<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, 1997

                                       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, 1997
                                                                      10,000,000

<PAGE>   2

                           BELDEN & BLAKE CORPORATION


                                      INDEX

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

<TABLE>
<CAPTION>

                                                                                                  Page
                                                                                                  ----

PART I   Financial Information:
------   

<S>               <C>                                                                            <C>
         Item 1.  Financial Statements

                  Consolidated Balance Sheets as of September 30, 1997 and                          1
                  December 31, 1996

                  Consolidated Statements of Operations for the Successor                           3
                  Company three months ended September 30, 1997 and the Predecessor
                  Company six months ended June 30, 1997 and three and nine months ended
                  September 30, 1996

                  Consolidated Statements of Shareholders' Equity for the                           4
                  Successor Company three months ended September 30,
                  1997 and Predecessor Company six months ended June
                  30, 1997 and the years ended December 31, 1996 and
                  1995

                  Consolidated Statements of Cash Flows for the Successor Company                   5
                  three months ended September 30, 1997 and the Predecessor
                  Company six months ended June 30, 1997 and nine months ended
                  September 30, 1996

                  Notes to Consolidated Financial Statements                                        6

         Item 2.  Management's Discussion and Analysis of Financial Condition                      10
                  and Results of Operations


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


<PAGE>   3

                           BELDEN & BLAKE CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                SUCCESSOR     |    PREDECESSOR
                                                                                 COMPANY      |      COMPANY
                                                                             ================ | =================
                                                                              SEPTEMBER 30,   |    DECEMBER 31,
                                                                                  1997        |        1996
                                                                             ================ | ================
                                                                               (UNAUDITED)    |
<S>                                                                            <C>            |   <C>          
ASSETS                                                                                        |
                                                                                              |
CURRENT ASSETS                                                                                |
     Cash and cash equivalents                                                 $       6,879  |   $       8,606
     Accounts receivable, net                                                         32,496  |          33,523
     Inventories                                                                       8,550  |           9,397
     Deferred income taxes                                                             2,739  |           2,918
     Other current assets                                                              5,128  |           2,280
                                                                             ---------------- | ----------------
                TOTAL CURRENT ASSETS                                                  55,792  |          56,724
                                                                                              |
PROPERTY AND EQUIPMENT, AT COST                                                               |
     Oil and gas properties (successful efforts method)                              470,804  |         266,521
     Gas gathering systems                                                            19,119  |          26,045
     Land, buildings, machinery and equipment                                         25,809  |          31,578
                                                                             ---------------- | ----------------
                                                                                     515,732  |         324,144
     Less accumulated depreciation, depletion                                                 |
       and amortization                                                               14,518  |          86,808
                                                                             ---------------- | ----------------
                PROPERTY AND EQUIPMENT, NET                                          501,214  |         237,336
                                                                                              |
OTHER ASSETS                                                                          31,487  |           9,703
                                                                             ---------------- | ----------------
                                                                               $     588,493  |   $     303,763
                                                                             ================ | ================
</TABLE>

The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

See accompanying notes.


                                       1
<PAGE>   4

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


<TABLE>
<CAPTION>

                                                                                SUCCESSOR     |    PREDECESSOR
                                                                                 COMPANY      |      COMPANY
                                                                             ================ |  =================
                                                                              SEPTEMBER 30,   |    DECEMBER 31,
                                                                                  1997        |        1996
                                                                             ================ |  ================
                                                                               (UNAUDITED)    |
<S>                                                                            <C>            |   <C>          
LIABILITIES AND SHAREHOLDERS' EQUITY                                                          |
                                                                                              |
CURRENT LIABILITIES                                                                           |
     Accounts payable                                                          $       9,105  |   $       9,421
     Accrued expenses                                                                 30,679  |          20,990
     Current portion of long-term liabilities                                          1,348  |           4,203
                                                                             ---------------- | ----------------
                TOTAL CURRENT LIABILITIES                                             41,132  |          34,614
                                                                                              |
LONG-TERM LIABILITIES                                                                         |
     Bank and other long-term debt                                                   104,314  |          59,216
     Senior notes                                                                         --  |          31,111
     Senior subordinated notes                                                       225,000  |              --
     Convertible subordinated debentures                                                  --  |           5,550
     Other                                                                             4,308  |           1,765
                                                                             ---------------- | ----------------
                                                                                     333,622  |          97,642
                                                                                              |
DEFERRED INCOME TAXES                                                                111,319  |          12,589
                                                                                              |
SHAREHOLDERS' EQUITY                                                                          |
     Predecessor common stock without par value; $.10 stated                                  |
       value per share; authorized 50,000,000 shares;                                         |
       issued and outstanding 11,231,865 shares                                               |           1,123
     Successor common stock without par value; $.10 stated                                    |
       value per share; authorized 58,000,000  shares;                                        |
       issued and outstanding 10,000,000 shares                                        1,000  |
     Predecessor preferred stock without par value; $100 stated                               |
       value per share; authorized 8,000,000 shares;                                          |
       issued and outstanding 24,000 shares                                                   |           2,400
     Paid in capital                                                                 107,230  |         128,035
     Retained (deficit) earnings                                                      (5,810) |          27,395
     Unearned portion of restricted stock                                                 --  |             (35)
                                                                             ---------------- | ----------------
                TOTAL SHAREHOLDERS' EQUITY                                           102,420  |         158,918
                                                                             ---------------- | ----------------
                                                                               $     588,493  |   $     303,763
                                                                             ================ | ================
</TABLE>                                                                      

The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

See accompanying notes.


                                       2
<PAGE>   5

                           BELDEN & BLAKE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                SUCCESSOR     |  PREDECESSOR       SUCCESSOR    |            PREDECESSOR
                                                 COMPANY      |    COMPANY          COMPANY     |              COMPANY
                                            ----------------- | --------------  ----------------| --------------------------------
                                              THREE MONTHS    | THREE MONTHS     THREE MONTHS   |    SIX MONTHS       NINE MONTHS
                                                  ENDED       |     ENDED             ENDED     |        ENDED            ENDED
                                              SEPTEMBER 30,   | SEPTEMBER 30,     SEPTEMBER 30, |      JUNE 30,       SEPTEMBER 30,
                                                  1997        |     1996              1997      |        1997             1996
                                            ================= | ===============  ===============| =============== ================
<S>                                           <C>             |  <C>              <C>           |    <C>             <C>           
REVENUES                                                      |                                 | 
   Oil and gas sales                          $      19,770   |  $    19,075      $       19,770|   $      41,591   $       57,265
   Gas marketing and gathering                       10,613   |        9,835              10,613|          21,657           31,624
   Oilfield sales and service                         7,999   |        7,661               7,999|          14,665           18,583
   Interest and other                                   736   |          814                 736|           1,484            2,555
                                            ----------------  |--------------    ---------------| --------------- ----------------
                                                     39,118   |       37,385              39,118|          79,397          110,027
EXPENSES                                                      |                                 | 
   Production expense                                 5,255   |        4,655               5,255|          10,158           13,033
   Production taxes                                     801   |          748                 801|           1,647            2,259
   Cost of gas and gathering expense                  8,929   |        8,155               8,929|          18,340           26,145
   Oilfield sales and service                         6,989   |        6,759               6,989|          13,936           16,785
   Exploration expense                                1,925   |        1,548               1,925|           4,380            4,407
   General and administrative expense                   820   |          944                 820|           2,445            3,059
   Depreciation, depletion and amortization          15,619   |        7,240              15,619|          15,366           21,941
   Franchise, property and other taxes                  443   |          446                 443|             908            1,328
                                            ----------------  |--------------    ---------------| --------------- ----------------
                                                     40,781   |       30,495              40,781|          67,180           88,957
                                            ----------------  |--------------    ---------------| --------------- ----------------
OPERATING (LOSS) INCOME                              (1,663)  |        6,890             (1,663)|          12,217           21,070
                                                              |                                 | 
   Interest expense                                   7,552   |        1,763               7,552|           3,715            5,587
   Transaction related expenses                               |                                 |          16,758
                                            ----------------  |--------------    ---------------| --------------- ----------------
                                                      7,552   |        1,763               7,552|          20,473            5,587
                                            ----------------  |--------------    ---------------| --------------- ----------------
(LOSS) INCOME FROM CONTINUING                                 |                                 | 
   OPERATIONS BEFORE INCOME TAXES                    (9,215)  |        5,127             (9,215)|          (8,256)         15,483
   (Benefit) provision for income taxes              (3,405)  |        1,502             (3,405)|           1,617           5,031
                                            ----------------  |--------------   ----------------|----------------- ----------------
(LOSS) INCOME FROM                                            |                                 | 
   CONTINUING OPERATIONS                             (5,810)  |        3,625             (5,810)|          (9,873)         10,452
LOSS FROM DISCONTINUED OPERATIONS                        --   |         (439)                 --|              --            (439)
                                            ----------------  |--------------    ---------------| --------------- ----------------
NET (LOSS) INCOME                             $      (5,810)  |  $     3,186     $       (5,810)|  $       (9,873)  $       10,013
                                            ================  | ==============   ===============| =============== ================
</TABLE>

See accompanying notes.



                                       3
<PAGE>   6

                           BELDEN & BLAKE CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                               SUCCESSOR            PREDECESSOR                                 
                                          =====================  ===================
                                           COMMON    COMMON       COMMON    COMMON     PREFERRED     PAID IN    
                                           SHARES     STOCK       SHARES     STOCK       STOCK       CAPITAL    
                                          ========= ===========  ========  =========   ==========  ============ 
<S>                                         <C>     <C>          <C>       <C>          <C>         <C>         
PREDECESSOR COMPANY:
JANUARY 1, 1995                                 --  $       --     7,085   $      709   $   2,400   $    70,379 

Stock issued                                                       4,028          403                    55,264 
Net income                                                                                                      
Preferred stock dividend                                                                                        
Stock options exercised                                                2           --                        25 
Employee stock bonus                                                  22            2                       251 
Restricted stock                                                                                            144 
----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1995                               --          --    11,137        1,114       2,400       126,063 

Net income                                                                                                      
Preferred stock dividend                                                                                        
Stock options exercised and
   related tax benefit                                                 3           --                        47 
Employee stock bonus                                                  26            3                       418 
Restricted stock activity                                              4           --                       263 
Conversion of debentures                                              62            6                     1,244 
----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996                               --          --    11,232        1,123       2,400       128,035 

Net loss                                                                                                        
Preferred stock redeemed                                                                   (2,400)              
Preferred stock dividend                                                                                        
Subordinated debentures
   converted to common stock                                         275           27                     5,523 
Stock options exercised and surrendered
   and related tax benefit                                             1           --                     1,596 
Employee stock bonus                                                  36            4                       926 
Restricted stock activity                                                                                    17 
----------------------------------------------------------------------------------------------------------------
JUNE 30, 1997 (UNAUDITED)                       --  $       --    11,544   $    1,154          --   $   136,097 
----------------------------------------------------------------------------------------------------------------

SUCCESSOR COMPANY:
Redemption of common stock                                       (11,544)      (1,154)                 (136,097)
Sale of common stock to TPG                 10,000       1,000                                          107,230 
Net loss                                                                                                        
----------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1997 (UNAUDITED)              10,000  $    1,000        --   $       --   $      --   $   107,230 
================================================================================================================

                                                       
                                                       UNEARNED
                                          RETAINED    RESTRICTED
                                          EARNINGS       STOCK         TOTAL
                                          ==========  =========== =============
<S>                                        <C>         <C>         <C>         
PREDECESSOR COMPANY:
JANUARY 1, 1995                            $   7,879   $     (225) $     81,142

Stock issued                                                             55,667
Net income                                     5,121                      5,121
Preferred stock dividend                        (180)                      (180)
Stock options exercised                                                      25
Employee stock bonus                                                        253
Restricted stock                                              119           263
--------------------------------------------------------------------------------
DECEMBER 31, 1995                             12,820         (106)      142,291

Net income                                    14,755                     14,755
Preferred stock dividend                        (180)                      (180)
Stock options exercised and
   related tax benefit                                                       47
Employee stock bonus                                                        421
Restricted stock activity                                      71           334
Conversion of debentures                                                  1,250
--------------------------------------------------------------------------------
DECEMBER 31, 1996                             27,395          (35)      158,918

Net loss                                      (9,873)                    (9,873)
Preferred stock redeemed                                                 (2,400)
Preferred stock dividend                         (45)                       (45)
Subordinated debentures
   converted to common stock                                              5,550
Stock options exercised and surrendered
   and related tax benefit                                                1,596
Employee stock bonus                                                        930
Restricted stock activity                                      35            52
--------------------------------------------------------------------------------
JUNE 30, 1997 (UNAUDITED)                  $  17,477   $       --  $    154,728
--------------------------------------------------------------------------------

SUCCESSOR COMPANY:
Redemption of common stock                   (17,477)                  (154,728)
Sale of common stock to TPG                                             108,230
Net loss                                      (5,810)                    (5,810)
--------------------------------------------------------------------------------
SEPTEMBER 30, 1997 (UNAUDITED)             $  (5,810)  $       --  $    102,420
================================================================================
</TABLE>

See accompanying notes.



                                       4
<PAGE>   7

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

<TABLE>
<CAPTION>
                                                                         SUCCESSOR       |            PREDECESSOR
                                                                          COMPANY        |               COMPANY
                                                                     ------------------- | -------------------------------------
                                                                        THREE MONTHS     |     SIX MONTHS         NINE MONTHS
                                                                           ENDED         |        ENDED             ENDED
                                                                       SEPTEMBER 30,     |       JUNE 30,        SEPTEMBER 30,
                                                                            1997         |         1997              1996
                                                                     =================== |   ===============  ==================
<S>                                                                   <C>                |    <C>                <C>           
CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |
   Net (loss) income                                                  $          (5,810) |    $      (9,873)     $       10,013
   Adjustments to reconcile net (loss) income to net cash                                |
     provided by operating activities:                                                   |
       Depreciation, depletion and amortization                                  15,619  |           15,366              21,941
       Transaction related expenses                                                  --  |           15,903                  --
       Loss (gain) on disposal of property and equipment                             17  |              356                 393
       Deferred income taxes                                                     (3,093) |            3,125               2,832
       Deferred compensation and stock grants                                        26  |            1,756                 840
       Change in operating assets and liabilities, net of                                |
         effects of purchases of businesses:                                             |
          Accounts receivable and other operating assets                         (3,103) |            1,237                 791
          Inventories                                                               736  |              112                (322)
          Accounts payable and accrued expenses                                  (1,800) |            4,800              (1,449)
                                                                     ------------------- |   ---------------  ------------------
            NET CASH PROVIDED BY OPERATING ACTIVITIES                             2,592  |           32,782              35,039
                                                                                         |
CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |
   Acquisition of businesses, net of cash acquired                                 (196) |           (9,263)             (4,490)
   Proceeds from property and equipment disposals                                   520  |              704               2,128
   Additions to property and equipment                                          (12,892) |          (18,419)            (24,269)
   Decrease (increase) in other assets                                              124  |           (9,496)               (500)
                                                                     ------------------- |   ---------------  ------------------
            NET CASH USED IN INVESTING ACTIVITIES                               (12,444) |          (36,474)            (27,131)
                                                                                         |
CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |
   Proceeds from revolving line of credit and long-term debt                         --  |           46,000              12,105
   Proceeds from new credit agreement                                             2,000  |          104,000                  --
   Proceeds from senior subordinated notes                                           --  |          225,000                  --
   Repayment of long-term debt and other obligations                             (2,591) |         (140,325)            (20,907)
   Payment to shareholders and optionholders                                         --  |         (203,934)                 --
   Transaction related expenses                                                      --  |          (15,903)                 --
   Preferred stock redeemed                                                          --  |           (2,400)                 --
   Preferred stock dividends                                                         --  |              (45)               (135)
   Proceeds from sale of common stock and stock options                              --  |               15                  --
                                                                     ------------------- |   ---------------  ------------------
             NET CASH PROVIDED BY (USED IN)                                              |
               FINANCING ACTIVITIES                                                (591) |           12,408              (8,937)
                                                                     ------------------- |   ---------------  ------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                            (10,443) |            8,716              (1,029)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 17,322  |            8,606              12,322
                                                                     ------------------- |   ---------------  ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $           6,879  |    $      17,322      $       11,293
                                                                     ==================  |   ==============   ==================  
CASH PAID DURING THE PERIOD FOR:                                                         |
  Interest                                                            $           1,518  |    $       4,153      $        6,472
  Income taxes                                                                       --  |              288               1,069
NON-CASH INVESTING AND FINANCING ACTIVITIES:                                             |
  Debentures converted to stock                                                      --  |            5,550                  --
  Acquisition of assets in exchange for long-term obligations                        --  |              792                  --

</TABLE>

See accompanying notes.


                                       5
<PAGE>   8




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

SEPTEMBER 30, 1997
--------------------------------------------------------------------------------

(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-month and nine-month periods ended September 30,
1997 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997. 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, 1996.

(2)      MERGER
         On March 27, 1997, the Company signed a definitive merger agreement
with TPG Partners II, L.P. ("TPG"), a private investment partnership, pursuant
to which TPG and certain other investors acquired the Company in an all-cash
transaction valued at $485 million. Under the terms of the agreement, TPG and
such investors paid $27 per share for all common shares outstanding plus an
additional amount to redeem certain options held by directors and employees. The
transaction was completed on June 27, 1997 and for financial reporting purposes
has been accounted for as a purchase effective June 30, 1997. The results of
operations for the periods ended June 30, 1997 reflect the historical results of
the predecessor company including the recognition of transaction related
expenses which were paid by the predecessor company. The September 30, 1997
balance sheet includes the preliminary allocation of the purchase price to the
assets acquired and liabilities assumed by the successor company and is not
comparable to the balance sheet as of December 31, 1996. A vertical black line
is shown to separate the financial statements of the predecessor and successor
companies.

         Following are unaudited pro forma results of operations as if the
transaction occurred at the beginning of 1996 (in thousands):
<TABLE>
<CAPTION>
                                        Nine months ended September 30,
                                       ------------------------------------
                                              1997               1996
                                       ------------------  ----------------
<S>                                    <C>                 <C>            
 Total revenues                        $         118,515   $       110,027
 Net loss from continuing operations            (14,408)          (26,746)
</TABLE>

         The unaudited pro forma information presented above does not purport to
be indicative of the results that actually would have been obtained if the
merger had been consummated at the beginning of 1996 and is not intended to be a
projection of future results or trends.

         In connection with the merger, the Company entered into a Transaction
Advisory Agreement with TPG pursuant to which TPG received a cash financial
advisory fee of $5.0 million for services as financial advisor in connection
with the merger. The fee is included in the $16.8 million of transaction related
expenses. TPG also will be entitled to receive (but, at its discretion, may
waive) fees of up to 


                                       6
<PAGE>   9

1.5% of the transaction value for each subsequent transaction (a tender offer,
acquisition, sale, merger, exchange offer, recapitalization, restructuring or
other similar transaction) entered into by the successor company.

         Certain former officers have entered into non-competition agreements
with the Company dated March 27, 1997, which became effective contemporaneously
with consummation of the merger. These agreements have a term of 36 months and a
total present value of $3.0 million as of June 30, 1997. The obligation for
these agreements is included in the balance sheet.

         Certain executives of the predecessor company have agreed that they
would not exercise or surrender certain stock options having an aggregate value
of $1.8 million, based on the intrinsic value of the options (the difference
between the exercise price of the options and a purchase price of $27 per
share). New stock options of the successor company were issued to these
individuals based on the intrinsic value of the predecessor company's options.

(3)      LONG-TERM DEBT
         Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                              September 30,        December 31,
                                                   1997                1996
                                             -----------------   -----------------
<S>                                          <C>                 <C>             
 New credit agreement                        $        104,000    $             --
 Revolving line of credit                                  --              59,000
 Senior Notes                                              --              35,000
 Senior subordinated notes                            225,000                  --
 Convertible subordinated debentures                       --               5,550
 Other                                                    449                 246
                                             -----------------   -----------------
                                                      329,449              99,796
 Less current portion                                     135               3,918
                                             -----------------   -----------------
 Long-term debt                              $        329,314    $         95,878
                                             =================   =================
</TABLE>

          On June 27, 1997, the Company completed a private placement (pursuant
to Rule 144A) of $225 million of 9 7/8% Senior Subordinated Notes, Series A,
which mature on June 15, 2007. The notes were issued under an indenture which
requires interest to be paid semiannually on June 15 and December 15 of each
year, commencing December 15, 1997. The notes are subordinate to the new credit
agreement. In September 1997, the Company completed a registration statement on
Form S-4 providing for an exchange offer under which each Series A Senior
Subordinated Note would be exchanged for a Series B Senior Subordinated Note.
The terms of the Series B Notes are the same in all respects as the Series A
Notes except that the Series B Notes have been registered under the Securities
Act of 1933 and therefore will not be subject to certain restrictions on
transfer.



                                       7
<PAGE>   10

         The notes are redeemable in whole or in part at the option of the
Company, at any time on or after June 15, 2002, at the redemption prices set
forth below plus, in each case, accrued and unpaid interest, if any, thereon.

<TABLE>
<CAPTION>
                  YEAR                                                  PERCENTAGE
                  ----                                                  ----------
<S>               <C>                                                   <C>     
                  2002............................................      104.938%
                  2003............................................      103.292%
                  2004............................................      101.646%
                  2005 and thereafter.............................      100.000%
</TABLE>

         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 60 days of the date
of the closing of the related sale of common stock of the Company. 

         Upon a "change in control" of the Company, as defined in the indenture,
the note holders may require, at their election, that the Company repurchase all
or a portion of the notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, if any,
thereon.

         The indenture under which the subordinated notes were issued 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. 

         On June 27, 1997, the Company entered into a new credit agreement with
several lenders. These lenders have 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 new credit agreement is a senior revolving credit facility. The
initial borrowing base has been set at $180 million. The borrowing base is the
sum of the Company's proved developed reserves, proved developed non-producing
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
re-determined annually. If more than 75% of the borrowing base is utilized, the
borrowing base will be re-determined semi-annually. The Company borrowed $104
million under the new credit agreement to partially finance the acquisition of
the Company by TPG; to repay certain existing outstanding indebtedness of the
Company and to pay certain fees and expenses related to the transaction. The new
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 7.156% at September 30, 1997.

         The new credit agreement contains a number of covenants that, among
other things, restrict 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 


                                       8
<PAGE>   11

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 restrict certain corporate activities. In addition,
under the new credit agreement, the Company is required to maintain specified
financial ratios and tests, including minimum interest coverage ratios and
maximum leverage ratios.

         From time to time the Company may enter into interest rate swaps to
hedge the interest rate exposure associated with the credit agreement, whereby a
portion of the Company's floating rate exposure would be exchanged for a fixed
interest rate. During October 1997, the Company entered into two interest rate
swap arrangements with a major financial institution covering $90 million of
debt. The Company swapped $40 million of floating three-month LIBOR +1.5% for a
fixed rate of 7.485% 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 +1.5% for a fixed rate of 7.649% for five years.

(4)      RECENT ACCOUNTING PRONOUNCEMENTS
          In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) 128, "Earnings per Share" and
Statement of Financial Accounting Standards (SFAS) 129, "Disclosure of
Information About Capital Structure." The Company will adopt these statements
effective December 31, 1997. While SFAS 128 simplifies the standards for
computing earnings per share (EPS) by replacing primary and fully diluted EPS
with the new basic and diluted EPS, it will not impact the Company's disclosure.
SFAS 129 establishes standards for disclosing information about an entity's
capital structure.

          In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) 130, "Reporting Comprehensive
Income" and Statement of Financial Accounting Standards (SFAS) 131, "Disclosure
about Segments of an Enterprise and Related Information." The Company expects to
adopt these statements effective the year ended December 31, 1998.

         SFAS 130 establishes standards for reporting and displaying
comprehensive income and its components in general-purpose financial statements.
The Company does not believe this pronouncement will have a material impact on
its financial statements.

         SFAS 131 establishes standards for public business enterprises for
reporting information about operating segments in annual financial statements
and requires that such enterprises report selected information about operating
segments in interim financial reports issued to shareholders. This statement
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. The Company will begin presenting any
additional information required by the statement in its financial statements for
the year ended December 31, 1998.

(5)      HEDGING ACTIVITIES
         From time to time the Company may enter into a combination of futures
contracts, commodity derivatives and fixed-price physical contracts to manage
its exposure to natural gas price volatility. The Company employs a policy of
hedging gas production sold under NYMEX based contracts 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. During October 1997,
the Company hedged 3.1 Bcf of 1998 gas production at a weighted average NYMEX
price of $2.37 per Mcf. Gains and losses on these instruments are included as an
adjustment to gas revenue for the production being hedged in the contract month.
The effect of gas 


                                       9
<PAGE>   12

hedging in the third quarter of 1997 was immaterial and open futures contracts
as of September 30, 1997 were immaterial.

         When market conditions are favorable the Company may enter into
interest rate swap arrangements, whereby a portion of the Company's floating
rate exposure may be exchanged for a fixed rate. See Note 3, "Long-Term Debt."

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

         As disclosed in the accompanying notes to consolidated financial
statements, on March 27, 1997 the Company entered into a merger agreement with
TPG which resulted in all of the Company's common stock being acquired by TPG
and certain other investors on June 27, 1997 in a transaction accounted for as a
purchase. For financial reporting purposes, the merger is considered effective
June 30, 1997 and the operations of the company prior to July 1, 1997 are
classified as predecessor company operations. The consolidated balance sheet at
September 30, 1997 includes the application of purchase accounting to measure
the Company's assets and liabilities at fair value and is not comparable to the
historical balance sheet as of December 31, 1996. Debt incurred to finance the
acquisition and related transaction costs are reflected in the September 30,
1997 financial statements. A vertical black line is shown in the financial
statements to separate the financial position and results of operations of the
predecessor and successor companies.

         The allocation of the purchase price at fair value resulted in a
significant increase in the book value of the Company's assets. The increase in
the book value of assets resulted in materially higher charges for depreciation,
depletion and amortization in the third quarter of 1997. These higher charges
are expected to continue in subsequent accounting periods.

         The Company incurred transaction costs associated with the acquisition
by TPG of $16.8 million. These costs were expensed in the second quarter of
1997. As a result of the acquisition by TPG, the Company is highly leveraged,
resulting in materially higher interest charges in the third quarter of 1997.
These higher interest charges are expected to continue in subsequent accounting
periods.

RESULTS OF OPERATIONS
         As a result of the merger with TPG, the results of operations for the
periods subsequent to June 30, 1997 are not necessarily comparable to those
prior to July 1, 1997. The following table combines the six month predecessor
company period ended June 30, 1997 with the three month successor company period
ended September 30, 1997 for purposes of the discussion of nine months results
(dollars in thousands, percentage of revenue).

                                       10
<PAGE>   13

<TABLE>
<CAPTION>
                                       Three months ended September 30,        Nine months ended September 30,
                                      ------------------------------------  --------------------------------------
 REVENUES                                    1997              1996                1997                1996
                                      -----------------  -----------------  ------------------  ------------------
<S>                                   <C>        <C>     <C>        <C>     <C>         <C>     <C>         <C>  
   Oil and gas sales                  $ 19,770    50.5%  $  19,075   51.0%  $   61,361   51.8%  $   57,265   52.1%
   Gas marketing and gathering          10,613    27.1       9,835   26.3       32,270   27.2       31,624   28.7
   Oilfield sales and service            7,999    20.5       7,661   20.5       22,664   19.1       18,583   16.9
   Interest and other                      736     1.9         814    2.2        2,220    1.9        2,555    2.3
                                      -----------------  -----------------  ------------------  ------------------
                                        39,118   100.0      37,385  100.0      118,515  100.0      110,027  100.0
 EXPENSES
   Production expense                    5,255    13.4       4,655   12.5       15,413   13.0       13,033   11.9
   Production taxes                        801     2.1         748    2.0        2,448    2.1        2,259    2.1
   Cost of gas and gathering expense     8,929    22.8       8,155   21.8       27,269   23.0       26,145   23.8
   Oilfield sales and service            6,989    17.9       6,759   18.1       20,925   17.7       16,785   15.3
   Exploration expense                   1,925     4.9       1,548    4.1        6,305    5.3        4,407    4.0
   General and administrative expense      820     2.1         944    2.5        3,265    2.8        3,059    2.8
   Depreciation, depletion and          
     amortization                       15,619    39.9       7,240   19.4       30,985   26.1       21,941   19.9
   Franchise, property and other       
     taxes                                 443     1.1         446    1.2        1,351    1.1        1,328    1.2
                                      -----------------  -----------------  ------------------  ------------------
                                        40,781   104.3      30,495   81.6      107,961   91.1       88,957   80.9
                                      -----------------  -----------------  ------------------  ------------------
 OPERATING (LOSS) INCOME                (1,663)  (4.3)       6,890   18.4       10,554    8.9       21,070   19.2
   Interest expense                      7,552    19.3       1,763    4.7       11,267    9.5        5,587    5.1
   Transaction expense                                                          16,758   14.1
                                      -----------------  -----------------  ------------------  ------------------
                                         7,552    19.3       1,763    4.7       28,025   23.7        5,587    5.1
                                      -----------------  -----------------  ------------------  ------------------
 (LOSS) INCOME FROM  CONTINUING
   OPERATIONS BEFORE INCOME TAXES       (9,215) (23.6)       5,127   13.7     (17,471) (14.7)       15,483   14.1
   (Benefit) provision for income      
     taxes                              (3,405)  (8.7)       1,502    4.0      (1,788)  (1.5)        5,031    4.6
                                      -----------------  -----------------  ------------------  ------------------
 (LOSS) INCOME FROM CONTINUING          (5,810) (14.9)       3,625    9.7     (15,683) (13.2)       10,452    9.5
 OPERATIONS
 LOSS FROM DISCONTINUED OPERATIONS                           (439)  (1.2)                            (439)    (.4)
                                      -----------------  -----------------  ------------------  ------------------
 NET (LOSS) INCOME                    $ (5,810)(14.9)%   $   3,186   8.5%   $ (15,683) (13.2)%  $   10,013   9.1%
                                      =================  =================  ==================  ==================

 EBITDAX                              $ 15,881   40.6%   $  15,678  41.9%   $   47,844  40.4%   $   47,418   43.1%
</TABLE>

THIRD QUARTERS OF 1997 AND 1996
         Operating income decreased $8.6 million (124%) from $6.9 million in the
third quarter of 1996 to an operating loss of $1.7 million in the third quarter
of 1997. The operating income from the oil and gas operations segment decreased
$8.4 million (152%) from $5.5 million in the third quarter of 1996 to an
operating loss of $2.9 million in the third quarter of 1997. The operating
income from the oilfield sales and service segment decreased $30,000 from
$538,000 in the third quarter of 1996 to $508,000 in the third quarter of 1997.
The decrease in operating income was due primarily to an $8.4 million increase
in depreciation, depletion and amortization expense from significant increases
in property, equipment and other assets as a result of the purchase accounting
associated with the merger discussed above.

         Income from continuing operations decreased $9.4 million from income of
$3.6 million in the third quarter of 1996 to a loss of $5.8 million in the third
quarter of 1997. This decrease was the result of the $8.4 million increase in
depreciation, depletion and amortization expense and an increase of $5.8 million
in interest expense offset by a decrease in the provision for income taxes of
$4.9 million. This decrease in the provision for income taxes was primarily due
to the decrease in income from continuing operations before income taxes
combined with an increase in the effective tax rate. The increase in the third
quarter effective tax rate was primarily due to the decrease in the utilization
of nonconventional fuel source tax credits in the 1997 period.

         Earnings before interest, income taxes, depreciation, depletion and
amortization and exploration expense ("EBITDAX") was $15.9 million in the third
quarter of 1997 compared to $15.7 million in the third quarter of 1996.


                                       11
<PAGE>   14


         Total revenues increased $1.7 million (5%) in the third quarter of 1997
compared to the same period of 1996. Gross operating margins in the third
quarter of 1997 were consistent when compared to the same period in 1996.

         Oil volumes increased 3,000 Bbls (barrels) (1%) from 181,000 Bbls in
the third quarter of 1996 to 184,000 Bbls in the third quarter of 1997 resulting
in an increase in oil sales of approximately $50,000. Gas volumes increased 0.6
Bcf (billion cubic feet) (9%) from 6.3 Bcf in the third quarter of 1996 to 6.9
Bcf in the third quarter of 1997 resulting in an increase in gas sales of
approximately $1.4 million. These volume increases were primarily due to
production from properties acquired and wells drilled in 1996 and 1997.

         The average price paid for the Company's oil decreased from $20.14 per
barrel in the third quarter of 1996 to $17.00 per barrel in the third quarter of
1997 which decreased oil sales by approximately $580,000. The average price paid
for the Company's natural gas decreased $.03 per Mcf (thousand cubic feet) to
$2.43 per Mcf in the third quarter of 1997 compared to the third quarter of 1996
which decreased gas sales in the third quarter of 1997 by approximately
$210,000.

         Production expense increased $600,000 (13%) from $4.7 million in the
third quarter of 1996 to $5.3 million in the third quarter of 1997. The average
production cost increased from $.63 per Mcfe (equivalent Mcf of natural gas) in
the third quarter of 1996 to $.66 per Mcfe in the third quarter of 1997. These
increases were due to an anticipated steep decline in production volumes from
certain high volume wells with low production costs coupled with a reduction in
operating fees received from third parties primarily due to the purchase of
certain third party working interests by the Company. Such fees are recorded as
a reduction of production expense. Production taxes increased $53,000 (7%) from
$748,000 in the third quarter of 1996 to $801,000 in the third quarter of 1997.
This increase was primarily due to the increased production volumes discussed
above.

         Depreciation, depletion and amortization increased by $8.4 million
(116%) from $7.2 million in the third quarter of 1996 to $15.6 million in the
third quarter of 1997. Depletion expense increased $7.5 million (136%) from $5.5
million in the third quarter of 1996 to $13.0 million in the third quarter of
1997. Depletion per Mcfe increased from $.75 per Mcfe in the third quarter of
1996 to $1.64 per Mcfe in the third quarter of 1997. These increases were
primarily the result of significant increases in property, equipment and other
assets as a result of the purchase accounting associated with the merger
discussed above.

         Interest expense increased $5.8 million (328%) from $1.8 million in the
third quarter of 1996 to $7.6 million in the third quarter of 1997. This
increase was due to substantial additional debt incurred to finance the merger.

NINE MONTHS OF 1997 AND 1996
         Operating income decreased $10.5 million (50%) from $21.1 million in
the first nine months of 1996 to $10.6 million in the first nine months of 1997.
The operating income from the oil and gas operations segment decreased $9.9
million (56%) from $17.8 million in the first nine months of 1996 to $7.9
million in the first nine months of 1997. The operating income from the oilfield
sales and service segment decreased $260,000 from $732,000 in the first nine
months of 1996 to $472,000 in the first nine months of 1997. The decrease in
operating income was due primarily to a $9.1 million increase in depreciation,
depletion and amortization expense resulting from significant increases in
property and equipment primarily as a result of the purchase accounting
associated with the merger discussed above.


                                       12
<PAGE>   15

         Income from continuing operations decreased $26.2 million from income
of $10.5 million in the first nine months of 1996 to a loss of $15.7 million in
the first nine months of 1997. This decrease was the result of $16.8 million of
transaction expenses related to the merger, the $9.1 million increase in
depreciation, depletion and amortization expense and an increase of $5.7 million
in interest expense offset by a decrease in the provision for income taxes of
$6.8 million. This decrease in the provision for income taxes was primarily due
to the decrease in income from continuing operations before income taxes
combined with a change in the effective tax rate due to the nondeductibility of
certain transaction related expenses and a decrease in the utilization of
nonconventional fuel source tax credits in the first nine months of 1997.

         EBITDAX was $47.8 million in the first nine months of 1997 compared to
$47.4 million in the first nine months of 1996.

         Total revenues increased $8.5 million (8%) in the first nine months of
1997 compared to the same period of 1996. Gross operating margins in the first
nine months of 1997 were consistent when compared to the same period in 1996.

         Oil volumes increased 26,000 Bbls (5%) from 539,000 Bbls in the first
nine months of 1996 to 565,000 Bbls in the first nine months of 1997 resulting
in an increase in oil sales of approximately $510,000. Gas volumes increased 1.0
Bcf (5%) from 18.6 Bcf in the first nine months of 1996 to 19.6 Bcf in the first
nine months of 1997 resulting in an increase in gas sales of approximately $2.5
million. These volume increases were primarily due to production from properties
acquired and wells drilled in 1996 and 1997.

         The average price paid for the Company's oil decreased from $19.44 per
barrel in the first nine months of 1996 to $18.42 per barrel in the first nine
months of 1997 which decreased oil sales by approximately $580,000. The average
price paid for the Company's natural gas increased $.09 per Mcf to $2.60 per Mcf
in the first nine months of 1997 compared to the first nine months of 1996 which
increased gas sales in the first nine months of 1997 by approximately $1.8
million.

         Production expense increased $2.4 million (18%) from $13.0 million in
the first nine months of 1996 to $15.4 million in the first nine months of 1997.
The average production cost increased from $.60 per Mcfe in the first nine
months of 1996 to $.67 per Mcfe in the first nine months of 1997. These
increases were due to an anticipated steep decline in production volumes from
certain high volume wells with low production costs coupled with a reduction in
operating fees received from third parties primarily due to the purchase of
certain third party working interests by the Company. Such fees are recorded as
a reduction of production expense. Production taxes increased $189,000 (8%) from
$2.3 million in the first nine months of 1996 to $2.4 million in the first nine
months of 1997. This increase was primarily due to the increased production
volumes discussed above.

         Depreciation, depletion and amortization increased by $9.1 million
(41%) from $21.9 million in the first nine months of 1996 to $31.0 million in
the first nine months of 1997. Depletion expense increased $8.0 million (47%)
from $16.9 million in the first nine months of 1996 to $24.9 million in the
first nine months of 1997. Depletion per Mcfe increased from $.77 per Mcfe in
the first nine months of 1996 to $1.08 per Mcfe in the first nine months of
1997. These increases were primarily due to significant increases in property,
equipment and other assets which resulted from the purchase accounting
associated with the merger discussed above.


                                       13
<PAGE>   16

         Interest expense increased $5.7 million (102%) from $5.6 million in the
first nine months of 1996 to $11.3 million in the first nine months of 1997.
This increase was due to substantial additional debt incurred to finance the
merger. Transaction related expenses were $16.8 million in the first nine months
of 1997 reflecting non-recurring costs of the merger paid by the predecessor
company.

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 gas.

         The Company's current ratio at September 30, 1997 was 1.36 to 1.00.
During the first nine months of 1997, working capital decreased $7.4 million
from $22.1 million to $14.7 million. The decrease was primarily due to an
increase in accrued interest expense of $5.6 million and an increase in accrued
drilling costs of $3.0 million. The Company's operating activities provided cash
flows of $35.4 million during the first nine months of 1997.

         On June 27, 1997, the Company entered into a senior revolving credit
agreement with several lenders. These lenders have 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 initial borrowing base has been set at $180
million. The borrowing base is determined based on the Company's oil and gas
reserves and other assets and is subject to annual or semi-annual adjustment.
The Company borrowed $104 million under the new credit agreement to partially
finance the acquisition of the Company by TPG, to repay certain existing
outstanding indebtedness of the Company and to pay certain fees and expenses
related to the transaction. The new 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 7.156% at September
30, 1997.

         The new credit agreement contains a number of covenants that, among
other things, restrict 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 restrict certain corporate
activities. In addition, under the new credit agreement, the Company is required
to maintain specified financial ratios and tests, including minimum interest
coverage ratios and maximum leverage ratios.

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

         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 


                                       14
<PAGE>   17

occur within 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 of control.

         Upon a "change in control" of the Company, as defined in the indenture
under which the notes were issued, the note holders may require, at their
election, that the Company repurchase all or a portion of the notes at an offer
price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, thereon.

         The indenture 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.

         On March 31, 1997, the Company redeemed all of the outstanding Class II
Series A preferred stock for $2.4 million in cash.

         On April 3, 1997, the Company gave notice of redemption of all of the
outstanding 9.25% convertible subordinated debentures for 104% of face value.
Redemption of these debentures occurred June 10, 1997 when holders of the
debentures elected to convert them into 275,425 shares of common stock in the
Company. 

         On June 25, 1997, the Company redeemed all $35 million of its 7%
fixed-rate senior notes. 

         On June 27, 1997, the Company repaid all outstanding amounts due under
the then existing revolving bank facility in the amount of $94.0 million.

         The Company currently expects to spend approximately $35 million during
1997 on its drilling activities and approximately $7 million for other capital
expenditures. The Company's acquisition program is expected to be financed with
available cash flow and with its available revolving credit line.

         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. The Company intends to finance such activities
principally through its available cash flow and through additional borrowings
under its new credit agreement.

         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 would be 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 +1.5% for a fixed rate of 7.485% 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 +1.5% for a fixed rate of
7.649% for five years.

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 


                                       15
<PAGE>   18

Company's future drilling and gas marketing activity, the uncertainties of
reserve estimates, environmental risks, 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.


                                       16
<PAGE>   19

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

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 3, 1997               By:  /s/ Ronald L. Clements             
     ------------------------              ------------------------
                                           Ronald L. Clements, Director 
                                           and Chief Executive Officer  
                                                                           
                                        


Date:    November 3, 1997               By:  /s/ Ronald E. Huff
     ------------------------              ------------------------             
                                           Ronald E. Huff, Director, President
                                           and Chief Financial Officer


                                       18