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

                                   Form 10-Q

(Mark one)

[X]     Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
          Act of 1934
        For the Quarterly Period Ended March 31, 2002

[ ]     Transition Report Under Section 13 or 15(d) of the Securities Exchange
          Act of 1934
        For the Transition Period from ______ to _______


                        Commission File Number ...1-12508

                         MAGNUM HUNTER RESOURCES, INC.
              Exact name of registrant 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 1100, Irving, Texas 75039
                     Address of principal executive offices

                                 (972) 401-0752
               Registrant's telephone number, including area code

     Indicate by check mark whether the  registrant (1) has filed all reports 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. Yex [X] No [ ]

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of May 15, 2002: 69,541,047.

<PAGE>
                         PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements

                 Magnum Hunter Resources, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                            (in thousands of dollars)
<TABLE>
<CAPTION>
<S>                                                                             <C>                            <C>
                                                                                            March 31,                  December 31,
                                                                                               2002                        2001
                                                                             ------------------------------------------------------
                                          ASSETS                                         (unaudited)
Current Assets
    Cash and cash equivalents................................................      $          3,851              $           2,755
    Accounts receivable
         Trade, net of allowance of $4,734 and $3,264 respectively...........                38,146                         14,251
         Due from affiliates.................................................                    15                            235
    Notes receivable ........................................................                 2,350                              -
    Notes receivable from affiliate..........................................                   300                            300
    Deferred tax asset.......................................................                12,500                            300
    Derivative assets, current...............................................                 7,682                          5,045
    Prepaid and other........................................................                 7,847                          2,220
                                                                             ------------------------------------------------------
          Total Current Assets...............................................                72,691                         25,106
                                                                             ------------------------------------------------------
Property, Plant, and Equipment
    Oil and gas properties, full cost method
          Unproved...........................................................               144,543                         18,653
          Proved.............................................................             1,034,780                        556,766
    Pipelines................................................................                33,775                         12,642
    Other property...........................................................                 5,766                          3,640
                                                                             ------------------------------------------------------
    Total Property, Plant and Equipment......................................             1,218,864                        591,701
          Accumulated depreciation, depletion, amortization and impairment...              (186,959)                      (171,864)
                                                                             ------------------------------------------------------
    Net Property, Plant and Equipment........................................             1,031,905                        419,837
                                                                             ------------------------------------------------------
Other Assets
    Deposits and other assets................................................                15,025                          4,420
    Investment in unconsolidated affiliates..................................                 5,323                          5,022
    Goodwill ................................................................                52,902                              -
                                                                             ------------------------------------------------------
    Total Assets                                                                   $      1,177,846              $         454,385
                                                                             ------------------------------------------------------
                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
    Trade payables and accrued liabilities...................................      $         46,460              $          41,446
    Suspended revenue payable................................................                 7,512                          2,154
    Derivative liabilities, current .........................................                10,402                            996
    Current maturities of long-term debt, with recourse......................                 1,954                             73
    Note payable ............................................................                 1,970                          4,044
                                                                             ------------------------------------------------------
          Total Current Liabilities..........................................                68,298                         48,713
                                                                             ------------------------------------------------------
Long-Term Liabilities
    Long-term debt, with recourse, less current maturities...................               627,563                        284,466
    Long-term debt, non recourse ............................................                 5,834                              -
    Production payment liability.............................................                   198                            203
    Derivative liabilities, noncurrent ......................................                14,935                          1,531
    Deferred income taxes payable............................................                95,671                          1,498
Stockholders' Equity
    Preferred stock - $.001 par value; 10,000,000 shares
       authorized, 216,000 designated as Series A; 80,000 issued
       and outstanding,
          liquidation amount $0..............................................                     -                              -
       1,000,000 designated as 1996 Series A Convertible; 1,000,000 purchased
         and held for remarketing by subsidiary, liquidation amount $10,000,000                   1                              1
    Common Stock - $.002 par value; 100,000,000 shares authorized,
          70,700,260 and 36,588,097 shares issued, respectively..............                   141                             73
    Additional paid-in capital...............................................               418,520                        157,836
    Accumulated other comprehensive income (loss)............................               (15,380)                         1,632
    Accumulated deficit......................................................               (29,190)                       (36,636)
    Receivable from stockholder..............................................                  (442)                          (442)
    Unearned common stock in ESOP, at cost (813,052 and 468,652 shares,
      respectively ).........................................................                (5,068)                        (2,576)
                                                                             ------------------------------------------------------
                                                                                            368,582                        119,888
    Treasury stock, at cost (628,813 and 441,813 shares of common stock,
       respectively).........................................................                (3,235)                        (1,914)
                                                                             ------------------------------------------------------
    Total Stockholders' Equity...............................................               365,347                        117,974
                                                                             ------------------------------------------------------
    Total Liabilities and Stockholders' Equity...............................      $      1,177,846              $         454,385
                                                                             ======================================================
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
       (Unaudited, in thousands of dollars, except for per share amounts)

<TABLE>
<CAPTION>
<S>                                                                             <C>                          <C>
                                                                                             Three Months Ended
                                                                                                  March 31,
                                                                           --------------------------------------------------------
                                                                                       2002                          2001
                                                                           --------------------------------------------------------
Operating Revenues:
      Oil and gas sales....................................................       $           39,150           $        42,953
      Gas gathering, marketing and processing..............................                    3,582                     7,102
      Oil field management services........................................                      392                       515
                                                                           --------------------------------------------------------
                  Total Operating Revenues.................................                   43,124                    50,570
                                                                           --------------------------------------------------------
Operating Costs and Expenses:
      Oil and gas production lifting costs.................................                    8,948                     4,650
      Production taxes and other costs.....................................                    4,303                     4,015
      Gas gathering, marketing and processing..............................                    2,680                     6,572
      Oil field management services........................................                      276                       362
      Depreciation, depletion and amortization.............................                   15,096                     7,415
      Gain on sale of assets...............................................                        -                        (2)
      General and administrative...........................................                    2,524                     1,712
                                                                           --------------------------------------------------------
                  Total Operating Costs and Expenses.......................                   33,827                    24,724
                                                                           --------------------------------------------------------
Operating Profit...........................................................                    9,297                    25,846
      Equity in earnings of affiliate......................................                      301                       618
      Other income.........................................................                       57                        94
      Other non-cash hedging adjustments ..................................                     (593)                      889
      Interest expense.....................................................                   (7,505)                   (4,866)
                                                                           --------------------------------------------------------
Income before income tax...................................................                    1,557                    22,581
      Provision for income tax benefit/(expense)
         Current...........................................................                        -                    (1,283)
         Deferred..........................................................                    6,510                    (7,270)
                                                                           --------------------------------------------------------
                  Total provision for income tax benefit/(expense).........                    6,510                    (8,553)
Income Before Extraordinary Loss                                                               8,067                    14,028
Extraordinary Loss From Early Extinguishment of Debt, net
      of income tax benefit of $379                                                             (621)                        -
                                                                           ---------------------------------------------------
Net Income.................................................................       $            7,446           $        14,028
                                                                           ========================================================
Comprehensive Income:
      Net Income ..........................................................       $            7,446           $        14,028
      Other Comprehensive Income (Loss), net of tax
      Cumulative effect on prior years of a change in accounting principle.                        -                    (1,757)
      Reclassification adjustment related to derivative contracts..........                   (2,121)                     (137)
      Change in fair value of outstanding hedging positions................                  (14,819)                    1,903
      Unrealized loss on investments.......................................                      (72)                     (204)
                                                                           --------------------------------------------------------
Total Comprehensive Income (Loss)..........................................       $           (9,566)          $        13,833
                                                                           ========================================================
Income per Common Share - Basic............................................
      Income Before Extraordinary Loss ....................................       $             0.19           $          0.41
      Extraordinary Loss  .................................................                    (0.01)                        -
                                                                           --------------------------------------------------------
Income per Common Share - Basic............................................       $             0.18           $          0.41
                                                                           ========================================================
Income per Common Share - Diluted .........................................
      Income Before Extraordinary Loss ....................................       $             0.18           $          0.37
      Extraordinary Loss  .................................................                    (0.01)                        -
                                                                           --------------------------------------------------------
Income per Common Share - Diluted..........................................       $             0.17           $          0.37
                                                                           ========================================================
Common Shares Used in Per Share Calculation
      Basic ...............................................................               41,777,431                34,582,683
                                                                           ========================================================
      Diluted .............................................................               43,024,235                37,410,509
                                                                           ========================================================
</TABLE>

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

                                        2
<PAGE>



                 Magnum Hunter Resources, Inc. and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                    For the Three Months Ended March 31, 2002
                      (Unaudited, in thousands of dollars)

<TABLE>
<CAPTION>
<S>                                                   <C>         <C>     <C>        <C>        <C>       <C>        <C>
                                                                                                                      Additional
                                                        Preferred Stock       Common Stock        Treasury Stock        Paid-In
                                                       Shares      Amount   Shares    Amount     Shares    Amount       Capital
                                                       ---------------------------------------------------------------------------
Balance at December 31, 2001.......................... 1,080,000   $   1   36,588,097   $   73  (441,813)  $(1,914)   $   157,836
   Common stock and warrants issued in Prize
   Energy Corp merger, less fees .....................                     34,062,963       68                            260,454
   Exercise of employees' common stock options........                         49,200        -                                214
   Deferred tax benefit on exercise of employee
               stock options..........................                                                                         16
   Purchase of treasury stock ........................                                          (187,000)   (1,321)
   Net income ........................................
   Reclassification adjustment related to derivative
               contracts .............................
   Change in fair value of outstanding hedging
     positions, net of tax............................
   Unrealized loss on investments ....................

   Loan to ESOP.......................................
                                                      ----------------------------------------------------------------------------
Balance at March 31, 2002............................. 1,080,000   $   1   70,700,260   $  141  (628,813)  $(3,235)   $   418,520
                                                      ============================================================================
</TABLE>

<TABLE>
<CAPTION>
<S>                                                    <C>                <C>               <C>            <C>           <C>
                                                        Accumulated Other                     Receivable      Unearned Shares in
                                                         Comprehensive     Accumulated          from                ESOP
                                                         Income (Loss)       Deficit         Stockholder    Shares        Amount
                                                       ---------------------------------------------------------------------------
Balance at December 31, 2001........................... $      1,632       $     (36,636)      $  (442)    (468,652)     $(2,576)
   Common stock and warrants issued in Prize
   Energy Corp merger, less fees ......................
   Exercise of employees' common stock options.........
   Deferred tax benefit on exercise of employee
               stock options...........................
   Purchase of treasury stock .........................
   Net income .........................................                            7,446
   Reclassification adjustment related to derivative
               contracts ..............................       (2,121)
   Change in fair value of outstanding hedging
     positions, net of tax.............................      (14,819)
   Unrealized loss on investments .....................          (72)
   Loan to ESOP........................................                                                    (344,400)      (2,492)
                                                       ---------------------------------------------------------------------------
Balance at March 31, 2002.............................. $    (15,380)      $     (29,190)      $  (442)    (813,052)     $(5,068)
                                                       ===========================================================================
</TABLE>

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

                                        3
<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                      (Unaudited, in thousands of dollars)
<TABLE>
<CAPTION>
<S>                                                                                        <C>                      <C>

                                                                                                    For the Three Months Ended
                                                                                                           March 31,
                                                                                             ---------------------------------------
                                                                                                 2002                     2001
                                                                                             ---------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
   Net Income................................................................................  $   7,446             $      14,028
   Adjustments to reconcile net income to cash provided by operating activities
      Extraordinary Loss ....................................................................        621                         -
        Depreciation, depletion and amortization.............................................     15,096                     7,415
      Amortization of financing fees.........................................................        370                       268
      Imputed interest on debt due to merger.................................................        108                         -
        Deferred income taxes................................................................     (6,510)                    7,270
        Equity in income of unconsolidated affiliate.........................................       (301)                     (618)
      Non-cash hedging adjustments...........................................................        593                      (889)
        Gains on sale of assets..............................................................          -                        (2)
        Changes in certain assets and liabilities, net of acquisition of Prize Energy, Inc.
           Accounts and notes receivable.....................................................     (3,316)                    2,502
           Derivative assets.................................................................          -                    (1,303)
           Other current assets..............................................................     (4,261)                      219
           Accounts payable and accrued liabilities..........................................    (33,828)                     (261)
           Current income taxes payable......................................................          -                       983
                                                                                             ---------------------------------------
   Net Cash (Used In) Provided By Operating Activities.......................................    (23,982)                   29,612
                                                                                             ---------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of assets..............................................................          -                         2
   Additions to property and equipment.......................................................    (18,989)                  (29,859)
   Net cash paid in Prize merger.............................................................    (41,097)                        -
   Increase in deposits and other assets.....................................................          -                         2
   Increase in note receivable...............................................................     (2,350)                        -
   Payments received on promissory note receivable...........................................          -                        63
   Distribution from unconsolidated affiliate................................................          -                       749
                                                                                             ---------------------------------------
   Net Cash Used In Investing Activities.....................................................    (62,436)                  (29,043)
                                                                                             ---------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from the issuance of debt........................................................    534,183                    27,500
   Fees paid related to financing activities.................................................    (11,732)                      (12)
   Payments of principal on debt and production payment......................................   (431,269)                  (29,633)
   Repayment of stockholder loan.............................................................          -                       360
   Loan to ESOP..............................................................................     (2,492)                        -
   Proceeds from issuance of common stock, net of offering costs.............................        145                     1,615
   Purchase of treasury stock  ..............................................................     (1,321)                        -
   Decrease in restricted cash for payment of notes payable .................................          -                       552
   Cash dividends paid.......................................................................          -                      (169)
                                                                                             ---------------------------------------
   Net Cash Provided By Financing Activities.................................................     87,514                       213
                                                                                             ---------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS....................................................      1,096                       782
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............................................      2,755                         9
                                                                                             ---------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...................................................  $   3,851             $         791
                                                                                             ---------------------------------------
Cash interest paid...........................................................................  $  14,537             $       2,481
                                                                                             =======================================
Cash taxes paid (refund received)............................................................  $     (49)            $         300
                                                                                             =======================================
</TABLE>

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

                                       4
<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

NOTE 1 - MANAGEMENT'S REPRESENTATION

     The  consolidated  balance  sheet of  Magnum  Hunter  Resources,  Inc.  and
subsidiaries (the Company) as of March 31, 2002, and the consolidated statements
of income and comprehensive income,  stockholders' equity and cash flows for the
three  months  ended  March 31, 2002 and 2001 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 at March
31, 2002, results of operations,  changes in stockholders' equity and cash flows
for the three month periods.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America 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, 2001 annual
report and on Form 10-K for the Company. The results of operations for the three
month  period  ended  March  31,  2002  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 subsidiaries.  All significant intercompany transactions and
balances  have  been  eliminated  in  consolidation.  Certain  items  have  been
reclassified to conform with the current presentation.

     During the first  quarter of 2002,  the Company  merged  with Prize  Energy
Corp.  (Prize),  an independent oil and gas development and production  company.
The merger with Prize closed on March 15, 2002,  but for operating and financial
reporting purposes,  was effective as of March 1, 2002. As such, the results for
the three months ended March 31, 2002,  include only one month of  contributions
from Prize. See Note 2 for further discussion of the Prize merger.

     In order for the Company to comply with terms of the  Company's  indentures
covering  both its 10% Senior Notes due 2007 and its 9.6% Senior Notes due 2012,
the Company created two unrestricted subsidiaries,  Canvasback Energy, Inc., and
Redhead  Energy,  Inc.  Redhead  Energy,  Inc. is a  wholly-owned  subsidiary of
Canvasback  Energy,  Inc.  Canvasback  Energy,  Inc. and its  subsidiaries  will
hereafter be collectively referred to as Canvasback. On March 15, 2002, Bluebird
Energy,  Inc.  (Bluebird)  transferred  all of its assets to  Canvasback,  which
effectively capitalized Canvasback.  Upon completion of this transfer,  Bluebird
was merged into Magnum Hunter Production, Inc.

     The Company is a holding  company with no significant  assets or operations
other than its investments in its subsidiaries. The wholly-owned subsidiaries of
the  Company,  except  for  Canvasback,  are  direct  guarantors  of each of the
Company's  10%  Senior  Notes  and  9.6%  Senior  Notes,   and  have  fully  and
unconditionally  guaranteed  the  notes  on  a  joint  and  several  basis.  The
guarantors  comprise all of the direct and indirect  subsidiaries of the Company
(other  than  Canvasback),  and the  Company has  presented  separate  condensed
consolidating   financial  statements  and  other  disclosures  concerning  each
guarantor  and  Canvasback  (See Note 5).  Except  for  Canvasback,  there is no
restriction on the ability of  consolidated  or  unconsolidated  subsidiaries to
transfer funds to the Company in the form of cash dividends, loans, or advances.

NOTE 2 - MERGER WITH PRIZE ENERGY CORP.

     On March 15, 2002,  the Company merged with Prize,  an independent  oil and
gas development and production  company.  The transaction was accounted for as a
purchase of Prize by the Company in accordance  with the provisions of Statement
of Financial Accounting Standards (SFAS) No. 141 "Business Combinations",  which
requires the use of the purchase method of accounting for business  combinations
initiated and completed after June 30, 2001. Under the terms of the merger,  the
Company distributed 2.5 shares of common stock plus $5.20 in cash for each Prize
Energy share outstanding.  The assumed purchase price,  computed from the equity
and cash consideration given at the time of the merger, was

                                        5

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

     allocated  to the fair  value of the net  assets  acquired.  The  amount of
purchase price in excess of the fair value of Prize's net assets was assigned to
goodwill.  In  accordance  with SFAS No.  142  "Goodwill  and  Other  Intangible
Assets",  which was  adopted by the  Company on  January 1, 2002,  the  goodwill
realized  in the  merger  with  Prize  will not be  amortized.  However,  future
evaluations  of goodwill  will be performed  annually to  determine  whether any
impairment has occurred. The Company has not completed a final allocation of the
purchase price to the fair values of the assets and liabilities of Prize and the
related  business  integration  plan.  The  Company  expects  that the  ultimate
purchase price allocation may include additional  adjustments to the fair values
of the assets and the carrying values of certain  liabilities.  Accordingly,  to
the extent  that such  assessments  indicate  that the fair values of assets and
liabilities  differ  from their  preliminary  purchase  price  allocation,  such
differences would adjust the amounts allocated to the assets and liabilities and
would change the amounts  allocated to goodwill.  The following table summarizes
the total assumed purchase price and related  preliminary  allocation to the net
assets acquired (in thousands):

<TABLE>
<CAPTION>
<S>                                                                                               <C>
Total Purchase Price:
    Fair Value of 34,062,963 shares of Magnum Hunter common
       stock .................................................................                       $              257,175
    Cash consideration .......................................................                                       70,851
    Fair Value of Prize warrants .............................................                                        3,416
                                                                                 ------------------------------------------
       Total .................................................................                       $              331,442
                                                                                 ==========================================

Net Preliminary Purchase Price Allocation:
    Net purchase price  ......................................................                       $              331,442
    Historical net assets acquired  ..........................................                                     (148,272)
                                                                                 ------------------------------------------
    Excess purchase price  ...................................................                                      183,170
    Adjustment of proved oil and gas properties to fair value  ...............                                      (66,023)
    Adjustment of unproved oil and gas properties to fair value...............                                     (124,766)
    Adjustment of gas plant to fair value  ...................................                                      (18,977)
    Write-off of historical Prize deferred financing costs  ..................                                        2,386
    Other fair value adjustments  ............................................                                        2,545
    Imputed interest on debt due to merger....................................                                         (108)
    Additional deferred income taxes  ........................................                                       74,675
                                                                                 ------------------------------------------
       Excess purchase price allocated to goodwill ...........................                      $                52,902
                                                                                 ==========================================
</TABLE>

                                        6

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

     The following summary,  prepared on a pro forma basis, presents the results
of  operations  for the three month periods ended March 31, 2002 and 2001, as if
the acquisition of Prize occurred as of the beginning of the respective periods.
The pro forma  information  includes  the effects of  adjustments  for  interest
expense,  depreciation,  depletion  and  amortization,  and  income  taxes.  The
proforma  results are not  necessarily  indicative of what  actually  would have
occurred if the  acquisition  had been  completed  as of the  beginning  of each
period  presented,  nor are they necessarily  indicative of future  consolidated
results.

(Unaudited) - Proforma
                                                       March 31,
                                        ---------------------------------------
                                               2002                2001
                                        ---------------------------------------
                                            (in thousands of dollars,
                                           except for per share amounts)
                                        ---------------------------------------
Revenues ...............................  $     68,657         $    107,080
Total Operating Costs and Expenses   ...       (56,203)             (57,500)
                                        ---------------------------------------
Operating Profit .......................        12,454               49,580
Interest Expense and Other  ............       (13,004)              (6,659)
                                        ---------------------------------------
Income before Tax  .....................          (550)              42,921
Provision for Income Tax ...............         7,309              (16,257)
Extraordinary loss from early
    extinguishment of debt  ............          (621)                   -
                                        ---------------------------------------
Net Income .............................         6,138               26,664
                                        =======================================
Net Income Per Common Share
    Basic ..............................  $       0.09         $       0.39
                                        =======================================
    Diluted ............................  $       0.09         $       0.37
                                        =======================================

                                        7
<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

NOTE 3 - EARNINGS PER SHARE INFORMATION

     The  following is a  reconciliation  of the basic and diluted  earnings per
share computations.

<TABLE>
<CAPTION>
<S>                                          <C>         <C>            <C>       <C>           <C>               <C>
                                                                          Three Months Ended
                                            ---------------------------------------------------------------------------------------
                                                          March 31, 2002                    March 31, 2001
                                            ---------------------------------------------------------------------------------------
                                              Per Share                                 Per Share
                                               Income      Shares        Amount           Income          Shares           Amount
-----------------------------------------------------------------------------------------------------------------------------------
                                                                        (Thousands, except per share amounts)
                                            ---------------------------------------------------------------------------------------
   Income before extraordinary loss           $    8,067              $      0.19      $    14,028                      $      0.41
   Less: Extraordinary Loss                        (621)                    (0.01)               -                                -
                                                                      ------------                                      -----------
Basic EPS
   Income available to common
     stockholders...........................  $    7,446     41,777   $      0.18      $    14,028         34,583       $      0.41
                                                                      ============                                      ===========

Effect of Dilutive Securities
   Warrants.................................           -         66                              -            274
   Options..................................           -      1,181                              -          2,554
                                            ---------------------------------------------------------------------------------------

Diluted EPS
   Income available to common
 stockholders and assumed conversions.......  $    7,446     43,024   $      0.17      $    14,028         37,411       $      0.37
   Add Back: Extraordinary Loss.............         621                     0.01                -                                -
                                            ---------------------------------------------------------------------------------------
Income before Extraordinary Loss............  $    8,067     43,024   $      0.18      $    14,028         37,411       $      0.37
                                            =======================================================================================
</TABLE>

     At March 31, 2002, warrants representing  12,145,019 shares of common stock
and options representing 5,284,384 shares of common stock were outstanding.  The
outstanding   warrant  total  includes  the  conversion  of  Prize  warrants  in
connection with the merger on March 15, 2002 (See Note 2) into 4,271,813  Magnum
Hunter warrants.  Additionally,  the Company  distributed on March 21, 2002, one
warrant for every five shares of the Company's common stock owned on January 10,
2002,  for  a  total  of  7,228,457  warrants.   At  March  31,  2001,  warrants
representing 644,749 shares of common stock and options  representing  4,337,900
shares of common stock were outstanding. On January 1, 2001, the remaining $25.0
million  (liquidation  value)  of the  Company's  1999  Series A 8%  convertible
preferred stock was converted into 4,761,904 shares of common stock.

NOTE 4 - DEBT

     The Company  amended and  restated  its Senior  Bank Credit  Facility  (the
facility)  in  conjunction  with the merger  with Prize.  The  amended  facility
provides for total borrowings of $500 million, up from $225 million,  and raises
the borrowing  base limit from $160 million to $300 million.  Additionally,  the
expiration  date of the facility  was amended and extended to March 2006.  After
March 15,  2002,  the  facility  was used to i) fund the cash  component  of the
merger consideration payable to the Prize shareholders, ii) pay costs associated
with the merger, and iii) for general corporate purposes.

     The amended  facility was treated as a new credit  facility with respect to
the funds flow on the effective  date of March 15, 2002.  As such,  the existing
balances  on the  facility  prior to March  15 were  paid off with the  proceeds
received on March 15, 2002. The original capitalized debt issuance costs of $621
thousand,  net  of  tax,  related  to  the  facility  were  written  off  as  an
extraordinary  loss from early  extinguishment  of debt during the quarter ended
March 31, 2002.

                                        8
<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

     On March 15,  2002,  the  Company  completed  a private  placement  of $300
million  of new  unsecured  Senior  Notes due 2012 to  institutional  investors.
Interest  on  these  Senior  Notes  bears  a  fixed  annual  rate  of  9.6%  due
semi-annually,  commencing  September 15, 2002. Funds received from the issuance
of these notes were used to i.) retire outstanding  indebtedness under the Prize
commercial bank credit facility, ii) pay fees related to the issuance of the new
Senior Notes, and iii) for general corporate purposes.

     On January 15, 2002, the Company entered into a sale-leaseback  transaction
on  three  newly  constructed   offshore  production  platforms  and  associated
pipelines that were recently placed into service.  The Company  received a total
of $11.2 million in new funding which was used for general  corporate  purposes.
The production platforms are being leased from a syndicate group of lenders over
a term of three  years and at a cost of funds based on the one month LIBOR rate,
currently yielding a cost of approximately 5.30% per annum. This transaction was
accounted for as a capital lease and was included in long-term debt.

     On March 15, 2002,  the Company  repaid its 7% notes  payable to vendors of
$4.0 million plus accrued  interest.  On March 14, 2002, the Company borrowed an
additional  $2.5 million under a new note bearing a fixed interest rate of 4.25%
per annum and with a maturity date of December 14, 2002 to finance its insurance
premiums for the year.

     On March 7, 2002,  Canvasback entered into a $10.0 million revolving credit
agreement with a financial  institution.  The credit agreement provides for both
LIBOR and prime based  interest rate options,  a 6.5% interest rate at March 31,
2002. The agreement also provides that upon the revolving loan  termination date
of June 30, 2002, the aggregate  outstanding  principal  amount of any revolving
loan will automatically be converted to a term loan,  repayable on the term loan
maturity date of March 7, 2004,  together with accrued  interest.  Proceeds from
the initial  drawdown  under the agreement of $5.8 million were used to purchase
the same  amount in face  value of the  Company's  10% Senior  Notes  which were
acquired in 2001 by the Company, and were being held as an investment. These 10%
Senior Notes,  together with $4.7 million of 10% Senior Notes  formerly owned by
Bluebird and contributed to Canvasback in its initial  capitalization,  serve as
collateral for the loan. The loan is non-recourse to the Company.

NOTE 5 - HEDGING

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities", as extended by SFAS No. 137 (June 1999) and amended by SFAS No. 138
(June 2000), was effective for the Company  beginning  January 1, 2001. SFAS No.
133 establishes  accounting and reporting standards for derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging  activities.  It requires the  recognition of derivatives in the balance
sheet and the measurement of those instruments at fair value.

     The Company was obligated to nine crude oil derivatives, twenty natural gas
derivatives,  and two interest rate  derivatives  on March 31, 2002. The Company
has determined that all outstanding  derivatives qualify as cash flow hedges and
for hedge treatment as defined within SFAS No. 133, which require the Company to
record the  derivative  assets or liabilities at their fair value on its balance
sheet with an offset to other comprehensive income.  However, in connection with
the merger with Prize on March 15, 2002,  the Company  purchased $7.6 million in
hedge assets from Prize at fair value on that date, with no corresponding offset
to other comprehensive income. Consequently, this hedge balance will amortize as
a charge to other  non-cash  hedging  adjustments  over the next 33 months.  The
balance of these Prize hedge assets on March 31, 2002 was $7.2  million.  Future
hedge ineffectiveness on the cash-flow hedges will be recorded in earnings.

                                        9
<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

     At March 31,  2002,  the fair value of the  Company's  derivatives  were as
follows (in thousands):


Derivative Assets
--------------------------------------------
Natural gas collars                          $            7,513
Crude oil swaps                                             169
                                            -------------------
Total derivative assets                      $            7,682
                                            -------------------
Derivative Liabilities
--------------------------------------------
Natural gas collars                          $            7,591
Natural gas swaps                                        14,275
Crude oil collars                                         1,158
Crude oil swaps                                           1,665
Interest rate swaps                                         648
                                            -------------------
Total derivative liabilities                 $           25,337
                                            -------------------
Net derivative liabilities                   $           17,655
                                            ===================

     For the  three-month  period  ended March 31,  2002,  the income  statement
includes a loss of $158 thousand  related to the natural gas  derivatives  and a
loss of $435 thousand  related to the  amortization of hedge assets purchased in
the Prize  merger.  The Company  expects  that the  remaining  balances in other
comprehensive  income at March 31,  2002 will be  reclassified  into the  income
statement within the next 33 months.  During the next 12 months, $5.2 million of
amortization  of hedge  assets  purchased in the Prize merger will be charged to
the income statement.  Additionally,  $2.7 million of other comprehensive income
will be reclassified into the income statement during the next 12 months.

NOTE 6 - INCOME TAXES

     The  Company  realized a tax benefit of $6.5  million for the period  ended
March 31,  2002.  This  benefit was  realized as a result of the reversal of the
$7.1 million valuation  allowance for the Company's net operating losses and tax
credit  carryforwards from 2001 and earlier years. The Company believes that due
to the merger with Prize,  it will be possible to generate future taxable income
to utilize these losses and carryforwards and that the valuation allowance is no
longer needed.

     At March 31, 2002,  the Company had a deferred  tax asset of $12.5  million
and a deferred tax liability of $95.7 million,  for a net deferred tax liability
of $83.2  million.  The  majority of this  balance was booked as a result of the
Prize merger; $40.7 million related to Prize's historical deferred tax liability
and $74.7 million  related to the deferred  taxes computed on the purchase price
in excess of historical net assets excluding goodwill. Additionally, the Company
recorded a $12.3  million  deferred tax asset  related to the portion of Prize's
total net  operating  loss and tax  assets  that may be used by the  Company  as
carrybacks  to the  extent  of  available  offsetting  prior  operating  profits
generated  by Prize.  This  deferred  tax asset was  included  in the  Company's
original goodwill allocation resulting from the Prize merger.

                                       10
<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

NOTE 7 - SEGMENT DATA

     The Company has three reportable  segments.  The Exploration and Production
segment  is  engaged  in  exploratory   and   developmental   drilling  and  the
acquisition, production, and sale of crude oil, condensate, and natural gas. The
Gas Gathering,  Marketing and Processing segment is engaged in the gathering and
compression of natural gas from the wellhead, the purchase and resale of natural
gas which it gathers,  and the processing of natural gas liquids.  The Oil Field
Services  segment is engaged in the managing and  operation of producing oil and
gas properties for interest owners.

     The Company's  reportable  segments are strategic business units that offer
different  products  and  services.  They are managed  separately  because  each
business requires different technology and marketing strategies. The Exploration
and Production  segment has three geographic areas that are aggregated.  The Gas
Gathering,  Marketing and Processing  segment includes the activities of the two
gathering  systems  and  four  natural  gas  liquids  processing  plants  in two
geographic  areas that are aggregated.  The Oil Field Services segment has three
geographic  areas that are aggregated.  The reason for aggregating the segments,
in each case, is due to the similarity in nature of the products, the production
processes, the type of customers, the method of distribution, and the regulatory
environments.

     The  accounting  policies  of the  segments  are the same as those  for the
Company as a whole. The Company  evaluates  performance  based on profit or loss
from operations  before income taxes. The accounting for intersegment  sales and
transfers is done as if the sales or transfers were to third  parties,  that is,
at current market prices.

     Segment  data for the periods  ended  March 31,  2002 and 2001  follows (in
thousands):

<TABLE>
<CAPTION>
<S>                                     <C>                <C>              <C>              <C>           <C>        <C>
                                                              Gas Gathering,
                                          Exploration &         Marketing &     Oil Field
  Three Months Ended March 31, 2002:       Production           Processing       Services     All Other   Elimination  Consolidated
-----------------------------------------------------------------------------------------------------------------------------------
Revenue from external customers............$      39,150     $     3,582     $      392       $       -     $           $   43,124
Intersegment revenues......................                        2,483            417               -       (2,900)            -
Depreciation, depletion and amortization          14,542             370            105              79                     15,096
Segment profit (loss)......................       10,451             472            (77)         (1,549)                     9,297
Equity in earnings (losses) of affiliates..                                                         301                        301
Interest expense...........................                                                      (7,505)                   (7,505)
Other expense..............................                                                        (536)                     (536)
                                                                                                                     --------------
Income before income taxes.................                                                                             $    1,557
Provision for income tax...................                                                       6,510                      6,510
Extraordinary loss                                                                                 (621)                     (621)
                                                                                                                     --------------
Net income.................................                                                                             $    7,446
                                                                                                                     ==============
Segment assets (as of March 31, 2002)       $  1,000,213     $    36,898      $  18,446       $ 122,289                 $1,177,846
Capital expenditures (net of asset sales)..      603,904          21,133            432           1,694                    627,163
</TABLE>

                                       11
<PAGE>
                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                         <C>               <C>              <C>         <C>          <C>           <C>
                                                               Gas Gathering,
                                              Exploration &      Marketing &    Oil Field
  Three Months Ended March 31, 2001:           Production        Processing      Services    All Other   Elimination   Consolidated
------------------------------------------------------------------------------------------------------------------------------------
Revenue from external customers.............   $   43,137     $   7,102        $     515     $        -   $                 50,754
Intersegment revenues.......................                      7,560            1,439              -      (8,999)             -
Depreciation, depletion and amortization            7,097           220               93              5                      7,415
Segment profit (loss).......................       27,375           311             (556)        (1,100)                    26,030
Equity in earnings (losses) of affiliates...                                                        618                        618
Interest expense............................                                                     (4,161)                    (4,161)
Other income................................                                                         94                         94
                                                                                                                    ----------------

Income before income taxes..................                                                                           $    22,581
Provision for income tax....................                                                     (8,553)                    (8,553)
                                                                                                                    ----------------

Net income..................................                                                                           $    14,028
                                                                                                                    ================

Segment assets (as of March 31, 2001).......  $   281,104     $  16,211        $  24,599   $      9,248                $   331,162
Capital expenditures (net of asset sales)...       28,865             6              134            854                     29,859
</TABLE>

NOTE 8 -- CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

     The Company  and its  wholly-owned  subsidiaries,  except  Canvasback,  are
direct  guarantors  of the  Company's 10% Senior Notes and 9.6% Senior Notes and
have  fully and  unconditionally  guaranteed  the  notes on a joint and  several
basis.  In addition to not being a guarantor of the  Company's  10% Senior Notes
and 9.6% Senior Notes,  Canvasback cannot be included in determining  compliance
with certain  financial  covenants under the Company's  credit  agreements.  The
Company  has  concluded  that  separate  financial  statements  related  to  the
guarantors are not included because  management has determined that they are not
material to investors.  Condensed consolidating financial information for Magnum
Hunter  Resources,  Inc. and  subsidiaries as of March 31, 2002 and December 31,
2001, and for the three months ended March 31, 2002 and 2001, was as follows:

                 Magnum Hunter Resources, Inc. and Subsidiaries
                     Condensed Consolidating Balance Sheets

<TABLE>
<CAPTION>
<S>                                          <C>                 <C>                   <C>              <C>
                                                            As of March 31, 2002
---------------------------------------------------------------------------------------------------------------------------
                                                 Magnum Hunter         Canvasback                      Magnum Hunter
                                                Resources, Inc.       Energy, Inc.                    Resources, Inc.
Amounts in Thousands                          And Guarantor Subs    (Non Guarantor)    Eliminations     Consolidated
---------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets..................................  $    70,024          $ 2,667          $       -       $     72,691
Property and equipment
  (using full cost accounting)..................    1,024,592            7,313                  -          1,031,905
Investment in subsidiaries
 (equity method)................................       15,225                -            (15,225)                 -
Investment in Parent............................            -           22,905            (22,905)                 -
Other assets....................................       73,250                -                  -             73,250
                                               ----------------------------------------------------------------------------
   Total assets.................................  $ 1,183,091          $32,885          $ (38,130)      $  1,177,846
                                               ============================================================================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities.............................  $    68,209          $    89          $       -       $     68,298
Long-term liabilities...........................      737,164           17,571            (10,534)           744,201
Shareholders' equity............................      377,718           15,225            (27,596)           365,347
                                                ----------------------------------------------------------------------------
   Total liabilities and shareholders' equity...  $ 1,183,091          $32,885          $ (38,130)      $  1,177,846
                                                ============================================================================

</TABLE>
<TABLE>
<CAPTION>
<S>                                          <C>                 <C>                <C>              <C>
                                                                   As of December 31, 2001
---------------------------------------------------------------------------------------------------------------------------
                                                 Magnum Hunter         Canvasback                      Magnum Hunter
                                                Resources, Inc.       Energy, Inc.                    Resources, Inc.
Amounts in Thousands                          And Guarantor Subs    (Non Guarantor)    Eliminations     Consolidated
---------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets..................................  $    21,196          $ 3,910          $       -       $     25,106
Property and equipment
  (using full cost accounting)..................      412,720            7,117                  -            419,837
Investment in subsidiaries
 (equity method)................................       14,963                -            (14,963)                 -
Investment in Parent............................            -           15,750            (15,750)                 -
Other assets....................................        9,442                -                  -              9,442
                                               ----------------------------------------------------------------------------
   Total assets.................................  $   458,321          $26,777          $ (30,713)      $    454,385
                                               ============================================================================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities.............................  $    48,561          $   152          $       -       $     48,713
Long-term liabilities...........................      280,736           11,662             (4,700)           287,698
Shareholders' equity............................      129,024           14,963            (26,013)           117,974
                                                ----------------------------------------------------------------------------
   Total liabilities and shareholders' equity...  $   458,321          $26,777          $ (30,713)      $    454,385
                                                ============================================================================
</TABLE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
                 Condensed Consolidating Statement of Operations

<TABLE>
<CAPTION>
<S>                                  <C>                     <C>                   <C>               <C>
                                        For the Three Months ended March 31, 2002
------------------------------------------------------------------------------------------------------------------------
                                            Magnum Hunter         Canvasback                            Magnum Hunter
                                           Resources, Inc.       Energy, Inc.                          Resources, Inc.
Amounts in Thousands                     And Guarantor Subs     (Non Guarantor)      Eliminations       Consolidated
------------------------------------------------------------------------------------------------------------------------
Revenues............................... $          42,862       $          262        $        -        $     43,124
Expenses...............................            41,675                  193                 -              41,868
                                       ---------------------------------------------------------------------------------
Income before                                       1,187                   69                 -               1,256
 Equity in net earnings of subsidiary..               301                    -                 -                 301
                                       ---------------------------------------------------------------------------------
Income before income taxes.............             1,488                   69                 -               1,557
Income tax provision...................             6,536                  (26)                -               6,510
                                       ---------------------------------------------------------------------------------
Income before extraordinary loss.......             8,024                   43                 -               8,067
Extraordinary Loss.....................              (621)                   -                 -                (621)
                                       ---------------------------------------------------------------------------------
Net income............................. $           7,403       $           43        $        -        $      7,446
                                       =================================================================================
</TABLE>

<TABLE>
<CAPTION>
<S>                                       <C>                   <C>                  <C>                 <C>
                                           For the Three Months ended March 31, 2001
---------------------------------------------------------------------------------------------------------------------------
                                               Magnum Hunter          Bluebird                             Magnum Hunter
                                              Resources, Inc.       Energy, Inc.                          Resources, Inc.
Amounts in Thousands                        And Guarantor Subs    (Non Guarantor)       Eliminations       Consolidated
---------------------------------------------------------------------------------------------------------------------------
Revenues.................................   $       32,627         $      18,282        $      (155)      $    50,754
Expenses.................................           20,547                 7,781               (155)           28,173
                                         ----------------------------------------------------------------------------------
Income before                                       12,080                10,501                  -            22,581
 Equity in net earnings of subsidiary....            6,524                     -             (6,524)                -
                                         ----------------------------------------------------------------------------------
Income before income taxes...............           18,604                10,501             (6,524)           22,581
Income tax provision.....................           (4,576)               (3,977)                 -            (8,553)
                                         ----------------------------------------------------------------------------------
  Net income.............................   $       14,028         $       6,524        $    (6,524)      $    14,028
                                         ==================================================================================
</TABLE>

                                       12
<PAGE>
                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2002
                                   (Unaudited)

                 Magnum Hunter Resources, Inc. and Subsidiaries
                Condensed Consolidating Statements of Cash Flows

                    For the Three Months Ended March 31, 2002
<TABLE>
<CAPTION>
<S>                                           <C>                     <C>                 <C>               <C>
                                                    Magnum Hunter        Canvasback                            Magnum Hunter
                                                   Resources, Inc.      Energy, Inc.                          Resources, Inc.
Amounts in Thousands                             And Guarantor Subs    (Non Guarantor)       Eliminations      Consolidated
-------------------------------------------------------------------------------------------------------------------------------
Cash flow from (used in) operating activities..  $     (26,058)          $    2,076          $         -       $      (23,982)
Cash flow used in investing activities.........        (60,021)              (2,415)                   -              (62,436)
Cash flow from (used in) financing activities..         88,616               (1,102)                   -               87,514
                                               --------------------------------------------------------------------------------
Net increase (decrease) in cash................          2,537               (1,441)                   -                1,096
Cash at beginning of period....................            730                2,025                    -                2,755
                                               --------------------------------------------------------------------------------
Cash at end of period..........................  $       3,267           $      584          $         -       $        3,581
                                               ================================================================================
</TABLE>

                    For the Three Months Ended March 31, 2001
<TABLE>
<CAPTION>
<S>                                          <C>                  <C>                <C>                <C>
                                                  Magnum Hunter         Bluebird                           Magnum Hunter
                                                 Resources, Inc.      Energy, Inc.                        Resources, Inc.
Amounts in Thousands                           And Guarantor Subs   (Non Guarantor)     Eliminations       Consolidated
---------------------------------------------------------------------------------------------------------------------------
Cash flow from operating activities..........    $     20,772       $     8,840         $        -         $   29,612
Cash flow used in investing activities.......         (23,251)           (5,792)                 -            (29,043)
Cash flow provided by (used in) financing
activities...................................           3,261            (3,600)               552                213
                                             ------------------------------------------------------------------------------
Net increase (decrease) in cash..............             782              (552)               552                782
Cash at beginning of period..................               9             1,820             (1,820)                 9
                                             ------------------------------------------------------------------------------
Cash at end of period........................    $        791       $     1,268         $   (1,268)        $      791
                                             ==============================================================================
</TABLE>

NOTE 9 - NEW ACCOUNTING STANDARD

     SFAS No. 145 - SFAS No. 145  "Rescission of FASB  Statements No. 4, 44, and
64,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections"  will be
effective for the Company  beginning  January 1, 2003.  The Statement  rescinds,
updates,  clarifies and simplifies various existing  accounting  pronouncements.
SFAS  No.  145  rescinds   SFAS  No.  4,   "Reporting   Gains  and  Losses  from
Extinguishment of Debt", which required all gains and losses from extinguishment
of debt to be aggregated and, if material,  classified as an extraordinary item,
net of related  income tax effect.  As a result,  SFAS No. 145 will  require the
Company to reclassify extraordinary items for debt extinguishment costs which do
not meet the criteria as described in APB Opinion No. 30 "Reporting  the Results
of  Operations  -  Reporting  the  Effects  of  Disposal  of  a  Business,   and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions",  as
additional interest expense. The Company plans to adopt this statement beginning
January 1, 2003.

                                       13
<PAGE>

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

Results of Operations

     The following  discussion and analysis  should be read in conjunction  with
the Company's  consolidated  financial  statements and the notes associated with
them  contained  in its Form 10-K for the year ended  December  31,  2001.  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 the
Company.

     There have been no changes to critical  accounting  policies for the period
ended March 31, 2002.  For a discussion  of our  critical  accounting  policies,
refer to the Company's Form 10-K for the period ended December 31, 2001.

     The discussion  below  compares  numbers which include the results of Prize
for one month in the 2002  period but not for the 2001  period.  The merger with
Prize  closed on March 15,  2002,  but for  operating  and  financial  reporting
purposes was effective as of March 1, 2002.  As such,  the results for the three
months  ended March 31, 2002  include  only one month of  operating  results for
Prize.

     Throughout  this  document  we  make  statements  that  are  classified  as
"forward-looking."  Please refer to the "Forward-Looking  Statements" section of
this document for an explanation of these types of assertions.

     The Company's results of operations have been significantly affected by our
past success in acquiring oil and gas  properties and our ability to maintain or
increase oil and natural gas production  through  exploration  and  exploitation
activities.  Fluctuations in oil and gas prices have also significantly affected
the results of operations.

     The following table sets forth certain  information with respect to our oil
and gas operations and our gas gathering, marketing and processing operations.

                                                     Three Months Ended
                                                         March 31,
                                                   2002             2001
                                            ------------------------------------
Oil and Gas Operations
--------------------------------------------------------------------------------
Reported Production:
   Oil (MBbls).............................         670             302
   Gas (MMcf)..............................       9,068           5,537
   Oil and Gas (MMcfe).....................      13,089           7,351
   Equivalent Daily Rate (MMcfe/day).......       145.4            81.7
Average Sale Prices (after hedging)
   Oil (per Bbl)...........................   $   21.04       $   26.89
   Gas (per Mcf)...........................        2.76            6.32
   Oil and Gas (per Mcfe)..................        2.99            5.87
Effect of hedging activities (per Mcfe)....        0.44           (0.14)
Lease Operating Expense (per Mcfe)
   Lifting costs...........................        0.68            0.63
   Production tax and other costs..........        0.33            0.55
Gross margin (per Mcfe)....................   $    1.98       $    4.69
Gas Gathering, Marketing and
   Processing Operations
--------------------------------------------------------------------------------
Throughput Volumes (Mcf per day)
   Gathering...............................      15,257          16,245
   Processing..............................      17,880          11,856
Gross margin (in thousands)................   $     902       $     530
   Gathering (per Mcf throughput)..........   $    0.13       $       -
   Processing (per Mcf throughput).........   $    0.38       $    0.44

                                       14
<PAGE>
Period to Period Comparison

For the Three Months Ended March 31, 2002 and 2001

     We reported net income of $7.4 million for the three months ended March 31,
2002 as  compared  to net income of $14.0  million  for the same period in 2001.
Total  operating  revenues  decreased 15% to $43.1 million and operating  profit
decreased 64% to $9.3 million in 2002. A 49% decrease in the price  received for
oil and gas sold (on a thousand  cubic feet  equivalent,  or Mcfe,  basis) and a
104% increase in  depreciation,  depletion and amortization  expense,  partially
offset by an income tax benefit of $6.5 million  resulting from the  elimination
of a net  operating  loss  valuation  allowance  taken  in a prior  period,  was
primarily  responsible  for  these  decreases.  We also  reported  decreases  in
revenues  from  our gas  gathering,  marketing  and  processing,  and oil  field
services  segments in the 2002 period  compared to the 2001 period,  also due to
lower  product  prices.  However,  gross  margins for gas  gathering  increased,
primarily as a result of the reduction of unfavorable  inventory pricing effects
experienced  in the 2001  period.  Income per common share - basic was $0.18 per
share and diluted was $0.17 per share in the 2002 period  compared to income per
common  share - basic of $0.41 per share and  diluted  of $0.37 per share in the
2000 period.

Oil and Gas Operations:

     For the three months ended March 31, 2002,  we reported oil  production  of
670 Mbbls  (thousand  barrels) and gas  production of 9,068 MMcf (million  cubic
feet),  which  represents an increase of 122% in oil produced and an increase of
64% in gas produced from the comparable period in 2001. Our reported  equivalent
daily  rate of  production  on a million  cubic  feet per day basis  (MMcfe/day)
increased  78% to 145.4  MMcfe/day  in the 2002  period.  These  increases  were
primarily  the result of the merger with Prize and the  success of our  drilling
program offsetting normal production declines. For the period, Prize contributed
259 Mbbls of oil and 2,435 MMcf of gas to the total production numbers.

     Oil  revenues  increased $6 million,  or 74%, in the first  quarter of 2002
compared to the same period in 2001. Production gains of 368 Mbbls increased oil
revenues by $10  million.  These  production  gains were  partially  offset by a
decrease of $4 million in oil  revenues as a result of a $5.85 per barrel,  or a
22% price decline realized in the quarter. Gas revenues decreased $10 million in
the  first  quarter  of 2002  compared  to the same  period  in 2001.  Gas price
decreases  of $3.56 per Mcf, or a 56%  decline,  decreased  gas revenue by $32.3
million.  These price  decreases were  partially  offset by an increase of $22.3
million in gas revenues as a result of a 3,531 MMcf  increase in gas  production
for the quarter.

     From time to time,  we enter into  various  hedging  contracts  in order to
reduce our exposure to the  possibility of declining oil and gas prices.  During
the 2002  period,  hedging  increased  the average  price we received for oil by
$0.31 per barrel and for gas by $0.61 per Mcf. During the first quarter of 2002,
we had 74% of our natural gas  production  hedged through a combination of fixed
price  swaps  and  cost-less  collars  at a  weighted  average  floor  price  of
approximately  $3.11 per Mcf and a ceiling  price of $3.23 per Mcf.  We also had
30% of our crude oil hedged at a weighted  average floor price of $23.92 per bbl
and a ceiling  price of $26.56 per bbl. From April 1, 2002 through the remainder
of 2002,  we have an  average of 113  MMcf/day  of  natural  gas  hedged  with a
weighted average floor price of approximately  $3.31 per Mcf and a ceiling price
of $3.60 per Mcf.  For the same time  period,  we also have  8,500 bbls of crude
hedged with a weighted average floor price of $23.40 per bbl and a ceiling price
of $25.79 per bbl.

     Lease operating expenses consist of two primary  components,  lifting costs
and production  tax and other costs.  For the 2002 period,  lifting costs,  on a
unit of production  basis,  were $0.68 per Mcfe as compared to $0.63 per Mcfe in
the 2001 period,  an increase of 8%.  Production  tax and other costs were $0.33
per Mcfe in the 2002  period  compared to $0.55 per Mcfe in the 2001  period,  a
decrease of 40%.  Decreases in production taxes,  which were a function of lower
oil and gas prices,  resulted in overall lease operating expenses  decreasing by
14% compared to the 2001 period.

     Our gross  margin for oil and gas  operations  (oil and gas  revenues  less
lease  operating  expenses) for the 2002 period was $25.9 million,  or $1.98 per
Mcfe,  compared  to $34.5  million,  or $4.69  per  Mcfe in the 2001  period,  a
decrease  of 25% on a per unit of  production  basis,  primarily  as a result of
lower oil and gas prices.

                                       15
<PAGE>
Gathering, Marketing and Processing Operations:

     For the  three  months  ended  March 31,  2002,  our gas  gathering  system
throughput was 15.3 MMcf per day versus 16.2 MMcf per day for the same period in
2001, a decline of 6% due to normal well production  declines behind the system.
Gas processing throughput was 17.9 MMcf per day in 2002 versus 11.9 MMcf per day
in 2000, an increase of 50%.  This increase is primarily due to the  acquisition
of a 100%  owned  interest  in the  Elmore  City  plant as a result of the Prize
merger.  For the  month  of  March  2002,  the  Elmore  City  plant  contributed
approximately 11.7 Mmcf per day of gas processing throughput.  Additionally, for
a portion of the 2001  period,  one of our gas  processing  plants was shut down
voluntarily  due to  adverse  processing  economics  as a result of record  high
natural gas prices.

     Revenues from gas gathering, marketing and processing decreased 49% to $3.6
million in 2002 versus $7.1  million in 2001.  We received  significantly  lower
prices for  natural  gas  liquids  and plant  products  sold in the 2002  period
compared to the 2001 period.  Operating  costs for the gas gathering,  marketing
and processing  segment  decreased 59% to $2.7 million in 2002 from $6.6 million
in 2001.  Lower  natural gas prices paid also  affected the cost of gas marketed
and processed.

     The gross margin realized from gas gathering,  marketing and processing for
2002 was $902 thousand versus $530 thousand million in 2001, an increase of 70%.
Gas  gathering  margin was $0.13 per Mcf gathered in 2002 versus zero per Mcf in
2001 due to an increase in marketing  spreads.  In the 2001 period,  we incurred
losses on natural  gas  inventories  due to  unfavorable  price  movements.  Gas
processing  margin was $0.38 per Mcf in 2002  compared to $0.44 per Mcf in 2001,
due to a decrease in plant  processing  spreads as a result of lower natural gas
liquids prices.

Oil Field Management Services Operations:

     Revenues from oil field management  services were $392 thousand in the 2002
period versus $515  thousand in the 2001 period,  due to a decrease in customers
for  whom we  provided  management  and  operations  services.  Operating  costs
decreased  to $276  thousand  in 2002 from $362  thousand in 2001 due to a lower
costs for labor and overhead. The gross margin for this segment in 2002 was $116
thousand versus $153 thousand in 2001, a decrease of 24%.

Other Income and Expenses:

     Depreciation  and  depletion  expense was $15.1  million in the 2002 period
versus $7.4 million in the 2001 period.  Depreciation  and  depletion of oil and
gas  properties  was  $1.11  per Mcfe  produced  in 2002  versus  $0.97 per Mcfe
produced  in  2001.  This  14%  increase  in the  equivalent  unit  cost was due
primarily to an increase in development  costs  associated  with our exploration
efforts in the Gulf of Mexico.  The increase was  partially  offset by the lower
depletion rate associated with the properties acquired in the Prize merger.

     General and  administrative  expense for 2002 increased 47% to $2.5 million
from $1.7 million in 2001. The principal  cause of this increase was an increase
in  salary,  benefits  and  retirement  plan  expenses  and an  increase  in the
Company's overall  headcount  associated with its merger with Prize. We recorded
equity in earnings of affiliate of $301 thousand in 2002 versus earnings of $618
thousand in 2001.  This  decrease  was due to decreased  net  earnings  from gas
marketing operations of one of the Company's 30% owned affiliates.  Other income
was $57 thousand  for 2002 versus $94 thousand in 2001.  The decrease was caused
by a slight decrease in interest income.  The Company recognized a $593 thousand
loss in other non-cash hedging  adjustments in 2002 versus an $889 thousand gain
in  2001.  In the  2002  period,  $435  thousand  of  the  loss  relates  to the
amortization of hedge assets acquired in the Prize merger.  The remaining losses
represent hedge  ineffectiveness  as the Company's hedge position changed from a
net asset to a net liability  during the quarter.  In the 2001 period,  the gain
was  principally  related to a fair value interest rate  derivative that did not
qualify for hedge accounting under FAS133.

     Interest  expense was $7.5  million for 2002 versus $4.9  million for 2001.
Interest  expense  increased as a result of the addition of $300 million in 9.6%
Senior Notes and an increase in the borrowing base and amount outstanding on the
Senior Bank Credit  Facility,  both created in connection with the Prize merger.
Additional  interest  expense was  recorded  as a result of new capital  leases,
vendor financed loans, and non-recourse indebtedness.

                                       16
<PAGE>

     We  recorded a total  income tax  benefit  of $6.5  million in 2002  versus
income tax expense of $8.6 million in 2001. For the 2002 period, the Company was
able to eliminate the $7.1 million valuation  allowance on its NOL balances as a
result of the merger  with  Prize.  The 2001  period  provision  included a $1.3
million current provision due to alternative minimum tax regulations.

     There were no dividends  applicable  to  preferred  stock in 2002 or in the
2001 period. The elimination of the dividend was due to the purchase, redemption
and conversion of all of the Company's  remaining  outstanding  dividend  paying
preferred stock as of January 2001.

Liquidity and Capital Resources

     CASH FLOW AND WORKING  CAPITAL.  Net cash used in and provided by operating
activities for the three month periods in 2002 and 2001 was $(24.0)  million and
$29.6  million,  respectively.  The  substantial  decrease in our operating cash
flows in 2002 over 2001 was  primarily the result of a reduction of balances due
on payables that had accumulated at year end and from the merger with Prize. Our
net working capital  position at March 31, 2002 was $4.4 million.  On that date,
Magnum  Hunter also had  available  $110.9  million under its Senior Bank credit
facility.

     INVESTING  ACTIVITIES.  Net cash  used in  investing  activities  was $62.4
million in the 2002  period.  We made cash capital  expenditures  of $19 million
under our capital budget during 2002. Our capital  expenditures are discussed in
further detail below. We also made a loan of $2.4 million and used $41.1 million
in the merger with Prize in 2002.

     In the 2001  period,  net  cash  used in  investing  activities  was  $29.0
million.  We made cash  expenditures  of $29.9 million under our capital  budget
during 2001, of which $5.8 million was  attributable to Bluebird.  Additionally,
we  received  a total of $749  thousand  from an  unconsolidated  affiliate.  We
received  payments on promissory notes receivable  totaling $63 thousand and had
other receipts of cash of $4 thousand during the 2001 period.

     FINANCING  ACTIVITIES.  Net cash provided by financing activities was $87.5
million in the 2002  period.  We borrowed a total of $534.2  million,  including
$300 million in new 9.6% Senior Notes,  $185.6 million under the new Senior Bank
credit  facility,  and the remainder under the previous credit facility and from
other sources.  During the period we also repaid  borrowings of $431.3  million,
including $155.7 million to pay off the previous credit facility, $245.8 million
to pay off the Prize  credit  facility in  connection  with the merger,  and the
remainder to pay off other  indebtedness.  We paid $11.8 million in fees related
to the newly issued Senior Notes and the new Senior Bank credit facility, loaned
$2.5 million to the ESOP, purchased treasury stock for $1.3 million, and had net
proceeds  from the  issuance of common  stock of $145  thousand . Our  financing
activities are discussed in further detail below.

     Net cash  provided by financing  activities  was $213  thousand in the 2001
period.  We  borrowed  a total of $27.5  million  under our Senior  Bank  credit
facility, none of which was attributable to Bluebird. We repaid borrowings under
our Senior Bank  credit  facility of $29.6  million,  of which $3.6  million was
attributable to Bluebird.  We received $1.6 million in cash from the issuance of
common  stock.  We paid $12 thousand  for fees related to financing  activities.
Cash dividends  paid were $169 thousand in 2001.  Bluebird had a net decrease in
cash of $552 thousand.

     CAPITAL  RESOURCES.  The following  discussion of Magnum  Hunter's  capital
resources  refers to the Company and its affiliates (not including  Bluebird for
the 2001 period).  Internally  generated  cash flow and the  borrowing  capacity
under  its  Senior  Bank  credit  facility  are the  Company's  major  source of
liquidity.  From time to time, the Company may also sell  properties in order to
increase liquidity.  In addition,  the Company may use other sources of capital,
including the issuance of additional  debt securities or equity  securities,  as
sources to fund  acquisitions  or other specific needs. In the past, the Company
has accessed both the public and private  capital  markets to provide  liquidity
for specific activities and general corporate purposes.

     The Company  amended and  restated  its Senior  Bank Credit  Facility  (the
facility)  in  conjunction  with the merger  with Prize.  The  amended  facility
provides for total borrowings of $500 million, up from $225 million,  and raises
the borrowing  base limit from $160 million to $300 million.  Additionally,  the
expiration  date of the facility  was amended and extended to March 2006.  After
March 15,  2002,  the  facility  was used to i) fund the cash  component  of the
merger consideration payable to the Prize shareholders, ii) pay costs associated
with the merger, and iii) for general corporate purposes.

                                       17
<PAGE>

     On March 15,  2002,  the  Company  completed  a private  placement  of $300
million of new unsecured  Senior Notes due 2012.  Interest on these Senior Notes
bears a fixed annual rate of 9.6% due  semi-annually,  commencing  September 15,
2002.  Funds  received  from the  issuance of these notes were used to i) retire
outstanding  indebtedness  under the Prize commercial bank credit facility,  ii)
pay fees  related to the  issuance  of the Senior  Notes,  and iii) for  general
corporate purposes.

     On January 15, 2002, the Company entered into a sale-leaseback  transaction
on  three  newly  constructed   offshore  production  platforms  and  associated
pipelines that were recently placed into service.  The Company  received a total
of $11.2 million in new funding which was used for general  corporate  purposes.
The production platforms are being leased from a syndicate group of lenders over
a term of three  years and at a cost of funds based on the one month LIBOR rate,
currently yielding a cost of approximately 5.30% per annum. This transaction was
accounted for as a capital lease and was included in long-term debt.

     On March 15, 2002,  the Company  repaid its 7% notes  payable to vendors of
$4.0 million plus accrued  interest.  On March 14, 2002, the Company borrowed an
additional  $2.5 million from vendors under a new note bearing a fixed  interest
rate of 4.25% per annum and with a maturity date of December 14, 2002.

     On March 7, 2002,  Canvasback entered into a $10.0 million revolving credit
agreement with a financial  institution.  The credit agreement provides for both
LIBOR and prime based  interest rate options,  a 6.5% interest rate at March 31,
2002. The agreement also provides that upon the revolving loan  termination date
of June 30, 2002, the aggregate  outstanding  principal  amount of any revolving
loan will automatically be converted to a term loan,  repayable on the term loan
maturity date of March 7, 2004,  together with accrued  interest.  Proceeds from
the initial  drawdown  under the agreement of $5.8 million were used to purchase
the same  amount in face  value of the  Company's  10% Senior  Notes  which were
acquired in 2001 by the Company, and were being held as an investment. These 10%
Senior Notes,  together with $4.7 million of 10% Senior Notes  formerly owned by
Bluebird and contributed to Canvasback in its initial  capitalization,  serve as
collateral for the loan. The loan is non-recourse to the Company.

     In January, 2001 the remaining 50% of the Company's outstanding 1999 Series
A 8%  Convertible  preferred  stock was converted by the holder to the Company's
common stock at the conversion  price of $5.25 per share.  The Company no longer
has any dividend paying preferred stock outstanding to a non-affiliated entity.

     On a semiannual  basis, the Company's  borrowing base under its Senior Bank
credit facility is redetermined by the financial institutions who have committed
to the  Company  based on  their  review  of the  Company's  proved  oil and gas
reserves. If the outstanding senior bank debt exceeds the redetermined borrowing
base, the Company must repay the excess.

     The Company's  internally  generated cash flow, results of operations,  and
financing for its operations are substantially  dependent on oil and gas prices.
To the extent that oil and gas prices decline,  the Company's  earnings and cash
flows may be adversely  affected.  The Company  believes that its cash flow from
operations,  existing working capital and availability under its new Senior Bank
credit  facility will be  sufficient  to meet interest  payments and to fund the
capital expenditure budget for the year 2002.

     CAPITAL  EXPENDITURES.  During the 2002 period, the Company's total capital
expenditures  were $19  million,  excluding  the $608.2  million  in  properties
acquired  through the Prize merger.  Exploration  activities  accounted for $4.7
million,  development  activities  accounted for $13.9 million, and additions to
other assets accounted for $0.4 million of the capital expenditures. The Company
participated  in the drilling of 24 wells  during the 2002  period,  of which 20
were  onshore  and 4 were  offshore  in the  Gulf of  Mexico.  Three of the four
offshore  wells were  considered  successful.  Of the 24 wells  drilled,  3 were
exploratory  wells, of which 2 were successful,  and 21 were development  wells,
all of which  were  successful.  As of March 31,  2002,  the  Company  had total
unproved  oil and gas property  costs of $144.5  million,  consisting  of $125.7
million  acquired in the merger with Prize and $18.8  million of other  property
acquisition costs.

     For calendar year 2002, the Company has budgeted approximately $115 million
for  exploration and development  activities.  The Company is not  contractually
obligated to proceed with any of its material budgeted capital expenditures. The
amount and allocation of future capital  expenditures will depend on a number of
factors  that are not  entirely  within  the  Company's  control  or  ability to
forecast, including drilling results, oilfield costs, and changes in oil and gas
prices. As a result, actual

                                       18
<PAGE>
capital expenditures may vary significantly from current expectations.

     In the normal course of business, the Company reviews opportunities for the
possible  acquisition  of oil and gas reserves and activities  related  thereto.
When  potential  acquisition   opportunities  are  deemed  consistent  with  the
Company's growth  strategy,  bids or offers in amounts and with terms acceptable
to the Company may be submitted. It is uncertain whether any such bids or offers
which may be submitted by the Company  from time to time will be  acceptable  to
the sellers. In the event of a future significant  acquisition,  the Company may
require additional financing in connection therewith.

     FORWARD-LOOKING STATEMENTS. This Form 10-Q and the information incorporated
by reference  contain  statements that constitute  "forward-looking  statements"
within the meaning of Section 27A of the  Securities  Act and Section 21E of the
Securities Exchange Act. The words "expect", "project",  "estimate",  "believe",
"anticipate",  "intend",  "budget",  "plan",  "forecast",  "predict"  and  other
similar expressions are intended to identify forward-looking  statements.  These
statements  appear in a number of places and include  statements  regarding  our
plans,  beliefs,  or current  expectations,  including the plans,  beliefs,  and
expectations of our officers and directors.

     When considering any forward-looking statement, you should keep in mind the
risk factors that could cause our actual results to differ materially from those
contained in any forward-looking  statement.  Important factors that could cause
actual results to differ materially from those in the forward-looking statements
herein include the timing and extent of changes in commodity  prices for oil and
gas, operating risks and other risk factors as described in our Annual Report on
Form 10-K as filed with the Securities and Exchange Commission. Furthermore, the
assumptions  that  support  our   forward-looking   statements  are  based  upon
information  that  is  currently   available  and  is  subject  to  change.   We
specifically  disclaim all  responsibility  to publicly  update any  information
contained in a forward-looking statement or any forward-looking statement in its
entirety and therefore disclaim any resulting  liability for potentially related
damages.

     All  forward-looking  statements  attributable to Magnum Hunter  Resources,
Inc. are expressly qualified in their entirety by this cautionary statement.

Inflation and Changes in Prices

     During the 2002 period, the Company  experienced  substantial  decreases in
prices for oil and gas  compared to the same period in the  previous  year.  The
results of operations  and cash flow of the Company have been, and will continue
to be,  affected by the  volatility  in oil and gas  prices.  Should the Company
experience a significant increase in oil and gas prices that is sustained over a
prolonged  period,  it would  expect  that there  would also be a  corresponding
increase in oil and gas finding costs,  lease  acquisition  costs, and operating
expenses.  Periodically  the Company  enters  into  futures,  options,  and swap
contracts to reduce the effects of fluctuations in crude oil and gas prices.  It
is the  policy of the  Company  not to enter  into any such  arrangements  which
exceed 75% of the Company's oil and gas production  during the projected next 12
months.

     The Company  markets  oil and gas for its own  account,  which  exposes the
Company  to  the  attendant  commodities  risk.  A  significant  portion  of the
Company's gas production is currently sold to a 30% owned affiliate,  NGTS, LLC,
or end-users either on the spot market on a  month-to-month  basis at prevailing
spot market prices,  or under  long-term  contracts based on current spot market
prices. The Company normally sells its oil under  month-to-month  contracts to a
variety of purchasers.

Hedging

     Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative  Instruments and Hedging  Activities"  (SFAS No. 133), as extended by
SFAS No. 137 (June 1999) and amended by SFAS No. 138 (June 2000),  was effective
for the Company beginning  January 1, 2001. SFAS No. 133 establishes  accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
the recognition of derivatives in the balance sheet and the measurement of those
instruments at fair value.

     The Company was obligated to nine crude oil derivatives, twenty natural gas
derivatives,  and two interest rate  derivatives  on March 31, 2002. The Company
has determined that all outstanding  derivatives qualify as cash flow hedges and
for hedge

                                       19
<PAGE>
     treatment  as defined  within  SFAS No. 133,  which  require the Company to
record the  derivative  assets or liabilities at their fair value on its balance
sheet with an offset to other comprehensive income.  However, in connection with
the merger with Prize on March 15, 2002,  the Company  purchased $7.6 million in
hedge assets at fair value on that date, with no  corresponding  offset to other
comprehensive income. Consequently, this hedge balance will amortize as a charge
to other non-cash hedging  adjustments  over the next 33 months.  The balance of
these  Prize  hedge  assets on March 31,  2002 was $7.2  million.  Future  hedge
ineffectiveness on the cash-flow hedges will be recorded in earnings.

     At March 31,  2002,  the fair value of the  Company's  derivatives  were as
follows (in thousands):


Derivative Assets
-------------------------------
Natural gas collars                     $            7,513
Crude oil swaps                                        169
                               ---------------------------
Total derivative assets                 $            7,682
                               ---------------------------
Derivative Liabilities
-------------------------------
Natural gas collars                     $            7,591
Natural gas swaps                                   14,275
Crude oil collars                                    1,158
Crude oil swaps                                      1,665
Interest rate swaps                                    648
                               ---------------------------
Total derivative liabilities              $         25,337
                               ---------------------------
Net derivative liabilities                $         17,655
                               ===========================

     For the  three-month  period  ended March 31,  2002,  the income  statement
includes a loss of $158 thousand  related to the natural gas  derivatives  and a
loss of $435 thousand  related to the  amortization of hedge assets purchased in
the Prize  merger.  The Company  expects  that the  remaining  balances in other
comprehensive  income at March 31,  2002 will be  reclassified  into the  income
statement within the next 33 months.  During the next 12 months, $5.2 million of
amortization  of hedge  assets  purchased in the Prize merger will be charged to
the income statement.  Additionally,  $2.7 million of other comprehensive income
will be reclassified into the income statement during the next 12 months.

New Accounting Standard

     SFAS No. 145 - SFAS No. 145  "Rescission of FASB  Statements No. 4, 44, and
64,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections"  will be
effective for the Company  beginning  January 1, 2003.  The Statement  rescinds,
updates,  clarifies and simplifies various existing  accounting  pronouncements.
SFAS  No.  145  rescinds   SFAS  No.  4,   "Reporting   Gains  and  Losses  from
Extinguishment of Debt", which required all gains and losses from extinguishment
of debt to be aggregated and, if material,  classified as an extraordinary item,
net of related  income tax effect.  As a result,  SFAS No. 145 will  require the
Company to reclassify extraordinary items for debt extinguishment costs which do
not meet the criteria as described in APB Opinion No. 30 "Reporting  the Results
of  Operations  -  Reporting  the  Effects  of  Disposal  of  a  Business,   and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions",  as
additional interest expense. The Company plans to adopt this statement beginning
January 1, 2003.

                                       20
<PAGE>
Item 3. Qualitative and Quantitative Disclosure About Market Risk

     The Company's  operations are exposed to market risks primarily as a result
of changes in  commodity  prices and  interest  rates.  The Company does not use
derivative financial instruments for speculative or trading purposes.

     Energy swap agreements.  The Company produces,  purchases,  and sells crude
oil,  natural  gas,  condensate,  and  natural  gas  liquids.  As a result,  the
Company's  financial  results can be  significantly  impacted as these commodity
prices  fluctuate  widely in response to changing  market forces and conditions.
The Company has previously engaged in oil and gas hedging activities and intends
to continue to consider various hedging arrangements to realize commodity prices
which it considers  favorable.  The Company  engages in futures  contracts  with
certain  of  its  oil  and  gas  production  through  various  contracts  ("Swap
Agreements").  The primary  objective of these  activities is to protect against
significant decreases in price during the term of the hedge.

     The Swap  Agreements  provide for separate  contracts  tied to the New York
Mercantile  Exchange  ("NYMEX")  light sweet oil and the Inside FERC natural gas
index price posting ("Index").  The Company has contracts which contain specific
contracted  prices  ("Swaps") that are settled  monthly based on the differences
between  the  contract  prices  and the  specified  Index  prices for each month
applied to the related  contract  volumes.  To the extent the Index  exceeds the
contract  price,  the Company  pays the spread,  and to the extent the  contract
price exceeds the Index price, the Company receives the spread. In addition, the
Company has combined  contracts which have agreed upon price floors and ceilings
("Costless  Collars").  To the  extent  the Index  price  exceeds  the  contract
ceiling,  the  Company  pays the spread  between the ceiling and the Index price
applied to the  related  contract  volumes.  To the extent  the  contract  floor
exceeds the Index,  the Company  receives the spread  between the contract floor
and the Index price applied to the related contract volumes.

     To the extent the Company  receives the spread  between the contract  floor
and the Index  price  applied to related  contract  volumes,  the  Company has a
credit risk in the event of nonperformance of the counterparty to the agreement.
The Company does not anticipate any material impact to its results of operations
as a result of nonperformance by such parties.

     The  Company is  contractually  obligated  to a  counterparty  to provide a
margin deposit in the form of cash or bank letter of credit should the aggregate
fair value of hedge contracts held with the counterparty  exceed a predetermined
value.

     The following is a summary of the Company's open commodity  hedge contracts
as of March 31, 2002:

                                                                   Weighted
                                          Weighted average      average ceiling
           Period       Volumes/day          floor price             price
           --------------------------------------------------------------------
Oil         2002             8,500 Bbl      $        23.40       $      25.79
Gas         2002           111,273 Mcf      $         3.31       $       3.60
Oil         2003             1,000 Bbl      $        21.25       $      21.25
Gas         2003           100,000 Mcf      $         3.00       $       3.69
Gas         2004            15,000 Mcf      $         3.00       $       4.20

     Based on future  market  prices at March 31,  2002,  the fair value of open
contracts  to the Company was a liability  of $17.1  million.  If future  market
prices were to  increase  10% from those in effect at March 31,  2002,  the fair
value of open contracts to the Company would be a liability of $42.3 million. If
future market prices were to decline 10% from those in effect at March 31, 2002,
the fair value of the open  contracts  to the Company  would be an asset of $4.5
million.

                                       21
<PAGE>

     The  Company  currently  intends  to  commit  no more than 75% of its daily
production on a Bcfe basis to such  arrangements at any point in time. A portion
of the  Company's  oil and  natural  gas  production  will be  subject  to price
fluctuations unless the Company enters into additional hedging transactions.

Interest Rate Swaps

     On August 9, 2001,  the Company  entered  into two  interest  rate swaps in
order to shift a portion of its variable rate bank debt to fixed rate debt.  The
following table reflects the terms of these swaps:

<TABLE>
<CAPTION>
<S>                          <C>                <C>                 <C>            <C>
          Type                Notional Amount   Termination Date       Pay Rate      Receive Rate
----------------------------------------------------------------------------------------------------------------
Pay Fixed/Receive Variable     $50,000,000         8/23/03           4.25% Fixed    3 month LIBOR
                                                                                   currently 2.195%
</TABLE>

     Based on future  market  rates at March 31,  2002,  the fair  value of open
contracts  to the Company was a liability  of $648  thousand.  If future  market
rates  were to  increase  10% from those in effect at March 31,  2001,  the fair
value of open contracts to the Company would be a liability of $492 thousand. If
future  market rates were to decline 10% from those in effect at March 31, 2001,
the fair value of the open contracts to the Company would be a liability of $804
thousand..

Fixed and Variable Debt

     The Company uses fixed and  variable  debt to  partially  finance  budgeted
expenditures.  These  agreements  expose the Company to market  risk  related to
changes in interest rates.

     The following  table  presents the carrying and fair value of the Company's
debt along with average  interest  rates.  Fair values are calculated as the net
present value of the expected cash flows of the  financial  instruments,  except
for the fixed rate Senior  Notes,  which are valued at their last  traded  value
before March 31, 2002.

<TABLE>
<CAPTION>
<S>                                     <C>            <C>         <C>        <C>         <C>            <C>            <C>
    Expected Maturity Dates
       (in thousan                ds)         2002         2003-6      2006     2007           2012         Total       Fair Value
-----------------------------------------------------------------------------------------------------------------------------------
Variable Rate Debt:
Bank Debt with Recourse (a).............. $       -     $      -   $ 189,104  $      -     $       -      $  189,104     $  189,104
Bank Debt without Recourse (b)........... $       -     $   5,834  $       -  $      -     $       -      $    5,834     $    5,834
Capital Leases (c)....................... $    1,918    $   8,993  $       -  $      -     $       -      $   10,911     $   10,911

Fixed Rate Debt:
Senior Notes (d)......................... $       -     $      -   $       -  $ 129,466    $       -      $  129,466     $  134,645

Senior Notes (e)......................... $       -     $      -   $       -  $      -     $ 300,000      $  300,000     $  311,250
Note Payable (f)......................... $    1,970    $      -   $       -  $      -     $       -      $    1,970     $    1,970
Other.................................... $       36    $      -   $       -  $      -     $       -      $       36     $       36
</TABLE>

------------
     (a) The average interest rate on the bank debt with recourse is 4.4%.
     (b) The average interest rate on the bank debt without recourse is 6.5%.
     (c) The average interest rate on the two capital leases is 5.3%
     (d) The interest rate on the senior notes due 2007 is a fixed 10%.
     (e) The interest rate on the senior notes due 2012 is a fixed 9.6%
     (f) The interest rate on the note payable to vendors is 4.25%

                                       22
<PAGE>

                          PART II -- OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
<TABLE>
<CAPTION>
<S>                  <C>
Number                                   Description of Exhibit

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              Articles of Amendment to Articles of Incorporation (incorporated by reference to Form 10-K for the year
                       ended December 31, 2001)
3.6 & 4.6              By-Laws, as Amended (Incorporated by reference to Registration Statement on Form SB-2, File No.
                       33-66190)
3.7 & 4.7              Amendment to By-Laws (Incorporated by reference to Registration Statement on Form S-4, File No.
                       333-76774)
3.8 & 4.8              Certificate of Designation of 1996 Series A Preferred Stock (Incorporated by reference to Form 8-K dated
                       December 26, 1996, filed January 3, 1997)
3.9 & 4.9              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)
4.10                   Form of Warrant Agreement by and between Magnum Hunter Resources, Inc. and American Stock
                       Transfer & Trust Company, as warrant agent (Incorporated by reference to Registration Statement on Form
                       S-3, File No. 333-82552)
4.11                   Form of Warrant Agreement by and between Midland Resources, Inc. and Stock Transfer Company of
                       America, Inc., as warrant agent, dated November 1, 1990 (Incorporated by reference to Registration
                       Statement on Form S-3, File No. 333-83376)
4.12                   Form of Warrant Agreement by and between Vista Energy Resources, Inc. and American Stock Transfer
                       & Trust Company, as warrant agent, dated October 28, 1998 (Incorporated by reference to Registration
                       Statement on Form S-3, File No. 333-83376)
4.13                   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. 333-2290)
4.14                   Supplemental Indenture dated January 27, 1999 between Magnum Hunter Resources, the subsidiary
                       guarantors named therein and First Union National Bank of North Carolina, as Trustee (Incorporated by
                       reference to Form 10-K for the fiscal year-end December 31, 1998 filed April 14, 1999)
4.15                   Form of 10% Senior Note due 2007 (Incorporated by reference to Registration Statement on Form S-4, File
                       No. 333-2290)
4.16                   Indenture, dated March 15, 2002, 2002, between Magnum Hunter Resources, Inc., the subsidiary
                       guarantors named therein and Bankers Trust Company, as Trustee (Incorporated by reference to Form 10-K
                       for the year ended December 31, 2001)
4.17                   Shareholder Rights Agreement dated as of January 6, 1998 by and between Magnum Hunter Resources,
                       Inc. and Securities Transfer Corporation, as Rights Agent (Incorporated by reference to Form 8-K dated
                       January 7, 1998, filed January 9, 1998)
10.1                   Fourth Amended and Restated Credit Agreement, dated March 15, 2002, between Magnum Hunter
                       Resources, Inc. and Bankers Trust Company, et al  (Incorporated by reference to Form 10-K for the year
                       ended December 31, 2001)

                                       23
<PAGE>

10.2                   Employment Agreement for Gary C. Evans (Incorporated by reference to Form 10-K for the fiscal year-end
                       December 31, 1999 filed March 30, 2000)
10.3                   Employment Agreement for Richard R. Frazier (Incorporated by reference to Form 10-K for the fiscal
                       year-end December 31, 1999 filed March 30, 2000)
10.4                   Employment Agreement for Chris Tong (Incorporated by reference to Form 10-K for the year ended
                       December 31, 2001)
10.5                   Employment Agreement for R. Douglas Cronk  (Incorporated by reference to Form 10-K for the year ended
                       December 31, 2001)
10.6                   Employment Agreement for Charles Erwin  (Incorporated by reference to Form 10-K for the year ended
                       December 31, 2001)
10.7                   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)
10.8                   Purchase and Sale Agreement between Magnum Hunter Resources, Inc. , NGTS, et al., dated December
                       17, 1997  (Incorporated by reference to Form 8-K, dated December 17, 1997, filed December 29, 1997)
10.9                   Purchase and Sale Agreement dated November 25, 1998 between Magnum Hunter Production, Inc. and
                       Unocal Oil Company of California (Incorporated by reference to Form 10-K for the fiscal year-end December
                       31, 1998 filed April 14, 1999)
10.10                  Stock Purchase Agreement dated February 3, 1999 between ONEOK Resources Company and Magnum
                       Hunter Resources, Inc. (Incorporated by reference to Form 8-K, dated February 3, 1999, filed February 11,
                       1999)
10.11                  Agreement of Limited Partnership of Mallard Hunter, L.P., dated May 23, 2000 (Incorporated by reference
                       to Form 10-Q/A for the period ended June 30, 2000 filed November 30, 2000)
</TABLE>

(b) Reports on Form 8-K

     1) Form 8-K filed February 19, 2002 under Item 5.
     2) Form 8-K filed March 1, 2002 under Item 5.
     3) Form 8-K filed March 14, 2002 under Item 5.
     4) Form 8-K filed March 21, 2002 under Item 5.

                                       24
<PAGE>

                                    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                                         May 15, 2002
  -----------------------------------------------
   Gary C. Evans
   President and Chief Executive Officer


By /s/ Chris Tong                                            May 15, 2002
  -----------------------------------------------
   Sr. Vice President and
   Chief Financial Officer


By  /s/ David S. Krueger                                     May 15, 2002
    ---------------------------------------------
    David S. Krueger
    Vice President and
    Chief Accounting Officer


By /s/ Morgan F. Johnston                                    May 15, 2002
   ----------------------------------------------
    Morgan F. Johnston
    Vice President,  General Counsel and
    Secretary

                                       25