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, 1998

                                       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 11,  1998,  63,030,308  shares of Common  Stock,  par value  $0.10 per
share, were outstanding.



<PAGE>



                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                      INDEX

                                                                                                                  PAGE
                                                                                                                 NUMBER

PART I.  FINANCIAL INFORMATION

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

                  Consolidated Statements of Operations for the Three Months

                  Ended March 31, 1998 and 1997.................................................................    3

                  Consolidated Statements of Comprehensive Income

                  for the Three Months Ended March 31, 1998 and 1997 ...........................................    4

                  Consolidated Balance Sheets - March 31, 1998 and December 31, 1997............................    5

                  Consolidated Statements of Cash Flows for the Three Months

                  Ended March 31, 1998 and 1997.................................................................    6

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

    Item 2.   Management's Discussion and Analysis of Financial

              Condition and Results of Operations...............................................................   11

PART II.  OTHER INFORMATION.....................................................................................   16

SIGNATURES......................................................................................................   17
</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,
                                                                        ---------------------------------------------------
                                                                                 1998                        1997
                                                                        -----------------------      ----------------------
<S>                                                                     <C>                          <C>
Revenues:
   Oil and gas operations............................................          $    90,449                $    125,004
   Alaska transmission and distribution..............................               31,876                      34,569
                                                                        -----------------------      ----------------------
                                                                                   122,325                     159,573
Costs of Operations:
   Operations and maintenance........................................               39,880                      42,871
   Alaska transmission and distribution cost of gas sold.............               14,763                      16,722
   Exploration charges...............................................               10,118                       8,953
   Depreciation, depletion and amortization..........................               39,979                      42,111
   General and administrative........................................                3,384                       2,310
                                                                        -----------------------      ----------------------
                                                                                   108,124                     112,967
                                                                        -----------------------      ----------------------

Operating Profit.....................................................               14,201                      46,606

Other (Income) Expense:
   Interest expense..................................................                8,547                      10,410
   Interest income and other.........................................                 (532)                       (698)
                                                                        -----------------------      ----------------------
                                                                                     8,015                       9,712
                                                                        -----------------------      ----------------------

Income Before Income Taxes...........................................                6,186                      36,894

Income Tax Expense...................................................                3,031                      19,640
                                                                        -----------------------      ----------------------

Net Income...........................................................          $     3,155                $     17,254
                                                                        =======================      ======================

Earnings Per Common Share:
   Basic.............................................................          $      0.05                $      0.27
                                                                        =======================      ======================
   Diluted...........................................................          $      0.05                $      0.27
                                                                        =======================      ======================

Weighted Average Number of Common
   Shares Outstanding:
   Basic.............................................................               63,022                      62,784
                                                                        =======================      ======================
   Diluted...........................................................               63,480                      63,631
                                                                        =======================      ======================

See accompanying Notes to Consolidated Financial Statements.
</TABLE>


                                      -3-
<PAGE>



                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                             (Amounts in Thousands)

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                        Three Months Ended
                                                                                            March 31,
                                                                        ---------------------------------------------------
                                                                                 1998                        1997
                                                                        -----------------------      ----------------------

<S>                                                                     <C>                          <C>
Net income...........................................................          $     3,155                $     17,254

Other comprehensive income, net of tax:
   Foreign currency translation adjustment...........................                    -                      (1,196)
                                                                        -----------------------      ----------------------

Comprehensive income.................................................          $     3,155                $     16,058
                                                                        =======================      ======================

See accompanying Notes to Consolidated Financial Statements.

</TABLE>





                                      -4-
<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,
                                                                                       1998                    1997
                                                                               ---------------------   ---------------------
<S>                                                                            <C>                     <C>
ASSETS:
   Current Assets:
     Cash and cash equivalents...............................................     $       17,729            $     45,654
     Accounts receivable, net................................................            132,319                 147,442
     Inventories.............................................................             14,345                  13,635
     Prepaid expenses and other..............................................             15,361                  16,240
                                                                               ---------------------   ---------------------
       Total Current Assets..................................................            179,754                 222,971

   Property, Plant and Equipment (successful efforts method).................          2,107,581               2,053,683
   Accumulated Depreciation, Depletion and Amortization......................            947,956                 908,849
                                                                               ---------------------   ---------------------
                                                                                       1,159,625               1,144,834

   Other Assets..............................................................             42,146                  43,261
                                                                               ---------------------   ---------------------

   Total Assets..............................................................     $    1,381,525            $  1,411,066
                                                                               =====================   =====================

LIABILITIES AND SHAREHOLDERS' EQUITY:
   Current Liabilities:
     Accounts and note payable...............................................     $      141,710            $    159,138
     Accrued expenses........................................................             34,745                  47,625
     Current maturities of long-term debt....................................              7,193                   7,097
                                                                               ---------------------   ---------------------
       Total Current Liabilities.............................................            183,648                 213,860

   Long-Term Debt............................................................            469,016                 469,017
   Other Noncurrent Liabilities..............................................             49,800                  51,168
   Deferred Income Taxes.....................................................             12,495                  14,126

   Redeemable Bearer Shares..................................................             15,635                  15,691

   Commitments and Contingencies.............................................                  -                       -

   Shareholders' Equity:
     Common Stock, $.10 par value; authorized 100,000,000 shares;
       issued 63,910,150 shares (1998) and  63,877,442 (1997)................              6,391                   6,388
     Additional paid-in capital..............................................            494,475                 493,829
     Retained earnings.......................................................            168,090                 164,935
     Less:  note receivable from employee stock ownership plan...............             (3,067)                 (2,990)
     Less:  treasury stock -  861,314 shares.................................            (14,958)                (14,958)
                                                                               ---------------------   ---------------------

     Total Shareholders' Equity..............................................            650,931                 647,204
                                                                               ---------------------   ---------------------

  Total Liabilities and Shareholders' Equity.................................     $    1,381,525            $  1,411,066
                                                                               =====================   =====================

See accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                      -5-
<PAGE>



                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Amounts in Thousands)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended March 31,
                                                                                  ------------------------------------------
                                                                                         1998                   1997
                                                                                  -------------------    -------------------
<S>                                                                               <C>                    <C>
 OPERATING ACTIVITIES:
   Net income...............................................................           $    3,155            $   17,254
   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation, depletion and amortization...............................               39,979                42,111
     Amortization of deferred financing costs...............................                  495                   606
     Deferred income taxes..................................................               (1,708)               12,494
     Dry hole expense.......................................................                2,972                   270
     Other..................................................................                  167                   378
                                                                                  -------------------    -------------------
                                                                                           45,060                73,113

     Changes in operating assets and liabilities, net of acquisitions:
       Decrease in accounts receivable......................................               14,897                57,137
       Decrease (increase) in inventories, prepaid expenses and other.......                1,015               (10,925)
       Decrease in accounts payable.........................................              (14,928)              (25,338)
       Decrease in accrued expenses and other...............................              (13,041)              (20,472)
                                                                                  -------------------    -------------------

   Net Cash Provided By Operating Activities................................               33,003                73,515

 INVESTING ACTIVITIES:
   Capital expenditures.....................................................              (58,134)              (55,427)
   Acquisitions, net of cash acquired.......................................                 (377)                 (101)
   Proceeds from sales of property, plant and equipment.....................                  224                   645
                                                                                  -------------------    -------------------

   Net Cash Used In Investing Activities....................................              (58,287)              (54,883)

 FINANCING ACTIVITIES:
   Proceeds from debt.......................................................               41,095               166,252
   Principal payments on debt ..............................................              (43,560)             (174,147)
   Proceeds from sales of common stock......................................                  497                 2,171
   Other....................................................................                 (673)                 (855)
                                                                                  -------------------    -------------------

   Net Cash Used In Financing Activities....................................               (2,641)               (6,579)

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

   Increase (Decrease) In Cash And Cash Equivalents.........................              (27,925)               11,999

 Cash And Cash Equivalents At Beginning Of Period...........................               45,654                15,284
                                                                                  -------------------    -------------------

 Cash And Cash Equivalents At End Of Period.................................           $   17,729            $   27,283
                                                                                  ===================    ===================

See accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                      -6-
<PAGE>



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

NOTE 1.  PRESENTATION OF FINANCIAL INFORMATION

         In the opinion of  management,  the  unaudited  consolidated  financial
statements presented herein contain all adjustments  necessary to present fairly
the financial  position of Seagull  Energy  Corporation  and  Subsidiaries  (the
"Company" or "Seagull") as of March 31, 1998, and the results of its operations,
comprehensive  income and cash flows for the three  months  ended March 31, 1998
and 1997. All adjustments made are of a normal, recurring nature. The results of
operations  for the  three  months  ended  March  31,  1998 are not  necessarily
indicative of the results to be expected for the full year.

         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, 1997.

         Comprehensive  Income -- Effective January 1, 1998, the Company adopted
Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standard  ("SFAS") No. 130,  "Reporting  Comprehensive  Income." This  statement
established  standards for reporting and display of comprehensive income and its
components in the Company's financial statements.  Comprehensive income includes
all changes in the Company's  equity except those resulting from  investments by
and distributions to owners.

         Earnings Per Share -- The  following  table  provides a  reconciliation
between basic and diluted  earnings (loss) per share (stated in thousands except
per share data):

<TABLE>
<CAPTION>

                                                                                     Weighted Average           Earnings
                                                                                       Common Shares            Per-Share
                                                           Net Income                   Outstanding              Amount
                                                      ------------------------     ------------------------    -----------
<S>                                                   <C>                          <C>                         <C>
QUARTER ENDED MARCH 31, 1998:
     BASIC.....................................           $    3,155                          63,022               $ 0.05
     EFFECT OF DILUTIVE STOCK OPTIONS..........                    -                             458
                                                     ------------------------     ------------------------
     DILUTED...................................           $    3,155                          63,480               $ 0.05
                                                     ========================     ========================

Quarter Ended March 31, 1997:
     Basic.....................................           $   17,254                          62,784               $ 0.27
     Effect of dilutive stock options..........                    -                             847
                                                     ------------------------     ------------------------
     Diluted...................................           $   17,254                          63,631               $ 0.27
                                                     ========================     ========================
</TABLE>

         Weighted average options to purchase  2,460,524 and 1,750,144 shares of
common  stock at $17.94 to $26.38 per share  were  outstanding  during  1998 and
1997, respectively, but were not included in the computation of diluted earnings
per share  because the  options'  exercise  prices were greater than the average
market price of the common  shares.  These options  expire at various dates from
2003 to 2008.


                                      -7-
<PAGE>
                   SEAGULL ENERGY CORORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

         Derivative  Financial  Instruments -- The Company enters into a variety
of commodity  derivative financial  instruments (futures contracts,  price swaps
and  options)  only for  non-trading  purposes  as a hedging  strategy to manage
commodity  prices  associated with oil and gas sales and to reduce the impact of
price  fluctuations.  To  qualify  as  hedges,  these  instruments  must  highly
correlate to anticipated  future production such that the Company's  exposure to
the effects of price changes is reduced.  The Company uses the hedge or deferral
method of accounting for these instruments and, as a result, gains and losses on
commodity  derivative  financial  instruments  are  generally  offset by similar
changes in the realized prices of the  commodities.  Income and costs related to
these  hedging  activities  are  recognized  in oil and gas  revenues  when  the
commodities  are produced.  Income and costs on commodity  derivative  financial
instruments  that are  closed  before  the  hedged  production  occurs  are also
deferred until the production month originally hedged. In the event of a loss of
correlation  between  changes in oil and gas reference  prices under a commodity
derivative financial  instrument and actual oil and gas prices,  income or costs
are recognized  currently to the extent the financial  instrument has not offset
changes in actual oil and gas  prices.  Any  realized  income and costs that are
deferred at the balance sheet date and any margin accounts for futures contracts
are  included  as net  current  assets.  While  commodity  derivative  financial
instruments  are  intended to reduce the  Company's  exposure to declines in the
market  price  of oil  and  natural  gas,  the  commodity  derivative  financial
instruments  may also limit the  Company's  gain from  increases in those market
prices.

         The Company  recorded $0.2 million and $8 million for the quarter ended
March 31,  1998 and  1997,  respectively,  in costs  related  to equity  hedging
activities, including costs related to the monetary production payment hedges of
approximately $0.2 million and $1 million in 1998 and 1997, respectively. By the
end of the first quarter of 1997, the Company's  equity  hedging  activities had
been substantially  reduced,  leaving primarily the 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 11 MMcf
per day through  December  1998. The Company also recorded $0.5 million and $0.3
million in hedging costs for 1998 and 1997, respectively, related to third-party
marketing  activities.  At March 31,  1998,  the  Company  had open  natural gas
futures, swaps and option contracts related to its third-party marketing efforts
totaling 14 Bcf related to purchases  and 22 Bcf related to sales for the period
from April 1998 through July 1999. At March 31, 1998,  the fair value related to
the Company's  commodity hedging activities was $0.5 million of costs related to
open contracts.

         Accounting  Pronouncements  -- In June 1997,  the FASB  issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." This
statement  establishes  standards  for  reporting  information  about  operating
segments in annual financial  statements and requires selected information about
operating  segments be included in interim  reports issued to  shareholders.  In
February  1998,  the FASB  issued SFAS No. 132,  "Employers'  Disclosures  about
Pensions  and  Other  Postretirement   Benefits."  This  statement   establishes
standards  for  disclosure  for  pensions and other  postretirement  benefits in
annual  financial  statements.  These  statements  are  effective  for financial
statements for periods  beginning after December 15, 1997. As both SFAS Nos. 131
and 132 establish  standards  for  reporting  and display,  the Company does not
expect  the  adoption  of these  statements  to have a  material  impact  on its
financial condition or results of operations.


                                      -8-
<PAGE>

                   SEAGULL ENERGY CORORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
                             (Amounts in Thousands)
<TABLE>
<CAPTION>

                                                                                         Three Months Ended March 31,
                                                                                   -----------------------------------------
                                                                                         1998                   1997
                                                                                   ------------------    -------------------
<S>                                                                                <C>                   <C>
Cash paid during the period for:
  Interest, net of amount capitalized..........................................       $   16,571              $   15,988
  Income taxes.................................................................       $    4,841              $    6,432

</TABLE>

NOTE 3.  COMMITMENTS AND CONTINGENCIES

         Historically, most computer systems (including microprocessors embedded
into field  equipment and other  machinery)  utilized  software  that  processed
transactions using two digits to represent the year of the transaction (i.e., 97
represents the year 1997). This software (including software built into embedded
microprocessors) requires modification to properly process dates beyond December
31,  1999 (the "Year 2000  Issue").  During  1997,  the  Company  utilized  both
internal and external resources to reprogram,  or replace, and test software for
necessary modifications  identified in its assessment of the Year 2000 Issue. By
December  31,  1997,  the  Company's  Year 2000  remediation  was  substantially
complete and approximately $300,000 had been expensed related to this assessment
and  remediation.  The Company  presently  believes  that,  as a result of these
efforts,   the  Year  2000  Issue  will  not  have  a  material  adverse  effect
attributable to the Company's systems.

         The  Company  has  initiated  formal  communications  with  all  of its
significant  suppliers and large  customers to determine the extent to which the
Company is vulnerable  to those third  parties'  potential  failure to remediate
their own Year 2000 Issue.  However,  there can be no guarantee that the systems
of  other  companies,  on which  the  Company's  systems  rely,  will be  timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible  with the Company's  systems,  would not have a material adverse
effect on the Company.

NOTE 4.   SUBSEQUENT EVENTS

         NorAm Litigation -- In April 1998, Seagull,  NorAm Gas Transmission Co.
("NorAm") and Arkansas  Western Gas Company  ("AWG")  signed a final  Settlement
Agreement (the  "Settlement") with respect to NorAm Gas Transmission Co., et al.
v.  Seagull  Mid-South  Inc.  (the  "NorAm  Litigation").  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  approximately
$0.16 per Mcf. NorAm and AWG sought a declaratory judgment that the gas contract
remain in effect with respect to these wells or, in the  alternative,  that they
receive money damages.  NorAm and AWG 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 Settlement called for Seagull to make a cash payment and to deliver
gas under a five-year gas sales contract.  The Settlement resulted in no further
charges to the Company's income in 1998.

                                      -9-
<PAGE>


                   SEAGULL ENERGY CORORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

         Acquisitions  -- On March 30, 1998, the Company entered into a Purchase
and Sale  Agreement  whereby  Seagull will purchase the stock of BRG  Petroleum,
Inc.  ("BRG"),  a closely held private company,  and the assets of BRG's limited
partnerships and programs  (collectively,  the "BRG Assets") for $102 million in
cash,  subject to final  closing  adjustments.  The Company  expects to fund the
acquisition  through existing credit facilities.  The transaction is expected to
close during the second quarter of 1998.

         The BRG Assets include proved oil and gas reserves of 102 billion cubic
feet of natural gas equivalents  ("Bcfe").  BRG operates more than 70 percent of
600 currently  producing oil and gas wells in  approximately  140 fields.  Daily
production  from the  properties  net to the  combined  BRG  interests  averaged
approximately  18 million  cubic feet of gas and 400  barrels of oil and natural
gas liquids in 1997. The most  significant of the BRG Assets are concentrated in
East Texas, primarily in Freestone, Upshur, Rusk and Nacogdoches counties.


                                      -10-
<PAGE>



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

                   SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

         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,  1998 and 1997.  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, 1997 contain detailed
information  that  should  be  referred  to in  conjunction  with the  following
discussion.

                              RESULTS OF OPERATIONS

                             CONSOLIDATED HIGHLIGHTS
                             (Amounts in Thousands)
<TABLE>
<CAPTION>
                                                                                        Three Months Ended March 31,
                                                                                  ------------------------------------------
                                                                                        1998                     1997
                                                                                  ------------------      ------------------
<S>                                                                               <C>                     <C>
Revenues:
  Oil and gas operations .....................................................      $     90,449            $    125,004
  Alaska transmission and distribution........................................            31,876                  34,569
                                                                                  ------------------      ------------------
                                                                                    $    122,325            $    159,573
                                                                                  ==================      ==================
Operating profit:
  Oil and gas operations .....................................................      $      8,931            $     39,079
  Alaska transmission and distribution........................................             9,541                  10,466
  Corporate...................................................................            (4,271)                 (2,939)
                                                                                  ------------------      ------------------
                                                                                    $     14,201            $     46,606
                                                                                  ==================      ==================

Net income....................................................................      $      3,155            $     17,254
Net cash provided by operating activities before
  changes in  operating assets and liabilities................................      $     45,060            $     73,113
Net cash provided by operating activities.....................................      $     33,003            $     73,515

</TABLE>

         Revenues  decreased  $37  million and  operating  profit  declined  $32
million from the first  quarter of 1997 to the first  quarter of 1998  primarily
due to  significant  decreases in domestic  oil and gas prices and  decreases in
international  oil prices  combined with the sale of the Company's  Canadian oil
and gas  operations.  The price  decreases were  partially  offset by higher oil
production from the Company's  international  operations.  Net income  decreased
from $17 million for the first quarter of 1997 to $3 million for the same period
in 1998 due to the lower commodity prices discussed above.


                                      -11-
<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


                             OIL AND GAS OPERATIONS
                             (Amounts in Thousands)
<TABLE>
<CAPTION>

                                                                                        Three Months Ended March 31,
                                                                                  ------------------------------------------
                                                                                         1998                   1997
                                                                                  -------------------     ------------------
<S>                                                                               <C>                     <C>
Revenues:
  Natural gas................................................................       $     60,560             $    85,500
  Oil and NGL................................................................             24,285                  30,823
  Pipeline and marketing.....................................................              5,604                   8,681
                                                                                  -------------------     ------------------
                                                                                          90,449                 125,004
                                                                                  -------------------     ------------------

Production operating expense.................................................             27,444                  29,883
Pipeline and marketing expenses..............................................              6,986                   7,691
Exploration charges..........................................................             10,118                   8,953
Depreciation, depletion and amortization.....................................             36,970                  39,398
                                                                                  -------------------     ------------------
  Operating profit...........................................................       $      8,931             $    39,079
                                                                                  ===================     ==================

</TABLE>

         The  decline  in  commodity  prices was the  significant  factor in the
decrease in operating profit for the Oil and Gas Operations ("O&G") segment from
$39 million for the first quarter of 1997 to $9 million for the first quarter of
1998.  In  addition,  the first  quarter  of 1998  reflects  the  absence of the
Company's  Canadian  operations  which were sold in October 1997. These Canadian
operations  contributed  approximately $11 million in revenues and $4 million in
operating profit in the first quarter of 1997.

         Domestic  natural  gas prices  decreased  18% from $2.60 per Mcf in the
first  quarter  of 1997 to $2.14  per Mcf for the  same  period  in  1998.  This
significant price decrease and a 3% decrease in domestic gas production combined
to create a $15 million decrease in domestic natural gas revenues. Worldwide oil
prices also showed a significant  decrease of 34%, from $19.52 per Bbl in 1997's
first  quarter to $12.89 per Bbl in 1998.  While  declining  oil prices were the
primary factor for the $7 million  decrease in oil revenues,  this was partially
offset by a 35%  increase  in oil  production  in the U.S.  and Egypt as Seagull
realized  additional  contributions  from  several  new  domestic  wells and two
Egyptian  concessions - Qarun,  where additional  facilities became  operational
during mid 1997, and West Abu Gharadig, which was purchased in late 1997.

         The Company  recorded $0.2 million and $8 million for the quarter ended
March 31,  1998 and  1997,  respectively,  in costs  related  to equity  hedging
activities, including costs related to the monetary production payment hedges of
approximately $0.2 million and $1 million in 1998 and 1997, respectively. By the
end of the first quarter of 1997, the Company's  equity  hedging  activities had
been substantially  reduced,  leaving primarily the 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 11 MMcf
per day through  December  1998. The Company also recorded $0.5 million and $0.3
million in hedging costs for 1998 and 1997, respectively, related to third-party
marketing  activities.  At March 31,  1998,  the  Company  had open  natural gas
futures, swaps and option contracts 


                                      -12-
<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


related  to  its  third-party  marketing  efforts  totaling  14 Bcf  related  to
purchases  and 22 Bcf  related to sales for the period  from April 1998  through
July 1999. At March 31, 1998, the fair value related to the Company's  commodity
hedging activities was $0.5 million of costs related to open contracts.

         Pipeline  and  marketing  revenues  declined  $3 million  for the first
quarter of 1998 due to a decrease in third party marketing  margins and revenues
related to the Company's gas gathering and processing facilities.  This decrease
in gas gathering and processing revenues was substantially  offset by a decrease
in the related cost of gas.


                    EXPLORATION AND PRODUCTION OPERATING DATA
                   (Amounts in thousands except per unit data)
<TABLE>
<CAPTION>

                                                              Three Months Ended March 31,
                              ---------------------------------------------------------------------------------------------
                                        Net Daily Production                                    Unit Price
                                   1998                     1997                      1998                      1997
                              ----------------        -----------------         -----------------         -----------------

<S>                           <C>                     <C>                       <C>                       <C>
Gas Sales (1):

  Domestic..............                 292                      302               $   2.14                  $    2.60
  Canada (2)............                   -                       48                      -                       2.19
  Cote d'Ivoire.........                  10                        5                   1.50                       1.90
  Indonesia.............                  12                       14                   2.81                       3.49
                              ----------------        -----------------         -----------------         -----------------
                                         314                      369               $   2.14                  $    2.57
                              ================        =================         =================         =================

  Oil and NGL Sales(1):

  Domestic..............               5,054                    3,674               $  13.62                  $   20.75
  Canada (2)............                   -                      877                      -                      19.56
  Egypt.................              10,504                    7,861                  13.16                      19.76
  Cote d'Ivoire.........               1,099                    1,449                  10.31                      21.19
  Tatarstan.............               3,993                    3,413                  11.62                      16.87
  Indonesia.............                 276                      259                  17.79                      20.02
  Other.................                  10                       15                  12.61                      19.40
                              ----------------        -----------------         -----------------         -----------------
                                      20,936                   17,548               $  12.89                  $   19.52
                              ================        =================         =================         =================

(1) Natural gas is stated in MMcf and $ per Mcf.  Oil and NGLs are stated in Bbl
    and $ per Bbl.
(2) All of the Company's  Canadian oil and gas  operations  were sold in October
    1997.

</TABLE>

         While production expenses decreased by slightly more than $2 million to
$27 million for the first quarter of 1998,  production  expenses per  equivalent
unit of production  improved  slightly to $4.16 per Boe in 1998 versus $4.20 per
Boe in 1997. The $2 million decrease is primarily attributable to the absence of
the Company's Canadian  operations,  partially offset by expenses related to the
increased Egyptian production discussed above.

         The decrease in E&P depreciation, depletion and  amortization  ("DD&A")
expense to $37  million  for the first  quarter of 1998 from $39 million for the
first quarter of 1997 is primarily due to the sale of


                                      -13-
<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


the  Company's  Canadian  operations.  The DD&A expense per  equivalent  unit of
production for oil and gas producing activities remained stable at $5.54 per Boe
for 1998 and $5.48 per Boe for 1997.

                      ALASKA TRANSMISSION AND DISTRIBUTION
                   (Amounts in Thousands Except Per Unit Data)
<TABLE>
<CAPTION>

                                                                                       THREE MONTHS ENDED MARCH 31,
                                                                                -------------------------------------------
                                                                                       1998                    1997
                                                                                -------------------       -----------------

<S>                                                                             <C>                       <C>
Revenues...................................................................        $    31,876              $    34,569
Cost of gas sold...........................................................             14,763                   16,722
                                                                                -------------------       -----------------
    Gross margin...........................................................             17,113                   17,847
Operations and maintenance expense.........................................              5,450                    5,297
Depreciation, depletion and amortization...................................              2,122                    2,084
                                                                                -------------------       -----------------
    Operating profit.......................................................        $     9,541              $    10,466
                                                                                ===================       =================

OPERATING DATA:
    Degree days (1)........................................................              3,697                    3,720
</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, 1998 decreased $1 million,  or approximately 9%,
from that of the prior year quarter,  primarily due to decreased  volumes.  This
decrease in volumes was due to a variety of factors, including a lower number of
degree days.

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

                                      OTHER

         General and administrative  expenses of $3 million for the 1998 quarter
were  greater  than 1997's $2 million of G&A  expenses  primarily  due to 1997's
reduction in expenses  associated with compensation plans that are tied directly
to the market price of Seagull's common stock as the stock price  experienced an
18% decline during the first quarter of 1997.  Interest expense decreased almost
$2  million  to $9  million  in the first  quarter  of 1998 as a result of lower
average  debt  balance on the  Company's  revolving  credit  facility  after the
utilization  of the proceeds  from the sale of the Canadian  operations  in late
1997 to pay down existing debt. Income tax expense decreased  substantially from
$20  million  in 1997 to $3  million  in 1998  primarily  as a result of the 83%
decrease in income before income taxes.



                                      -14-
<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

                         LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
                              CAPITAL EXPENDITURES
                             (Amounts in Thousands)

                                                                                          Three Months Ended March 31,
                                                                                  ------------------------------------------
                                                                                        1998                     1997
                                                                                  ------------------      -------------------
<S>                                                                               <C>                     <C>
Exploration and production:
  Leasehold..................................................................        $     1,608              $      833
  Exploration................................................................             20,538                  21,837
  Development................................................................             32,063                  29,771
                                                                                  ------------------      -------------------
                                                                                          54,209                  52,441
Other oil and gas operations.................................................                556                      37
                                                                                  ------------------      -------------------
    Total oil and gas operations.............................................             54,765                  52,478
Alaska transmission and distribution.........................................              1,539                   1,405
Corporate ...................................................................              1,830                   1,544
                                                                                  ------------------      -------------------
                                                                                     $    58,134              $   55,427
                                                                                  ==================      ===================
</TABLE>

         Seagull's  capital  expenditure  program is  designed  to  fulfill  the
Company's  goals of growing its reserve base and  production  capacity.  Capital
expenditures increased by nearly $3 million as expenditures increased related to
the Company's Egyptian operations, partially offset by the sale of the Company's
Canadian operations which had expenditures of $5 million in the first quarter of
1997.

         The Company has a revolving  credit  facility  (the "Credit  Facility")
with a maximum  commitment  of $500  million.  At March 31, 1998,  there were no
amounts  borrowed  under the  Credit  Facility  and $481  million  of the unused
commitment was immediately available.

         The  Credit  Facility   contains  certain   covenants  and  restrictive
provisions, including limitations on the incurrence of additional debt or liens,
the  declaration  or payment of dividends  and the  repurchase  or redemption of
capital stock and the maintenance of certain  financial  ratios.  Under the most
restrictive of these  provisions,  approximately  $349 million was available for
payment of cash  dividends on common stock or to  repurchase  common stock as of
March 31, 1998.

         On March  30,  1998,  the  Company  entered  into a  Purchase  and Sale
Agreement  whereby  Seagull  will  purchase  the  stock of BRG  Petroleum,  Inc.
("BRG"),  a closely  held  private  company,  and the  assets  of BRG's  limited
partnerships and programs  (collectively,  the "BRG Assets") for $102 million in
cash,  subject to final  closing  adjustments.  The Company  expects to fund the
acquisition  through existing credit facilities.  The transaction is expected to
close during the second quarter of 1998.

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


                                      -15-
<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES


         In March 1998, Seagull announced that later in 1998 it may include some
of the less strategic  properties located away from its various core assets in a
package of properties to be liquidated.

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. MMBoe, MBoe and Boe represent one million barrels, one thousand barrels
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 and  Section  21E of the
Securities Exchange Act of 1934, as amended. Although Seagull believes that such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will in fact occur. Important factors that could
cause  actual  results to differ  materially  from those in the  forward-looking
statements include, but are not limited to, the result of the acquisition of the
BRG  Assets,  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, the availability of skilled personnel, materials
and equipment,  operating hazards  attendant to the industry,  and conditions of
the capital and equity markets during the periods covered by the forward-looking
statements, as well as the other factors discussed in Seagull's Annual Report on
Form 10-K for the year ended December 31, 1997.

                           PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
(a)  Exhibits:
<S>      <C>  <C>          <C>
         *    4.1          Senior  Indenture dated as of July 15, 1993 by and between the Company and The Bank of New York,
                           as Trustee.
         *    4.2          Senior Subordinated  Indenture dated as of July 15, 1993 by and between the Company and The Bank
                           of New York, as Trustee.
         *#   10.1         1998 Executive Incentive Plan.

         *#   10.2         Employment  Agreement  dated  December 30, 1983  by and  between  the Company and Barry J. Galt,
                           Chairman of the Board, President and Chief Executive Officer of the Company.
         *#   10.3         Seagull Energy Corporation 1981 Stock Option Plan (Restated).
</TABLE>

                                      -16-
<PAGE>

                  SEAGULL ENERGY CORPORATION AND SUBSIDIARIES

<TABLE>
<S>     <C>   <C>          <C>

         *#   10.4         Seagull Energy Corporation 1983 Stock Option Plan (Restated).
         *#   10.5         Seagull Energy Corporation 1986 Stock Option Plan (Restated).
         *    10.6         Purchase and Sale  Agreement,  dated as of March
                           30, 1998, by and between  Seagull Energy  Corporation
                           and The shareholder of BRG Petroleum, Inc.
         *    27.1         Financial Data Schedule for 3/31/98.
         *    27.2         Restated Financial Data Schedule for 1997 quarterly periods.
         *    27.3         Restated Financial Data Schedule for 1996 quarterly periods.
         *    27.4         Restated Financial Data Schedule for the years 1996 and 1996.
</TABLE>

(b) There were no reports on Form 8-K filed  during the three months ended March
    31, 1998.

---------------------------
*        Filed herewith.
#        Identifies management contracts and compensatory plans or arrangements.


                                   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 13, 1998


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

                                   Date:      May 13, 1998

                                      -17-
<PAGE>



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

                                                                                                                    Page
EXHIBIT                                                                                                            Number

<S>      <C>  <C>          <C>
         *    4.1          Senior  Indenture  dated as of July 15,  1993 by and  between  the Company and The
                           Bank of New York, as Trustee.
         *    4.2          Senior  Subordinated  Indenture  dated  as of  July 15, 1993  by and  between  the
                           Company and The Bank of New York, as Trustee.
         *#   10.1         1998 Executive Incentive Plan.
         *#   10.2         Employment Agreement dated  December 30, 1983 by and between the Company and Barry
                           J. Galt,  Chairman  of the Board,  President  and Chief  Executive  Officer of the
                           Company.
         *#   10.3         Seagull Energy  Corporation 1981 Stock Option Plan (Restated).
         *#   10.4         Seagull Energy  Corporation 1983 Stock Option Plan (Restated).
         *#   10.5         Seagull Energy  Corporation 1986 Stock Option Plan (Restated).
         *    10.6         Purchase and Sale  Agreement,  dated as of March
                           30, 1998, by and between  Seagull Energy  Corporation
                           and The shareholder of BRG Petroleum, Inc.
         *    27.1         Financial Data Schedule for 3/31/98.
         *    27.2         Restated Financial Data Schedule for 1997 quarterly periods.
         *    27.3         Restated Financial Data Schedule for 1996 quarterly periods.
         *    27.4         Restated Financial Data Schedule for the years 1996 and 1996.
---------------------------
*        Filed herewith.
#        Identifies management contracts and compensatory plans or arrangements.
</TABLE>