<PAGE>

                                  United States
                       Securities and Exchange Commission
                             Washington, D. C. 20549

                                   Form 10-QSB

(Check one)
[X]      Quarterly Report  Under Section  13 or 15(d) of the Securities Exchange
         Act of 1934
         For the Quarterly Period Ended   June 30, 1997

[   ]    Transition Report Under Section 13 or 15(d) of the Exchange Act
         For the transition period from .......... to ..........

                     Commission File Number..........1-12508

                          MAGNUM HUNTER RESOURCES, INC.
         Exact name of small business issuer as specified in its charter

         Nevada                                            87-0462881
State or other jurisdiction of                   IRS employer identification No.
incorporation or organization

           600 East Las Colinas Blvd., Suite 1200, Irving, Texas 75039
                     Address of principal executive offices

                                 (972) 401-0752
                            Issuer's telephone number

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of August 8, 1997: 13,708,098

     Transitional Small Business Disclosure Format (Check one) Yes    No X





    



                                        1

<PAGE>

PART I -- FINANCIAL INFORMATION


Item 1. Financial Statements

     The  consolidated  financial  statements of Magnum Hunter  Resources,  Inc.
("Magnum  Hunter"or the  "Company")  required by Item 310(b) of  Regulation  S-B
follow "Item 2. Management's Discussion and Analysis or Plan of Operation".


Item 2. Management's Discussion and Analysis or Plan of  Operation

     The following  discussion and analysis  should be read in conjunction  with
Magnum Hunter's consolidated  financial statements and the notes associated with
them  contained in its Form 10-KSB for the year ended  December  31, 1996.  This
discussion  should not be construed to imply that the results  discussed  herein
will necessarily  continue into the future or that any conclusion reached herein
will necessarily be indicative of actual operating  results in the future.  Such
discussion  represents only the best present  assessment by management of Magnum
Hunter.

     In June 1996,  the Company  acquired the Panoma  Properties,  which include
interests in 520 gas wells in the Texas  Panhandle  and Western  Oklahoma and an
adjoining  427-mile gas gathering  system,  from  Burlington  Resources Inc. for
$34.7 million. The Company assumed operations of nearly all the wells and of the
gathering system and began planning for increased density  development  drilling
in the Panoma area.

     In January  1997,  the Company  purchased  a 50%  interest in a natural gas
liquids processing plant, the McLean Gas Plant, which is connected to the Panoma
gas gathering system, for $2.5 million.  The related operating  agreement allows
the Company to recoup its investment out of 100% of the net profits of the plant
before reverting to a 50% interest after payout.

     In February  1997, the Company  entered into an agreement  with  Burlington
Resources Inc. to purchase certain oil and gas properties located in the Permian
Basin (hereinafter referred to as the "Permian Basin Properties"), consisting of
1,852  producing oil and natural gas wells and associated  acreage located in 25
field areas of West Texas and in 22 field  areas of  Southeast  New  Mexico.  On
April  30,  1997,  the  Company  closed  on  the  purchase  for a net  price  of
approximately $133 million,  including,  but not limited to, certain adjustments
for a January 1, 1997 effective date.

     On  April  29,  1997,  the  Company  received  and  accepted  two new  loan
commitments  from Bankers Trust Company,  as Agent, and Banque Paribas and First
Union  National  Bank of North  Carolina for senior  credit  facilities  for the
Company and several of its  subsidiaries.  The two new senior credit  facilities
were  structured as a $130 million  revolving line of credit with a term of five
years and a $60 million one year senior subordinated bridge facility convertible
into a five year term loan. The new credit  facilities were  conditioned,  among
other things,  upon the closing of the Permian Basin Properties from Burlington,
which took place April 30, 1997. The revolving line of credit gives the

                                       2
<PAGE>



Company the  flexibility  of choosing a range of either "LIBOR" or "Prime" based
interest rate options. This new credit facility replaced the previously existing
$100 million revolving credit facility.

     On May 29, 1997, the Company placed,  through a Rule 144A private placement
offering,  $140 million in Senior Notes due 2007.  Net proceeds from the sale of
the Senior Notes were used to completely repay the Company's  outstanding bridge
loan facility in the principal amount of $60 million with the remaining proceeds
used to repay a  substantial  portion  of the  Company's  outstanding  revolving
credit  facility.  The Notes have a 10% coupon,  with interest payable on June 1
and December 1, commencing on December 1, 1997.

Results of Operations for the Six Month Periods in 1997 and 1996

     As discussed  above,  the Company  acquired the Panoma  Properties  in June
1996, the McLean Gas Plant in January 1997, and the Permian Basin  Properties in
April 1997. As such,  the results of  operations  for the six month period ended
June 30, 1997,  included six months of operations  for Panoma and McLean and two
months for Permian Basin,  while the  corresponding  period in 1996 contained no
results related to these properties.  Unless otherwise stated,  the increases in
the  1997  interim   period  over  the  1996  period  were  a  result  of  these
acquisitions.

     Oil and natural gas sales were  $11,791,000  in 1997, a 318%  increase over
1996. The Company sold 239,752  barrels of oil, a 167%  increase,  and 3,332,349
Mcf of gas, a 583% increase,  in 1997. The price received for oil was $18.33 per
barrel and for gas was $2.22 per Mcf in 1997,  representing a 5% decrease in oil
price and a 1%  decrease  in gas price  compared  to 1996.  Oil and  natural gas
production  costs  increased  321% to  $4,740,000  in 1997 over 1996.  The gross
operating  margin from oil and natural gas  production was $7,051,000 in 1997, a
316% increase over 1996. On an equivalent unit basis, the gross margin was $1.48
per Mcfe in 1997 versus $1.65 in 1996, a 10% decrease.  The sales price declined
10% to $2.47 per Mcfe while production costs also declined 10% to $0.99 per Mcfe
from  1996 to 1997.  These  production  costs are  inclusive  of  gathering  and
overhead  charges of $0.19 per Mcfe. The sales price decline was caused by lower
oil and gas  prices in 1997,  while the lower  unit  production  costs  were the
result of lower Permian Basin  Properties unit costs,  principally gas gathering
fees, compared to the unit costs of the Company's other properties.  The overall
increase in the gross operating  margin from 1996 to 1997 was principally due to
the 364% increase in Mcfe sold, from 1,027,182 Mcfe to 4,770,861 Mcfe.

     Gas gathering,  marketing,  and processing  revenues were $5,283,000 in the
1997  period,  a  246%  increase  over  1996,  principally  as a  result  of the
acquisition of the Panoma Gas Gathering  System and the McLean Gas Plant.  Costs
from these  activities were $3,938,000 in 1997, a 200% increase over 1996. Gross
operating  margin  was  $1,345,000  in 1997  versus  $214,000  in  1996,  a 529%
increase. As a result of the acquisition of the Panoma System,  gathering system
throughput  increased 385% to 21,057 Mcf per day in 1997 compared with 4,344 Mcf
per  day in  1996.  Due to the  McLean  Plant  acquisition,  natural  gas  plant
processing  throughput  was 15,303 Mcf per day in 1997 versus  none  reported in
1996. Gross operating margin from gathering operations was $787,000, or $0.22

                                       3
<PAGE>



per Mcf of throughput,  in 1997 versus  $214,000,  or $0.27 per Mcf in 1996. The
gross  operating  margin from natural gas processing was $558,000,  or $0.22 per
Mcf of throughput versus none reported in 1996.

     Revenues from oil field services and international  sales was $3,606,000 in
1997, a $3,405,000  increase over 1996,  principally due to an increase in sales
of Hunter Butcher International,  L.L.C. in the amount of $3,398,000.  Operating
costs  increased 947% to $3,424,000 in 1997 from 1996,  also  principally due to
Hunter  Butcher in the amount of  $3,338,000.  The gross  operating  margin from
these  activities  was  $182,000  in 1997  versus a loss of $126,000 in the 1996
period.  The margin from Hunter  Butcher  operations  was $60,000 in 1997 versus
$32,000 in 1996. Oil field services  produced an operating margin of $122,000 in
1997 versus a loss of $158,000 in 1996.

     Depreciation and depletion expense increased 311% to $4,460,000 in 1997 due
to the acquisitions. Depletion expense on oil and gas production was $4,080,000,
or $0.86 per Mcfe, in 1997 versus $975,000,  or $0.95 per Mcfe in 1996.  General
and  administrative  expense was $651,000 in 1997, a 47% increase over 1996, due
to increased staffing and other costs as a result of the acquisitions.

     Operating  profit  increased to $3,467,000 in 1997 from $256,000 in 1996, a
1,245% increase.  Interest expense increased to $4,758,000 in 1997 from $499,000
in 1996,  an increase of 854%,  due to increased  levels of borrowing  under the
Company's  revolving  credit lines with banks,  the 10% Senior Notes, and bridge
financing  used to fund  the  acquisitions  previously  mentioned.  The  Company
incurred a net loss before  income tax and minority  interest of  $1,136,000  in
1997, versus a $57,000 loss in 1996,  principally due to interest expense on the
acquisitions  exceeding  operating  income  and  due to the  higher  charge  for
depreciation  and  depletion.  The Company  provided  for a deferred  income tax
benefit of $432,000  on this loss in 1997.  After  recording a $20,000  minority
interest in Hunter Butcher, the Company reported a net loss before extraordinary
item of $724,000,  or $0.09 per common share,  in 1997 versus a $57,000 loss, or
$0.03 per common share, in 1996.

     The Company realized an extraordinary  loss of $1,384,000 ($0.10 per common
share) as required under Accounting  Principles  Board ("APB")  Statement No. 26
and   Statement  of  Financial   Standards   ("SFAS")  No.  4,  from  the  early
extinguishment  of bank debt. The early  extinguishment  was a result of the new
10% Senior Notes financing and amended  revolving  credit  agreements with banks
arranged to facilitate the $133 million purchase of the Permian Basin Properties
from Burlington  Resources Inc. The net loss,  after the  extraordinary  charge,
applicable  to common  shareholders  was  $2,546,000  ($0.19  per share) in 1997
compared to a loss of $397,000  ($0.03 per share) in 1996.  The Company  accrued
$436,000 in dividends on its preferred stock in 1997 versus $340,000 in 1996.

                                       4



<PAGE>



Results of Operations for the Three Month Periods in 1997 and 1996

     The results of  operations  for the three month period ended June 30, 1997,
included  three  months of  operations  for Panoma and McLean and two months for
Permian  Basin,  while the  corresponding  period in 1996  contained  no results
related to these properties.  Unless otherwise stated, the increases in the 1997
interim period over the 1996 period were a result of these acquisitions.

     Oil and natural gas sales were  $8,528,000  in 1997, a 492%  increase  over
1996. The Company sold 193,735  barrels of oil, a 326%  increase,  and 2,359,969
Mcf of gas, a 915% increase,  in 1997. The price received for oil was $17.76 per
barrel and for gas was $2.16 per Mcf in 1997,  representing  an 11%  decrease in
oil  price and a 5%  decrease  in gas price in 1997  compared  to 1996.  Oil and
natural gas production costs increased 460% to $3,143,000 in 1997 over 1996. The
gross  operating  margin from oil and natural gas  production  was $5,385,000 in
1997, a 512% increase over 1996. On an equivalent  unit basis,  the gross margin
was $1.53 per Mcfe in 1997 versus $1.74 in 1996, a 12% decrease. The sales price
declined 15% to $2.42 per Mcfe while production costs also declined 20% to $0.89
per Mcfe from 1996 to 1997.  These  production  costs are inclusive of gathering
and overhead  charges of $0.09 per Mcfe.  The sales price  decline was caused by
lower oil and gas prices in 1997, while the lower unit production costs were the
result of lower Permian Basin  Properties unit costs,  principally gas gathering
fees, compared to the unit costs of the Company's other properties.  The overall
increase in the gross operating  margin from 1996 to 1997 was principally due to
the 597% increase in Mcfe sold, from 505,136 Mcfe to 3,522,379 Mcfe.

     Gas gathering,  marketing,  and processing  revenues were $1,391,000 in the
1997  period,  an  80%  increase  over  1996,  principally  as a  result  of the
acquisition of the Panoma Gas Gathering  System and the McLean Gas Plant.  Costs
from these  activities  were $978,000 in 1997, a 46% increase  over 1996.  Gross
operating  margin was $413,000 in 1997 versus $101,000 in 1996, a 309% increase.
As a result of the acquisition of the Panoma System, gathering system throughput
increased  338% to 18,796 Mcf per day in 1997 compared with 4,287 Mcf per day in
1996.  Due to  the  McLean  Plant  acquisition,  natural  gas  plant  processing
throughput  was 12,614 Mcf per day in 1997 versus none  reported in 1996.  Gross
operating  margin from gathering  operations  was $179,414,  or $0.10 per Mcf of
throughput,  in 1997  versus  $101,000,  or  $0.26  per Mcf in 1996.  The  gross
operating  margin from natural gas processing was $234,000,  or $0.20 per Mcf of
throughput versus none reported in 1996.

     Revenues from oil field  services and  international  sales was $135,000 in
1997, a 36% increase over 1996,  principally  due to increased  operator fees on
oil and gas  properties.  Operating  costs decreased 46% to $86,000 in 1997 from
1996 due to an increased allocation of operating costs to oil and gas production
costs.  The gross  operating  margin from these  activities  was $49,000 in 1997
versus a loss of $61,000 in the 1996 period.

     Depreciation and depletion expense increased 485% to $3,379,000 in 1997 due
to the acquisitions. Depletion expense on oil and gas production was $3,184,000,
or $0.90 per Mcfe, in 1997 versus $505,000,  or $1.00 per Mcfe in 1996.  General
and  administrative  expense was $429,000 in 1997, a 94% increase over 1996, due
to increased staffing and other costs as a result of the acquisitions.

     Operating  profit  increased to $2,039,000 in 1997 from $121,000 in 1996, a
1,585% increase. Interest

                                       5
<PAGE>



     expense  increased to $3,690,000 in 1997 from $245,000 in 1996, an increase
of 1,406%,  due to increased  levels of borrowing under the Company's  revolving
credit lines with banks, the 10% Senior Notes, and bridge financing used to fund
the acquisitions  previously  mentioned.  The Company incurred a net loss before
income tax and minority interest of $1,568,000 in 1997, versus income of $36,000
in 1996,  principally  due to  interest  expense on the  acquisitions  exceeding
operating  income , inclusive of depreciation  and depletion in the total amount
of  $3,379,000.  The  Company  provided  for a deferred  income  tax  benefit of
$596,000  on  this  loss  in  1997.  The  Company  reported  a net  loss  before
extraordinary item of $974,000, or $0.09 per common share, in 1997 versus income
of $36,000 in 1996.

     The Company realized an extraordinary  loss of $1,384,000 ($0.10 per common
share) as required under Accounting  Principles  Board ("APB")  Statement No. 26
and   Statement  of  Financial   Standards   ("SFAS")  No.  4,  from  the  early
extinguishment  of bank debt. The early  extinguishment  was a result of the new
10% Senior Notes financing and amended  revolving  credit  agreements with banks
arranged to facilitate the $133 million purchase of the Permian Basin Properties
from Burlington  Resources Inc. The net loss,  after the  extraordinary  charge,
applicable  to common  shareholders  was  $2,577,000  ($0.19  per share) in 1997
compared to a loss of $132,000  ($0.03 per share) in 1996.  The Company  accrued
$219,000 in dividends on its preferred stock in 1997 versus $168,000 in 1996.

Liquidity and Capital Resources

     On April 30, 1997,  the Company  closed on the  acquisition  of the Permian
Basin Properties for a net purchase price of approximately $133 million.  At the
same time, the Company's  existing $100 million  revolving  credit  facility was
replaced  by two new credit  facilities,  a  revolving  credit  facility of $130
million and a bridge loan facility of $60 million,  for a total of $190 million.
The  initial  advances  under  these  new  facilities  totaled  $179.5  million,
including  funds to complete  the Permian  Basin  Property  acquisition,  to pay
principal and accrued  interest  remaining on the $100 million  revolving credit
facility, and to provide cash for working capital purposes.

     On May 29, 1997,  the Company sold,  through a Rule 144A private  placement
offering,  $140 million in Senior Notes due 2007.  Net proceeds from the sale of
the Senior Notes were used to completely repay the Company's  outstanding bridge
loan facility in the principal amount of $60 million with the remaining proceeds
used to repay a  substantial  portion  of the  Company's  outstanding  revolving
credit  facility.  The Notes have a 10% coupon,  with interest payable on June 1
and December 1,  commencing on December 1, 1997.  After  paydown,  the revolving
facility was reduced from $130 million to $75 million,  with a current borrowing
base of $60 million.  Total long-term debt under the revolving  credit agreement
at June 30, 1997 was $47 million,  leaving $13 million available to draw at this
time,  prior to the next borrowing  base  redetermination  occurring  during the
third  quarter.  At June 30, 1997, the Company had $1.6 million in cash and cash
equivalents  and $4.2 million in net working  capital,  in addition to the funds
available under the revolving line of credit.

     For fiscal  1997,  the Company is currently  projecting  that it will spend
approximately $20 million on development and exploration activities, of which $3
million is budgeted on exploration  projects.  In addition,  with respect to the
recently closed Permian Basin  Properties  acquisition,  the Company projects to
spend approximately $40 million in a development program to enhance an existing

                                       6
<PAGE>


     waterflood  project in the  Westbrook  Field  located in  Mitchell  County,
Texas. This capital expenditure is budgeted over a four year period beginning in
1997.  Based upon the  Company's  anticipated  level of  operations,  management
believes that cash flow from operations together with the availability under the
New Credit  Facility will be adequate to meet its anticipated  requirements  for
working capital,  capital  expenditures and scheduled  interest payments for the
foreseeable  future.  The Company may seek to increase it liquidity  through the
sale of common equity  and/or the exercise of its publicly  traded  warrants.  A
depressed  price for oil or natural gas would have a material  adverse effect on
the Company's cash flow from operations and could cause the Company to alter its
planned capital expenditures.

Inflation and Changes in Prices

     During the past several years,  the Company has experienced  some inflation
in oil and natural gas prices with  moderate  increases in property  acquisition
and  development  costs.  During  1996,  the Company  received  somewhat  higher
commodity  prices for the natural  resources  produced from its properties.  The
results of operations  and cash flow of the Company have been, and will continue
to be affected to a certain  extent,  by the  volatility  in oil and natural gas
prices.  Should the Company experience a significant increase in oil and natural
gas prices that is sustained over a prolonged period, it would expect that there
would also be a  corresponding  increasing  oil and natural  gas finding  costs,
lease acquisition costs, and operating expenses. Periodically the Company enters
into futures,  options,  and swap contracts to reduce the effect of fluctuations
in crude oil and natural  gas  prices.  It is policy of the Company not to enter
any such  arrangements  which  exceed 50% of the  Company's  oil and natural gas
production during the next 12 months.

                                       7

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                                   <C>
                                                                                        June 30,
                                                                                         1997
                                                                                ----------------------

                                               ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                  $        1,571
     Securities available for sale                                                         360
     Accounts receivable
     Trade, net of allowance of $134,158                                                10,541
      Due from affiliates                                                                  101
   Notes receivable from affiliate                                                         382
     Current portion of long-term note receivable                                          129
     Prepaid and other                                                                     384
                                                                                ----------------------
          TOTAL CURRENT ASSETS                                                          13,468
                                                                                ----------------------
     PROPERTY, PLANT AND EQUIPMENT                                                     
     Oil and gas properties, full cost method   
          Unproved                                                                         460                                      
          Proved                                                                       208,871
     Pipelines                                                                           9,824
     Other property                                                                        571
                                                                                ---------------------                               
          TOTAL PROPERTY, PLANT AND EQUIPMENT                                          219,726              
     Accumulated depreciation, depletion and impairment                                 (9,329)
                                                                                ---------------------                         
          NET PROPERTY, PLANT AND EQUIPMENT                                            210,397
                                                                                ---------------------                               
                                                                                                    
OTHER ASSETS
     Deposits and other assets                                                           6,140                                      
     Long-term notes receivable, net of imputed interest                                 1,665
                                                                                ---------------------                             
                                                                                                  
                                            TOTAL ASSETS                        $      231,670
                                                                                =====================
 
                                  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Trade payables and accrued liabilities                                      $        5,524 
    Dividends payable                                                                      219
    Suspended revenue payable                                                              834
    Current maturities of long-term debt                                                    22
    Notes payable                                                                        2,699
                                                                                ---------------------
          TOTAL CURRENT LIABILITIES                                                      9,298
                                                                                ---------------------                               
LONG-TERM LIABILITIES                                                                                                  
   Long-term debt, less current maturities                                             187,033                                      
   Production payment liability                                                            831
   Deferred income taxes                                                                 2,215                                      
   Minority interest                                                                        40                          
                                                                                                                          
COMMITMENTS AND CONTINGENCIES                                                                                          
                                                                                                                          
STOCKHOLDERS' EQUITY
   Preferred stock - $.001 par value; 10,000,000 shares authorized,
         216,000  designated as Series A; 80,000 shares issued and  outstanding,
         liquidation  amount  $0                                                            -
   1,000,000  shares  designated  as  1996  Series  A Convertible;
         1,000,000 issued and outstanding, liquidation amount $10,000,000                    1                                      
   Common stock - $.002 par value; 50,000,000 shares authorized,
       14,263,037 shares issued and outstanding                                             29                                      
   Additional paid-in capital                                                           39,782                       
   Accumulated deficit                                                                  (7,688)                                 
   Unrealized gain (loss) on investments                                                   130
                                                                                --------------------
                                                                                        32,254                                    
   Treasury stock (654,939 shares of common stock)                                          (1)
                                                                                --------------------
   TOTAL STOCKHOLDERS' EQUITY                                                           32,253
                                                                                --------------------  
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $      231,670
                                                                                ====================                           


     The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>  
                                        8
<PAGE>


                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                  (in thousands, except for per share amounts)
<TABLE>
<CAPTION>
<S>                                                                   <C>               <C>                 <C>           <C>

                                                                           Three Months Ended                 Six Months Ended
                                                                               June 30,                          June 30,           
                                                                      --------------------------------------------------------------
                                                                             1997         1996              1997           1996
                                                                      --------------------------------------------------------------

Operating Revenues:
     Oil and gas sales                                                $    8,528     $   1,441            $ 11,791      $ 2,821
     Gas gathering,  marketing and processing                              1,391           771               5,283        1,528
     Oil field services and international sales                              135            99               3,606          201
                                                                      --------------------------------------------------------------

Total Operating Revenues                                                  10,054         2,311              20,680        4,550
                                                                      --------------------------------------------------------------

Operating Costs and Expenses
     Oil and gas production                                                3,143           561               4,740        1,126
     Gas gathering, marketing and processing                                 978           670               3,938        1,314
     Oil field services and international sales                               86           160               3,424          327
     Depreciation and depletion                                            3,379           578               4,460        1,084
     General and administrative                                              429           221                 651          443
                                                                      --------------------------------------------------------------

Total Operating Costs and Expenses                                         8,015         2,190              17,213        4,294
                                                                      --------------------------------------------------------------

Operating Profit (Loss)                                                    2,039           121               3,467          256

     Other income                                                             83           160                 155          186
     Interest expense                                                     (3,690)         (245)             (4,758)        (499)
                                                                      --------------------------------------------------------------

Net Income (Loss) before income tax and minority interest                 (1,568)           36              (1,136)         (57)

     Benefit (Provision) for deferred income tax                             596            -                  432            -
                                                                      --------------------------------------------------------------

Net Income (Loss) before minority interest                                  (972)           36                (704)         (57)

     Minority interest in subsidiary earnings                                 (2)           -                  (20)           -
                                                                      --------------------------------------------------------------

Net Income (Loss) Before Extraordinary Loss                                 (974)           36                (724)         (57)

Extraordinary Loss From Early Extinguishment of Debt                      (1,384)           -               (1,384)           -
                                                                      --------------------------------------------------------------

Net Income (Loss)                                                         (2,358)           36              (2,108)         (57)

     Dividends Applicable to Preferred Stock                                (219)         (168)               (438)        (340)
                                                                      --------------------------------------------------------------

Loss Applicable to Common Shares                                      $   (2,577)    $    (132)           $ (2,546)     $  (397)
                                                                      ==============================================================

Loss Before Extraordinary Loss per Common Share                       $    (0.09)    $   (0.01)           $  (0.09)     $ (0.03)
                                                                      

Extraordinary Loss per Common Share                                   $    (0.10)    $     -              $  (0.10)     $    -
                                                                      --------------------------------------------------------------

Loss per Common Share                                                 $    (0.19)    $   (0.01)           $  (0.19)     $ (0.03)
                                                                      ==============================================================

Common Shares Used In Per Share Calculation                           13,602,940     11,710,065          13,644,884     11,658,958
                                                                      ==============================================================



     The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                        9

<PAGE>



                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                             <C>                     <C>

                                                                                          Six Months Ended
                                                                                               June 30,
                                                                                ----------------------------------

                                                                                      1997               1996
                                                                                ----------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
       Net income (loss)                                                        $    (2,108)          $   (57)
       Adjustments to reconcile net income (loss) to cash provided by
       (used for) operating activities:
          Extraordinary loss                                                          1,384               -
          Depreciation and depletion                                                  4,460             1,084
          Amortization of financing fees                                                153               -
          Deferred income taxes                                                        (432)              -
          Minority interest                                                              20               -
          (Gain) Loss on sale of assets                                                  -               (143)
          Other                                                                          51               -
          Change in certain assets and liabilities
              Accounts and notes receivables                                         (6,029)             (479)
              Other current assets                                                     (332)              (82)
              Deposits and other assets                                                  -               (401)
              Accounts payable and accrued liabilities                                1,634               351
                                                                                ----------------------------------
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES                             $    (1,198)          $   273
                                                                                ----------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from the sale of assets                                                   463               188
     Additions to property and equipment                                           (141,667)          (37,301)
     Loan made for promissory note receivable                                          (145)             -
     Payments received on promissory note receivable                                    164              -
                                                                                ----------------------------------
NET CASH USED BY INVESTING ACTIVITIES                                              (141,185)          (37,113)
                                                                                ----------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of long-term debt and production payment                335,000            54,313
     Fees paid related to financing activities                                       (7,881)             -
     Proceeds from short-term notes payable                                           2,699              -
     Payments of principal on long-term debt and production payment                (186,817)          (15,890)
     Payment of fees on issuance of preferred stock                                    (505)             -
     Proceeds from issuance of common and preferred stock,
          net of offering costs                                                          12              -
     Dividends paid                                                                    (241)             (349)
                                                                                ----------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                           142,267            38,074

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (116)            1,234                      
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                      1,687             1,544
                                                                                ---------------------------------
 
 CASH AND CASH EQUIVALENTS, END OF PERIOD                                       $     1,571           $ 2,778
                                                                                =================================
                                                                                                          
                                                                                                        
 
     The accompanying notes are an integral part of these consolidated financial statements

</TABLE>

                                        10

<PAGE>



                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1997
                                   (Unaudited)

                                 
NOTE 1 - MANAGEMENT'S REPRESENTATION

     The  consolidated  balance  sheet as of June  30,  1997,  the  consolidated
statements  of operations  for the six months ended June 30, 1997 and 1996,  and
the  consolidated  statements of cash flows for the six month periods then ended
are unaudited.  In the opinion of management,  all necessary  adjustments (which
include only normal recurring  adjustments) have been made to present fairly the
financial  position,  results of  operations  and  changes in cash flows for the
three month periods.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  It is suggested that these condensed  financial
statements  be read in  conjunction  with the  financial  statements  and  notes
thereto  included in the December 31, 1996 annual  report on Form 10-KSB for the
Company. The results of operations for the six month period ended June 30, 1997,
are not necessarily indicative of the operating results for the full year.

     The accompanying  consolidated financial statements include the accounts of
the Company and its  wholly-owned  subsidiaries.  All  significant  intercompany
transactions and balances have been eliminated in  consolidation.  Certain items
have been reclassified to conform with the current presentation.

NOTE 2 - RECENT EVENTS

     In February,  1997,  the Company  entered into a definitive  agreement with
Burlington  Resources,  Inc. to acquire for $143.5  million,  subject to certain
purchase  price  adjustments,  effective  January 1,  1997,  the  Permian  Basin
Properties  consisting  of 25 field  areas in West  Texas and 22 field  areas in
Southeast New Mexico  containing  1,852  producing oil and natural gas wells. In
accordance  with  the  definitive  acquisition  agreement,  the  Company  made a
performance deposit of $10 million against the purchase price.

     On April 30, 1997,  the Company closed on the purchase of the Permian Basin
Properties for a net purchase price of  approximately  $133 million,  including,
but not limited to, certain adjustments for a January 1, 1997 effective date.

     The Company financed the acquisition of the Permian Basin Properties with a
new $130.0  million  credit  facility (the "New Credit  Facility")  and a senior
subordinated  credit  facility of $60.0  million (the  "Bridge Loan  Facility").
Borrowings  of $119.5  million  under the New Credit  Facility and $60.0 million
under the Bridge Loan  Facility were used to pay the $123.0  million  balance of
the $133.0 million net purchase price for the Permian Basin Properties, to repay
the $53.7  million in  outstanding  indebtedness  as of April 30, 1997 under the
Company's  previous  $100.0  million  credit  facility  and  to  pay  the  costs
associated with the Permian Basin acquisition and the

                                       11
<PAGE>


related financings.

     On May  28,  1997,  the  Company  completed  an  offering  of  $140,000,000
aggregate  principal  amount of its 10%  Senior  Notes  due 2007 (the  "Notes").
Interest on the Notes will accrue from their date of original  issuance and will
be  payable  semi-annually  in  arrears  on June 1 and  December 1 of each year,
commencing on December 1, 1997, at the rate of 10% per annum.  The Notes will be
redeemable,  in whole or in part,  at the option of the Company on or after June
1, 2002, at the redemption prices set forth herein, plus accrued interest to the
date of  redemption.  The Notes will be  general  unsecured  obligations  of the
Company  and will rank pari passu with any  unsubordinated  indebtedness  of the
Company and will rank senior in right of payment to all subordinated obligations
of the Company.  The net proceeds  from the offering were  approximately  $135.5
million after  deducting  estimated fees and expenses of $4.5 million payable by
the Company. The Company utilized the net proceeds to repay the $60.0 million of
outstanding   indebtedness   under  the  Bridge  Loan  Facility  and  to  reduce
indebtedness under the New Credit Facility by approximately $75.5 million. As of
June 30, 1997, the Company had approximately $47 million of secured indebtedness
outstanding  (excluding  unused  commitments of $13 million under the New Credit
Facility).

                                       12

<PAGE>

                          PART II -- OTHER INFORMATION


     Item 6. Exhibits and Reports on Form 8-K
             --------------------------------
(a) Exhibits
    --------

3.1 & 4.1       Articles    of  Incorporation   (Incorporated  by  reference  to
                Registration Statement on Form S-18, File No. 33-30298-D)
3.2 & 4.2       Articles of Amendment to Articles of Incorporation (Incorporated
                by reference to Form 10-K for the year ended December 31, 1990)
3.3 & 4.3       Articles of Amendment to Articles of Incorporation (Incorporated
                by reference to Registration Statement on Form SB-2, File No.33-
                66190)
3.4 & 4.4       Articles of Amendment to Articles of Incorporation (Incorporated
                by reference to Registration Statement on Form S-3, File No.333-
                30453)
3.5 & 4.5       By-Laws,    as   Amended    (Incorporated   by   reference    to
                Registration Statement on Form SB-2, File No.  33-66190)
3.6 & 4.6       Certificate  of  Designation  of  1996 Series A  Preferred Stock
                (Incorporated by reference to Form 8-K dated  December 26, 1996,
                filed January 3, 1997)
3.7 & 4.7       Amendment  to  Certificate  of  Designations  for  1996 Series A
                Convertible  Preferred  Stock  (Incorporated  by   reference  to
                Registration Statement on Form S-3, File No. 333-30453)
4.8             Indenture dated May 29, 1997  between  Magnum  Hunter Resources,
                the subsidiary guarantors named therein and First Union National
                Bank of North Carolina, as Trustee (Incorporated by reference to
                Registration Statement on Form S-4, File No. 333-31149)
4.9             Form of 10% Senior Note due 2007 (Incorporated by   reference to
                Registration Statement on Form S-4, File No.333-31149)
10.1            Amended and  Restated  Credit  Agreement, dated  April 30, 1997,
                between Magnum Hunter Resources, Inc. and Bankers Trust Company,
                et al. (Incorporated by reference to  Registration  Statement on
                Form S-4, File No. 333-31149)
10.2            First Amendment to Amended and Restated Credit  Agreement, dated
                April 30, 1997, between Magnum HunterResources, Inc. and Bankers
                Trust Company, et al. (Incorporated by reference to Registration
                Statement on Form S-4, File No. 333-31149)
10.3            Employment Agreement for Gary C. Evans(Incorporated by reference
                to Registration Statement on Form S-4, File No. 333-2290)
10.4            Employment  Agreement  for  Matthew  C.  Lutz  (Incorporated  by
                reference to Registration Statement on Form S-4,   File No. 333-
                2290)
10.5            Stock Purchase Agreement among Magnum Hunter Resources, Inc. and
                Trust Company  of  the West and TCW Asset Management Company, in
                the capacities described herein, TCW Debt and  Royalty  Fund IVB
                and TCW  Debt and Royalty Fund IVC, dated as of December 6, 1996
                (Incorporated by reference to Form 8-K dated  December 26, 1996,
                filed January 3, 1997)
10.6            Registration Rights Agreement,dated May 29, 1997, between Magnum
                Hunter Resources, Inc. and Bankers
                Trust Company, et al. (Incorporated by reference to Registration
                Statement on Form S-4, File No. 333-31149)
10.7            Purchase and Sale Agreement, dated May 17, 1996 between Meridian
                Oil, Inc. and ConMag Energy
                Corporation (Incorporated by reference  to Form 8-K, dated  June
                28, 1996, filed July 12, 1996)
10.8            Purchase  and  Sale  Agreement,  dated  February 27, 1997  among
                Burlington Resources Oil and Gas Company, Glacier  Park  Company
                and Magnum Hunter Production, Inc. (Incorporated by reference to
                Form 8-K, dated April 30, 1997, filed May 12, 1997)







                                        13

<PAGE>

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

(b)   Reports on Form 8-K
      -------------------

       Items Reported              F/S Included                                Date of Event     Date Filed
       --------------              ------------                                -------------     -----------

(1)      Items 2 and 7             Historical Financial Statements             April 30, 1997     May 14, 1997
                                   of Permian Basin Properties
                                   and Pro Forma financial information

(2)      Item 5                    N/A                                         May 20, 1997       May 20, 1997

(2)      Item 5                    N/A                                         May 30, 1997       May 30, 1997

</TABLE>

                                       
                                    SIGNATURE

In accordance  with the  requirements  of the Exchange Act, the  Registrant  has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

MAGNUM HUNTER RESOURCES, INC.



By /s/ Gary C. Evans                                     August 14 , 1997
  ----------------------------
  Gary C. Evans
  President, Chief Executive Officer and
  Chief Financial Officer



By /s/ David S. Krueger                                  August 14 , 1997
   ---------------------------
   David S. Krueger
   Vice President and
   Chief Accounting Officer



                                       14

<PAGE>