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

                                   Form 10-QSB

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

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

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

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

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

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

                                 (972) 401-0752
                            Issuer's telephone number

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.
                                                      Yes    X        No

State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of November 5, 1997: 13,911,243

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









                                        1

<PAGE>



                         PART I -- FINANCIAL INFORMATION


Item 1. Financial Statements

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


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

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

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

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

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

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



                                        2

<PAGE>



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

On May 29,  1997,  the Company  placed,  through a Rule 144A  private  placement
offering,  $140 million in Senior  Notes due 2007.  The Notes have a 10% coupon,
with interest  payable on June 1 and December 1, commencing on December 1, 1997.
There is no restriction  on the ability of any  consolidated  or  unconsolidated
subsidiary to transfer funds to the Company in the form of cash dividends, loans
or  advances.  Net  proceeds  from the sale of the  Senior  Notes  were  used to
completely repay the Company's outstanding bridge loan facility in the principal
amount of $60 million with the  remaining  proceeds  used to repay a substantial
portion of the Company's  outstanding  revolving credit facility.  At that time,
the maximum commitment under the revolving credit facility was reduced from $130
million  to $75  million,  with a  borrowing  base of $60  million.  The  credit
facility  was  amended  as of  September  30,  1997,  to  increase  the  maximum
commitment  from $75 million to $125 million,  increase the borrowing base by $5
million to $65 million, and modify the interest expense coverage ratio test.

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

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

Oil  and  natural  gas  sales  were  $22,793,000  in 1997, a 259%  increase over
1996. In 1997,  the Company sold 489,771  barrels of oil, a 250%  increase,  and
6,450,700 Mcf of gas, a 295% increase. The price received for oil was $17.79 per
barrel and for gas was $2.18 per Mcf in 1997,  representing  an 11%  decrease in
oil price and a 2% decrease in gas price  compared to 1996.  Oil and natural gas
production  costs  increased  270% to  $8,521,000  in 1997 over 1996.  The gross
operating  margin from oil and natural gas production was $14,272,000 in 1997, a
252% increase over 1996,  principally  due to the volume increase of oil and gas
sold. On an equivalent  unit basis,  the gross margin was $1.52 per Mcfe in 1997
versus $1.64 in 1996, a 7% decrease,  principally  due to decline in sales price
received for both oil and gas between 1996 and 1997.

Gas gathering,  marketing,  and processing  revenues were $7,721,000 in the 1997
period, a 146% increase over 1996, principally as a result of the acquisition of
the Panoma  Gas  Gathering  System  and the  McLean Gas Plant.  Costs from these
activities were  $5,803,000 in 1997, a 121% increase over 1996.  Gross operating
margin was  $1,918,000 in 1997 versus  $514,000 in 1996, a 273%  increase.  As a
result  of   the  acquisition  of  the  Panoma  System, total  gathering  system
throughput increased 100% to



                                        3

<PAGE>



20,193 Mcf per day in 1997 compared with 10,078 Mcf per day in 1996.  Due to the
McLean Plant acquisition, natural gas plant processing throughput was 14,512 Mcf
per day in 1997  versus  none  reported  in 1996.  Gross  operating  margin from
gathering  operations  was $0.24 per Mcf of  throughput in 1997 versus $0.29 per
Mcf in 1996.  The gross  operating  margin from natural gas processing was $0.23
per Mcf of throughput versus none reported in 1996.

Revenues  from oil field  services and  international  sales were  $3,792,000 in
1997, a $3,407,000  increase over 1996,  principally due to an increase in sales
of Hunter Butcher International,  L.L.C. in the amount of $3,398,000.  Operating
costs were $3,482,000 in 1997, a $2,961,000 increase over 1996, also principally
due to Hunter  Butcher.  The gross  operating  margin from these  activities was
$310,000 in 1997 versus a loss of $136,000 in the 1996  period.  The margin from
Hunter Butcher  operations was $60,000 in 1997 versus $32,000 in 1996. Oil field
services  produced  an  operating  margin of  $250,000  in 1997 versus a loss of
$168,000 in 1996.

Depreciation  and  depletion  expense  increased  356% to $8,607,000 in 1997 due
to the  acquisitions.  Depletion  expense on oil and gas  production in 1997 was
$8,025,000,  or $0.85 per Mcfe,  versus  $1,625,000,  or $0.66 per Mcfe in 1996.
General and  administrative  expense was $1,128,000 in 1997, a 68% increase over
1996, due to increased staffing and other costs as a result of the acquisitions.

Operating  profit  increased  to   $6,765,000 in 1997 from $1,872,000 in 1996, a
261% increase.  Other income increased 184% to $608,000 due to a gain on sale of
marketable  securities.  Interest  expense  increased to $9,298,000 in 1997 from
$1,550,000  in 1996, an increase of 500%,  due to increased  levels of borrowing
under the Company's revolving credit lines with banks, the 10% Senior Notes, and
bridge financing used to fund the acquisitions previously mentioned. The Company
incurred a net loss before  income tax and minority  interest of  $1,925,000  in
1997, versus net income of $536,000 in 1996, principally due to interest expense
on the acquisitions  exceeding operating income and due to the higher charge for
depreciation  and  depletion.  The Company  provided  for a deferred  income tax
benefit of $732,000 on this loss in 1997 versus  deferred  income tax expense of
$204,000 in 1996. After recording a $40,000 minority interest in Hunter Butcher,
the  Company  reported  a  net  loss  in  1997  before  extraordinary  items  of
$1,234,000, or $0.14 per common share, versus a $332,000 net profit, or no cents
per common share, in 1996.

The  Company  realized an extraordinary  loss of  $1,384,000 ($0.10  per  common
share) as required under Accounting  Principles  Board ("APB")  Statement No. 26
and   Statement  of  Financial   Standards   ("SFAS")  No.  4,  from  the  early
extinguishment  of bank debt. The early  extinguishment  was a result of the new
10% Senior Notes financing and amended  revolving  credit  agreements with banks
arranged to facilitate the $133 million purchase of the Permian Basin Properties
from  Burlington  Resources Inc. The net loss in 1997,  after the  extraordinary
charge   applicable  to common  shareholders  was  $3,275,000  ($0.24 per common
share)  compared to a loss of $50,000 (no cents per common  share) in 1996.  The
Company  accrued  $657,000 in  dividends on its  preferred  stock in 1997 versus
$382,000 in 1996.





                                        4

<PAGE>



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

The results of operations  for the three month period ended  September 30, 1997,
included three months of operations for Panoma, McLean, and Permian Basin, while
the corresponding period in 1996 contained three months of operations for Panoma
and none for McLean and Permian.  Unless otherwise stated,  the increases in the
1997 interim period over the 1996 period were substantially the  result of these
acquisitions.

Oil and natural gas sales were  $11,002,000  in 1997, a 211% increase over 1996.
The Company sold 250,019  barrels of oil, a 400% increase,  and 3,118,351 Mcf of
gas, a 173% increase,  in 1997. The price received for oil was $17.28 per barrel
and for gas was $2.14 per Mcf in 1997, representing an 18% decrease in oil price
and a 1%  decrease in gas price in 1997  compared  to 1996.  Oil and natural gas
production  costs  increased  221% to  $3,781,000  in 1997 over 1996.  The gross
operating  margin from oil and natural gas  production was $7,221,000 in 1997, a
206% increase over 1996. On an equivalent unit basis, the gross margin was $1.56
per Mcfe in 1997 versus $1.63 in 1996, a 4% decrease.  The sales price  declined
3% to $2.38 per Mcfe while production costs were $0.82 per Mcfe in both 1996 and
1997.  These production costs are inclusive of gathering and overhead charges of
$0.12 per Mcfe in 1997. The overall  increase in the gross operating margin from
1996 to 1997  was  principally  due to the  220%  increase  in Mcfe  sold,  from
1,444,264 Mcfe to 4,618,465 Mcfe.

Gas gathering,  marketing,  and processing  revenues were $2,438,000 in the 1997
period, a 51% increase over 1996,  principally as a result of the acquisition of
the McLean Gas Plant. Costs from these activities were $1,865,000 in 1997, a 42%
increase over 1996.  Gross operating margin was $573,000 in 1997 versus $300,000
in 1996, a 91% increase.  Gathering system throughput decreased 4% to 20,442 Mcf
per day in 1997  compared  with  21,310  Mcf per day in 1996.  Due to the McLean
Plant  acquisition,  natural gas plant processing  throughput was 15,615 Mcf per
day in 1997 versus none reported in 1996.  Gross operating margin from gathering
operations was $0.16 per Mcf of throughput in 1997 versus $0.30 per Mcf in 1996.
The gross  operating  margin from  natural gas  processing  was $0.25 per Mcf of
throughput in 1997 versus none reported in 1996.

Revenues from oil field services and international sales was $186,000 in 1997, a
1% increase  over 1996.  Operating  costs  decreased 70% to $58,000 in 1997 from
1996 due to an increased allocation of operating costs to oil and gas production
costs.  The gross  operating  margin from these  activities was $128,000 in 1997
versus a loss of $10,000 in the 1996 period.

Depreciation and depletion  expense  increased 416% to $4,147,000 in 1997 due to
the acquisitions. Depletion expense on oil and gas production was $3,945,000, or
$0.85 per Mcfe, in 1997 versus $650,000,  or $0.45 per Mcfe in 1996. General and
administrative  expense was $477,000 in 1997, a 110% increase over 1996,  due to
increased staffing and other costs as a result of the acquisitions.

Operating profit increased to $3,298,000 in 1997 from $1,616,000 in 1996, a 104%
increase.  Other income was $453,000 in 1997, an increase of $425,000,  due to a
gain on sale of marketable securities.  Interest expense increased to $4,540,000
in 1997 from $1,051,000 in 1996, an increase of 332%, due



                                        5

<PAGE>



to increased levels of borrowing under the Company's revolving credit lines with
banks  and the  10%  Senior  Notes  used to  fund  the  acquisitions  previously
mentioned.  The  Company  incurred a net loss  before  income  tax and  minority
interest of $789,000 in 1997, versus income of $593,000 in 1996, principally due
to interest expense on the acquisitions exceeding operating income, inclusive of
depreciation  and  depletion  in the total  amount of  $1,242,000.  The  Company
provided  for a deferred  income tax  benefit of  $300,000  on this loss in 1997
versus deferred  income tax expense of $204,000 in 1996. The Company  reported a
net loss of  $509,000,  or $0.05 per  common  share,  in 1997  versus  income of
$389,000,  or $0.03 per common share in 1996.  The Company  accrued  $219,000 in
dividends on its preferred stock in 1997 versus $42,000 in 1996.

Liquidity and Capital Resources

The Company has three principal  operating  sources of operating cash: (i) sales
of oil and gas, (ii) revenues from gas gathering, processing, and marketing, and
(iii) revenues from petroleum management and consulting services.  The Company's
cash flow is highly  dependent upon oil and gas prices.  Decreases in the market
price of oil and gas  could  result  in  reductions  of both  cash  flow and the
Borrowing  Base under the  Company's  Credit  Facility,  which  would  result in
decreased funds available, including funds for capital expenditures.

On April 30,  1997 the  Company  closed the  acquisition  of the  Permian  Basin
Properties for a net purchase price of approximately $133.0 million. At the same
time, the Company's  previously  existing  $100.0  million  credit  facility was
replaced by two new credit  facilities,  the $130.0 million Credit  Facility and
the $60.0 million Term Loan Facility, for a total of $190.0 million. The initial
advances under these new facilities  totaled $179.5 million,  including funds to
complete the Permian Basin  Acquisition,  to pay principal and accrued  interest
remaining on the Company's  previous  credit  facility,  and to provide cash for
working capital purposes.

On May 29,  1997  the  Company  sold,  through  a Rule  144A  private  placement
offering,  $140.0 million aggregate principal amount of Notes. Net proceeds from
the sale of the Notes  were used to  completely  repay the  Company's  Term Loan
Facility in the  principal  amount of $60.0  million and to repay a  substantial
portion of the amount  outstanding  under the Credit Facility.  The Notes have a
10%  coupon,  with  interest  payable  on June 1 and  December 1  commencing  on
December 1, 1997.  After pay down,  the Credit  Facility was reduced from $130.0
million  to  $75.0  million,  with a  Borrowing  Base of  $60.0  million.  Total
long-term  debt  under the  Credit  Facility  at  September  30,  1997 was $48.0
million,  leaving  $12.0  million  available to draw at such time,  prior to the
amendment discussed below and the next Borrowing Base redetermination based upon
financial  results of the Company.  At October 29, 1997,  total  long-term  debt
under the Credit Facility was $50.0 million,  leaving $10.0 million available to
draw at such time. At September  30, 1997,  the Company has $3.1 million in cash
and cash equivalents and $2.1 million in net working capital, in addition to the
funds  available under the Credit  Facility.  The Company  recently  amended its
Credit  Facility with its lenders  resulting in an increase of the amount of the
Credit  Facility to $125.0  million,  an increase of the Borrowing Base to $65.0
million and a modification of the interest expense coverage ratio covenant.



                                        6

<PAGE>



The Company has called its publicly  traded  Warrants for redemption on November
7, 1997 at a redemption  price of $0.02 per Warrant.  The Warrants are presently
exercisable  for Common Stock at an exercise  price of $5.50 per share.  Because
the  closing  sale price of the Common  Stock on  November 3, 1997 was $7.75 per
share, the Company  anticipates that  substantially  all of the Warrants will be
exercised.  Assuming  that all the  Warrants  are  exercised,  the Company  will
receive cash proceeds in the amount of approximately $4.7 million.

On October  30,  1997 the  Company  announced  that it had filed a  registration
statement with the  Securities  and Exchange  Commission to register 6.5 million
shares of  common  stock to be sold to the  public  ("Offering").  The  proceeds
received  from  the  Offering  will be used to  repay  substantially  all of the
outstanding  indebtedness  under the Credit  Facility.  The  Company  intends to
reborrow  amounts under the Credit Facility to fund  exploration and development
activities,  potentially expand operations,  including  acquisitions,  and other
general corporate purposes.

For  fiscal  1997  the  Company  is  currently  projecting  that it  will  spend
approximately $20.0 million on development and exploration activities, including
$5.0 million  budgeted for development  projects on the Permian Basin Properties
and $3.0 million budgeted for exploration projects. In addition, with respect to
the recently closed Permian Basin Acquisition,  the Company  anticipates that it
will spend approximately $38.1 million over a four year period beginning in 1997
in a  development  program  to  enhance an  existing  waterflood  project in the
Westbrook Field located in Mitchell County,  Texas. For fiscal 1998, the Company
has  budgeted   approximately  $36.0  million  on  development  and  exploration
activities,  of which  $6.0  million  is  projected  to be spent on  exploration
projects.  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  and  changes in oil and gas
prices. As a result,  actual capital  expenditures may vary  significantly  from
current expectations.

Based  upon   the  Company's   anticipated  level  of  operations,  the  Company
believes that cash flow from operations together with the availability under the
Credit  Facility (approximately  $15.0  million as of  November 3, 1997) will be
adequate  to meet its  anticipated  requirements  for working  capital,  capital
expenditures  and scheduled  interest  payments for the foreseeable  future.  As
referenced  above, the Company plans on applying the net proceeds  received from
the Offering and the proceeds received from full exercise of the Warrants to the
outstanding debt balance on the Credit  Facility.  Adjusting for these items and
depending upon the final sales price of the Company's  common stock, the Company
anticipates  having  approximately $65 million available for borrowing under the
Credit Facility.

Inflation and Changes in Prices

During the past several years, the Company has experienced some inflation in oil
and natural gas prices  with  moderate  increases  in property  acquisition  and
development  costs.  During 1996, the Company received somewhat higher commodity
prices for the natural  resources  produced from its properties.  The results of
operations  and cash flow of the  Company  have been,  and will  continue  to be
affected to a certain  extent,  by the volatility in oil and natural gas prices.
Should the Company experience a



                                        7

<PAGE>



significant  increase in oil and natural  gas prices  that is  sustained  over a
prolonged  period,  it would  expect  that there  would also be a  corresponding
increase in oil and natural gas finding  costs,  lease  acquisition  costs,  and
operating expenses.  Periodically the Company enters into futures,  options, and
swap contracts to reduce the effect of fluctuations in crude oil and natural gas
prices.  It  is policy  of the  Company not to enter into any such  arrangements
which exceed 50%  of the  Company's oil  and natural gas  production  during the
next 12 months.

The Company  markets gas for its own account,  which  exposes the Company to the
attendant commodities risk. Substantially all of the Company's gas production is
currently sold to gas marketing  firms 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.

Hedging Activity

Periodically,  the Company enters into futures,  options,  and swap contracts to
reduce the effects of  fluctuations  in crude oil and natural gas prices.  As of
September 30, 1997, the Company had 33% of its oil production and 43% of its gas
production hedged. At September 30, 1997, the Company had open contracts for oil
price  collars  of 30,000  Bbls of oil per month  (with cap and floor  prices of
$23.25 and $18.50,  respectively)  through December 1998. At September 30, 1997,
the Company had open  contracts  for gas price swaps of 100,000 MMBtu of gas per
month at $1.905 per MMBtu through  January 1998,  100,000 MMBtu of gas per month
at $1.77 per MMBtu through January 1998 and 300,000 MMBtu of gas per month at an
average price of $2.67 per MMBtu through March 1998.  The average Btu content of
gas produced by the Company exceeds 1,100 Btu per Mcf of gas. Therefore, each of
the above gas prices  should be increased by 10% to reflect the actual gas price
per Mcf  received  by the  Company.  All of these  swaps are against the El Paso
Permian Basin Index. These contracts expire monthly. The gains and losses on the
Company's  hedging  transactions  are determined as the  difference  between the
contract price and a reference price,  generally  closing prices on the New York
Mercantile Exchange.  The resulting  transaction gains and losses are determined
monthly and are  included in the period the hedged  production  or  inventory is
sold.

Year 2000 Modification

The Company is currently  reviewing  its  computer  systems in order to evaluate
necessary  modifications  for the year  2000.  The  Company  does not  currently
anticipate  that it will  incur  material  expenditures  to  complete  any  such
modifications.



                                        8

<PAGE>
<TABLE>
<CAPTION>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                                 (in thousands)
<S>                                                                             <C>

                                                                                   September 30,
                                                                                      1997
                                                                                 ----------------

                                               ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                   $      3,081
     Accounts receivable
      Trade, net of allowance of $133                                                  14,211
      Due from affiliates                                                                 119
   Notes receivable from affiliate                                                        412
     Current portion of long-term note receivable                                         619
     Prepaid and other                                                                  1,024
                                                                                ---------------
          TOTAL CURRENT ASSETS                                                         19,466 
                                                                                ---------------                                
PROPERTY, PLANT AND EQUIPMENT                                                          
     Oil and gas properties, full cost method                                            
          Unproved                                                                        460
          Proved                                                                      215,513
     Pipelines                                                                          9,841
     Other property                                                                       653
                                                                                ----------------
          TOTAL PROPERTY, PLANT AND EQUIPMENT                                         226,467
     Accumulated depreciation, depletion and impairment                               (13,467)
                                                                                ----------------                               
          NET PROPERTY, PLANT AND EQUIPMENT                                           213,000  
                                                                                                                        
OTHER ASSETS                                                                                         
     Deposits and other assets                                                          6,046
     Long-term notes receivable, net of imputed interest                                1,646                             
                                                                                ----------------    
                                            TOTAL ASSETS                         $    240,158
                                                                                ================                                   

                                                                                                      
                                LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Trade payables and accrued liabilities                                       $     13,753
    Dividends payable                                                                     219
    Suspended revenue payable                                                             846
    Current maturities of long-term debt                                                   22
    Notes payable                                                                       2,699
                                                                                ----------------
          TOTAL CURRENT LIABILITIES                                                    17,539           
                                                                                ----------------
LONG-TERM LIABILITIES                                                                                                 
   Long-term debt, less current maturities                                            188,027   
   Production payment liability                                                           790  
     Deferred income taxes                                                              1,858
     Minority interest                                                                     40                          
                                                                                                                     
COMMITMENTS AND CONTINGENCIES                                                                                         
                                                                                                                          
STOCKHOLDERS' EQUITY
     Preferred stock - $.001 par value; 10,000,000 shares authorized,
         216,000  designated as Series A; 80,000 shares issued and  outstanding,
     liquidation  amount  $0                                                              -
         1,000,000  shares  designated  as  1996  Series  A
     Convertible; 1,000,000 issued and outstanding, liquidation
           amount $10,000,000                                                               1       
     Common stock - $.002 par value; 50,000,000 shares authorized,
       14,271,975 shares issued                                                            29      
   Additional paid-in capital                                                          40,291
       Accumulated deficit                                                             (8,416)                                    
                                                                                ----------------- 
                                                                                       31,905                      
      Treasury stock (538,633 shares of common stock)                                      (1)
                                                                                -----------------
            TOTAL STOCKHOLDERS' EQUITY                                                 31,904                               
                                                                                ----------------- 
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $     240,158
                                                                                =================                       


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

</TABLE>


                                        9

<PAGE>



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


                                                                            Three Months Ended            Nine Months Ended
                                                                               September 30,                September 30,           
                                                                      --------------------------------------------------------------
                                                                          1997          1996           1997         1996
                                                                      --------------------------------------------------------------

Operating Revenues:
     Oil and gas sales                                                $   11,002   $   3,536      $   22,793       $   6,357
     Gas gathering,  marketing and processing                              2,438       1,615           7,721           3,143
     Oil field services and international sales                              186         184           3,792             385
                                                                      --------------------------------------------------------------
Total Operating Revenues                                                  13,626       5,335          34,306           9,885
                                                                      --------------------------------------------------------------
Operating Costs and Expenses
     Oil and gas production                                                3,781       1,179           8,521           2,305
     Gas gathering, marketing and processing                               1,865       1,315           5,803           2,629
     Oil field services and international sales                               58         194           3,482             521
     Depreciation and depletion                                            4,147         804           8,607           1,888
     General and administrative                                              477         227           1,128             670
                                                                      --------------------------------------------------------------
Total Operating Costs and Expenses                                        10,328       3,719          27,541           8,013
                                                                      --------------------------------------------------------------
Operating Profit (Loss)                                                    3,298       1,616           6,765           1,872
     Other income                                                            453          28             608             214
     Interest expense                                                     (4,540)     (1,051)         (9,298)         (1,550)
                                                                      --------------------------------------------------------------
Net Income (Loss) before income tax and minority interest                   (789)        593          (1,925)            536
     Benefit (Provision) for deferred income tax                             300        (204)            731            (204)   
                                                                      --------------------------------------------------------------
Net Income (Loss) before minority interest                                  (489)        389          (1,194)            332
     Minority interest in subsidiary earnings                                (20)         -              (40)             -
                                                                      --------------------------------------------------------------
Net Income (Loss) Before Extraordinary Loss                                 (509)        389          (1,234)            332
Extraordinary Loss From Early Extinguishment of Debt                          -           -           (1,384)             -
                                                                      --------------------------------------------------------------
Net Income (Loss)                                                           (509)        389          (2,618)            332
     Dividends Applicable to Preferred Stock                                (219)        (42)           (657)           (382)
                                                                      --------------------------------------------------------------
Loss Applicable to Common Shares                                      $     (728)  $     347      $   (3,275)      $     (50)
                                                                      ==============================================================
Loss Before Extraordinary Loss per Common Share                       $    (0.05)  $    0.03      $    (0.14)      $     0.00
Extraordinary Loss per Common Share                                   $      -     $              $    (0.10)      $      -        
                                                                      --------------------------------------------------------------
Loss per Common Share                                                 $    (0.05)  $    0.03      $    (0.24)      $     0.00
                                                                      ==============================================================
Common Shares Used In Per Share Calculation                            13,687,278    12,924,967      13,659,170      12,084,041
                                                                      ==============================================================



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


</TABLE>


                                       10

<PAGE>



                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<S>                                                                                  <C>                    <C>
                                                                                                   Nine Months Ended
                                                                                                     September 30,
                                                                                        -------------------------------
                                                                                              1997              1996
                                                                                        -------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
       Net income (loss)                                                                $   (2,618)          $   332
       Adjustments to reconcile net income (loss) to cash provided by
       (used for) operating activities:
          Extraordinary loss                                                                 1,384                -
          Depreciation and depletion                                                         8,607             1,888
          Amortization of financing fees                                                       330                -
          Deferred income taxes                                                               (732)              204
          Minority interest                                                                     40                -
          (Gain) Loss on sale of assets                                                       (333)             (143)
          Other                                                                                 32                -
          Change in certain assets and liabilities
              Accounts and notes receivables                                                (9,717)           (2,317)
              Other current assets                                                            (972)             (160)
              Deposits and other assets                                                          -              (376)
              Accounts payable and accrued liabilities                                       9,875             2,436
                                                                                        -------------------------------
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES                                     $    5,897           $ 1,864
                                                                                        -------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from the sale of assets                                                          953               188
     Additions to property and equipment                                                  (148,429)          (38,787)
     Loan made for promissory note receivable                                                 (666)               -
     Payments received on promissory note receivable                                           183                -
                                                                                        -------------------------------
NET CASH USED BY INVESTING ACTIVITIES                                                     (147,959)          (38,599)
                                                                                        -------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of long-term debt and production payment                       337,500            55,313
     Fees paid related to financing activities                                              (7,936)               -
     Proceeds from short-term notes payable                                                  2,699                -
     Payments of principal on long-term debt and production payment                       (188,364)          (17,710)
     Payment of fees on issuance of preferred stock                                           (505)               -
     Proceeds from issuance of common and preferred stock,
          net of offering costs                                                                522                -
     Redemption of preferred stock                                                              -               (295)
     Dividends paid                                                                           (460)             (438)
                                                                                        -------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                  143,456            36,870
                                                                                        -------------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         1,394               135  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                             1,687             1,544           
                                                                                        -------------------------------
 CASH AND CASH EQUIVALENTS, END OF PERIOD                                                $   3,081           $ 1,679 
                                                                                        ===============================   
                                                                                        

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


</TABLE>

                                       11

<PAGE>



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

NOTE 1 - MANAGEMENT'S REPRESENTATION

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

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

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

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  are direct  Guarantors  of the  Company's  Section 144 A 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  inconsequential  subsidiaries),  and the Company has not  presented
separate  financial  statements and other disclosures  concerning each Guarantor
because  management  has  determined  that such  information  is not material to
investors.   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 - RECENT EVENTS

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



                                       12

<PAGE>



against the purchase price.

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

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

On May 28, 1997,  the Company  completed an offering of  $140,000,000  aggregate
principal amount of its 10% Senior Notes due 2007 (the "Notes"). Interest on the
Notes accrue from their date of original issuance and are payable  semi-annually
in arrears on June 1 and  December 1 of each year,  commencing  on  December  1,
1997,  at the rate of 10% per annum.  The Notes are  redeemable,  in whole or in
part,  at the option of the  Company on or after  June 1,  2002,  at  decreasing
redemption  prices,  plus accrued interest to the date of redemption.  The Notes
are general  unsecured  obligations  of the Company and rank pari passu with any
unsubordinated  indebtedness  of the Company and rank senior in right of payment
to all  subordinated  obligations  of the  Company.  The net  proceeds  from the
offering were approximately  $135.5 million after deducting fees and expenses of
approximately $4.5 million payable by the Company.  The Company utilized the net
proceeds to repay the $60.0 million of outstanding indebtedness under the Bridge
Loan  Facility  and to reduce  indebtedness  under the New  Credit  Facility  by
approximately  $75.0 million.  Concurrent with the pay-down,  the Borrowing Base
was set at $60.0  million.  Total  long-term  debt under the Credit  Facility at
September 30, 1997 was $48.0 million.  The Company  recently  amended its Credit
Facility  with its  liabilities  effective as of September 30, 1997, to increase
the amount of the Credit Facility to $125.0  million,  to increase the amount of
the borrowing base to $65.0 million, and to modify a loan covenant.

The Company has called its publically traded Warrants for redemption on November
7, 1997 at a redemption  price of $0.02 per Warrant.  The Warrants are presently
exercisable  for  Common  Stock at an  exercise  price of $5.50 per  share.  The
Company  anticipates that substantially all the Warrants will be exercised,  and
if so, the Company  will receive  cash  proceeds in the amount of  approximately
$4.7 million.

On October  30,  1997,  the  Company  filed a  registration  statement  with the
Securities  and Exchange  Commission  ("SEC") to register 6.5 million  shares of
common  stock to be sold by the  Company  and an  additional  150,000  shares of
common stock to be sold by a selling shareholder. The proceeds received from the
sale of shares by the  Company  will be used to repay  substantially  all of the
outstanding indebtedness under the Company's senior bank credit facility.



                                       13

<PAGE>



On  November  4, 1997  the  Company  announced  that  one  of  its  wholly-owned
subsidiaries,  Hunter Gas Gathering,  Inc., entered into a non-binding letter of
intent to acquire a 30% ownership interest  in a  privately  held gas  marketing
company for an estimated  consideration  of  approximately $5 million payable by
the Company in restricted common  stock.  The proposed  transaction  is  subject
to due diligence, negotiation of a definitive agreement and other contingencies.



                                       14

<PAGE>
                          PART II -- OTHER INFORMATION

Item 4 Submission of Matters to a Vote of Security Holders

     An annual meeting of the  stockholders  of the Company was held on the 26th
day of August, 1997. The results of the voting for (i) the election of directors
and (ii) the proposal to ratify the  appointment of Deloitte & Touche LLP as the
Company's independent auditors was as follows:

     (1) For each director:

     Gary C. Evans:  10,670,054  shares  voted in favor of the  nominee,  10,720
shares voted against the nominee and 14,342 shares abstained from voting.

     Matthew C. Lutz:  10,669,799  shares voted in favor of the nominee,  10,720
shares voted against the nominee and 14,597 shares abstained from voting.

     Gerald W. Bolfing:  10,669,699 shares voted in favor of the nominee, 10,820
shares voted against the nominee and 14,597 shares abstained from voting.

     Oscar C. Lindemann: 10,668,099 shares voted in favor of the nominee, 12,420
shares voted against the nominee and 14,597 shares abstained from voting.

     John H.  Trescot,  Jr.:  10,668,099  shares  voted in favor of the nominee,
12,420 shares voted against the nominee and 14,597 shares abstained from voting.

     James E. Upfield:  10,668,199 shares voted in favor of the nominee,  12,320
shares voted against the nominee and 14,597 shares abstained from voting.

     (2) For the ratification of the appointment of Deloitte & Touche LLP as the
Corporation's  independent  auditors:  10,653,272  shares  voted in favor of the
above-described  proposal,  23,494  shares  voted  against  the  above-described
proposal and 18,350 shares abstained from voting.

<PAGE>

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

3.1 & 4.1        Articles of Incorporation (Incorporated by reference to
                 Registration Statement on Form S-18, File No. 33-30298-D)
3.2 & 4.2        Articles  of  Amendment to Articles of  Incorporation 
                 (Incorporated by reference to Form  10-K for the year ended 
                 December 31, 1990)
3.3 & 4.3        Articles of Amendment to Articles of Incorporation(Incorporated
                 by reference to  Registration Statement on Form SB-2, File No.
                 33-66190)
3.4 & 4.4        Articles of Amendment  to Articles  of  Incorporation
                 (Incorporated by reference to  Registration Statement on
                 Form S-3, File No. 333-30453)
3.5 & 4.5        By-Laws, as Amended (Incorporated by  reference to Registration
                 Statement on Form SB-2File No. 33-66190)
3.6 & 4.6        Certificate of Designation of 1996 Series A Preferred Stock
                 (Incorporated by reference to Form 8-K dated December 26, 1996,
                 filed January 3, 1997)
3.7 & 4.7        Amendment to Certificate  of  Designations  for  1996 Series A
                 Convertible Preferred Stock (Incorporated by reference to 
                 Registration Statement on Form S-3, File No. 333-30453)
4.8              Indenture  dated May 29, 1997 between Magnum  Hunter Resources,
                 the subsidiary  guarantors  named therein
                 and First Union National Bank of North  Carolina, as Trustee
                 (Incorporated by Reference to Registration Statement on Form
                 S-4 File No. 333- 31149)
4.9              Form of 10% Senior Note due 2007 (Incorporated by Reference to
                 Registration Statement on Form S-4 File No.
                 333- 31149)
10.1             Amended and Restated Credit Agreement, dated April 30, 1997, 
                 between Magnum Hunter Resources,Inc. and Bankers Trust Company,
                 et al. (Incorporated by Reference to Registration Statement on 
                 Form S-4 File No.333- 31149)
10.2             First Amendment to Amended and Restated Credit Agreement, dated
                 April 30, 1997, between Magnum Hunter Resources, Inc. and
                 Bankers Trust Company, et al (Incorporated by Reference to
                 Registration Statement on Form S-4 File No. 333- 31149)
10.3  *          Second Amendment to the Amended and Restated Credit Agreement
                 dated April 30, 1997, between Magnum Hunter Resources, Inc. and
                 Bankers Trust Company, et al.
10.4             Employment Agreementfor Gary C Evans (Incorporated by reference
                 to Registration Statement on Form S-4,File No. 333-2290)
10.5             Employment Agreement for Matthew C.Lutz Incorporated by
                 reference to Registration Statement on Form S-4,File No.
                 333-2290)
10.6             Stock Purchase Agreement among Magnum Hunter Resources, Inc.
                 and Trust Company of the West and TCW Asset Management Company,
                 in the capacities described herein, TCW Debt and Royalty Fund
                 IVB and TCW Debt and Royalty  Fund IVC, dated as of December 6,
                 1996(Incorporated by reference to Form 8-K dated   December 26,
                 1996, filed January 3, 1997)
10.7             Registration Rights  Agreement, dated May  29, 1997, between
                 Magnum Hunter Resources, Inc. and Bankers Trust Company, et al.
                 (Incorporated by Reference to Registration Statementon Form S-4
                 File No.333-31149)
10.8             Purchase  and Sale  Agreement,  dated  May   17, 1996 between
                 Meridian Oil, Inc. and ConMag Energy Corporation (Incorporated
                 by reference  to Form 8-K, dated June 28, 1996, filed July 12,
                 1996)
10.9             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)

       *         Filed herewith

(b)              Reports on Form 8-K

Items Reported   F/S Included           Date of Event             Date Filed

None

                                       15

<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             
   ---------------------------                                November 5, 1997
   Gary C. Evans
   President and Chief Executive Officer 


By /s/ Chris Tong                                             November 5, 1997
   ----------------------------
   Chris Tong   
   Sr. Vice President and
   Chief Financial Officer


By  /s/ David S. Krueger                                      November 5 , 1997
    ---------------------------
    David S. Krueger
    Vice President and
    Chief Accounting Officer


By /s/ Morgan F. Johnston                                     November 5, 1997
   -----------------------------
   Morgan F. Johnston
   Vice President, General Counsel and
   Secretary