##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2007
 or
 o
    
    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
 
  Ohio
    
    34-1686642(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)1001 Fannin Street, Suite 800Houston, Texas
    
    77002(Address of principal executive offices)
    
    (Zip Code)
  
  þ o
  o o þ
 o þ




---



##### Table of Contents



PagePART I Financial InformationItem 1. Financial Statements (unaudited)Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    1Statements of Operations:Three and six months ended June 30, 2007Three and six months ended June 30, 2006
    
    
    2Statements of Cash Flows:Six months ended June 30, 2007Six months ended June 30, 2006
    
    
    3Notes to Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    17PART II Other InformationItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults Upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    18Signatures
    
    
    19EX-31.1EX-31.2EX-32.1EX-32.2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BELDEN & BLAKE CORPORATION
 
 BALANCE SHEETS
 (unaudited, in thousands)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    13,513
    
    
    $
    5,927Accounts
receivable (less accumulated provision for doubtful accounts:
June 30, 2007  $1,023; December 31, 2006  $1,271)
    
    
    18,918
    
    
    
    19,855Inventories
    
    
    962
    
    
    
    885Deferred income taxes
    
    
    15,413
    
    
    
    12,607Other current assets
    
    
    207
    
    
    
    510Fair value of derivatives
    
    
    423
    
    
    
    378Total current assets
    
    
    49,436
    
    
    
    40,162Property and equipment, at costOil and gas properties (successful efforts method)
    
    
    703,710
    
    
    
    692,576Gas gathering systems
    
    
    1,305
    
    
    
    1,305Land, buildings, machinery and equipment
    
    
    2,761
    
    
    
    3,031707,776
    
    
    
    696,912Less accumulated depreciation, depletion and amortization
    
    
    70,585
    
    
    
    52,564Property and equipment, net
    
    
    637,191
    
    
    
    644,348Goodwill
    
    
    90,076
    
    
    
    90,076Fair value of derivatives
    
    
    84
    
    
    
    193Other assets
    
    
    2,076
    
    
    
    2,244$
    778,863
    
    
    $
    777,023LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    3,408
    
    
    $
    2,259Accrued expenses
    
    
    20,992
    
    
    
    21,554Current portion of long-term liabilities
    
    
    281
    
    
    
    408Fair value of derivatives
    
    
    38,970
    
    
    
    27,576Total current liabilities
    
    
    63,651
    
    
    
    51,797Long-term liabilitiesBank and other long-term debt
    
    
    99,950
    
    
    
    95,454Senior secured notes
    
    
    164,681
    
    
    
    165,106Subordinated promissory note  related party
    
    
    25,623
    
    
    
    25,000Asset retirement obligations and other long-term liabilities
    
    
    21,058
    
    
    
    20,627Fair value of derivatives
    
    
    180,375
    
    
    
    160,011Deferred income taxes
    
    
    105,664
    
    
    
    115,325Total long-term liabilities
    
    
    597,351
    
    
    
    581,523Shareholders equityCommon stock: without par value; 3,000 shares authorized and 1,534 shares issued
    
    
    
    
    
    
    Paid in capital
    
    
    125,000
    
    
    
    125,000Retained earnings
    
    
    13,628
    
    
    
    41,262Accumulated other comprehensive loss
    
    
    (20,767
    )
    
    
    (22,559
    )Total shareholders equity
    
    
    117,861
    
    
    
    143,703$
    778,863
    
    
    $
    777,023
  1




---



##### Table of Contents



BELDEN & BLAKE CORPORATION
 
 STATEMENTS OF OPERATIONS
 (unaudited, in thousands)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended June 30,
    
    
    ended June 30,
    
    
    ended June
    
    
    ended June2007
    
    
    2006
    
    
    30, 2007
    
    
    30, 2006RevenuesOil and gas sales
    
    $
    32,027
    
    
    $
    36,212
    
    
    $
    58,829
    
    
    $
    77,150Gas gathering and marketing
    
    
    2,774
    
    
    
    2,254
    
    
    
    5,394
    
    
    
    6,004Other
    
    
    494
    
    
    
    193
    
    
    
    662
    
    
    
    29835,295
    
    
    
    38,659
    
    
    
    64,885
    
    
    
    83,452ExpensesProduction expense
    
    
    6,456
    
    
    
    4,937
    
    
    
    12,259
    
    
    
    10,728Production taxes
    
    
    642
    
    
    
    579
    
    
    
    1,193
    
    
    
    1,288Gas gathering and marketing
    
    
    2,270
    
    
    
    1,663
    
    
    
    4,474
    
    
    
    4,946Exploration expense
    
    
    303
    
    
    
    375
    
    
    
    1,028
    
    
    
    549General and administrative expense
    
    
    1,933
    
    
    
    2,204
    
    
    
    3,860
    
    
    
    5,442Depreciation, depletion and amortization
    
    
    9,454
    
    
    
    9,201
    
    
    
    18,013
    
    
    
    18,513Accretion expense
    
    
    319
    
    
    
    304
    
    
    
    630
    
    
    
    596Derivative fair value loss (gain)
    
    
    3,985
    
    
    
    6,186
    
    
    
    46,141
    
    
    
    13,47625,362
    
    
    
    25,449
    
    
    
    87,598
    
    
    
    55,538Operating income (loss)
    
    
    9,933
    
    
    
    13,210
    
    
    
    (22,713
    )
    
    
    27,914Other expenseInterest expense
    
    
    5,938
    
    
    
    5,806
    
    
    
    11,835
    
    
    
    11,579Gain on early extinguishment of debt
    
    
    
    
    
    
    (436
    )
    
    
    
    
    
    
    (436
    )Income (loss) before
income taxes
    
    
    3,995
    
    
    
    7,840
    
    
    
    (34,548
    )
    
    
    16,771Provision (benefit) for income taxes
    
    
    1,580
    
    
    
    3,096
    
    
    
    (13,664
    )
    
    
    6,639Net income (loss)
    
    $
    2,415
    
    
    $
    4,744
    
    
    $
    (20,884
    )
    
    $
    10,132
  2




---



##### Table of Contents



BELDEN & BLAKE CORPORATION
 
 STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Six months
    
    
    Six monthsended June 30,
    
    
    ended June2007
    
    
    30, 2006Cash flows from operating activities:Net (loss) income
    
    $
    (20,884
    )
    
    $
    10,132Adjustments to reconcile
net (loss) income
to net cash provided by operating activities:Depreciation, depletion and amortization
    
    
    18,013
    
    
    
    18,513Accretion expense
    
    
    630
    
    
    
    596Gain on disposal of property and equipment
    
    
    (57
    )
    
    
    Gain on debt extinguishment
    
    
    
    
    
    
    (436
    )Non-cash hedging activities
    
    
    49,108
    
    
    
    4,075Exploration expense
    
    
    279
    
    
    
    549Deferred income taxes
    
    
    (13,664
    )
    
    
    6,639Other non-cash expense
    
    
    1,159
    
    
    
    212Change in operating assets and liabilitiesAccounts receivable and other current assets
    
    
    1,050
    
    
    
    7,874Inventories
    
    
    (57
    )
    
    
    229Accounts payable and accrued expenses
    
    
    (167
    )
    
    
    (6,306
    )Net cash provided by operating activities
    
    
    35,410
    
    
    
    42,077Cash flows from investing activities:Additions to property and equipment
    
    
    (11,203
    )
    
    
    (18,136
    )Proceeds from property and equipment disposals
    
    
    270
    
    
    
    3,320Exploration expense
    
    
    (279
    )
    
    
    (549
    )Increase in other assets
    
    
    (44
    )
    
    
    (18
    )Net cash used in investing activities
    
    
    (11,256
    )
    
    
    (15,383
    )Cash flows from financing activities:Proceeds from revolving line of credit
    
    
    4,500
    
    
    
    48,476Repayment of revolving line of credit
    
    
    
    
    
    
    (12,000
    )Repayment of secured notes
    
    
    
    
    
    
    (33,933
    )Repayment of long-term debt and other obligations
    
    
    (21
    )
    
    
    (22
    )Settlement of derivative liabilities recorded in purchase accounting
    
    
    (14,297
    )
    
    
    (16,706
    )Dividends paid
    
    
    (6,750
    )
    
    
    (12,000
    )Net cash used in financing activities
    
    
    (16,568
    )
    
    
    (26,185
    )Net increase in cash and cash equivalents
    
    
    7,586
    
    
    
    509Cash and cash equivalents at beginning of period
    
    
    5,927
    
    
    
    8,172Cash and cash equivalents at end of period
    
    $
    13,513
    
    
    $
    8,681
  3




---



##### Table of Contents



BELDEN & BLAKE CORPORATION
 
 NOTES TO FINANCIAL STATEMENTS
 (unaudited)
 June 30, 2007
 (1) Basis of Presentation
   (2) Derivatives and Hedging
   4




---



##### Table of Contents



Natural Gas Swaps
    
    
    Crude Oil SwapsNYMEX
    
    
    
    
    
    
    NYMEXPrice per
    
    
    
    
    
    
    Price perBbtu
    
    
    Mmbtu
    
    
    Mbbls
    
    
    BblQuarter EndingSeptember 30, 2007
    
    
    2,686
    
    
    
    4.71
    
    
    
    57
    
    
    
    30.73December 31, 2007
    
    
    2,686
    
    
    
    4.91
    
    
    
    56
    
    
    
    30.445,372
    
    
    $
    4.81
    
    
    
    113
    
    
    $
    30.59Year EndingDecember 31, 2008
    
    
    10,126
    
    
    
    4.64
    
    
    
    208
    
    
    
    29.96December 31, 2009
    
    
    9,529
    
    
    
    4.43
    
    
    
    191
    
    
    
    29.34December 31, 2010
    
    
    8,938
    
    
    
    4.28
    
    
    
    175
    
    
    
    28.86December 31, 2011
    
    
    8,231
    
    
    
    4.19
    
    
    
    157
    
    
    
    28.77December 31, 2012
    
    
    7,005
    
    
    
    4.09
    
    
    
    138
    
    
    
    28.70December 31, 2013
    
    
    6,528
    
    
    
    4.04
    
    
    
    127
    
    
    
    28.70
 Bbl  Barrel
    
    Mmbtu  Million British thermal unitsMbbls  Thousand barrels
    
    Bbtu  Billion British thermal units
  (3) Industry Segment Financial Information
  (4) Supplemental Disclosure of Cash Flow Information
 Six months
    
    Six monthsended June 30,
    
    ended June 30,(in thousands)
    
    2007
    
    2006Cash paid during the period for:Interest
    
    $
    11,710
    
    
    $
    13,164Income taxes
    
    
    
    
    
    
    Non-cash investing and financing activities:Non-cash additions to property and equipment
    
    
    754
    
    
    
    4,218Non-cash additions to debt
    
    
    (623
    )
    
    
    
 (5) Contingencies
  5




---



##### Table of Contents



(6) Comprehensive Income
  Six months
    
    
    Six monthsended June 30,
    
    
    ended June 30,2007
    
    
    2006Comprehensive income (loss):Net (loss) income
    
    $
    (20,884
    )
    
    $
    10,132Other comprehensive income (loss), net of tax:Unrealized (loss) gain in derivative fair value
    
    
    (14
    )
    
    
    18,539Reclassification adjustment for derivative (loss) gain
reclassified into earnings
    
    
    (1,778
    )
    
    
    7,776Change in accumulated other comprehensive (loss) income
    
    
    (1,792
    )
    
    
    26,315Comprehensive (loss) income
    
    $
    (22,676
    )
    
    $
    36,447
 (7) Long-Term Debt
  June 30, 2007
    
    
    December 31, 2006Senior secured notes
    
    $
    159,475
    
    
    $
    159,475Bank revolving credit facility
    
    
    99,876
    
    
    
    95,376Subordinated promissory note (related party)
    
    
    25,623
    
    
    
    25,000Other
    
    
    81
    
    
    
    85285,055
    
    
    
    279,936Less current portion
    
    
    7
    
    
    
    7Long-term debt
    
    
    285,048
    
    
    
    279,929Fair value adjustment  senior secured notes
    
    
    5,206
    
    
    
    5,631$
    290,254
    
    
    $
    285,560
 Amended Credit Agreement
   6




---



##### Table of Contents



(8) Related Party Transactions
  (9) New Accounting Standards
  7




---



##### Table of Contents



Fair Value Measurements,
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-Looking Information
  8




---



##### Table of Contents



Results of Operations
  Three months ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006ProductionGas (Mmcf)
    
    
    3,437
    
    
    
    3,487
    
    
    
    6,732
    
    
    
    7,024Oil (Mbbls)
    
    
    90
    
    
    
    91
    
    
    
    182
    
    
    
    189Total production (Mmcfe)
    
    
    3,979
    
    
    
    4,035
    
    
    
    7,822
    
    
    
    8,160Average price (1)Gas (per Mcf)
    
    $
    7.71
    
    
    $
    8.65
    
    
    $
    7.17
    
    
    $
    9.29Oil (per Bbl)
    
    
    61.31
    
    
    
    66.36
    
    
    
    58.22
    
    
    
    62.80Mcfe
    
    
    8.05
    
    
    
    8.98
    
    
    
    7.52
    
    
    
    9.45Average costs (per Mcfe)Production expense
    
    $
    1.62
    
    
    $
    1.22
    
    
    $
    1.57
    
    
    $
    1.31Production taxes
    
    
    0.16
    
    
    
    0.14
    
    
    
    0.15
    
    
    
    0.16Depletion
    
    
    2.35
    
    
    
    2.24
    
    
    
    2.27
    
    
    
    2.23Oil and Gas operating margin (per Mcfe)
    
    
    6.27
    
    
    
    7.62
    
    
    
    5.80
    
    
    
    7.98
 
 (1)
    
    The average prices presented above include non-cash amounts related
to purchase accounting for the Transaction. Excluding these non-cash amounts
from oil and gas sales revenues would result in the following average prices: Three months ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Gas (per Mcf)
    
    $
    7.93
    
    
    $
    5.90
    
    
    $
    7.61
    
    
    $
    6.19Oil (per Bbl)
    
    
    61.31
    
    
    
    66.36
    
    
    
    58.22
    
    
    
    62.80Mcfe
    
    
    8.24
    
    
    
    6.60
    
    
    
    7.90
    
    
    
    6.78
 Mmcf  Million cubic feet
    
    Mbbls  Thousand barrels
    
    Mmcfe  Million cubic feet of natural gas equivalentMcf  Thousand cubic feet
    
    Bbl  Barrel
    
    Mcfe  Thousand cubic feet of natural gas equivalentOil and Gas operating margin (per Mcfe)  average price less production expense and production taxes
 Results of Operations  Second Quarters of 2007 and 2006 Compared  Revenues
   9




---



##### Table of Contents



Costs and Expenses
      10




---



##### Table of Contents



Results of Operations  Six Months of 2007 and 2006 Compared  Revenues
      Costs and Expenses
  11




---



##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
   12




---



##### Table of Contents



Capital Expenditures
   Financing and Credit Facilities
    13




---



##### Table of Contents



New Accounting Standards
     14




---



##### Table of Contents



Fair Value Measurements,
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
     15




---



##### Table of Contents



Natural Gas Swaps
    
    
    Crude Oil SwapsNYMEX
    
    
    
    
    
    
    NYMEXPrice per
    
    
    
    
    
    
    Price perBbtu
    
    
    Mmbtu
    
    
    Mbbls
    
    
    BblQuarter EndingSeptember 30, 2007
    
    
    2,686
    
    
    
    4.71
    
    
    
    57
    
    
    
    30.73December 31, 2007
    
    
    2,686
    
    
    
    4.91
    
    
    
    56
    
    
    
    30.445,372
    
    
    $
    4.81
    
    
    
    113
    
    
    $
    30.59Year EndingDecember 31, 2008
    
    
    10,126
    
    
    
    4.64
    
    
    
    208
    
    
    
    29.96December 31, 2009
    
    
    9,529
    
    
    
    4.43
    
    
    
    191
    
    
    
    29.34December 31, 2010
    
    
    8,938
    
    
    
    4.28
    
    
    
    175
    
    
    
    28.86December 31, 2011
    
    
    8,231
    
    
    
    4.19
    
    
    
    157
    
    
    
    28.77December 31, 2012
    
    
    7,005
    
    
    
    4.09
    
    
    
    138
    
    
    
    28.70December 31, 2013
    
    
    6,528
    
    
    
    4.04
    
    
    
    127
    
    
    
    28.70
 Bbl  Barrel
    
    Mmbtu  Million British thermal unitsMbbls  Thousand barrels
    
    Bbtu  Billion British thermal units
   16




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Change in Internal Controls Over Financial Reporting
  
 PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  17




---



##### Table of Contents



Item 6. Exhibits
  31.1*
    
    Certification of Principal Executive Officer of Belden & Blake Corporation as required by
Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 193431.2*
    
    Certification of Principal Financial Officer of Belden & Blake Corporation as required by
Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 193432.1*
    
    Certification of Chief Executive Officer of Belden & Blake Corporation pursuant to 18 U.S.C.
Section 1350.32.2*
    
    Certification of Chief Financial Officer of Belden & Blake Corporation pursuant to 18 U.S.C.
Section 1350.
 
 *
    
    Filed herewith. 18




---



##### Table of Contents



BELDEN & BLAKE CORPORATIONDate:August 10, 2007
    
    By:
    
    /s/ Mark A. Houser
Mark
A. Houser, Chief Executive Officer,Chairman of the Board of Directors and DirectorDate:August 10, 2007
    
    By:
    
    /s/ James M. Vanderhider
James
M. Vanderhider, President, ChiefFinancial Officer and Director(Principal Financial Officer)
 19