<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549
                                  FORM 10-QSB



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

               For the quarterly period ended September 30, 1999

                                      or

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

            For the period from _______________ to _______________.


                        Commission file number 0-19753


                           GOTHIC ENERGY CORPORATION
            (Exact name of registrant as specified in its charter)


     Oklahoma                                           22-2663839
     (State or other jurisdiction of                  (IRS Employer
     incorporation or organization)                 Identification No.)



             5727 South Lewis, #700, Tulsa, Oklahoma    74105-7148
                   (Address of principal executive offices)


                                 918-749-5666
             (Registrant's telephone number, including area code)



        Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes   X      No
                       -------     -------


                    APPLICABLE ONLY TO CORPORATE  ISSUERS:

        As of  November 1, 1999, 18,685,765 shares of the Registrant's Common
Stock, $.01 par value, were outstanding.
<PAGE>

                           GOTHIC ENERGY CORPORATION
                         GOTHIC PRODUCTION CORPORATION


                               TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

                                                                      PAGE
     Item 1 - Financial Statements

     Consolidated Unaudited Balance Sheet
     December 31, 1998 and September 30, 1999.........................  3

     Consolidated Unaudited Statement of Operations
     Nine months ended September 30, 1998 and 1999....................  4

     Consolidated Unaudited Statement of Operations
     Three months ended September 30, 1998 and 1999...................  5

     Consolidated Unaudited Statement of Cash Flows
     Nine months ended September 30, 1998 and 1999....................  6

     Notes to Unaudited Consolidated Financial Statements.............  7

     Report of Review by Independent Accountants...................... 11

     Item 2 - Management's Discussion and Analysis

     Management's Discussion and Analysis or Plan of Operation........ 12


PART II - OTHER INFORMATION

     Item 2 - Changes in Securities................................... 19

     Item 6 - Exhibits and Reports on Form 8-K........................ 19

     Signatures....................................................... 20

                                       2
<PAGE>

                   GOTHIC ENERGY CORPORATION AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEET
                (in thousands, except par value and share data)



<TABLE>
<CAPTION>
                                                                           December 31,            September 30,
                             ASSETS                                           1998                      1999
                             ------                                    -------------------      --------------------
                                                                                                    (Unaudited)
<S>                                                                     <C>                      <C>
Current assets:
  Cash and cash equivalents                                                 $   2,289                 $   2,946
  Natural gas and oil receivables                                               7,236                     9,170
  Receivable from officers and employees                                           55                        72
  Other                                                                           221                       270
                                                                            ---------                 ---------
  Total current assets                                                          9,801                    12,458

Property and equipment:
  Natural gas and oil properties on full cost method:
    Properties being amortized                                                242,012                   254,837
    Unproved properties not subject to amortization                             2,862                     5,711
  Equipment, furniture and fixtures                                             3,327                     2,434
  Accumulated depreciation, depletion and amortization                        (33,201)                  (49,309)
                                                                            ---------                 ---------
Property and equipment, net                                                   215,000                   213,673
Other assets, net                                                              12,487                    11,452
                                                                            ---------                 ---------
Total assets                                                                $ 237,288                 $ 237,583
                                                                            =========                 =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------

Current liabilities:
  Accounts payable trade                                                    $   3,208                 $   2,328
  Revenues payable                                                              6,031                     5,546
  Accrued interest expense                                                      4,358                    10,893
  Other accrued liabilities                                                       253                     1,388
                                                                            ---------                 ---------
Total current liabilities                                                      13,850                    20,155

Long-term debt, net                                                           301,179                   312,297
Gas imbalance and other liabilities                                             6,180                     3,802

Stockholders' equity (deficit):
   Series B Preferred Stock, Par Value $.05, authorized
     165,000 shares; 54,187 and 57,477 shares issued and
     outstanding                                                               36,945                    43,360
  Common stock, par value $.01, authorized 100,000,000 shares;
     issued and outstanding 16,261,640 and 18,685,765 shares                      162                       187
  Additional paid in capital                                                   42,996                    42,987
  Accumulated deficit                                                        (163,845)                 (185,026)
  Note receivable                                                                (179)                     (179)
                                                                            ---------                 ---------
Total stockholders' equity (deficit)                                          (83,921)                  (98,671)
                                                                            ---------                 ---------
Total liabilities and stockholders' equity (deficit)                        $ 237,288                 $ 237,583
                                                                            =========                 =========
</TABLE>


                            See accompanying notes

                                       3
<PAGE>

                    GOTHIC ENERGY CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         For the nine months ended
                                                                               September 30,
                                                                ---------------------------------------------
                                                                        1998                      1999
                                                               --------------------      --------------------
<S>                                                              <C>                       <C>
Revenues:
  Natural gas and oil sales                                                $ 39,699                  $ 36,973
  Well operations                                                             1,949                     1,853
                                                                           --------                  --------
    Total Revenues                                                           41,648                    38,826

Costs and expenses:
  Lease operating expense                                                     9,949                     7,078
  Depreciation, depletion and amortization                                   19,240                    16,108
  General and administrative expense                                          2,663                     3,062
  Provision for impairment of natural gas and oil properties                 34,000                         -
                                                                           --------                  --------

Operating income (loss)                                                     (24,204)                   12,578
Interest expense and amortization of debt issuance costs                    (26,247)                  (28,200)
Interest and other income                                                       350                       855
Loss on sale of investments                                                    (305)                        -
                                                                           --------                  --------

Loss before extraordinary item                                              (50,406)                  (14,767)

Loss on early extinguishment of debt                                         31,459                         -
                                                                           --------                  --------

Net loss                                                                    (81,865)                  (14,767)

Preferred dividend ($95.46 and $90.08 per preferred share)                    4,008                     5,029
Preferred dividend - amortization of  preferred discount                      4,633                     1,385
                                                                           --------                  --------

Net loss available for common shares                                       $(90,506)                 $(21,181)
                                                                           ========                  ========

Loss per common share before extraordinary item,
   basic and diluted                                                         $(3.63)                   $(1.27)
                                                                           ========                  ========

Net loss per common share, basic and diluted                                 $(5.57)                   $(1.27)
                                                                           ========                  ========

Weighted average common shares outstanding                                   16,262                    16,683
                                                                           ========                  ========
</TABLE>

                            See accompanying notes

                                       4
<PAGE>

                   GOTHIC ENERGY CORPORATION AND SUBSIDIARY
                     CONSOLIDATED STATEMENT OF OPERATIONS
                   (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         For the three months ended
                                                                               September 30,
                                                               ----------------------------------------------
                                                                        1998                      1999
                                                               --------------------      --------------------
<S>                                                              <C>                       <C>
Revenues:
  Natural gas and oil sales                                                $ 11,778                   $13,556
  Well operations                                                               796                       594
                                                                           --------                   -------

    Total Revenues                                                           12,574                    14,150

Costs and expenses:
  Lease operating expense                                                     2,454                     2,477
  Depreciation, depletion and amortization                                    5,485                     5,456
  General and administrative expense                                            893                     1,078
  Provision for impairment of natural gas and oil properties                 34,000                         -
                                                                           --------                   -------

Operating income (loss)                                                     (30,258)                    5,139
Interest expense and amortization of debt issuance costs                     (9,153)                   (9,473)
Interest and other income                                                       171                        38
                                                                           --------                   -------

Net loss                                                                    (39,240)                   (4,296)

Preferred dividend ($30.24 and $30.24 per preferred share)                    1,544                     1,738
Preferred dividend - amortization of  preferred discount                        462                       462
                                                                           --------                   -------

Net loss available for common shares                                       $(41,246)                  $(6,496)
                                                                           ========                   =======

Net loss per common share, basic and diluted                                 $(2.54)                   $(0.37)
                                                                           ========                   =======

Weighted average common shares outstanding                                   16,262                    17,463
                                                                           ========                   =======
</TABLE>




                            See accompanying notes

                                       5
<PAGE>

                   GOTHIC ENERGY CORPORATION AND SUBSIDIARY
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         For the nine months ended
                                                                                September 30,
                                                               ----------------------------------------------
                                                                        1998                      1999
                                                               --------------------      --------------------
<S>                                                              <C>                       <C>
Cash flows from operating activities:
    Net loss                                                              $ (81,865)                 $(14,767)
Adjustments to reconcile net loss to net cash provided
    by operating activities:
    Depreciation, depletion and amortization                                 19,240                    16,108
    Amortization of discount and loan costs                                   1,581                     1,247
    Loss on early extinguishment of debt                                     31,459                         -
    Accretion of interest on discount notes                                   3,787                     7,118
    Provision for impairment of natural gas and oil properties               34,000                         -

Changes in assets and liabilities:
    Increase in accounts receivable                                          (2,365)                   (1,951)
    (Increase) decrease in other current assets                                   9                       (49)
    Increase (decrease)  in accounts and revenues payable                     1,589                    (1,365)
    Increase in accrued liabilities                                           7,151                     7,670
                                                                          ---------                  --------

Net cash provided by operating activities                                    14,586                    14,011

Net cash used by investing activities:
    Collection of note receivable from officer and director                     167                         -
    Purchase of available-for-sale investments                                 (462)                        -
    Proceeds from sale of investment                                          1,359                         -
    Proceeds from sale of property and equipment                             43,027                     2,117
    Purchase of property and equipment                                     (218,234)                   (4,643)
    Property development costs                                              (10,890)                  (14,403)
                                                                          ---------                  --------

Net cash used by investing activities                                      (185,033)                  (16,929)

Cash flows from financing activities:
    Proceeds from short-term borrowings                                      60,000                         -
    Payment of short-term borrowings                                        (60,000)                        -
    Proceeds from long-term borrowings                                      429,340                    21,000
    Payments of long-term borrowings                                       (257,934)                  (17,000)
    Proceeds from sale of preferred stock, net                               73,475                         -
    Redemption of preferred stock, net                                      (40,809)                        -
    Payment of loan fees                                                    (38,461)                      (78)
    Other                                                                      (162)                     (347)
                                                                          ---------                  --------

Net cash provided by financing activities                                   165,449                     3,575

Net change in cash and cash equivalents                                      (4,998)                      657
Cash and cash equivalents, beginning of period                               16,722                     2,289
                                                                          ---------                  --------
Cash and cash equivalents, end of period                                  $  11,724                  $  2,946
                                                                          =========                  ========
Supplemental disclosure of interest paid                                  $   9,696                  $ 13,297
                                                                          =========                  ========
</TABLE>



                            See accompanying notes

                                       6
<PAGE>

                   GOTHIC ENERGY CORPORATION AND SUBSIDIARY
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.    GENERAL AND ACCOUNTING POLICIES

       Organization and Nature of Operations--The consolidated financial
statements include the accounts of Gothic Energy Corporation, a "holding
company", and its subsidiary, Gothic Production Corporation ("Gothic
Production") since its formation in April of 1998, (collectively referred to as
the ''Company''). All significant intercompany balances and transactions have
been eliminated. The Company is primarily engaged in the business of acquiring,
developing and exploiting natural gas and oil reserves in Oklahoma, Texas, New
Mexico and Kansas. Substantially all of the Company's natural gas and oil
production is being sold regionally in the ''spot market'' or under short-term
contracts, not extending beyond twelve months.

       Preparation of Financial Statements - 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 revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The December 31, 1998 consolidated balance sheet data was derived
from the audited financial statements but does not include all disclosures
required by generally accepted accounting principles. The financial statements
should be read in conjunction with the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1998.

       In the opinion of management of the Company, the accompanying financial
statements contain all adjustments, none of which were other than normal
recurring accruals, necessary to present fairly the financial position of the
Company as of  September 30, 1999, and the results of its operations and cash
flows for the periods ended September 30, 1998 and 1999.  The results of
operations for the 1999 period are not necessarily indicative of the results of
operations to be expected for the full year.

       Our independent accountants have performed a review of these interim
financial statements in accordance with standards established by the American
Institute of Certified Public Accountants.  Pursuant to Rule 436(c)  under the
Securities Act of 1933, their report of that review should not be considered a
part of any registration statements prepared or certified by them within the
meaning of Section 7 and 11 of that Act.

       Loss per common share - Loss per common share before extraordinary item
and net loss per common share are computed in accordance with Statement of
Financial Accounting Standards No. 128 ("FAS 128"). Presented on the
Consolidated Statement of Operations is a reconciliation of loss available to
common shareholders. There is no difference between actual weighted average
shares outstanding, which are used in computing basic loss per share and diluted
weighted average shares, which are used in computing diluted loss per share
because the effect of outstanding options and warrants would be antidilutive.
Warrants and options to purchase approximately 19,615,000 shares were
outstanding as of September 30, 1999 and were excluded from the computation of
diluted loss per share due to their anti-dilutive impact.

       Hedging Activities - In April 1999, the Company entered into a hedge
agreement in the form of a costless collar with respect to the production of
50,000 MMBTU of natural gas per day during the period of May through October
1999.  The costless collar places a floor of $1.80 per MMBTU and a ceiling of
$2.26 per MMBTU for the effective price of natural gas received by the Company.
Additionally, in July 1999 the Company entered into a similar costless collar
agreement with respect to the production of 50,000 MMBTU per day during the
period of November 1999 through March 2000 which places a floor of $2.30 per
MMBTU and a ceiling of $3.03 per MMBTU.  The collars represent approximately 70%
of the Company's current daily natural gas production.  Collar arrangements
limit the benefits the Company will realize if actual prices rise above the
ceiling price.  These arrangements provide for the Company to exchange a
floating market price for a fixed range contract price.  Payments are made by
the Company when the floating price exceeds the fixed range for a contract month
and payments are received when the fixed range price exceeds the floating price.
The commodity reference price for both contracts is the Panhandle Eastern
Pipeline Company, Texas, Oklahoma Mainline Index.   In August 1999, the

                                       7
<PAGE>

NOTE 1.    GENERAL AND ACCOUNTING POLICIES (Continued)

Company entered into a hedge agreement covering 10,000 barrels of oil per month
at a price of $20.10 per barrel.  This hedge is in effect from September 1999
through August 2000.

       Recently issued Financial Accounting Pronouncements - In June 1998, the
FASB issued Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities". FAS 133, as amended, is effective for all fiscal quarters
beginning after June 15, 2000. FAS 133 standardizes the accounting for
derivative instruments by requiring that all derivatives be recognized as assets
and liabilities and measured at fair value. Upon the Statement's initial
application, all derivatives are required to be recognized in the statement of
financial position as either assets or liabilities and measured at fair value.
In addition, all existing hedging relationships must be designated, reassessed,
documented and the accounting conformed to the provisions of FAS 133. Due to the
nature of the Company's hedging activities, the Company does not expect the
adoption of FAS 133 to have a significant impact on its financial position or
results of operations when adopted.


NOTE 2.    GOING CONCERN

       The Company incurred a significant net loss in 1998, due principally to a
decline in commodity prices during that year.  This commodity price decline
required the Company to write down the carrying value of its natural gas and oil
properties by $76.0 million.  More significantly, the commodity price decline
continued to affect the ongoing revenues and cash flows of the Company during
early 1999, resulting in a net loss of  $14.8 million for the nine months ended
September 30, 1999.

       It is the intention of the Company to continue to spend available cash
flow (EBITDA less cash interest payable on Senior Secured Notes) on the
development of natural gas and oil properties. With the continued volatility of
commodity prices, hedging programs will continue to be utilized by the Company.
This should help to stabilize cash flow, but a sustained price increase will be
necessary to ensure the Company's ability to generate sufficient reserves to
replace current production. Should commodity prices fall below current levels,
the Company would be limited in its ability to increase production and related
cash flow to a level sufficient to meet its ongoing financial covenants under
its Credit Facility. The price of natural gas and oil has recently been
increasing, but there is no assurance that it will continue to increase or
remain at the current level. Further, the borrowing base amount available under
the Company's Credit Facility has recently been redetermined and has been
reduced to $20.0 million. There is no assurance that the Company's lender will
maintain the available amount at this current level.

NOTE 3.    EQUITY TRANSACTION

       On August 17, 1999, Chesapeake Energy Corporation fully exercised the
common stock purchase warrant issued to it in April 1998 and purchased 2,394,125
shares of the Company's common stock. The warrant had been issued to Chesapeake
as part of the transaction involving the sale to Chesapeake of shares of the
Company's Series B Senior Redeemable Preferred Stock, a 50% interest in the
Company's Arkoma basin natural gas and oil properties and a 50% interest in
substantially all of the Company's undeveloped acreage. The shares were issued
pursuant to the cashless exercise provisions of the warrant that permitted
Chesapeake to surrender the right to exercise the warrant for a number of shares
of the Company's common stock having a market value equivalent to the total
exercise price. The total exercise price was $23,941.25 or $0.01 per share. An
aggregate of 45,121 warrants were surrendered in payment of the total exercise
price. The shares of common stock were issued pursuant to the exemption form the
registration requirements of the Securities Act of 1933, as amended, afforded by
section 4 (2) thereof.

                                       8
<PAGE>

NOTE 4.    SUMMARIZED FINANCIAL INFORMATION


       Gothic Production Corporation was organized in March 1998 as a wholly
owned subsidiary of the Company. On April 27, 1998, the Company transferred to
Gothic Production its ownership in all its natural gas and oil properties.
Following is the summarized financial information related to Gothic Production
as of September 30, 1999 and for the nine month and three month periods ended
September 30, 1998 and September 30, 1999. (in thousands)

<TABLE>
<CAPTION>
                                                                    As of  September 30, 1999
                                 --------------------------------------------------------------------------------------------
                                                                                                            Gothic Energy
                                              Gothic Energy                Gothic Production                 Corporation
                                               Corporation                    Corporation                    Consolidated
                                               -----------                 -----------------                 ------------
<S>                                           <C>                           <C>                            <C>
Current assets                                  $       -                      $  12,458                      $  12,458
Non-current assets                                  1,842                        223,283                        225,125
Current liabilities                                     -                         20,155                         20,155
Non-current liabilities                            73,297                        242,802                        316,099

<CAPTION>
                                                        For the nine months ended September 30, 1998
                                 --------------------------------------------------------------------------------------------
                                                                                                            Gothic Energy
                                              Gothic Energy                Gothic Production                 Corporation
                                               Corporation                  Corporation (1)                  Consolidated
                                               -----------                 -----------------                 ------------
Total revenues                                   $ 21,033                       $ 20,615                       $ 41,648
Operating costs and
   expenses                                        16,172                         15,680                         31,852
Provision for impairment
   of natural gas and oil
   properties                                           -                         34,000                         34,000
Interest expense and
   amortization of debt
   issuance cost                                   14,515                         11,732                         26,247
Loss before
   extraordinary item                             (10,111)                       (40,295)                       (50,406)
Net loss                                          (41,545)                       (40,320)                       (81,865)

<CAPTION>
                                                         For the three months ended September 30, 1998
                                 --------------------------------------------------------------------------------------------
                                                                                                            Gothic Energy
                                              Gothic Energy                Gothic Production                 Corporation
                                               Corporation                    Corporation                    Consolidated
                                               -----------                 -----------------                 ------------
Total revenues                                    $     -                      $  12,574                      $  12,574
Operating costs and
   expenses                                             -                          8,832                          8,832
Provision for impairment
   of natural gas and oil
   properties                                           -                         34,000                         34,000
Interest expense and
   amortization of debt
   issuance cost                                    2,278                          6,875                          9,153
Net loss                                           (2,278)                       (36,962)                       (39,240)

</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                         For the nine months ended September 30, 1999
                                 --------------------------------------------------------------------------------------------
                                                                                                            Gothic Energy
                                              Gothic Energy                Gothic Production                 Corporation
                                               Corporation                    Corporation                    Consolidated
                                               -----------                 -----------------                 ------------
<S>                                         <C>                           <C>                            <C>
Total revenues                                   $      -                       $ 38,826                       $ 38,826
Operating costs and
   expenses                                             -                         26,248                         26,248
Interest expense and
   amortization of debt
   issuance cost                                    7,329                         20,871                         28,200
Net loss                                           (7,329)                        (7,438)                       (14,767)

<CAPTION>
                                                      For the three months ended September 30, 1999
                                 --------------------------------------------------------------------------------------------
                                                                                                            Gothic Energy
                                              Gothic Energy                Gothic Production                 Corporation
                                               Corporation                    Corporation                    Consolidated
                                               -----------                 -----------------                 ------------
Total revenues                                   $      -                       $ 14,150                       $ 14,150
Operating costs and
   expenses                                             -                          9,011                          9,011
Interest expense and
   amortization of debt
   issuance cost                                    2,515                          6,958                          9,473
Net loss                                           (2,515)                        (1,781)                        (4,296)

</TABLE>

(1)  Since the Recapitalization on April 27, 1998

                                       10
<PAGE>

                        INDEPENDENT ACCOUNTANT'S REPORT



To the Board of Directors and Stockholders:

     We have reviewed the accompanying consolidated balance sheet of Gothic
Energy Corporation and Subsidiary as of September 30, 1999 and the related
consolidated statements of operations for the three and nine-month periods ended
September 30, 1998 and 1999, and the consolidated statement of cash flows for
the nine-month periods ended September 30, 1998 and 1999.  These financial
statements are the responsibility of the Company's management.

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

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

     We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of  December 31, 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our report dated
March 12, 1999, we expressed an unqualified opinion on those consolidated
financial statements.  Our report included an explanatory paragraph that
described the substantial doubt about the Company's ability to continue as a
going concern, as discussed in Note 2 to those statements.  In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 1998 is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.



PricewaterhouseCoopers LLP


Tulsa, Oklahoma
October 29, 1999

                                       11
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation
------------------------------------------------------------------

     The following is management's discussion and analysis of certain
significant factors which have affected the Company's earnings, financial
condition and liquidity during the periods included in the accompanying
Consolidated Financial Statements.

General

     The Company's results of operations have been significantly affected by its
acquisition of producing natural gas and oil properties over the last three
years.  During the first quarter of 1998, the Company completed the Amoco
Acquisition for a purchase price of approximately $242.0 million.  This
acquisition included approximately 240.0 Bcfe.

     The profitability and revenues of the Company are dependent, to a
significant extent, upon prevailing spot market prices for natural gas and oil.
Prices are subject to wide fluctuations in response to changes in supply of and
demand for natural gas and oil, market uncertainty and a variety of additional
factors that are beyond the control of the Company.  Such factors include
political conditions, weather conditions, government regulations, the price and
availability of alternative fuels and overall economic conditions.

     The Company incurred a significant net loss in 1998, due principally to a
decline in commodity prices during that year.  This commodity price decline
required the Company to write down the carrying value of its natural gas and oil
properties by $76.0 million.  More significantly, the commodity price decline
continued to affect the ongoing revenues and cash flows of the Company during
early 1999, resulting in a net loss of  $14.8 million for the nine months ended
September 30, 1999.

     It is the intention of the Company to continue to spend available cash flow
(EBITDA less cash interest payable on Senior Secured Notes) on the development
of natural gas and oil properties.  With the continued volatility of commodity
prices, hedging programs will continue to be utilized by the Company.  This
should help to stabilize cash flow, but a sustained price increase will be
necessary to ensure the Company's ability to generate sufficient reserves to
replace current production.  Should commodity prices fall below current levels,
the Company would be limited in its ability to increase production and related
cash flow to a level sufficient to meet its ongoing financial covenants under
its Credit Facility. The price of natural gas and oil has recently been
increasing, but there is no assurance that it will continue to increase or
remain at the current level. Further, the borrowing base amount available under
the Company's Credit Facility has recently been redetermined and has been
reduced to $20.0 million. There is no assurance that the Company's lender will
maintain the available amount at this current level.

                                       12
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation (Continued)
------------------------------------------------------------------------------

     The following table reflects certain summary operating data for the periods
presented:

Results of Operations

<TABLE>
<CAPTION>
                                                         Three Months Ended            Nine months Ended
                                                         ------------------            -----------------
                                                           September  30,                September 30,
                                                           --------------                -------------
                                                         1998          1999            1998         1999
                                                         ----          ----            ----         ----
                                                            (in thousands, unless otherwise indicated)
<S>                                                 <C>              <C>            <C>           <C>
Net Production:
   Oil (Mbbls)                                              52             45            190           120
   Natural gas (Mmcf)                                    5,994          6,104         18,660        18,995
   Natural gas equivalent (Mmcfe)                        6,306          6,374         19,800        19,715

Oil and Natural Gas Sales:
   Oil                                                 $   668        $   858        $ 2,692       $ 1,903
   Natural gas                                          11,110         12,698         37,007        35,070
                                                       -------        -------        -------       -------
   Total                                               $11,778        $13,556        $39,699       $36,973
                                                       =======        =======        =======       =======

Average Sales Price:
   Oil (Bbl)                                           $ 12.74        $ 19.07        $ 14.18       $ 15.86
   Natural gas (Mcf)                                      1.85           2.08           1.98          1.85
   Natural gas equivalent (Mcfe)                          1.87           2.13           2.01          1.88

Expenses ($ per Mcfe):
   Lease operating (1) (2)                             $  0.26        $  0.22        $  0.40       $  0.22
   General and administrative(3)                          0.14           0.17           0.13          0.16
   Depreciation, depletion and amortization               0.87           0.86           0.97          0.82

</TABLE>
-------------------------------------------
(1)  Includes lease operating and direct field costs only.
(2)  The 1998 lease operating expense amount includes $1.1 million of non-
     recurring costs associated with the Amoco Acquisition transition.
(3)  Includes a non-recurring severance payment to a former officer in 1998.

     Nine months Ended September 30, 1999 Compared with Nine months Ended
                              September 30, 1998

     Revenues were $38.8 million for the nine months ended September 30, 1999,
as compared to $41.6 million for the nine months ended September 30, 1998.  This
represents a 7% decrease in total revenue for the period.  Natural gas and oil
sales for the nine months ended September 30, 1999 decreased $2.7 million (7%)
to $37.0 million, with $1.9 million from oil sales and $35.1 million from
natural gas sales, as compared to natural gas and oil sales of $39.7 million for
the nine months ended September 30, 1998, with $2.7 million from oil sales and
$37.0 million from natural gas sales.  The decrease in natural gas and oil sales
was primarily the result of lower natural gas prices within the industry during
the first quarter of 1999.  Of the $2.7 million decrease in comparable natural
gas and oil sales, approximately $2.4 million was the result of the lower
natural gas prices.  Oil sales in 1999 were based on the sale of 120,000 barrels
at an average price of $15.86 per barrel as compared to 190,000 barrels at an
average price of $14.18 per barrel in 1998.  Natural gas sales in 1999 were
based on the sale of 18,995,000 Mcf at an average price of $1.85 per Mcf
compared to 18,660,000 Mcf at an average price of $1.98 per Mcf in 1998.

     The Company incurred lease operating expenses for the nine months ended
September 30, 1999 of $7.1 million compared with lease operating expenses of
$9.9 million for the nine months ended September 30, 1998.  Lease operating
expenses include approximately $2.7 million in production taxes which the
Company incurred from its share of production in each of 1999 and 1998.  The
decrease in lease operating expenses is primarily due to the non-recurring costs
associated with the Amoco Acquisition transition which were incurred during the
first quarter of 1998 and the sale of oil properties in the Johnson Ranch and
Brushy Draw areas in early 1999.  Total lease operating expenses (including
production taxes) as a percentage of natural gas and oil sales were 19% in 1999
as compared to 25% in 1998.

                                       13
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation (Continued)
------------------------------------------------------------------------------

     Depreciation, depletion and amortization expense was $16.1 million for the
nine months ended September 30, 1999 as compared to $19.2 million for the nine
months ended September 30, 1998.  The decrease resulted primarily from the
writedown of natural gas and oil properties in the latter half of 1998, which
created a smaller depletable base, and the decreased production associated with
the properties sold in 1998.

     General and administrative costs were $3.1 million for the nine months
ended September 30, 1999, as compared to $2.7 million for the nine months ended
September 30, 1998.  This increase was primarily the result of additional
personnel and other costs related to the Amoco Acquisition and the
administrative costs incurred in operating the wells acquired from Amoco.
General and administrative costs per Mcfe increased from $0.13 in 1998 to $0.16
in 1999.

     Interest and debt issuance costs were $28.2 million for the nine months
ended September 30, 1999 as compared to $26.2 million for 1998.  The increase
primarily relates to interest, and costs associated with the 11 1/8% Senior
Secured Notes and the 14 1/8% Senior Secured Discount Notes issued as part of
the Company's recapitalization in April 1998.  The Company incurred interest
costs of $19.6 million related to the 11 1/8% Senior Secured Notes, $7.1 million
related to the 14 1/8% Senior Secured Discount Notes, $224,000 with Bank One,
Texas, N.A. and $1.2 million as amortization of loan costs.

     The Company earned $855,000 in interest and other income during the nine
months ended September 30, 1999 compared to $350,000 in 1998.  The 1999 amount
includes $720,000 from the sale of seismic data.

     The Company also incurred $6.4 million in preferred dividends and
amortization of preferred discount costs on its Series B Preferred Stock during
the nine months ended September 30, 1999, compared to $8.6 million in preferred
dividends and amortization of preferred discount costs on its Series A, redeemed
in April 1998, and its Series B Preferred Stock in 1998.

    Three Months Ended September 30, 1999 Compared with Three Months Ended
                              September 30, 1998

     Revenues were $14.2 million for the three months ended September 30, 1999,
as compared to $12.6 million for the three months ended September 30, 1998.
This represents a 13% increase in total revenue for the period.  Natural gas and
oil sales for the three months ended September 30, 1999 increased $1.8 million
(15%)  to $13.6 million, with $858,000 from oil sales and $12.7 million from
natural gas sales, as compared to natural gas and oil sales of $11.8 million for
the three months ended September 30, 1998, with $668,000 from oil sales and
$11.1 million from natural gas sales.  The increase in natural gas and oil sales
was primarily the result of an increase in natural gas and oil prices within the
industry during the 1999 period.  Oil sales in 1999 were based on the sale of
45,000 barrels at an average price of $19.07 per barrel as compared to 52,000
barrels at an average price of $12.74 per barrel in 1998.  Natural gas sales in
1999 were based on the sale of 6,104,000 Mcf at an average price of $2.08 per
Mcf compared to 5,994,000 Mcf at an average price of $1.85 per Mcf in 1998.

     The Company incurred lease operating expenses for the three months ended
September 30, 1999 of $2.5 million compared with lease operating expenses of
$2.5 million for the three months ended September 30, 1998.  Lease operating
expenses include approximately $1.1 million and $769,000, respectively, in
production taxes which the Company incurred from its share of production in 1999
and 1998.  Total lease operating expenses (including production taxes) as a
percentage of natural gas and oil sales were 18% in 1999 as compared to 21% in
1998.

     Depreciation, depletion and amortization expense was $5.5 million for both
the three months ended September 30, 1999 and the three months ended September
30, 1998.

                                       14
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation (Continued)
------------------------------------------------------------------------------

     General and administrative costs were $1.1 million for the three months
ended September 30, 1999, as compared to $893,000 for the three months ended
September 30, 1998.  This increase was primarily the result of additional
personnel and other costs related to the Amoco Acquisition and the
administrative costs incurred in operating the wells acquired from Amoco.
General and administrative costs per Mcfe increased from $0.14 in 1998 to $0.17
in 1999.

     Interest and debt issuance costs were $9.5 million for the three months
ended September 30, 1999 as compared to $9.2 million for 1998.  The increase
primarily relates to interest, and costs associated with the 11 1/8% Senior
Secured Notes and the 14 1/8% Senior Secured Discount Notes issued as part of
the Company's recapitalization in April 1998.  The Company incurred interest
costs of $6.5 million related to the 11 1/8% Senior Secured Notes, $2.4 million
related to the 14 1/8% Senior Secured Discount Notes, $75,000 with Bank One,
Texas, N.A. and $416,000 as amortization of loan costs.

     The Company earned $38,000 in interest and other income during the three
months ended September 30, 1999 compared to $171,000 in 1998.

     The Company also incurred $2.2 million in preferred dividends and
amortization of preferred discount costs on its Series B Preferred Stock during
the three months ended September 30, 1999, compared to $2.0 million in preferred
dividends and amortization of preferred discount costs on its Series B Preferred
Stock in 1998.

     In April 1999, the Company entered into a hedge agreement in the form of a
costless collar with respect to the production of 50,000 MMBTU of natural gas
per day during the period of May through October 1999.  The costless collar
places a floor of $1.80 per MMBTU and a ceiling of $2.26 per MMBTU for the
effective price of natural gas received by the Company.  Additionally, in July
1999 the Company entered into a similar costless collar agreement with respect
to the production of 50,000 MMBTU per day during the period of November 1999
through March 2000 which places a floor of $2.30 per MMBTU and a ceiling of
$3.03 per MMBTU.  The collars represent approximately 70% of the Company's
current daily natural gas production.  Collar arrangements limit the benefits
the Company will realize if actual prices rise above the ceiling price.  These
arrangements provide for the Company to exchange a floating market price for a
fixed range contract price.  Payments are made by the Company when the floating
price exceeds the fixed range for a contract month and payments are received
when the fixed range price exceeds the floating price.  The commodity reference
price for both contracts is the Panhandle Eastern Pipeline Company, Texas,
Oklahoma Mainline Index.  In August 1999, the Company entered into a hedge
agreement covering 10,000 barrels of oil per month at a price of $20.10 per
barrel.  This hedge is in effect from September 1999 through August 2000.

Liquidity and Capital Resources

General

     Since 1994, the Company's principal sources of cash have been bank
borrowings, the sale of equity and debt securities and cash flow from
operations.  The following summary table reflects comparative cash flows for the
Company for the nine months ended September 30, 1998 and 1999:

<TABLE>
<CAPTION>
                                                                        Nine months ended September 30,
                                                                         1998                     1999
                                                                    --------------            -------------
                                                                                 (in thousands)
<S>                                                                <C>                         <C>
Net cash provided by operating activities                            $   14,586                  $  14,011
Net cash used in investing activities                                  (185,033)                   (16,929)
Net cash provided by financing activities                               165,449                      3,575



</TABLE>

                                       15
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation (Continued)
------------------------------------------------------------------------------

     Net cash provided by operations was $14.0 million for the nine months ended
September 30, 1999 as compared to net cash provided of $14.6 million for the
same period in 1998.  The operating cash flows for the nine months ended
September 30, 1999 reflect the decrease in revenues resulting from lower
commodity prices during the first quarter of 1999, and the decrease in accounts
and revenues payable.

     The Company used $16.9 million of net cash in investing activities for the
nine months ended September 30, 1999 compared to net cash used of $185.0 million
for the same period in 1998.  The 1999 cash used for investing activities
includes property development costs of approximately $14.4 million and
approximately $4.6 million in cash paid for property acquisitions.  These uses
were partially offset by proceeds of $2.1 million received from the sale of
substantially all of the Company's Johnson Ranch operations.  The 1998 cash used
for investing activities includes approximately $229.1 million paid for property
acquisitions and development costs, including the Amoco Acquisition, offset by
approximately $43.0 million received from property sales.

     Net cash provided by financing activities for the nine months ended
September 30, 1999 was $3.6 million compared to $165.4 million provided in 1998.
The September 30, 1999 amount includes net proceeds from the Company's credit
facility of $4.0 million, partially offset by the payment of  $78,000 in bank
and other loan fees, and $347,000 in other costs.  The 1998 amount includes
approximately $429.3 million received from long-term borrowings and
approximately $73.5 million received from the sale of preferred stock, offset by
the payment of long-term borrowings of approximately $257.9 million, the
redemption of preferred stock of approximately $40.8 million and the payment of
loan fees of approximately $38.5 million.

     The Company has retained CIBC World Markets Corp. to provide assistance to
it with respect to considering alternatives for a restructuring of its capital
or other reorganization.

Outstanding Indebtedness and Other Securities

Credit Facility.
---------------

     On April 27, 1998, Gothic Production, with the Company as guarantor,
entered into the Credit Facility.  The Credit Facility consists of a revolving
line of credit, with an initial Borrowing Base of $25.0 million.  Borrowings are
limited to being available for the acquisition and development of natural gas
and oil properties, letters of credit and general corporate purposes.  The
Borrowing Base is redetermined at least semi-annually and was initially
redetermined on October 1, 1998.  Upon completion of the April 1, 1999
redetermination, the borrowing base remained at $25.0 million.  The principal is
due at maturity, April 30, 2001.  Interest is payable monthly calculated at the
Bank One Base Rate, as determined from time to time by Bank One.  Gothic
Production may elect to calculate interest under a London Interbank Offered Rate
("LIBOR") plus; (i) 2.0 % whenever the Total Outstandings are 50% or less of the
Borrowing Base; (ii) 2.25% whenever the Total Outstandings are greater than 50%
but less than or equal to 75% of the Borrowing Base; or (iii) 2.5% whenever the
Total Outstandings are greater than 75% of the Borrowing Base.  Gothic
Production is required to pay a commitment fee on the unused portion of the
Borrowing Base equal to  1/2 of 1% per annum.  Under the Credit Facility, Bank
One holds first priority liens on substantially all of the natural gas and oil
properties of Gothic Production, whether currently owned or hereafter acquired.
As of September 30, 1999, Gothic Production had $4.0 million outstanding under
the Credit Facility. Further, the borrowing base amount available under the
Company's Credit Facility is being redetermined and there is no assurance that
the Company's lender will maintain the available amount at its current level of
$25.0 million.

     The Credit Facility requires, among other things, semi-annual engineering
reports covering oil and natural gas reserves on the basis of which semi-annual
and other redeterminations of the borrowing base and monthly commitment
reduction are made.  The Credit Facility, as amended on May 7, 1999, also
includes various affirmative and negative covenants, including, among others,
(i)  prohibitions against additional indebtedness unless approved by the
lenders, subject to certain exceptions, (ii) prohibitions against the creation
of liens on the assets of the Company, subject to certain exceptions, (iii)
prohibitions against cash dividends, (iv) prohibitions against hedging positions
unless consented to by Bank One, (v) prohibitions on asset sales, subject to
certain exceptions, (vi) restrictions on mergers or consolidations, (vii) a
requirement to maintain a ratio of current assets to current

                                       16
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation (Continued)
------------------------------------------------------------------------------

liabilities of 1.0 to 1.0, and (viii) a minimum interest coverage ratio of not
less than 1.25 to 1.0 for the quarter ended June 30, 1999, 1.50 to 1.0 for the
quarter ended September 30, 1999, 1.75 to 1.0 for the quarter ended December 31,
1999 and 2.0 to 1.0 for each remaining quarter starting with the quarter ending
March 31, 2000.  The Credit Facility includes covenants prohibiting cash
dividends, distributions and loans or advances to third parties, subject to
certain exceptions.  If Gothic Production is required to purchase or redeem any
portion of the 11 1/8% Senior Secured Notes, or if any portion of the 11 1/8%
Senior Secured Notes become due, the Borrowing Base is subject to reduction.
Gothic Production is required to escrow interest payments due on the Senior
Secured Notes at such times as its borrowings under the Credit Facility equal or
exceed 75% of the Borrowing Base.  Events of default include the non-payment of
principal, interest or fees, a default under other outstanding indebtedness, a
breach of the representations and warranties contained in the loan agreement,
material judgements, bankruptcy or insolvency, a default under certain covenants
not cured within a grace period, and a change in the management or control of
the Company.

Future Capital Requirements and Resources

     The Company's capital requirements relate to the acquisition, exploration,
enhancement, development and operation of natural gas and oil properties.  In
general, because the natural gas and oil reserves the Company has acquired are
depleted by production over time, the success of its business strategy is
dependent upon a continuous acquisition, exploitation, enhancement, and
development program.  In order to achieve profitability and generate cash flow,
the Company will be dependent upon acquiring or developing additional natural
gas and oil properties or entering into joint natural gas and oil well
development arrangements. The Company had $21.0 million in borrowing capacity
available under its Credit Facility at September 30, 1999. Further, the
borrowing base amount available under the Company's Credit Facility has been
recently redetermined and has been reduced to $20.0 million. There is no
assurance that the Company's lender will maintain the available amount at this
current level.

Year 2000 Computer Issues

     The Year 2000 computer issue is the result of computer programs being
written to use two digits to define year dates.  Computer programs running date-
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000.  This could result in systems failure or miscalculations causing
disruptions of operations.

     We initiated a comprehensive assessment of our information technology and
non-information technology systems to ensure that our systems either will be
unaffected by the Year 2000 issue or will be upgraded to enable compliance with
Year 2000 standards.  In general, our information technology  computer systems
consist of our office computer network and financial management software.  Our
other computer systems, which are non-information technology, consist of certain
office equipment and other systems associated with our natural gas and oil
properties.  We are also evaluating the Year 2000 compliance by our customers
and suppliers to ascertain the potential impact on us of the extent of our
customers and suppliers compliance with Year 2000 issues.

     We began an in-house assessment of our Year 2000 problem with respect to
our information technology systems in mid 1997.  Since that time, we have
upgraded all of our financial management software to newer versions which are
Year 2000 compliant.  In addition, we have replaced nearly all of our
information technology hardware so that this hardware is now Year 2000
compliant.  To date the cost of the upgrade and of this software and hardware
has been approximately $75,000.

     Additionally, we have assessed our non-information technology systems,
which consist primarily of embedded technology at our Watonga, Oklahoma field
office and the production telemetry equipment used on our operated wellsites.
We believe that our non-information technology systems are now Year 2000
compliant.

     We are conducting an assessment of Year 2000 exposures related to our
suppliers and customers.  We have identified our key customers and suppliers and
have requested information as to the Year 2000 compliance of such customers.
Although no contingency plans have been developed to date, we will begin to
formulate such plans as we ascertain the preparedness of our customers and
suppliers.  As of  September 30, 1999 we have learned of no Year 2000 compliance
problems from our suppliers or customers.

                                       17
<PAGE>

Item 2 - Management's Discussion and Analysis or Plan of Operation (Continued)
------------------------------------------------------------------------------

     We believe that all of our internal systems and equipment are now Year 2000
compliant.  If all Year 2000 issues have not been adequately assessed, we may
not be Year 2000 compliant, which in turn could have a material adverse effect
on our business, operating results or financial condition.  In addition, our
operations may be disrupted in the event our suppliers or service providers are
not Year 2000 compliant and such failure could have a material adverse effect on
our business, operating results or financial condition.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.

     With the exception of historical matters, the matters discussed in this
Report are "forward-looking statements" as defined under the Securities Exchange
Act of 1934, as amended, that involve risks and uncertainties.  Forward-looking
statements include, but are not limited to, the matters described below, as well
as  Note 2 to Notes to Consolidated Financial Statements herein, "Item 2.
Management's Discussion and Analysis or Plan of Operations - General," "- Nine
months ended September 30, 1999 Compared with Nine months ended September 30,
1998," "Quarter Ended September 30, 1999 Compared with Quarter Ended September
30, 1998, "- Liquidity and Capital Resources."  Such forward-looking statements
relate to the Company's ability to attain and maintain profitability and cash
flow, the stability of and future prices for natural gas and oil, the ability of
the Company to acquire additional reserves,  the ability of the Company to raise
additional capital to meet its requirements and to obtain additional financing,
its ability to successfully implement its business strategy, and its ability to
maintain compliance with the covenants of its various loan documents and other
agreements pursuant to which securities have been issued.  The inability of the
Company to meet these objectives or the consequences on the Company from adverse
developments in general economic conditions, adverse developments in the oil and
gas industry, declines in the prices of natural gas and oil and other factors
could have a material adverse effect on the Company.  The Company cautions
readers that various risk factors described above and in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1998 could cause the
Company's operating results to differ materially from those expressed in any
forward-looking statements made by the Company and could adversely affect the
Company's financial condition and its ability to pursue its business strategy.

                                       18
<PAGE>

PART II.  OTHER INFORMATION

Item 2 - Changes in Securities
------------------------------

     On August 17, 1999, Chesapeake Energy Corporation fully exercised the
common stock purchase warrant issued to it in April 1998 and purchased 2,394,125
shares of the Company's common stock.  The warrant had been issued to Chesapeake
as part of the transaction involving the sale to Chesapeake of shares of the
Company's Series B Senior Redeemable Preferred Stock, a 50% interest in the
Company's Arkoma basin natural gas and oil properties and a 50% interest in
substantially all of the Company's undeveloped acreage.  The shares were issued
pursuant to the cashless exercise provisions of the warrant that permitted
Chesapeake to surrender the right to exercise the warrant for a number of shares
of the Company's common stock having a market value equivalent to the total
exercise price.  The total exercise price was $23,941.25 or $0.01 per share.  An
aggregate of 45,121 warrants were surrendered in payment of the total exercise
price.  The shares of common stock were issued pursuant to the exemption form
the registration requirements of the Securities Act of 1933, as amended,
afforded by section 4 (2) thereof.

Item 6.   Exhibits and Reports on Form 8-K
------------------------------------------

     (a)  Exhibits:

          15 -      Letter Regarding Unaudited Interim Financial Information

          27 -      Financial Data Schedule

     (b)  Reports on Form 8-K

          During the quarter ended September 30, 1999, the Company did not file
          any Current Reports on Form 8-K.

                                       19
<PAGE>

                                  SIGNATURES


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


                                    GOTHIC ENERGY CORPORATION



Date:  November 1, 1999       By:   /s/ Michael Paulk
                                    -----------------
                                    MICHAEL PAULK,
                                    President, Chief Executive Officer



Date:  November 1, 1999       By:   /s/ Steven P. Ensz
                                    ------------------
                                    STEVEN P. ENSZ,
                                    Vice President of Finance, Chief
                                    Financial Officer



Date:  November 1, 1999       By:   /s/ Andrew McGuire
                                    ------------------
                                    ANDREW MCGUIRE,
                                    Controller

                                       20