<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the period ended September 30, 1999
                                       or

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from ______________________to ________________________

Commission File Number:    0-20100

                           BELDEN & BLAKE CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Ohio                                           34-1686642
--------------------------------------------------------------------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.)


         5200 Stoneham Road
         North Canton, Ohio                                  44720
--------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)

                                 (330) 499-1660
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
         (Former name, former address and former fiscal year, if changed
                              since last report.)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                                         [X]  Yes    [ ]  No

Number of common shares of Belden & Blake Corporation
Outstanding as of October 31, 1999                       10,260,457

<PAGE>   2

                           BELDEN & BLAKE CORPORATION


                                      INDEX

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

<TABLE>
<CAPTION>

                                                                                           PAGE
                                                                                           ----
<S>                                                                                        <C>
PART I   Financial Information:

         Item 1.  Financial Statements

                  Consolidated Balance Sheets as of September 30, 1999 and
                     December 31, 1998 ...................................................    1

                  Consolidated Statements of Operations for the three and nine
                     months ended September 30, 1999 and 1998 ............................    2

                  Consolidated Statements of Shareholders' Equity (Deficit)
                     for the nine months ended September 30, 1999 and the
                     year ended December 31, 1998 ........................................    3

                  Consolidated Statements of Cash Flows for the nine
                     months ended September 30, 1999 and 1998 ............................    4

                  Notes to Consolidated Financial Statements .............................    5

         Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations ..................................    9

PART II  Other Information

         Item 6.  Exhibits and Reports on Form 8-K .......................................   17
</TABLE>

<PAGE>   3
<TABLE>
<CAPTION>

                                    BELDEN & BLAKE CORPORATION
                                    CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS, EXCEPT SHARE DATA)

                                                                  SEPTEMBER 30,     DECEMBER 31,
                                                                      1999              1998
                                                                 ================   ================
                                                                   (UNAUDITED)
<S>                                                                <C>                <C>
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                     $      13,228      $      10,691
     Accounts receivable, net                                             25,717             33,204
     Inventories                                                           3,067              9,200
     Deferred income taxes                                                 2,359              2,449
     Other current assets                                                  1,489              3,384
                                                                 ----------------   ----------------
                TOTAL CURRENT ASSETS                                      45,860             58,928

PROPERTY AND EQUIPMENT, AT COST
     Oil and gas properties (successful efforts method)                  534,464            535,837
     Gas gathering systems                                                22,109             22,008
     Land, buildings, machinery and equipment                             25,293             28,551
                                                                 ----------------   ----------------
                                                                         581,866            586,396
     Less accumulated depreciation, depletion and amortization           274,513            246,689
                                                                 ----------------   ----------------
                PROPERTY AND EQUIPMENT, NET                              307,353            339,707
OTHER ASSETS                                                              20,074             19,970
                                                                 ----------------   ----------------
                                                                   $     373,287      $     418,605
                                                                 ================   ================

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
     Accounts payable                                              $       4,598      $       6,458
     Accrued expenses                                                     28,969             29,373
     Current portion of long-term liabilities                             15,301             29,365
                                                                 ----------------   ----------------
                TOTAL CURRENT LIABILITIES                                 48,868             65,196

LONG-TERM LIABILITIES
     Bank and other long-term debt                                       125,162            126,178
     Senior subordinated notes                                           225,000            225,000
     Other                                                                 2,332              3,204
                                                                 ----------------   ----------------
                                                                         352,494            354,382

DEFERRED INCOME TAXES                                                     21,964             32,041

SHAREHOLDERS' DEFICIT
     Common stock without par value; $.10 stated value per share;
       authorized 58,000,000 shares; issued
       and outstanding 10,229,289 and 10,110,915 shares                    1,023              1,011
     Paid in capital                                                     107,562            107,897
     Deficit                                                            (158,624)          (141,922)
                                                                 ----------------   ----------------
                TOTAL SHAREHOLDERS' DEFICIT                              (50,039)           (33,014)
                                                                 ----------------   ----------------
                                                                   $     373,287      $     418,605
                                                                 ================   ================
</TABLE>

See accompanying notes.


                                       1
<PAGE>   4
<TABLE>
<CAPTION>

                                                      BELDEN & BLAKE CORPORATION
                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                                            (IN THOUSANDS)
                                                             (UNAUDITED)

                                                  THREE MONTHS ENDED SEPTEMBER 30,     NINE MONTHS ENDED SEPTEMBER 30,
                                                 -----------------------------------   ------------------------------------
                                                      1999             1998                1999               1998
                                                 ---------------    ----------------   ----------------    ---------------
<S>                                               <C>                <C>                 <C>                <C>
REVENUES
     Oil and gas sales                            $      20,274      $       21,042      $      57,996      $      65,425
     Gas marketing and gathering                          7,645               7,878             30,278             28,390
     Oilfield sales and service                           2,767               5,883              9,764             17,728
     Other                                                1,101               1,035              3,313              2,796
                                                 ---------------    ----------------   ----------------    ---------------
                                                         31,787              35,838            101,351            114,339
EXPENSES
     Production expense                                   5,654               5,843             16,030             17,586
     Production taxes                                       834                 889              2,375              2,668
     Cost of gas and gathering expense                    6,706               6,393             26,745             23,073
     Oilfield sales and service                           2,620               5,825              9,818             17,331
     Exploration expense                                  1,622               2,330              4,840              6,542
     General and administrative expense                   1,230               1,250              3,846              3,904
     Loss on sale of subsidiary and other
       nonrecurring expense                               5,692                  15              5,692                365
     Depreciation, depletion and amortization            10,815              16,949             32,492             51,818
     Franchise, property and other taxes                    176                 435                535              1,273
                                                 ---------------    ----------------   ----------------    ---------------
                                                         35,349              39,929            102,373            124,560
                                                 ---------------    ----------------   ----------------    ---------------
OPERATING LOSS                                           (3,562)             (4,091)            (1,022)           (10,221)
     Interest expense                                     8,679               8,349             25,668             24,528
                                                 ---------------    ----------------   ----------------    ---------------
LOSS BEFORE INCOME TAXES                                (12,241)            (12,440)           (26,690)           (34,749)
     Income tax benefit                                  (4,550)             (4,354)            (9,988)           (12,162)
                                                 ---------------    ----------------   ----------------    ---------------
NET LOSS                                          $      (7,691)     $       (8,086)     $     (16,702)     $     (22,587)
                                                 ===============    ================   ================    ===============
</TABLE>


See accompanying notes.


                                       2
<PAGE>   5



<TABLE>
<CAPTION>

                                          BELDEN & BLAKE CORPORATION
                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                                (IN THOUSANDS)

                                                                                                     TOTAL
                                       COMMON        COMMON          PAID IN                         EQUITY
                                       SHARES         STOCK          CAPITAL         DEFICIT       (DEFICIT)
                                     ============  ==============  ==============  ============== ==============

<S>                                       <C>      <C>             <C>               <C>           <C>
JANUARY 1, 1998                           10,000   $       1,000   $     107,230     $   (11,372)  $     96,858

Employee stock bonus                         111              11             667                            678
Net loss                                                                                (130,550)      (130,550)
----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998                         10,111           1,011         107,897        (141,922)       (33,014)

Employee stock bonus                         118              12            (335)                          (323)
Net loss                                                                                 (16,702)       (16,702)
----------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1999 (UNAUDITED)            10,229   $       1,023   $     107,562     $  (158,624)  $    (50,039)
================================================================================================================
</TABLE>

See accompanying notes.


                                       3
<PAGE>   6

<TABLE>
<CAPTION>

                                         BELDEN & BLAKE CORPORATION
                             CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                               (IN THOUSANDS)





                                                                                   NINE MONTHS ENDED SEPTEMBER 30,
                                                                                ---------------------------------------
                                                                                      1999                1998
                                                                                ------------------   ------------------
<S>                                                                             <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                                       $         (16,702)      $      (22,587)
 Adjustments to reconcile net loss to net cash
     provided by operating activities:
       Depreciation, depletion and amortization                                            32,492               51,818
       Loss on disposal of property and equipment                                           3,194                   19
       Deferred income taxes                                                               (9,988)             (12,162)
       Deferred compensation and stock grants                                                (500)               1,142
       Change in operating assets and liabilities, net of
         effects of purchases of businesses:
           Accounts receivable and other operating assets                                   5,635                2,263
           Inventories                                                                      1,962               (2,212)
           Accounts payable and accrued expenses                                           (1,231)               9,213
                                                                                ------------------   ------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                  14,862               27,494

CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of businesses, net of cash acquired                                               --              (11,574)
 Proceeds from property and equipment disposals                                             5,883                  822
 Additions to property and equipment                                                       (1,921)             (28,931)
 Increase (decrease) in other assets                                                          320               (1,359)
                                                                                ------------------   ------------------
           NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                              4,282              (41,042)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from revolving line of credit and term loan                                      21,000               19,000
 Repayment of long-term debt and other obligations                                        (37,607)              (3,373)
                                                                                ------------------   ------------------
           NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                            (16,607)              15,627
                                                                                ------------------   ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                   2,537                2,079
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                           10,691                6,552
                                                                                ------------------   ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $          13,228       $        8,631
                                                                                ==================   ==================

CASH PAID DURING THE PERIOD FOR:
 Interest                                                                       $          20,046       $       18,112
 Income taxes, net of refunds                                                                  --                 (117)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
 Acquisition of assets in exchange for long-term liabilities                                  125                  415
 Non-compete agreement and related obligation                                                 705                   --
</TABLE>

See accompanying notes.



                                       4
<PAGE>   7


                           BELDEN & BLAKE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

SEPTEMBER 30, 1999
--------------------------------------------------------------------------------

(1)      BASIS OF PRESENTATION
         The accompanying unaudited consolidated financial statements of Belden
& Blake Corporation (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes included in the Company's annual report on
Form 10-K for the year ended December 31, 1998. Certain reclassifications have
been made to conform to the presentation in the third quarter of 1999.

(2)      CREDIT AGREEMENT
         On June 27, 1997, the Company entered into a senior revolving credit
agreement with several lenders. These lenders committed, subject to compliance
with the borrowing base, to provide the Company with revolving credit loans of
up to $200 million, of which $25 million will be available for the issuance of
letters of credit. The credit agreement is a senior revolving credit facility
which is secured by substantially all of the Company's assets. The credit
agreement will mature on June 27, 2002. Outstanding balances under the agreement
incur interest at the Company's choice of several indexed rates, the most
favorable being 8.6% at September 30, 1999. The borrowing base is determined by
an evaluation of the Company's proved developed reserves, proved undeveloped
reserves and related processing and gathering assets and other assets of the
Company, adjusted by the engineering committee of the bank in accordance with
their standard oil and gas lending practices. If less than 75% of the borrowing
base is utilized, the borrowing base will be redetermined annually. If more than
75% of the borrowing base is utilized, the borrowing base will be redetermined
semi-annually.

         The Company's borrowing base at December 31, 1998 was $170 million. On
January 15, 1999, the Company's borrowing base was redetermined at $126 million.
The Company had $154 million outstanding under this agreement at December 31,
1998 which resulted in the Company having a borrowing base deficiency of $28
million. The Company agreed with the lenders to reduce this deficiency by $14
million on March 22, 1999 and by $14 million on May 10, 1999.

         On March 22, 1999, the Company made the $14 million payment to reduce
the outstanding amount under the credit agreement to $140 million. On May 10,
1999, the Company and its lenders further amended the credit agreement to
increase the Company's borrowing base to $136 million, subject to
redetermination in November 1999, and the Company paid $4 million to reduce the
outstanding loan balance to $136 million. The funds for these payments were
provided by internally generated cash flow and $14 million in term loans
provided by Chase Manhattan Bank. The Company was further required to make
additional payments of $5 million on the earlier of the receipt of aggregate
proceeds from asset sales totaling $5 million or August 10, 1999 and $5 million
on November 9, 1999, which would lower the borrowing base and outstanding
balance to $126 million. The Company paid $5 million on July 29, 1999 and $6
million on September 10, 1999 to reduce the outstanding balance to $125 million
at September 30,


                                       5
<PAGE>   8
1999. Future borrowing base revisions will require approval from all lenders
and any deficiency must be repaid within 30 days of the effective date of the
redetermination. The lenders have not completed the November 1999
redetermination. The amended agreement increased the interest rate to LIBOR plus
2.5% and provided certain covenant ratio relief. The Company paid approximately
$2 million in fees to the lenders and expenses associated with the amendment.
The Company's $14 million in term loans from Chase Manhattan Bank are due on
June 27, 2000 with interest payable at LIBOR plus 2.5%. The Company expects to
be able to meet its 1999 debt service requirements through internally generated
cash flow, the sale of non-strategic assets and additional debt.

         The credit agreement contains a number of covenants that, among other
things, restricts the ability of the Company and its subsidiaries to dispose of
assets, incur additional indebtedness, prepay other indebtedness or amend
certain debt instruments, pay dividends, create liens on assets, enter into sale
and leaseback transactions, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, change the business conducted
by the Company or its subsidiaries, make capital expenditures or engage in
certain transactions with affiliates and otherwise restricts certain corporate
activities. In addition, under the credit agreement, the Company is required to
maintain specified financial ratios and tests, including minimum interest
coverage ratios and maximum leverage ratios. The agreement requires a minimum
working capital ratio of 1.00 to 1.00. As of September 30, 1999, the Company's
working capital ratio was .94 to 1.00. As part of the May 10, 1999 amendment,
the Company and its lenders have agreed to exclude the current portion of
certain long term debt from this calculation. After making these adjustments the
working capital ratio as of September 30, 1999 was 1.32 to 1.00.

(3)      SALE OF TARGET OILFIELD PIPE AND SUPPLY COMPANY
         In August 1999, the Company and its wholly-owned subsidiary, The Canton
Oil & Gas Company ("COG"), completed a stock sale of Target Oilfield Pipe and
Supply Company ("TOPS"), a wholly-owned subsidiary of COG, to an oilfield supply
company. The buyer purchased all of the issued and outstanding shares of capital
stock of TOPS from COG. The Company recorded a $2.8 million loss on the sale in
the third quarter of 1999.

(4)      OTHER NONRECURRING EXPENSE
         In August 1999, the Company abandoned an acquisition effort and a
proposed public offering of a royalty trust. Approximately $830,000 of costs
associated with these efforts was written off in the third quarter of 1999.

         In September 1999, the Company implemented a plan to reduce costs and
improve operating efficiencies. The plan included actions to bring the Company's
employment level in line with current and anticipated future staffing needs
which resulted in staff reductions of approximately 10%. The Company recorded a
charge of $2.1 million in the third quarter of 1999 for severance and other
costs associated with implementing this plan.

(5)      STOCK BASED COMPENSATION
         The Company measures expense associated with stock-based compensation
under the provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees."

         The Company has a qualified defined contribution plan (a 401(k) plan)
covering substantially all of its employees. Common stock held in the 401k plan
is subject to variable plan accounting with changes in share value reported as
adjustments to compensation expense. The reduction in share value in the first
nine months of 1999 resulted in a reduction in compensation expense of $909,000.


                                       6
<PAGE>   9


(6)      INDUSTRY SEGMENT FINANCIAL INFORMATION
         The Company's operations are conducted in the United States and are
managed along three reportable segments which include: (1) exploration and
production, (2) gas marketing and gathering, and (3) oilfield sales and service.

         The following tables present certain financial information regarding
the Company's reportable segments. The "all other" column in each of the
following tables includes unallocated corporate charges that support the
segments and eliminations of all intersegment transactions to reconcile the
reportable segment's revenues, income or loss, assets and other significant
items to the Company's consolidated totals. The Company measures segment
operating results based on earnings before interest, taxes, depreciation,
depletion, amortization, exploration expense and loss on sale of subsidiary and
other nonrecurring expense ("EBITDAX") and (loss) income before income taxes.
Certain reclassifications have been made to conform to the presentation in the
third quarter of 1999.

<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED SEPTEMBER 30, 1999
                                   --------------------------------------------------------------------------------
                                    EXPLORATION      GAS MARKETING     OILFIELD SALES
                                    & PRODUCTION      & GATHERING        & SERVICE       ALL OTHER        TOTAL
                                   ---------------  -----------------  --------------   -----------   -------------
                                                                   (IN THOUSANDS)
<S>                                 <C>              <C>               <C>            <C>           <C>
REVENUES FROM CUSTOMERS             $  21,165        $     7,540       $     2,862    $      220    $     31,787
INTERSEGMENT REVENUES                      --              7,895               901        (8,796)             --
LOSS BEFORE INCOME TAXES               (4,633)              (250)           (3,527)       (3,831)        (12,241)
INTEREST EXPENSE                        7,953                467               252             7           8,679
LOSS ON SALE OF SUBSIDIARY
    AND OTHER NONRECURRING EXPENSE        109                 --             3,296         2,287           5,692
EXPLORATION EXPENSE                     1,622                 --                --            --           1,622
DEPRECIATION, DEPLETION, AND
    AMORTIZATION                        9,460                666               205           484          10,815
EBITDAX                                14,511                883               226        (1,053)         14,567
ASSETS                                313,941             34,410             6,634        18,302         373,287
</TABLE>

<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED SEPTEMBER 30, 1998
                                   --------------------------------------------------------------------------------
                                    EXPLORATION      GAS MARKETING     OILFIELD SALES
                                    & PRODUCTION      & GATHERING        & SERVICE       ALL OTHER        TOTAL
                                   ---------------  -----------------  --------------   -----------   -------------
                                                                   (IN THOUSANDS)
<S>                                 <C>              <C>                <C>             <C>           <C>
REVENUES FROM CUSTOMERS             $  21,954        $     7,849       $     5,983      $     52      $     35,838
INTERSEGMENT REVENUES                      --              6,997             1,840        (8,837)              --
(LOSS) INCOME BEFORE INCOME TAXES     (10,174)               286              (570)       (1,982)          (12,440)
INTEREST EXPENSE                        7,572                339               382            56             8,349
LOSS ON SALE OF SUBSIDIARY
    AND OTHER NONRECURRING EXPENSE         --                 --                --            15                15
EXPLORATION EXPENSE                     2,331                 --                --            (1)            2,330
DEPRECIATION, DEPLETION, AND
    AMORTIZATION                       15,357                769               429           394            16,949
EBITDAX                                15,086              1,394               241        (1,518)           15,203
ASSETS                                497,762             41,570            28,058        23,388           590,778

</TABLE>

                                       7
<PAGE>   10

<TABLE>
<CAPTION>

                                                         NINE MONTHS ENDED SEPTEMBER 30, 1999
                                   --------------------------------------------------------------------------------
                                    EXPLORATION      GAS MARKETING     OILFIELD SALES
                                    & PRODUCTION      & GATHERING        & SERVICE       ALL OTHER        TOTAL
                                   ---------------  -----------------  --------------   -----------   -------------
                                                                   (IN THOUSANDS)
<S>                                 <C>              <C>                <C>             <C>           <C>
REVENUES FROM CUSTOMERS             $  61,404        $     29,433       $     10,050    $      464    $    101,351
INTERSEGMENT REVENUES                      --              22,432              2,731       (25,163)             --
(LOSS) INCOME BEFORE INCOME TAXES     (16,216)              1,270             (4,608)       (7,136)        (26,690)
INTEREST EXPENSE                       23,426               1,321                877            44          25,668
LOSS ON SALE OF SUBSIDIARY
    AND OTHER NONRECURRING EXPENSE        109                  --              3,296         2,287           5,692
EXPLORATION EXPENSE                     4,840                  --                 --            --           4,840
DEPRECIATION, DEPLETION, AND
    AMORTIZATION                       28,622               1,971                640         1,259          32,492
EBITDAX                                40,781               4,562                205        (3,546)         42,002
ASSETS                                313,941              34,410              6,634        18,302         373,287
</TABLE>


<TABLE>
<CAPTION>

                                                         NINE MONTHS ENDED SEPTEMBER 30, 1998
                                   --------------------------------------------------------------------------------
                                    EXPLORATION      GAS MARKETING     OILFIELD SALES
                                    & PRODUCTION      & GATHERING        & SERVICE       ALL OTHER        TOTAL
                                   ---------------  -----------------  --------------   -----------   -------------
                                                                   (IN THOUSANDS)
<S>                                 <C>              <C>                <C>             <C>           <C>
REVENUES FROM CUSTOMERS             $     68,112     $     28,181       $     17,912    $      134    $    114,339
INTERSEGMENT REVENUES                         --           23,123              5,508       (28,631)             --
(LOSS) INCOME BEFORE INCOME TAXES        (28,596)           1,897             (1,705)       (6,345)        (34,749)
INTEREST EXPENSE                          22,401              833              1,104           190          24,528
LOSS ON SALE OF SUBSIDIARY
    AND OTHER NONRECURRING EXPENSE            --               --                 --           365             365
EXPLORATION EXPENSE                        6,543               --                 --            (1)          6,542
DEPRECIATION, DEPLETION, AND
    AMORTIZATION                          47,024            2,350              1,301         1,143          51,818
EBITDAX                                   47,372            5,080                700        (4,648)         48,504
ASSETS                                   497,762           41,570             28,058        23,388         590,778

</TABLE>

(7)      SUBSEQUENT EVENTS
         On November 2, 1999 the Company sold its Belden Energy Service Company
("BESCO") subsidiary to FirstEnergy Corp. BESCO was the Company's retail natural
gas marketing outlet in Ohio. In the future, that portion of the Company's Ohio
natural gas production not committed to existing sales contracts will be sold
on the wholesale market.


                                       8
<PAGE>   11

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

The following table presents certain information with respect to the oil and gas
operations of the Company:
<TABLE>
<CAPTION>

                                     THREE MONTHS ENDED           NINE MONTHS ENDED
                                         SEPTEMBER 30,                SEPTEMBER 30,
                                  -------------------------   --------------------------
                                       1999          1998          1999          1998
                                  -----------   -----------   -----------   ------------
<S>                                    <C>            <C>           <C>           <C>
PRODUCTION
  GAS (MMCF)                           6,751        7,433        20,440        22,539
  OIL (MBBLS)                            180          187           548           567
  TOTAL PRODUCTION (MMCFE)             7,832        8,554        23,726        25,938

AVERAGE PRICE
  GAS (PER MCF)                  $      2.50    $    2.52     $    2.43     $    2.58
  OIL (PER BBL)                        18.77        12.31         15.02         12.98
  MCFE                                  2.59         2.46          2.44          2.52

AVERAGE COSTS (PER MCFE)
  PRODUCTION EXPENSE                    0.72         0.68          0.68          0.68
  PRODUCTION TAXES                      0.11         0.10          0.10          0.10
  DEPLETION                             1.05         1.67          1.06          1.69

GROSS MARGIN (PER MCFE)                 1.76         1.68          1.66          1.74

</TABLE>

RESULTS OF OPERATIONS - THIRD QUARTERS OF 1999 AND 1998 COMPARED
         Operating loss decreased $529,000 (13%) from $4.1 million in the third
quarter of 1998 to $3.6 million in the third quarter of 1999. Net loss decreased
$395,000 from $8.1 million in the third quarter of 1998 to $7.7 million in the
third quarter of 1999. These decreases were due primarily to a $6.1 million
decrease in depreciation, depletion, and amortization expense, a $708,000
decrease in exploration expense and a $259,000 decrease in franchise, property,
and other taxes. These decreases in expense were offset by a $5.7 million
increase in loss on sale of subsidiary and other nonrecurring expense and a $1.0
million decrease in the Company's operating margin due to the net of decreases
in natural gas prices and the volume of natural gas sold and an increase in the
average price paid for the Company's oil. The volume decrease was due to the
natural production decline of the wells and curtailment of drilling due to
capital constraints caused by the reduction in the Company's borrowing base.

         EBITDAX decreased $636,000 from $15.2 million in the third quarter of
1998 to $14.6 million in the third quarter of 1999 primarily due to decreased
operating margins.

         Total revenues decreased $4.1 million (11%) in the third quarter of
1999 compared to the third quarter of 1998 due to the sale of the Company's TOPS
subsidiary and decreases in natural gas prices and the volume of natural gas
sold offset by an increase in the average price paid for the Company's oil.
Gross operating margins decreased $1.0 million in the third quarter of 1999
compared to the third quarter of 1998. These decreases were primarily due to
decreases in natural gas prices and the volume of natural gas sold offset by an
increase in the average price paid for the Company's oil.

                                       9
<PAGE>   12


         Oil volumes decreased 7,000 Bbls (barrels) (4%) from 187,000 Bbls in
the third quarter of 1998 to 180,000 Bbls in the third quarter of 1999 resulting
in a decrease in oil sales of approximately $85,000. Gas volumes decreased 0.6
Bcf (billion cubic feet) (9%) from 7.4 Bcf in the third quarter of 1998 to 6.8
Bcf in the third quarter of 1999 resulting in a decrease in gas sales of
approximately $1.7 million.

         The average price paid for the Company's oil increased from $12.31 per
barrel in the third quarter of 1998 to $18.77 per barrel in the third quarter of
1999 which increased oil sales by approximately $1.2 million. The average price
paid for the Company's natural gas decreased $.02 per Mcf (thousand cubic feet)
to $2.50 per Mcf in the third quarter of 1999 compared to the third quarter of
1998 which decreased gas sales in the third quarter of 1999 by approximately
$135,000. As a result of the Company's hedging activities the gas sales for the
third quarter of 1999 decreased by $472,000 or $.07 per Mcf, compared to an
increase of $494,000 or $.07 per Mcf, for the third quarter of 1998.

         Production expense decreased $189,000 (3%) from $5.8 million in the
third quarter of 1998 to $5.7 million in the third quarter of 1999. The average
production cost increased from $.68 per Mcfe (Mcf of natural gas equivalent) in
the third quarter of 1998 to $.72 per Mcfe in the third quarter of 1999
primarily due to decreased production volumes. Production taxes decreased
approximately $55,000 (6%) from $889,000 in the third quarter of 1998 to
$834,000 in the third quarter of 1999 due to decreased oil and gas sales.

         General and administrative expense in the third quarter of 1999 was
consistent with the same period in 1998.

         Loss on sale of subsidiary and other nonrecurring expense increased
from $15,000 in the third quarter of 1998 to $5.7 million in the third quarter
of 1999 due to a $2.8 million loss on the sale of the Company's TOPS subsidiary,
$2.1 million in employee reduction costs and $830,000 in costs associated with
an abandoned acquisition effort and an abandoned public offering of a royalty
trust in the third quarter of 1999.

         Exploration expense decreased by $708,000 (30%) from $2.3 million in
the third quarter of 1998 to $1.6 million in the third quarter of 1999 as a
result of the curtailment of the Company's drilling program previously
discussed.

         Depreciation, depletion and amortization decreased by $6.1 million
(36%) from $16.9 million in the third quarter of 1998 to $10.8 million in the
third quarter of 1999. Depletion expense decreased approximately $6.1 million
(42%) from $14.3 million in the third quarter of 1998 to $8.2 million in the
third quarter of 1999. Depletion per Mcfe decreased from $1.67 per Mcfe in the
third quarter of 1998 to $1.05 per Mcfe in the third quarter of 1999. These
decreases were primarily the result of the $160.7 million write-down of certain
permanently impaired assets in the fourth quarter of 1998.

         Interest expense increased $330,000 from $8.3 million in the third
quarter of 1998 to approximately $8.7 million in the third quarter of 1999 due
to an increase in average outstanding borrowings and higher blended interest
rates. The Company incurred $235,000 and $104,000 in additional interest expense
during the third quarters of 1999 and 1998, respectively, related to interest
rate swaps.

         Exploration and production segment revenues decreased $789,000 (4%)
from $22.0 million in the third quarter of 1998 to $21.2 million in the third
quarter of 1999. This decrease was due to decreases in natural gas prices and
the volume of oil and natural gas sold offset by an increase in the average
price


                                       10
<PAGE>   13

paid for the Company's oil. Segment loss before income taxes decreased $5.6
million (54%) from $10.2 million in the third quarter of 1998 to $4.6 million in
the third quarter of 1999. This decrease was due primarily to a $5.9 million
decrease in depreciation, depletion and amortization expense from the write-down
of certain permanently impaired exploration and production segment assets in the
fourth quarter of 1998.

         Gas marketing and gathering segment revenues decreased $309,000 (4%)
from $7.8 million in the third quarter of 1998 to $7.5 million in the third
quarter of 1999. The decrease was due to a $496,000 decrease in gas gathering
revenues resulting from reduced transportation rates to a major end user,
reduced gas gathering volumes due to normal production declines, and a reduction
in the Company's drilling activity. These decreases were partially offset by an
increase in gas marketing revenues from third party gas sales. Segment income
before income taxes decreased $536,000 (187%) from $286,000 in the third quarter
of 1998 to a loss of $250,000 in the third quarter of 1999 due primarily to a
$547,000 decrease in the gas marketing and gathering segment operating margin.

         Oilfield sales and service segment revenues decreased $3.1 million
(52%) from $6.0 million in the third quarter of 1998 to $2.9 million in the 1999
quarter. This decrease was primarily the result of the sale of the Company's
TOPS subsidiary and work deferred by the Company and third parties due to a
prolonged period of low oil and gas prices. Segment loss before income taxes
increased $3.0 million from $570,000 in the third quarter of 1998 to $3.5
million in the third quarter of 1999 due primarily to the $2.8 million loss on
the sale of TOPS.

RESULTS OF OPERATIONS - NINE MONTHS OF 1999 AND 1998 COMPARED
         Operating loss decreased $9.2 million (90%) from $10.2 million in the
first nine months of 1998 to $1.0 million in the first nine months of 1999. The
decrease in operating loss was due primarily to a $19.3 million decrease in
depreciation, depletion and amortization expense and a decrease in exploration
expense of $1.7 million. These decreases in expenses were partially offset by a
$7.8 million decrease in the Company's operating margin and a $5.3 million
increase in loss on sale of subsidiary and other nonrecurring expense. The
decrease in the Company's operating margin was primarily due to decreases in gas
prices and the volume of oil and natural gas sold offset by an increase in the
average price paid for the Company's oil. The volume decrease was due to the
natural production decline of the wells and curtailment of drilling due to
capital constraints caused by the reduction in the Company's borrowing base.

         Net loss decreased $5.9 million (26%) from $22.6 million in the first
nine months of 1998 to $16.7 million in the first nine months of 1999. This
decrease was the result of the $9.2 million decrease in operating loss offset by
a $1.1 million increase in interest expense and a $2.2 million decrease in the
income tax benefit due to a decrease in loss before income taxes.

         EBITDAX decreased approximately $6.5 million from $48.5 million in the
first nine months of 1998 to $42.0 million in the first nine months of 1999
primarily due to the decreased operating margins discussed above.

         Total revenues decreased $13.0 million (11%) in the first nine months
of 1999 compared to the first nine months of 1998 due to the sale of the
Company's TOPS subsidiary and decreases in gas prices and the volume of oil and
natural gas sold. These decreases were partially offset by an increase in the
average price paid for the Company's oil. Gross operating margins decreased $7.8
million in the first nine months of 1999 compared to the first nine months of
1998. These decreases were primarily due to


                                       11
<PAGE>   14

decreases in gas prices and the volume of oil and natural gas sold offset by an
increase in the average price paid for the Company's oil.

         Oil volumes decreased approximately 19,000 Bbls from 567,000 Bbls in
the first nine months of 1998 to 548,000 Bbls in the first nine months of 1999
resulting in a decrease in oil sales of approximately $245,000. Gas volumes
decreased 2.1 Bcf (9%) from 22.5 Bcf in the first nine months of 1998 to 20.4
Bcf in the first nine months of 1999 resulting in a decrease in gas sales of
approximately $5.4 million.

         The average price paid for the Company's oil increased from $12.98 per
barrel in the first nine months of 1998 to $15.02 per barrel in the first nine
months of 1999 which increased oil sales by $1.1 million. The average price paid
for the Company's natural gas decreased $.15 per Mcf to $2.43 per Mcf in the
first nine months of 1999 compared to the first nine months of 1998 which
decreased gas sales in the first nine months of 1999 by approximately $3.1
million. As a result of the Company's hedging activities the average gas price
for the first nine months of 1999 was enhanced by $1.4 million or $.07 per Mcf,
compared to $810,000 or $.04 per Mcf, for the first nine months of 1998.

         Production expense decreased approximately $1.6 million (9%) from $17.6
million in the first nine months of 1998 to $16.0 million in the first nine
months of 1999. The average production cost of $.68 per Mcfe in the first nine
months of 1999 was consistent with the same period in 1998 primarily due to
decreased production volumes in the first nine months of 1999. Production taxes
decreased $293,000 (11%) from $2.7 million in the first nine months of 1998 to
$2.4 million in the first nine months of 1999 due to decreased oil and gas
sales. Average production taxes remained constant at $.10 per Mcfe in the first
nine months of 1998 and 1999.

         General and administrative expense in the first nine months of 1999 was
consistent with the same period in 1998.

         Loss on sale of subsidiary and other nonrecurring expense increased
$5.3 million from $365,000 in the first nine months of 1998 to $5.7 million in
the first nine months of 1999 due to a $2.8 million loss on the sale of the
Company's TOPS subsidiary, $2.1 million in employee reduction costs and $830,000
in costs associated with an abandoned acquisition effort and an abandoned public
offering of a royalty trust in the third quarter of 1999.

         Exploration expense decreased by $1.7 million (26%) from $6.5 million
in the first nine months of 1998 to $4.8 million in the first nine months of
1999 as a result of the curtailment of the Company's drilling program previously
discussed.

         Depreciation, depletion and amortization decreased by $19.3 million
(37%) from $51.8 million in the first nine months of 1998 to $32.5 million in
the first nine months of 1999. Depletion expense decreased $18.9 million (43%)
from $43.9 million in the first nine months of 1998 to $25.0 million in the
first nine months of 1999. Depletion per Mcfe decreased from $1.69 per Mcfe in
the first nine months of 1998 to $1.06 per Mcfe in the first nine months of
1999. These decreases were primarily the result of the $160.7 million write-down
of certain permanently impaired assets in the fourth quarter of 1998.

         Interest expense increased $1.2 million (5%) from approximately $24.5
million in the first nine months of 1998 to approximately $25.7 million in the
first nine months of 1999 due to an increase in average outstanding borrowings
and higher blended interest rates. The Company incurred $920,000 and $289,000 in
additional interest expense during the first nine months of 1999 and 1998,
respectively, related to interest rate swaps.


                                       12
<PAGE>   15

         Exploration and production segment revenues decreased $6.7 million
(10%) from $68.1 million in the first nine months of 1998 to $61.4 million in
the first nine months of 1999. This decrease was due to decreases in gas prices
and the volume of oil and natural gas sold offset by an increase in the average
price paid for the Company's oil. Segment loss before income taxes decreased
$12.4 million (43%) from $28.6 million in the first nine months of 1998 to $16.2
million in the first nine months of 1999. This decrease was due primarily to a
$18.4 million decrease in depreciation, depletion and amortization expense
offset by a $6.8 million decrease in the segment's operating margin.

         Gas marketing and gathering segment revenues increased $1.2 million
(4%) from $28.2 million in the first nine months of 1998 to $29.4 million in the
first nine months of 1999. This increase was due to a $2.8 million increase in
gas marketing revenues from third party gas sales. This increase in gas
marketing revenues was offset by a $1.6 million decrease in gas gathering
revenues resulting from reduced transportation rates to a major end user,
reduced gas gathering volumes due to normal production declines and a reduction
in the Company's drilling activity. Segment income before income taxes decreased
$627,000 (33%) from $1.9 million in the first nine months of 1998 to $1.3
million in the first nine months of 1999 due primarily to a $600,000 decrease in
the gas marketing and gathering segment operating margin.

         Oilfield sales and service segment revenues decreased $7.8 million
(44%) from $17.9 million in the first nine months of 1998 to $10.1 million in
the first nine months of 1999. This decrease was primarily the result of the
sale of the Company's TOPS subsidiary and work deferred by the Company and third
parties due to a prolonged period of low oil and gas prices. Segment loss before
income taxes increased $2.9 million from $1.7 million in the first nine months
of 1998 to $4.6 million in the first nine months of 1999 due primarily to the
$2.8 million loss on the sale of TOPS.

LIQUIDITY AND CAPITAL RESOURCES
         The Company's liquidity and capital resources are closely related to
and dependent on the current prices paid for its oil and natural gas.

         The Company's current ratio at September 30, 1999 was .94 to 1.00.
During the first nine months of 1999, working capital increased $3.3 million
from a deficit of $6.3 million to a deficit of $3.0 million. The Company's
operating activities provided cash flows of $14.9 million during the first nine
months of 1999.

         On June 27, 1997, the Company entered into a senior revolving credit
agreement with several lenders. These lenders committed, subject to compliance
with the borrowing base, to provide the Company with revolving credit loans of
up to $200 million, of which $25 million will be available for the issuance of
letters of credit. The credit agreement is a senior revolving credit facility
which is secured by substantially all of the
Company's assets. The credit agreement will mature on June 27, 2002. Outstanding
balances under the agreement incur interest at the Company's choice of several
indexed rates, the most favorable being 8.6% at September 30, 1999. The
borrowing base is determined by an evaluation of the Company's proved developed
reserves, proved undeveloped reserves and related processing and gathering
assets and other assets of the Company, adjusted by the engineering committee of
the banks in accordance with their standard oil and gas lending practices. If
less than 75% of the borrowing base is utilized, the borrowing base will be
redetermined annually. If more than 75% of the borrowing base is utilized, the
borrowing base will be redetermined semi-annually.


                                       13
<PAGE>   16

         The Company's borrowing base at December 31, 1998 was $170 million. On
January 15, 1999, the Company's borrowing base was redetermined at $126 million.
The Company had $154 million outstanding under this agreement at December 31,
1998 which resulted in the Company having a borrowing base deficiency of $28
million. The Company agreed with the lenders to reduce this deficiency by $14
million on March 22, 1999 and by $14 million on May 10, 1999.

         On March 22, 1999, the Company made the $14 million payment to reduce
the outstanding amount under the credit agreement to $140 million. On May 10,
1999, the Company and its lenders further amended the credit agreement to
increase the Company's borrowing base to $136 million, subject to
redetermination in November 1999, and the Company paid $4 million to reduce the
outstanding loan balance to $136 million. The funds for these payments were
provided by internally generated cash flow and $14 million in term loans
provided by Chase Manhattan Bank. The Company was further required to make
additional payments of $5 million on the earlier of the receipt of aggregate
proceeds from asset sales totaling $5 million or August 10, 1999 and $5 million
on November 9, 1999, which would lower the borrowing base and outstanding
balance to $126 million. The Company paid $5 million on July 29, 1999 and $6
million on September 10, 1999 to reduce the outstanding balance to $125 million
at September 30, 1999. Future borrowing base revisions will require approval
from all lenders and any deficiency must be repaid within 30 days of the
effective date of the redetermination. The lenders have not completed the
November 1999 redetermination. The amended agreement increased the interest rate
to LIBOR plus 2.5% and provided certain covenant ratio relief. The Company paid
approximately $2 million in fees to the lenders and expenses associated with the
amendment. The Company's $14 million in term loans from Chase Manhattan Bank are
due on June 27, 2000 with interest payable at LIBOR plus 2.5%. The Company
expects to be able to meet its 1999 debt service requirements through internally
generated cash flow, the sale of non-strategic assets and additional debt.

         The credit agreement contains a number of covenants that, among other
things, restricts the ability of the Company and its subsidiaries to dispose of
assets, incur additional indebtedness, prepay other indebtedness or amend
certain debt instruments, pay dividends, create liens on assets, enter into sale
and leaseback transactions, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, change the business conducted
by the Company or its subsidiaries, make capital expenditures or engage in
certain transactions with affiliates and otherwise restricts certain corporate
activities. In addition, under the credit agreement, the Company is required to
maintain specified financial ratios and tests, including minimum interest
coverage ratios and maximum leverage ratios. The agreement requires a minimum
working capital ratio of 1.00 to 1.00. As of September 30, 1999, the Company's
working capital ratio was .94 to 1.00. As part of the May 10, 1999 amendment,
the Company and its lenders have agreed to exclude the current portion of
certain long term debt from this calculation. After making these adjustments the
working capital ratio as of September 30, 1999 was 1.32 to 1.00.

         The Company issued $225 million of 9.875% Senior Subordinated Notes on
June 27, 1997. The notes mature June 15, 2007. Interest is payable semiannually
on June 15 and December 15 of each year.

         The notes are general unsecured obligations of the Company and are
subordinated in right of payment to senior debt. Except as otherwise described
below, the notes are not redeemable prior to June 15, 2002. Thereafter, the
notes are subject to redemption at the option of the Company at specific
redemption prices. Prior to June 15, 2000, the Company may, at its option, on
any one or more occasions, redeem up to 40% of the original aggregate principal
amount of the notes at a redemption price equal to 109.875% of the principal
amount, plus accrued and unpaid interest, if any on the redemption date, with
all or a portion of net proceeds of public sales of common stock of the Company;
provided that at least 60% of the original aggregate principal amount of the
notes remains outstanding immediately after the occurrence of such redemption;
and provided, further, that such redemption shall occur within


                                       14
<PAGE>   17

60 days of the date of the closing of the related sale of common stock of the
Company. Prior to June 15, 2002, the notes may be redeemed as a whole at the
option of the Company upon the occurrence of a change in control.

         The notes were issued pursuant to an indenture which contains certain
covenants that limit the ability of the Company and its subsidiaries to incur
additional indebtedness and issue stock, pay dividends, make distributions, make
investments, make certain other restricted payments, enter into certain
transactions with affiliates, dispose of certain assets, incur liens securing
indebtedness of any kind other than permitted liens, and engage in mergers and
consolidations.

         The Company currently expects to spend approximately $4 million during
1999 on its drilling activities and other capital expenditures. The Company
intends to finance such activities, as well as its acquisition program, through
its available cash flow, available revolving credit line or additional debt. The
level of the Company's cash flow in the future will depend on a number of
factors including the demand and price levels for oil and gas, its ability to
acquire additional producing properties and the scope and success of its
drilling activities.

         From time to time the Company may enter into interest rate swaps to
hedge the interest rate exposure associated with the credit facility, whereby a
portion of the Company's floating rate exposure is exchanged for a fixed
interest rate. During October 1997, the Company entered into two interest rate
swap arrangements covering $90 million of debt. The Company swapped $40 million
of floating three-month LIBOR for a fixed rate of 7.485% (which includes an
applicable margin of 1.5%) for three years, extendible at the institution's
option for an additional two years. The Company also swapped $50 million of
floating three-month LIBOR for a fixed rate of 7.649% (which includes an
applicable margin of 1.5%) for five years. During June 1998, the Company entered
into a third interest rate swap covering $50 million of debt. The Company
swapped $50 million of floating rate three-month LIBOR for a fixed rate of
7.2825% (which includes an applicable margin of 1.5%) for three years. Effective
with the May 10, 1999 amendment to the credit agreement, the applicable margin
relating to these swaps was increased from 1.5% to 2.5%.

         To manage its exposure to natural gas price volatility, the Company may
partially hedge its physical gas sales prices by selling futures contracts on
the New York Merchantile Exchange ("NYMEX") or by selling NYMEX based commodity
derivative contracts which are placed with major financial institutions that the
Company believes are minimal credit risks. The contracts may take the form of
futures contracts, swaps or options. The Company had a pretax loss on its
hedging activities of $472,000 in the third quarter of 1999 and a pretax gain of
$494,000 in the third quarter of 1998. At September 30, 1999, the Company had
open futures contracts covering 2.2 Bcf of 1999 gas production at a weighted
average NYMEX price of $2.44 per Mcf which represented a net unrealized loss of
$627,000. As of September 30, 1999, the Company has hedged 9.8 Bcf of 2000 and
2001 natural gas production at a weighted average NYMEX price of $2.42 per Mcf
which represented a net unrealized loss of $1,620,000.

READINESS FOR YEAR 2000
         Like most companies, the Company is faced with the Year 2000 ("Y2K")
issue. The Y2K problem arose because many existing computer programs use only
the last two digits to refer to a year. This does not allow programs to properly
recognize a year that begins with "20" instead of "19". Any computer programs
that have date-sensitive software may recognize a date using "00" as the year
1900 instead of the year 2000. This could result in system failures and
miscalculations causing disruptions of operations or financial processes, such
as equipment failures or a temporary inability to process transactions or send
invoices.


                                       15
<PAGE>   18

         The Company has taken actions to understand the nature and extent of
the work required to make its systems and operations Y2K compliant. A project
team is responsible for coordinating the assessment, remediation, testing and
implementation of the necessary modifications to its key applications (which
consist of third party software, hardware and embedded chip systems, as well as
internally developed computer applications). To date, the team has identified
potential risks to the Company and has replaced the Company's major legacy
systems and envisions no major disruptions to operations. An inventory of
hardware and software and all peripheral systems is complete and was prioritized
for upgrade or replacement. A testing plan has been developed, and the Company
has completed testing of its mission-critical systems.

         The Company intends to monitor and compare the estimated costs
associated with its actions to actual costs. Estimated additional costs for
making the necessary changes (primarily installation of current releases of
operating systems and application software) to such systems, including
implementation and testing efforts, are expected to range from $250,000 to
$350,000 not including internal costs. This estimate is based on various factors
including availability of internal and external resources and complexity of the
software applications. Such estimate does not include costs of new systems for
which the principal justification is improved business functionality, rather
than Y2K compliance. While the Company has enlisted the guidance of various
industry experts in the project planning process, it does not rely on the
assistance of outside consultants to direct the project. Employees assigned to
the project have integrated their responsibilities into normal operations. The
Company does not separately track the internal costs incurred in connection with
the project. Such internal costs consist primarily of payroll costs for the
employees assigned to the project. Approximately $225,000 has been incurred as
of October 31, 1999 for equipment upgrades and the services of third party
contractors through the testing and implementation phases of the project.

         The Company's goal is to ensure that all of its critical systems and
processes remain functional. Since certain systems may be interrelated with
systems outside the Company's control, there can be no assurance that all
implementations will be successful. The Company has completed identification of
its critical relationships with outside vendors, customers and business partners
and has requested confirmation of Y2K compliance from such third parties. Among
these, special attention has been given to obtaining evidence of Y2K compliance
from third-party transporters of natural gas, deemed as a critical element to
the Company's uninterrupted business operations. The Company has prepared
contingency plans to minimize any disruptions resulting from a vendor, supplier
or customer not being Y2K compliant. Failure by the Company and/or its vendors,
suppliers, and customers to complete Y2K compliance could have a material
adverse effect on the Company's operations. Recognizing this risk, formal
contingency plans have been developed by the Company.

RECENT DEVELOPMENTS
         The Company named John L. Schwager as Chief Executive Officer on June
2, 1999. Mr. Schwager, 51, replaces Ronald L. Clements who announced his
retirement the previous month. Mr. Schwager has worked in the oil and gas
industry for 30 years. From October 1987 to August 1997, he served as President
and CEO of Alamco, Inc., which was a publicly-traded independent oil and gas
company with operations in the Appalachian Basin. In addition to Alamco, Mr.
Schwager has held executive and management positions with TGX Corporation,
Houston; Callon Petroleum Company, Natchez, Mississippi, and Shell Oil Company
in New Orleans. He graduated from the University of Missouri at Rolla in 1970
with a Bachelor of Science degree in Petroleum Engineering.


                                       16
<PAGE>   19

FORWARD-LOOKING INFORMATION
         The forward-looking statements regarding future operating and financial
performance contained in this report involve risks and uncertainties that
include, but are not limited to, the Company's future production and costs of
operation, the market demand for, and prices of, oil and natural gas, results of
the Company's future drilling, gas marketing activity, the uncertainties of
reserve estimates, environmental risks, availability of financing, the Company's
readiness for Y2K as well as potential adverse consequences related to third
party Y2K compliance and other factors detailed in the Company's filings with
the Securities and Exchange Commission. Actual results may differ materially
from forward-looking statements made in this report.

PART II  OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  (27)     Financial Data Schedule

         (b)      Reports on Form 8-K

                  None


                                       17
<PAGE>   20

SIGNATURES
--------------------------------------------------------------------------------

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



                                      BELDEN & BLAKE CORPORATION



Date: November 10, 1999               By:  /s/ John L. Schwager
      ---------------------------          -------------------------------------
                                           John L. Schwager, Director, President
                                           and Chief Executive Officer




Date: November 10, 1999               By:  /s/ Robert W. Peshek
      ----------------------------         -------------------------------------
                                           Robert W. Peshek, Vice President
                                           and Chief Financial Officer


                                       18