================================================================================
                       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 Quarter Ended March 31, 1997

                                       OR

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

                         Commission file number: 1-8094

                           Seagull Energy Corporation
             (Exact name of registrant as specified in its charter)

                   Texas                                74-1764876
       (State or other jurisdiction of                (I.R.S. Employer
       incorporation or organization)               Identification No.)

          1001 Fannin, Suite 1700, Houston, Texas      77002-6714
          (Address of principal executive offices)     (Zip code)

                                 (713) 951-4700
              (Registrant's telephone number, including area code)

                                      None
(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. Yes X .   No      .

As of May 8, 1997, 63,361,263 shares of Common Stock, par value $0.10 per share,
were outstanding.



================================================================================


<PAGE>



                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

                                                           
                                      INDEX

<TABLE>
<CAPTION>

                                                                           PAGE
                                                                          NUMBER
<S>                                                                       <C>

Part I.  Financial Information

 Item 1.   Unaudited Consolidated Financial Statements

    Consolidated Statements of Operations for the Three Months
    Ended March 31, 1997 and 1996..........................................    3

    Consolidated Balance Sheets - March 31, 1997
    and December 31, 1996..................................................    4

    Consolidated Statements of Cash Flows for the Three Months
    Ended March 31, 1997 and 1996..........................................    5

    Notes to Consolidated Financial Statements.............................    6

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


Part II.  Other Information................................................   14

Signatures.................................................................   15

</TABLE>

                                      -2-

<PAGE>




               Item 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Amounts in Thousands Except Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                            Three Months Ended March 31,
                                                                         ------------------------------------
                                                                              1997                 1996
                                                                         ----------------     ---------------
                                                                                                 Restated
<S>                                                                      <C>                  <C>

Revenues:
  Oil and gas operations..............................................      $125,004             $101,145                           
  Alaska transmission and distribution................................        34,569               35,430
                                                                         ----------------     ---------------
                                                                             159,573              136,575

Costs of Operations:
  Operations and maintenance..........................................        42,871               34,335                           
  Alaska transmission and distribution cost of gas sold...............        16,722               16,200                           
  Exploration charges.................................................         8,953                6,730                           
  Depreciation, depletion and amortization............................        42,111               38,206                           
  General and administrative..........................................         2,310                3,729
                                                                         ----------------     ---------------

                                                                             112,967               99,200
                                                                         ----------------     ---------------

Operating Profit......................................................        46,606               37,375

Other (Income) Expense:
  Interest expense....................................................        10,410               11,446                           
  Interest income and other...........................................          (698)              (1,155)
                                                                         ----------------     ---------------

                                                                               9,712               10,291
                                                                         ----------------     ---------------

Income Before Income Taxes............................................        36,894               27,084

Income Tax Expense....................................................        19,640                8,772
                                                                         ----------------     ---------------

Net Income............................................................      $ 17,254             $ 18,312
                                                                         ================     ===============

Earnings Per Share....................................................      $   0.27             $   0.29
                                                                         ================     ===============

Weighted Average Number of Common
  Shares Outstanding..................................................        64,088               62,972
                                                                         ================     ===============

</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                      -3-

<PAGE>


                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

             (Amounts in Thousands Except Share and Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                   March 31,      December 31,
                                                                                     1997             1996
                                                                                --------------   -------------
<S>                                                                             <C>              <C>    
ASSETS
  Current Assets:
    Cash and cash equivalents..................................................  $   27,283       $   15,284
    Accounts receivable, net...................................................     135,949          193,659
    Inventories................................................................      15,486           12,285
    Prepaid expenses and other.................................................      12,821            6,389
                                                                                --------------   -------------
                                                                                        
      Total Current Assets.....................................................     191,539          227,617
                                                                                       

  Property, Plant and Equipment - at cost......................................   2,099,143        2,049,356
  Accumulated Depreciation, Depletion and Amortization.........................     844,353          804,715
                                                                                --------------   -------------

                                                                                  1,254,790        1,244,641
 
  Other Assets.................................................................      43,939           42,805
                                                                                --------------   -------------

  Total Assets.................................................................  $1,490,268       $1,515,063
                                                                                ==============   =============              
                                                                                    

LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities:
    Accounts and note payable..................................................  $  141,633       $  166,775                        
    Accrued expenses...........................................................      41,122           57,368                        
    Current maturities of long-term debt.......................................       7,227            7,227
                                                                                --------------   -------------
                                                                                        
      Total Current Liabilities................................................     189,982          231,370
                                                                                      

  Long-Term Debt...............................................................     564,936          573,455                        
  Other Noncurrent Liabilities.................................................      59,904           65,428                        
  Deferred Income Taxes........................................................      43,250           31,021                        
  Redeemable Bearer Shares.....................................................      15,978           16,059                        
  Commitments and Contingencies................................................           -                -
                                                                                        

  Shareholders' Equity:
    Common Stock, $.10 par value; authorized
     100,000,000 shares; issued 63,342,247 shares (1997)
     and 63,073,287 shares (1996)..............................................       6,334            6,307                        
    Additional paid-in capital.................................................     485,521          483,118                        
    Retained earnings..........................................................     133,059          115,805                        
    Foreign currency translation adjustment....................................      (1,145)              51                        
    Less - note receivable from employee stock
     ownership plan............................................................      (4,284)          (4,284)                       
    Less - 361,314 shares of Common Stock
     held in Treasury, at cost.................................................      (3,267)          (3,267)
                                                                                --------------   -------------
                                                                                   
      Total Shareholders' Equity...............................................     616,218          597,730
                                                                                --------------   -------------
                                                                                     
  Total Liabilities and Shareholders' Equity...................................  $1,490,268       $1,515,063
                                                                                ==============   =============

</TABLE>


See accompanying Notes to Consolidated Financial Statements


                                      -4-

<PAGE>


                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                               Three Months Ended March 31,
                                                                                          -------------------------------------
                                                                                               1997                  1996
                                                                                          ----------------      ---------------

<S>                                                                                       <C>                   <C>

OPERATING ACTIVITIES:
   Net income...................................................................             $  17,254            $  18,312

   Adjustments  to  reconcile  net income to net cash 
      provided by  operating activities:
       Depreciation, depletion and amortization.................................                42,111               38,206
       Amortizationnof deferred financing costs.................................                   606                  876
       Deferred income taxes....................................................                12,494                4,762
       Dry hole expense.........................................................                   270                  754
       Other....................................................................                   378                 (372)
                                                                                          ----------------      ---------------
                                                                                                73,113               62,538
       Changes in operating assets and liabilities, net 
        of acquisitions:
         Decrease in short-term liquid investments..............................                     -                5,010
         Decrease (increase) in accounts receivable.............................                57,137               (8,034)
         Decrease (increase) in inventories, prepaid
          expenses and other....................................................               (10,925)               1,200
         Increase (decrease) in accounts and note payable.......................               (25,338)                   8
         Decrease in accrued expenses and other.................................               (20,472)              (8,589)
                                                                                         ----------------      ---------------

          Net Cash Provided By Operating Activities.............................                73,515               52,133

INVESTING ACTIVITIES:
   Capital expenditures.........................................................               (55,427)             (25,916)
   Acquisitions, net of cash acquired...........................................                  (101)                (877)
   Proceeds from sales of property, plant and equipment.........................                   645                  875
                                                                                         ----------------      ---------------

          Net Cash Used In Investing Activities.................................               (54,883)             (25,918)

FINANCING ACTIVITIES:
   Proceeds from debt...........................................................               166,252               91,750
   Principal payments on debt...................................................              (174,147)            (101,724)
   Proceeds from sales of common stock..........................................                 2,171                2,347
   Other........................................................................                  (855)              (2,031)
                                                                                         ----------------      ---------------

          Net Cash Used In Financing Activities.................................                (6,579)              (9,658)


Effect of exchange rate changes on cash.........................................                   (54)                  10
                                                                                         ----------------      ---------------

          Increase In Cash And Cash Equivalents.................................                11,999               16,567


Cash And Cash Equivalents At Beginning Of Period................................                15,284               21,477
                                                                                         ----------------      ---------------

Cash And Cash Equivalents At End Of Period......................................             $  27,283            $  38,044
                                                                                         ================      ===============

</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                      -5-

<PAGE>


                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


                                                         
Note 1.  Presentation of Financial Information

          Merger with Global  Natural  Resources Inc. -- On October 3, 1996, the
shareholders of Seagull Energy  Corporation and  Subsidiaries  (the "Company" or
"Seagull") and Global Natural Resources Inc.  ("Global")  approved a merger of a
wholly owned subsidiary of Seagull into Global (the "Global  Merger").  Pursuant
to the Global Merger,  each share of Global common stock was converted into 0.88
shares of Seagull common stock with  approximately 26.3 million shares issued to
the shareholders of Global.  The Global Merger was accounted for as a pooling of
interests.  Accordingly, the financial statements for 1996 have been restated to
combine the results of Seagull and Global.

          In the opinion of  management,  the unaudited  consolidated  financial
statements presented herein contain all adjustments  necessary to present fairly
the financial  position of Seagull as of March 31, 1997,  and the results of its
operations  and cash flows for the three  months  ended March 31, 1997 and 1996.
All  adjustments  made  are  of a  normal,  recurring  nature.  The  results  of
operations  for the  three  months  ended  March  31,  1997 are not  necessarily
indicative of the results to be expected for the full year.

          In February  1997,  the Financial  Accounting  Standards  Board issued
Statement  of Financial  Accounting  Standards  ("SFAS")  No. 128,  Earnings per
Share.  This  statement  establishes  standards  for  computing  and  presenting
earnings per share and requires,  among other things, dual presentation of basic
and diluted  earnings per share on the face of the statement of operations.  The
statement  is  effective  for  financial  statements  for periods  ending  after
December 15, 1997.  The Company will adopt SFAS No. 128 by December 31, 1997 and
does not expect the  adoption to have a material  impact on its  calculation  of
earnings per share.

          The  financial   information   presented  herein  should  be  read  in
conjunction with the consolidated financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.

          Certain  reclassifications  have  been  made  to  the  1996  financial
information to conform to the presentation used in 1997.


Note 2.  Supplemental Disclosures of Cash Flow Information

                Supplemental Disclosures of Cash Flow Information
<TABLE>
<CAPTION>

                                                                                         Three Months Ended March 31,
                                                                                   -----------------------------------------
(Amounts in Thousands)                                                                   1997                   1996
                                                                                   ------------------    -------------------
<S>                                                                                <C>                   <C>
Cash paid during the period for:                                                                             Restated
  Interest, net of amount capitalized..........................................         $15,988               $17,054
  Income taxes.................................................................         $ 6,432               $ 5,767

</TABLE>

                                       -6-

<PAGE>

                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                           
Note 3.   Commitments and Contingencies


          Royalty  Litigation.  Increasingly,  royalty  owners under oil and gas
leases are challenging valuation methodology and post-production deductions used
by producers. These cases have arisen because of the manner in which oil and gas
producers  such as Seagull have begun to provide  services  that had  previously
been provided by the interstate gas pipelines  prior to the  "unbundling" of gas
services.  For example,  in 1996, Seagull was sued in Anne K. Barnaby, et al. v.
Seagull  Mid-South,  Inc. This case is pending in state court of Latimer County,
Oklahoma.  In this case, the plaintiffs seek additional royalties based upon the
deduction  by  Seagull  of  post-production  costs,  such as  those  related  to
gathering,  compression,  dehydration and treating. In addition,  the plaintiffs
have  questioned  the sales  price used by  Seagull  as a basis for  calculating
royalty  to  the  extent  that  sales  were  made  to  Seagull's  gas  marketing
subsidiary.

          NorAm Litigation. Seagull also was sued in NorAm Gas Transmission Co.,
et al. v. Seagull Mid-South Inc. The case relates to Seagull's  termination of a
1956 gas  contract,  which  provided for the sale of gas by Seagull from certain
wells in the Aetna Field in Arkansas for $0.16 per Mcf.  NorAm Gas  Transmission
("NorAm")  has sought a declaratory  judgment  that the gas contract  remains in
effect with respect to these wells.  Since the termination by Seagull of the gas
contract,  Seagull has been  selling  the gas in  question  on the spot  market.
Seagull  believes  that  it has  reasonable  grounds  for  terminating  the  gas
contract.  The  NorAm  case is  currently  scheduled  for trial in  mid-1997  in
District Court in Harris County,  Texas.  Seagull  intends to vigorously  defend
this case and does not  believe  that this  case  will have a  material  adverse
effect on its financial condition or results of operations.

          NorAm  has also  sought a  declaratory  judgment  to the  effect  that
certain  additional  wells in the Aetna Field (including any new wells) would be
subject to the $0.16 per Mcf price (the "Additional Well Claim").  If NorAm were
successful  with the Additional  Well Claim,  Seagull's  operations in the Aetna
Field  would be  materially  affected  in an adverse  manner.  However,  Seagull
believes that there is little basis for this claim by NorAm and believes that it
will not be required to pay any amounts in connection  with the Additional  Well
Claim.

          Gulf Coast Vacuum Site. In 1993, the  Environmental  Protection Agency
("EPA")  notified the Company that a subsidiary  was a  potentially  responsible
party ("PRP") at the Gulf Coast Vacuum Services  Superfund Site (the "GCV Site")
in Vermilion Parish,  Louisiana.  Based upon the Company's investigation of this
claim, the Company believes that the basis for its alleged liability is a series
of transactions  between the Company's  subsidiaries and the operator of the GCV
Site that occurred  during 1979 and 1980.  While the EPA's cleanup cost estimate
of the GCV Site is in the range of $17 million,  the Company  believes  that its
liability  is unlikely to be material  to its  financial  condition,  results of
operations or cash flows because of the large number of potentially  responsible
parties at the GCV Site and the relative amount of  contamination,  if any, that
may have been  caused at the GCV Site by the  disposal  of wastes by the Company
during 1979 and 1980.

          Caddo  Natural Gas  Company  Site.  The  Company  was  notified by the
Louisiana Department of Environmental Quality on March 20, 1996, that one of the
Company's wholly owned  subsidiaries is a 

                                      -7-

<PAGE>


                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


PRP in a  state  Superfund site  known as  the Caddo  Natural Gas Company  Site.
This site is reported to be  contaminated  with low  levels of PCB, an  additive
used in lubricating oils prior to the 1980s.  During the first  quarter of 1997,
the Company  signed a  settlement  agreement whereby Seagull would pay a portion
of the cleanup costs for the Caddo Natural  Gas Company  Site.  Seagull's  share
of the cleanup  costs is not expected to be material to its financial condition,
results of operations or cash flows.

     Comstock Mill Site. On February 21, 1996,  the United States  Department of
Interior  Bureau  of Land  Management  ("BLM")  sent a letter to  Houston  Oil &
Minerals Corporation ("HO&M"), a wholly owned subsidiary of Seagull,  requesting
HO&M to prepare and submit a plan for sampling and  analyzing  groundwater  at a
former mining operation  located near Virginia City,  Nevada (the "Comstock Mill
Site").  The  basis for the  BLM's  request  was the  alleged  operation  of the
Comstock  Mill Site by HO&M  between  1978 and 1982.  Pursuant  to an  indemnity
provision in the stock purchase agreement by which Seagull acquired HO&M in 1988
(the "HO&M Purchase  Agreement"),  Seagull  tendered the BLM's letter to Tenneco
Inc.  ("Tenneco")  with a demand for indemnity and notified the BLM that Tenneco
would  respond to the BLM letter on behalf of HO&M.  The BLM has also  indicated
that  Tenneco  and HO&M might be required to address  cyanide  contamination  of
groundwater at the Comstock Mill Site by separate  action of the Nevada Division
of Environmental Protection. Seagull believes that any liability associated with
the Comstock  Mill Site is the  responsibility  of Tenneco or its  successors in
liability pursuant to the HO&M Purchase Agreement.


          The  Company  is a party to other  ongoing  litigation  in the  normal
course of business.  Management  regularly analyzes current  information and, as
necessary,   provides   accruals  for  probable   liabilities  on  the  eventual
disposition of these matters. While the outcome of lawsuits or other proceedings
against the Company cannot be predicted with certainty, management believes that
the effect on its financial condition,  results of operations and cash flows, if
any, will not be material.

                                      -8-

<PAGE>


                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

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


          The following  discussion is intended to assist in an understanding of
the Company's financial position,  results of operations and cash flows for each
of the  quarters  ended  March 31,  1997 and 1996.  The  Company's  accompanying
unaudited  consolidated  financial  statements  and the  notes  thereto  and the
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 contain detailed
information  that  should  be  referred  to in  conjunction  with the  following
discussion.

                              RESULTS OF OPERATIONS

                             CONSOLIDATED HIGHLIGHTS

<TABLE>
<CAPTION>

(Amounts in Thousands Except Per Share Data)                                                Three Months Ended March 31,
                                                                                          ----------------------------------
                                                                                               1997                1996
                                                                                          ---------------    ---------------
<S>                                                                                       <C>                <C>

Revenues:                                                                                                         Restated
  Oil and gas operations .............................................................         $125,004           $101,145
  Alaska transmission and distribution................................................           34,569             35,430
                                                                                          ---------------    ---------------
                                                                                               $159,573           $136,575
                                                                                          ===============    ===============
Operating profit:
  Oil and gas operations .............................................................         $ 39,079           $ 29,866
  Alaska transmission and distribution................................................           10,466             11,744
  Corporate...........................................................................           (2,939)            (4,235)
                                                                                          ---------------    ---------------
                                                                                               $ 46,606           $ 37,375
                                                                                          ===============    ===============

Net income............................................................................         $ 17,254           $ 18,312
Earnings per share....................................................................         $   0.27           $   0.29
Weighted average number of common shares outstanding..................................           64,088             62,972
Net cash provided by operating activities before changes in
  operating assets and liabilities....................................................         $ 73,113           $ 62,538
Net cash provided by operating activities.............................................         $ 73,515           $ 52,133

</TABLE>


          Revenues  increased  $23 million and  operating  profit  improved $9.2
million from the first  quarter of 1996 to the first  quarter of 1997  primarily
due to  significant  increases  in domestic  natural gas prices and Egyptian oil
production.  These  increases were partially  offset by lower  production in the
U.S. and Canada.  Net earnings  decreased slightly for the first quarter of 1997
over the same period in 1996 due to higher income taxes.

                                      -9-

<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


                             OIL AND GAS OPERATIONS


<TABLE>
<CAPTION>

(Amounts in Thousands)                                                                  Three Months Ended March 31,
                                                                                  ------------------------------------------
                                                                                         1997                   1996
                                                                                  -------------------     ------------------
                                                                                                                Restated
<S>                                                                               <C>                     <C>

Revenues:                                                                                                     
  Natural gas................................................................           $ 85,500                $ 72,668
  Oil and NGL................................................................             30,823                  16,885
  Pipeline and marketing.....................................................              8,681                  11,592
                                                                                  -------------------     ------------------
                                                                                         125,004                 101,145
                                                                                  -------------------     ------------------

E&P operating expense........................................................             29,883                  23,455
Pipeline and marketing expenses..............................................              7,691                   5,438
Exploration charges..........................................................              8,953                   6,730
Depreciation, depletion and amortization.....................................             39,398                  35,656
                                                                                  -------------------     ------------------
  Operating profit...........................................................           $ 39,079                $ 29,866
                                                                                  ===================     ==================
</TABLE>

         The operating profit of the Oil and Gas Operations  ("O&G") segment for
the first quarter of 1997 increased substantially as compared to the 1996 period
principally  due to the five-fold  increase in oil  production in Egypt combined
with a 29%  increase in domestic  natural gas prices.  With the  purchase of two
Egyptian   concessions   from  units  of  Exxon   Corporation  (the  "Esso  Suez
Acquisition") in September 1996, and the October 1996 merger with Global Natural
Resources Inc.,  Seagull's  operations  gained both a significant  international
component  and an  increase  in oil  production  as a  percentage  of the  total
production.  Increases in Egyptian oil  production  accounted  for just over $11
million of the total increase in revenue as Seagull realized  contributions from
the East Zeit  concession,  one of two  concessions  purchased  in the Esso Suez
Acquisition,  and as additional  production facilities became operational at the
Company's Qarun concession.  In addition,  increases in oil prices in both Egypt
and Tatarstan  accounted for  approximately $2 million of the Company's  overall
increase in revenues.

         The  domestic  natural  gas price  increase  from $2.02 per Mcf for the
first quarter of 1996 to $2.60 per Mcf for the first  quarter of 1997  accounted
for  approximately  $19 million of the overall  increase in natural gas revenue.
Additionally,  the  $0.78  per Mcf  increase  in  Canadian  natural  gas  prices
accounted  for  approximately  $4 million of the  overall  increase  in revenue.
Domestically, increases in oil prices from $16.76 per Bbl for 1996 to $20.75 per
Bbl for 1997 also  contributed  nearly $3 million  to the  overall  increase  in
revenues. These higher revenues were partially offset by lower production due to
normal production declines from developed properties combined with the impact of
substantially  lower  development  expenditures in late 1994 and all of 1995 and
Canadian royalties increasing in tandem with prices.

         The Company  recorded as a reduction of revenues  $7.5 million and $3.5
million of costs related to commodity  hedging  activities for the quarter ended
March 31, 1997 and 1996, respectively.  While substantially all commodity hedges
for equity  production were settled by March 31, 1997, the Company has commodity
hedges in place as required by the monetary  production  payment (related to the
1995  sale  of the  Company's  Section  29 tax  credit-bearing  properties)  for
approximately 12 MMcf per day through December 1998.

                                      -10-

<PAGE>


                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


         Pipeline and marketing revenues decreased from $12.4 million in 1996 to
$9.8 million in 1997  primarily  because the  volatility  in natural gas markets
during the first quarter of 1996 allowed significantly higher margins.



                    EXPLORATION AND PRODUCTION OPERATING DATA
(Amounts in thousands except per unit data)

<TABLE>
<CAPTION>

                                                            Three Months Ended March 31,
                           ------------------------------------------------------------------------------------------------
                                     Revenues                    Net Daily Production                  Unit Price
                              1997             1996             1997             1996             1997             1996
                           ------------    -------------     ------------    -------------     -----------     -------------
                           
                                             Restated                          Restated                          Restated
<S>                        <C>             <C>               <C>             <C>               <C>             <C>

Gas Sales (1):
  Domestic............        $70,873         $60,567             302.6          329.5             2.60             2.02
  Canada .............          9,490           7,391              48.1           57.6             2.19             1.41
  Cote d'Ivoire.......            823             693               4.8            4.4             1.90             1.72
  Indonesia...........          4,294           4,017              13.7           13.5             3.49             3.28
  Other  .............             20               -               0.2              -             1.01                -
                           ------------    ------------      ------------    -------------     -----------     -------------
                              $85,500         $72,668             369.4          405.0             2.57             1.97
                           ============    =============     ============    =============     ===========     =============

  Oil and NGL Sales(2):
  Domestic............        $ 6,862         $ 7,186             3,674          4,712            20.75            16.76
  Canada .............          1,543           1,373               877            984            19.56            15.33
  Egypt...............         13,978           2,088             7,861          1,231            19.76            18.64
  Cote d'Ivoire.......          2,763           2,812             1,449          1,631            21.19            18.94
  Tatarstan...........          5,183           3,205             3,413          2,707            16.87            13.01
  Indonesia...........            466             212               259            124            20.02            18.76
  Other  .............             28               9                15              9            19.40            13.55
                           ------------    ------------      ------------    -------------     -----------     -------------
                              $30,823         $16,885            17,548         11,398            19.52            16.28
                           ============    =============     ============    =============     ===========     =============

</TABLE>

(1) Net Daily Production in MMcf per day; Unit Price in $ per Mcf.
(2) Net Daily Production in Bbl per day; Unit Price in $ per Bbl.

          E&P operating  expenses per BOE increased by $0.93, from $3.27 in 1996
to $4.20 in 1997,  as a result of (i)  increased  domestic  production  taxes as
natural gas prices increased,  (ii) increased  domestic workover  expenses,  and
(iii) higher  average  operating  costs per BOE at the East Zeit  concession  as
compared to the Company's other operations.

          Exploration  charges increased for the 1997 quarter due to an increase
in seismic activity in both domestic and international operations.

          The increase in E&P depreciation,  depletion and amortization ("DD&A")
expense  from  $4.90 per BOE for the first  quarter of 1996 to $5.48 per BOE for
the first quarter of 1997  combined with the increase in Egyptian  production to
produce a 10% increase in DD&A expense for the O&G segment.  A change in the mix
of the properties being produced  domestically,  a higher DD&A rate for the East
Zeit concession as compared to the Company's other operations and an increase in
leasehold  amortization were the primary factors involved in the increase in the
DD&A rate per equivalent unit of production.

                                      -11-

<PAGE>

                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


                      ALASKA TRANSMISSION AND DISTRIBUTION
<TABLE>
<CAPTION>

(Amounts in Thousands Except Per Unit Data)                                              Three Months Ended March 31,
                                                                                    ----------------------------------------
                                                                                          1997                   1996
                                                                                    -----------------       ----------------

<S>                                                                                 <C>                    <C>

Revenues........................................................................        $34,569                 $35,430
Cost of gas sold................................................................         16,722                  16,200
                                                                                    -----------------      -----------------
  Gross margin..................................................................         17,847                  19,230
Operations and maintenance expense..............................................          5,297                   5,442
Depreciation, depletion and amortization........................................          2,084                   2,044
                                                                                    -----------------      -----------------
  Operating profit..............................................................        $10,466                 $11,744
                                                                                    =================      =================
OPERATING DATA:
  Degree days (1)...............................................................          3,720                   4,353
  Volumes (Bcf):
    Gas sold....................................................................            8.8                    10.4
    Gas transported.............................................................            6.3                     5.3
    Combined....................................................................           15.1                    15.7
  Margins (per Mcf):
    Gas sold....................................................................        $  1.65                 $  1.61
    Gas transported.............................................................        $  0.52                 $  0.48
    Combined....................................................................        $  1.18                 $  1.23


</TABLE>

(1)      A measure  of  weather  severity  calculated  by  subtracting  the mean
         temperature  for each day from 65 degrees Fahrenheit.  More degree days
         equate to colder weather.

         Operating profit of the Alaska  Transmission  and Distribution  segment
for the quarter ended March 31, 1997  decreased $1.3 million,  or  approximately
11%, from that of the prior year quarter,  primarily due to decreased volumes as
a result of a 15% decrease in degree days  resulting  from warmer weather in the
utility's service area.

         This segment's business is seasonal with  approximately  65%-70% of its
sales made in the first and fourth quarters of each year.

                                      -12-

<PAGE>

  
                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


                                    OTHER

          General and administrative  expenses decreased  quarter-to-quarter due
primarily  due to  efficiencies  being  realized  from  the  Global  Merger  and
decreased  expenses  associated  with  compensation  plans  that are tied to the
closing price of Seagull's common stock. Interest expense decreased in the first
quarter of 1997 as a result of lower  average  interest  rates on the  Company's
revolving credit facilities,  partially offset by an increase in debt due to the
financing  of  the  Esso  Suez   Acquisition.   Income  tax  expense   increased
substantially  from $8.8 million in 1996 to $19.6 million in 1997 as a result of
the 36%  increase in income  before  income taxes and the higher  effective  tax
rates relating to the Company's expanding international operations.


                         LIQUIDITY AND CAPITAL RESOURCES

                              CAPITAL EXPENDITURES

<TABLE>
<CAPTION>

(Amounts in Thousands)                                                                      Three Months Ended March 31,
                                                                                          ----------------------------------
                                                                                               1997                1996
                                                                                          ---------------     ---------------
                                                                                                                 Restated
<S>                                                                                       <C>                 <C>

Exploration and production:
  Leasehold.........................................................................           $   833             $ 1,963
  Exploration.......................................................................            21,837               8,666
  Development.......................................................................            29,771              13,540
                                                                                          ---------------     ---------------
                                                                                                52,441              24,169
Pipeline and marketing..............................................................                37                  10
                                                                                          ---------------     ---------------
    Oil and gas operations..........................................................            52,478              24,179
Alaska transmission and distribution................................................             1,405               1,178
Corporate ..........................................................................             1,544                 559
                                                                                          ---------------     ---------------
                                                                                               $55,427             $25,916
                                                                                          ===============     ===============

</TABLE>

         As drilling  activities  increased  substantially to meet the Company's
objectives  for  1997,  E&P  capital  expenditures  increased  primarily  in the
Company's  domestic,  Egyptian and Ivorian areas of  operations.  Plans for 1997
call for capital  expenditures of  approximately  $250 million,  including about
$235 million in E&P. Seagull anticipates spending  approximately $10 million for
lease   acquisitions,   $85  million  for   exploration  and  $140  million  for
development.  Of this total,  about $105 million is expected to be spent outside
North America.

         The  Company  has  two  revolving   credit   facilities   (the  "Credit
Facilities")  with a maximum  commitment of $650  million.  The amount of senior
indebtedness  available  to the  Company  under  the  provisions  of the  Credit
Facilities is subject to a borrowing base (the "Borrowing  Base") based upon the
proved  reserves of the Company's  exploration  and  production  segment and the
financial  performance of the Company's other business  segments.  The Borrowing
Base is generally determined annually, but may be redetermined, at the option of
either  Seagull  or the  banks,  one  additional  time  each  year,  and  may be
redetermined upon the sale of certain assets included in the Borrowing Base.

        

                                      -13-

<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


          Currently,  the available  commitment  under the Credit  Facilities is
subject to a $550 million Borrowing Base and is determined after considerationof
outstanding borrowings under Seagull's other senior debt facilities. As of March
31,  1997,  the  Company  had  immediately   available  unused   commitments  of
approximately $182 million.

          Management believes that the Company's  internally generated funds and
bank borrowing capabilities will be sufficient to finance current and forecasted
operations.

DEFINED TERMS

          Natural gas is stated herein in billion  cubic feet  ("Bcf"),  million
cubic feet ("MMcf") or thousand cubic feet ("Mcf").  Oil, condensate and natural
gas liquids ("NGL") are stated in barrels ("Bbl") or thousand barrels  ("MBbl").
MMcfe and Mcfe  represent the  equivalent of one million and one thousand  cubic
feet of natural gas, respectively.  Oil, condensate and NGL are converted to gas
at a ratio of one barrel of liquids per six Mcf of gas, based on relative energy
content.  MBOE and BOE represent one thousand  barrels of oil equivalent and one
barrel of oil  equivalent,  respectively,  with six Mcf of gas  converted to one
barrel of liquid.

FORWARD LOOKING STATEMENTS

          Item 2 of this document includes forward looking statements within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange  Act of  1934,  as  amended.  Although  Seagull
believes that its  expectations  are based upon reasonable  assumptions,  it can
give no assurance that its goals will be achieved.  Important factors that could
cause  actual  results to differ  materially  from those in the forward  looking
statements  include  political  developments in foreign  countries,  federal and
state  regulatory  developments,  the timing and extent of changes in  commodity
prices,  the  timing  and  extent of  success  in  discovering,  developing  and
producing or acquiring  oil and gas reserves and  conditions  of the capital and
equity markets during the periods covered by the forward looking statements.


                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits:

         *  27.1           Financial Data Schedule.

(b)  There  were  no reports  on  Form  8-K filed  during the three months ended
     March 31, 1997.

---------------------------
*        Filed herewith.


                                      -14-

<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

                                   SIGNATURES

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

                                           SEAGULL ENERGY CORPORATION

                                           By:    /s/ William L. Transier
                                                  William L. Transier
                                                  Senior Vice President and
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)

                                           Date:  May 12, 1997



                                           By:    /s/ Gordon L. McConnell
                                                  Gordon L. McConnell
                                                  Vice President and Controller
                                                  (Principal Accounting Officer)

                                           Date:  May 12, 1997


                                      -15-
<PAGE>




                                  EXHIBIT INDEX


EXHIBIT

  *  27.1         Financial Data Schedule.

---------------------------
*        Filed herewith.