |         | 
|----- |  | - | ------- | 
|2001  |  | $ | 105,000 | 
|     
|     
|     
|     
|2002  |  |   | 105,000 | 
|     
|     
|     
|     
|2003  |  |   | 158,660 | 
|      |  |   |        
|Total |  | $ | 368,660 | 
|      |  |   |        

Note 5  Related Party Transactions



| |                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because of the nature of WELLCs business, a significant number of
transactions are with related parties.                                                                                                                                                                                                                  
|
| | During 2000 and 1999, WELLC earned turnkey revenue from related
entities in the amount of $15,282,098 and $5,299,072, respectively.
The balance of turnkey revenues and allocated expenses owed to WELLC,
included in accounts receivable, as of December 31, 2000 and 1999,
totaled $4,793,153 and $945,997, respectively.
|
| | During 2000 and 1999, WELLC charged organizational fees to related
entities in the amount of $379,590 and $304,057, respectively.                                                                                                                                                                                          
|
| | WELLC advanced $973,217 to related entities during 2000. The amounts
are due on demand.                                                                                                                                                                                                                                    

F-39



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##### Table of Contents



Wolverine Energy, L.L.C.

---

Note 6  Cash Flows



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | A reconciliation of net income to net cash flows from operating
activities is as follows:

|                                                                           |                                     |                                   |                                           |         |             |           |         |         |           |         | 
|-------------------------------------------------------------------------- | ----------------------------------- | --------------------------------- | ----------------------------------------- | ------- | ----------- | --------- | ------- | ------- | --------- | ------- | 
|                                                                           |                                     |                                   |                                           |         | 2000        |           |         | 1999    |          
|                                                                           |                                     |                                   |                                           |         |             |           |         |         |          
|Net income                                                                 |                                     | $                                 | 731,742                                   |         |             | $         | 743,804 |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Adjustments to reconcile net income
to net cash from operating activities:
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Depreciation expense                |                                   |                                           | 3,061   |             |           |         | 18,494  |          
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Loss on disposal of equipment       |                                   |                                           | 13,631  |             |           |         |        |          
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Loss from equity investments        |                                   |                                           | 107,731 |             |           |         | 128,640 |          
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | (Increase) decrease in assets:     
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                     | Accounts receivable               |                                           |         | (3,957,965) |           |         |         | (281,028) |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                     | Working interests held for resale |                                           |         | 260,479     |           |         |         | 23,924    |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                     | Prepaid expenses                  |                                           |         | 8,129       |           |         |         | (7,950)   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                     | Other assets                      |                                           |         | 3,980       |           |         |         | 6,361     |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Increase (decrease) in liabilities:
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                     | Accounts payable                  |                                           |         | 6,627,695   |           |         |         | 302,017   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                     | Accrued expenses                  |                                           |         | (10,611)    |           |         |         | (10,854)  |        
|                                                                           |                                     |                                   |                                           |         |             |          
|                                                                           |                                     |                                   | Net cash provided by operating activities |         | $           | 3,787,872 |         |         | $         | 923,408 | 
|                                                                           |                                     |                                   |                                           |         |             |          



| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | There were no significant non-cash investing and financing activities
during 2000 and 1999.

Note 7  Commitments and Contingencies



| |                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As managing member in various affiliated oil and gas entities, WELLC
is subject to contingencies that may arise in the normal course of
business of these entities. Management is of the opinion that
liabilities, if any, related to such contingencies that may arise
would not be material to the financial statements.
|
| | WELLC currently has one offering it is soliciting, with a combined
maximum investor contribution limit of $6,000,000. The manager is
required to match every capital contribution from an investor with a
capital contribution equal to 1.0 percent of the investor
contribution.                                         
|
| | Subsequent to year-end, the Company guaranteed 20 percent of the
outstanding $3,100,000 in debt of a related party, for a total of
$620,000.                                                                                                                                                                              

F-40



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---













F-41



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##### Table of Contents



To the Member
Wolverine Energy, L.L.C.

The Estimates of Natural Gas Reserves on pages 15 and 16 are not a required
part of the basic financial statements of Wolverine Energy, L.L.C. (a Michigan
limited liability corporation), but constitute additional supplementary
information for additional analysis. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding
the methods of measurement and presentation of the supplementary information.
However, we did not audit the information and express no opinion on it.





May 2, 2001

F-42



---



##### Table of Contents



Wolverine Energy, L.L.C.

---




Estimates of Natural Gas Reserves  Unaudited
December 31, 2000

The following estimates of proven developed natural gas reserve quantities and
related standardized measure of discounted net cash flow are estimates prepared
by WELLCs accounting personnel as of December 31, 2000. They do not purport to
reflect realizable values or fair market values of WELLCs reserves. WELLC
emphasizes that reserve estimates are inherently imprecise and that estimates
of new discoveries are more imprecise than those of producing gas properties.
Accordingly, these estimates are expected to change, as future information
becomes available.

Proven developed reserves are estimated reserves of natural gas that WELLC
expects to be recoverable in future years from known reservoirs under existing
economic and operating conditions. Proven developed reserves are those expected
to be recovered through existing wells, equipment and operating methods. WELLC
does not have any undeveloped reserves.

The standardized measure of discounted future net cash flows is computed by
applying year-end prices of natural gas to the estimated future production of
proven developed reserves, less estimated future expenditures (based on
year-end costs) to be incurred in developing and producing those reserves, less
estimated future severance tax expenses and assuming continuation of existing
economic conditions. The estimated future net cash flows are then discounted
using a rate of 10 percent per year to reflect the estimated timing of the
future cash flows.

WELLC forms oil and gas entities for the purpose of investing in oil and gas
drilling programs. WELLC retains an investment interest in each of the programs
formed. WELLCs equity interest in proven developed reserves and standardized
measure of discounted future net cash flows for each of its investments is
presented as follows:

F-43



---



##### Table of Contents



Wolverine Energy, L.L.C.

---

Estimates of Natural Gas Reserves  Unaudited (Continued)
December 31, 2000

Equity Interest in Proven Developed Reserves

|                 |  |      |          |  |   |           |       |      |           |  |        |  |  |  |  |  | 
|---------------- |  | ---- | -------- |  | - | --------- | ----- | ---- | --------- |  | ------ |  |  |  |  |  | 
|                 |  |      | Total    |  |   | Wolverine |       |      | Wolverine | 
|                 |  |      | Reserves |  |   | Interest  |       |      | Reserves  | 
|Program          |  | MMCF |          |  | % |           |       | MMCF |          
|                 |  |      |          |  |   |           |       |      |          
|Trust 95         |  |      | 3,447    |  |   |           | 18.90 | %    |           |  | 651    | 
|                
|                
|                
|                
|1996-1           |  |      | 1,952    |  |   |           | 12.80 | %    |           |  | 250    | 
|                
|                
|                
|                
|1996-2           |  |      | 10,565   |  |   |           | 14.50 | %    |           |  | 1,532  | 
|                
|                
|                
|                
|1997-1           |  |      | 11,341   |  |   |           | 14.80 | %    |           |  | 1,678  | 
|                
|                
|                
|                
|1997-2           |  |      | 33,221   |  |   |           | 14.50 | %    |           |  | 4,817  | 
|                
|                
|                
|                
|1998-1           |  |      | 32,046   |  |   |           | 12.50 | %    |           |  | 4,006  | 
|                
|                
|                
|                
|1998-1999A       |  |      | 24,823   |  |   |           | 10.00 | %    |           |  | 2,482  | 
|                
|                
|                
|                
|1999-1           |  |      | 28,544   |  |   |           | 11.50 | %    |           |  | 3,283  | 
|                
|                
|                
|                
|Spotted Horse #1 |  |      | 14,470   |  |   |           | 5.00  | %    |           |  | 724    | 
|                
|                
|                
|                
|Spotted Horse #2 |  |      | 12,128   |  |   |           | 1.00  | %    |           |  | 121    | 
|                
|                
|                
|                
|Spotted Horse #3 |  |      | 22,601   |  |   |           | 1.00  | %    |           |  | 226    | 
|                
|                
|                
|                
|Spotted Horse #4 |  |      | 14,987   |  |   |           | 1.00  | %    |           |  | 150    | 
|                
|                
|                
|                
|2000-1A          |  |      | 2,584    |  |   |           | 1.00  | %    |           |  | 26     | 
|                 |  |      |          |  |   |           |       |      |           | 
|Total            |  |      | 212,709  |  |   |           |       |      |           |  | 19,946 | 

F-44



---



##### Table of Contents



Wolverine Energy, L.L.C.

---

Estimates of Natural Gas Reserves  Unaudited (Continued)
December 31, 2000

Equity Interest in Standardized Measure of Discounted Future Cash Flows

|                 |  |      |           |  |       |             |   |       |             |   |           |  |  |  |  |  | 
|---------------- |  | ---- | --------- |  | ----- | ----------- | - | ----- | ----------- | - | --------- |  |  |  |  |  | 
|                 |  |      | Wolverine |  |       | Future      |   |       | Wolverine   |  
|                 |  |      | Reserves  |  |       | Development |   |       | Net Present |  
|Program          |  | MMCF |           |  | Costs |             |   | Value |            
|                 |  |      |           |  |       |             |   |       |            
|Trust 95         |  |      | 651       |  |       | $           |  |       |             | $ | 487,180   | 
|                
|                
|                
|                
|1996-1           |  |      | 250       |  |       |             |  |       |             |   | 80,939    | 
|                
|                
|                
|                
|1996-2           |  |      | 1,532     |  |       |             |  |       |             |   | 757,953   | 
|                
|                
|                
|                
|1997-1           |  |      | 1,678     |  |       |             |  |       |             |   | 716,130   | 
|                
|                
|                
|                
|1997-2           |  |      | 4,817     |  |       |             |  |       |             |   | 1,118,420 | 
|                
|                
|                
|                
|1998-1           |  |      | 4,006     |  |       |             |  |       |             |   | 1,452,977 | 
|                
|                
|                
|                
|1998-1999A       |  |      | 2,482     |  |       |             |  |       |             |   | 442,190   | 
|                
|                
|                
|                
|1999-1           |  |      | 3,283     |  |       |             |  |       |             |   | 957,838   | 
|                
|                
|                
|                
|Spotted Horse #1 |  |      | 724       |  |       |             |  |       |             |   | 1,154,400 | 
|                
|                
|                
|                
|Spotted Horse #2 |  |      | 121       |  |       |             |  |       |             |   | 214,130   | 
|                
|                
|                
|                
|Spotted Horse #3 |  |      | 226       |  |       |             |  |       |             |   | 399,060   | 
|                
|                
|                
|                
|Spotted Horse #4 |  |      | 150       |  |       |             |  |       |             |   | 224,829   | 
|                
|                
|                
|                
|2000-1A          |  |      | 26        |  |       |             |  |       |             |   | 38,764    | 
|                 |  |      |           |  |       |             |   |       |             |  
|Total            |  |      | 19,946    |  |       | $           |  |       |             | $ | 8,044,810 | 
|                 |  |      |           |  |       |             |   |       |             |  

F-45



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##### Table of Contents



Item 8. Changes in and Disagreements with Accountants and Accounting and Financial Disclosure

The Company has nothing to report in this item.

46



---



##### Table of Contents






Item 9. Directors, Executive Officers, Promoters and Control Persons

WOLVERINE ENERGY, L.L.C.

Wolverine Energy, L.L.C., (i.e., the Manager) is a Michigan limited
liability company which was organized to continue the business of a group of
affiliated entities of which Mr. Arbaugh was a 50 percent equity owner
(collectively, the Prior Manager) and through which Mr. Arbaugh had
previously conducted his natural gas investment business. The Manager was
formed by Mr. Arbaugh after the reorganization of the business of the Prior
Manager and the termination of the activities of the Prior Manager as an
organizer of new natural gas development projects. All of the outstanding
members equity of the Manager is owned by Mr. Arbaugh or his affiliates.

The principal business of the Manager is the design, organization and
management of oil and gas investment programs. Since its formation in November
1995, the Manager has served as sole managing trustee and shareholder of one
natural gas development investment program organized as a Delaware business
trust, and is currently serving as managing interestholder of natural gas well
development programs organized as Michigan limited liability companies.

AFFILIATED COMPANIES

Mr. Arbaugh is also an equity investor, though not individually or with
any affiliate with a controlling interest, in the following companies:



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | MOBILE INFORMATION SERVICES, INC.  pager interface trust company
operating in Chicago, Illinois



| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | WOLVERINE TOWERS, INC.  owner of radio and television transmission
tower in Lansing, Michigan



| |                                                                        
| | -----------------------------------------------------------------------
| | SUPERBROKERS, INC.  yacht brokerage located in Traverse City,
Michigan

EXECUTIVE OFFICERS AND DIRECTORS OF THE MANAGER

GEORGE H. ARBAUGH, JR., age 60, is the sole manager and CEO of the
Manager. Mr. Arbaugh was awarded a bachelors degree in Economics from Michigan
State University in 1963. He was sole proprietor of a chain of sporting goods
stores in Michigan from 1969 until he sold that business in 1977. From 1977
until 1979, Mr. Arbaugh acted as an independent consultant and sales
representative for a major sporting goods manufacturer. Mr. Arbaugh acquired
his interest in the Prior Manager in 1978 and was actively engaged in its
activities full time from that time until its reorganization in November 1995.
Mr. Arbaugh remains actively engaged in the business of the Prior Manager on a
less than full-time basis. He is a 42.5% equity owner of the Prior Manager.
Mr. Arbaugh has been active in the oil and gas investment business since 1978
for his own account and through investment entities. Mr. Arbaugh formed the
Manager in November 1995 and has been actively engaged in its activities full
time since then.

47



---



##### Table of Contents



EDWARD H. MARGOLIN,age 65, has been the President of the Manager since
April, 2001. He is responsible primarily for managing investor relations,
including oversight of selling broker-dealers. From 1999 until joining the
Manager, Mr. Margolin worked as a consultant through his wholly owned company,
Consolidated Capital Financial Services, located in Mill Valley, California.
In this capacity, Mr. Margolin assisted emerging growth companies and oil and
gas ventures in their efforts to raise equity capital. From 1997 to 1999, Mr.
Margolin served as Project Manager and Managing Director for Special Projects
for American Tower Corp. out of Boston, Massachusetts, a company engaged in
building and leasing communications towers. From 1995 to 1997 and 1987 to
1993, Mr. Margolin was affiliated with First Consolidated Capital of Sausalito,
California, where he consulted to start-up and second stage companies in
connection with raising capital. Mr. Margolin has also worked as Executive
Vice President of Spacetime Arts of Sausalito, California (1993-1995), and
president of EHM & Associates, Inc. (1971-1987).

GARY L. FOLTZ, age 59, has been Executive Vice President and Chief
Operating Officer of the Manager since May 1, 1997. His main responsibility is
to oversee and manage the operations of the Manager. Mr. Foltz was awarded a
Bachelors Degree in Business Administration and a Juris Doctorate Degree in
1968 from the University of Kentucky. Mr. Foltz was employed for two years by
the State of Kentucky and for three years by First Kentucky Trust Company,
Louisville, Kentucky, as a specialist in personal estate and tax planning. In
1973, Mr. Foltz joined Dooleys, Inc., a developer and operator of restaurants
and night clubs in university communities. He was personally involved in the
planning and development of four Dooleys units, representing an investment
exceeding $5,000,000, and the employment of over 300 employees. In addition to
his restaurant experience, Mr. Foltz has served as general partner and manager
of various business developments outside the oil and gas industry. Mr. Foltz is
also a major stockholder and director of Crystal Computer Corporation in San
Jose, California. He is the 100 percent owner of a hospitality industry
consulting company, and investor/developer of several real estate projects.

Item 10. Executive Compensation

Program As Operating Agreement requires Program A to pay the Manager
certain fees, including a one-time Management Fee equal to two and one-half
percent of the Interestholders. The actual management fees paid to the Manager
by Program A were $53,109 in 1999 and $17,342 in 1998.

Program As Operating Agreement also requires Program A to pay the Manager
an annual administrative cost allowance equal to two and one-half percent of
the Interestholders capital contributions, subject to an annual COPAS
adjustment, starting in the month that Program A first realizes revenue from
production. The Manager is allowed to waive or defer the payment of this
allowance on a month-by-month basis. In 2000, the Manager waived all of the
administrative cost allowance accrued.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The Manager owns five percent of Program As outstanding Interests.

48



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##### Table of Contents



Item 12. Certain Relationships and Related Transactions

Program A was organized by the Manager and was activated on December 31,
1999. Program A has purchased all of its natural gas wells from the Manager
under a turnkey arrangement. In 1999, Program A incurred an obligation to pay
the Manager $1,937,629 to purchase gas wells. Program A still owes the Manager
$62,039 of this obligation. The cost to the Manager of the well interests
purchased by Program A was approximately $1,705,475.

Item 13. Exhibits and Reports on Form 8-K

(a) The Exhibits listed on the Index to Exhibits immediately following the
signatures are filed as part of, or incorporated by reference, into this
report.




(b) No reports on Form 8-K were filed during the period covered by this
report.



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | WOLVERINE ENERGY 1998-1999 (A) DEVELOPMENT COMPANY, L.L.C.
By: Wolverine Energy, L.L.C., Manager
|
|
|
|
| | By://George H. Arbaugh, Jr.//                                                                   
| | George H. Arbaugh, Jr., Sole Manager
      And Chief Executive Officer                          
|
|
|
|
| | Date: May 30, 2001                                                                              

In accordance with the Exchange Act, this report has been signed below by
the following person on behalf of the registrant in the capacity and on the
date indicated.

|                                                              |  |                                                                    |  |             
|------------------------------------------------------------- |  | ------------------------------------------------------------------ |  | ------------
|Signature                                                     |  | Title                                                              |  | Date        
|                                                              |  |                                                                    |  |             
|By:  //s// George H. Arbaugh, Jr.
      George H. Arbaugh Jr. |  | Sole Manager,
Chief Executive Officer and
Chief Accounting Officer |  | May 30, 2001

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##### Table of Contents






|            |  |                                                      |  |                         
|----------- |  | ---------------------------------------------------- |  | ------------------------
|Exhibit No. |  | Description                                         
|            |  |                                                     
|(3)(i)      |  | Articles of Organization of Program A                |  | Form 10-KSB for 12/31/99
|           
|           
|           
|           
|            |  | Articles of Organization of Manager                  |  | Registration Statement  
|           
|           
|           
|           
|(4)         |  | Instruments defining rights of
security holders     
|           
|           
|           
|           
|            |  | - Operating Agreement  Program A                    |  | Form 10-KSB for 12/31/99
|           
|           
|           
|           
|            |  | - Operating Agreement  Manager                      |  | Registration Statement  
|           
|           
|           
|           
|(9)         |  | Voting Trust Agreement                               |  | N/A                     
|           
|           
|           
|           
|(10)        |  | Material contracts                                  
|           
|            |  | - Federated Agreement                                |  | Form 10-KSB for 12/31/99
|           
|           
|           
|           
|            |  | - Turnkey Agreement                                  |  | Form 10-KSB for 12/31/99
|           
|           
|           
|           
|(11)        |  | Statement of
Computation of per-share earnings       |  | N/A                     
|           
|           
|           
|           
|(13)        |  | Annual Report                                        |  | N/A                     
|           
|           
|           
|           
|(16)        |  | Letter
regarding change in certifying accountant     |  | N/A                     
|           
|           
|           
|           
|(18)        |  | Letter
regarding change in accounting principles     |  | N/A                     
|           
|           
|           
|           
|(19)        |  | Previously unfiled documents                         |  | N/A                     
|           
|           
|           
|           
|(22)        |  | Subsidiaries of Registrant                           |  | N/A                     
|           
|           
|           
|           
|(23)        |  | Published
report regarding matters submitted to vote |  | N/A                     
|           
|           
|           
|           
|(24)        |  | Consent of experts and counsel                       |  | N/A                     
|           
|           
|           
|           
|(25)        |  | Power of Attorney                                    |  | N/A                     

50