<PAGE>
 
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              ____________________


                                   FORM 10-Q
(Mark one)

[X]            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the quarterly period ended June 30, 1997

                                       OR

[_]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
             For the transition period from _________ to _________

                        Commission file number 1-14344
                        ______________________________


                         PATINA OIL & GAS CORPORATION
            (Exact name of registrant as specified in its charter)

                  Delaware                            75-2629477
     (State or other jurisdiction of               (IRS Employer
     incorporation or organization)                Identification No.)

        1625 Broadway, Suite 2000                        80202
            Denver, Colorado                           (Zip Code)
  (Address of principal executive offices)

       Registrant's telephone number, including area code (303) 389-3600

<TABLE> 
<CAPTION> 

         Title of each class                         Name of each exchange on which registered
___________________________________________        _____________________________________________
<S>                                                <C> 
     Common Stock, $.01 par value                           New York Stock Exchange
Convertible Preferred Stock, $.01 par value                 New York Stock Exchange
       Common Stock Warrants                                New York Stock Exchange

</TABLE> 

          Securities registered pursuant to Section 12(g) of the Act:
                                     None
                               (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes      X       No ___________.
    -----------                 

 There were 18,820,248 Common Shares outstanding as of July 25, 1997, of which
              2,000,000 are designated as Series A Common Shares.

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

<PAGE>
 
PART I.  FINANCIAL INFORMATION

     Patina Oil & Gas Corporation (the "Company") was formed in January 1996 to
hold the assets and operations of Snyder Oil Corporation ("SOCO") in the
Wattenberg Field and to facilitate the acquisition of Gerrity Oil & Gas
Corporation ("GOG"). Previously, SOCO's Wattenberg operations had been conducted
through SOCO or its wholly owned subsidiary, SOCO Wattenberg Corporation
("SWAT"). On May 2, 1996, SOCO contributed the balance of its Wattenberg assets
to SWAT and transferred all of the shares of SWAT to the Company. Immediately
thereafter, GOG merged into another wholly owned subsidiary of the Company ("the
Merger"). As a result of these transactions, SWAT and GOG became subsidiaries of
the Company. The results of operations of the Company for periods prior to the
Merger reflected in these financial statements include only the historical
results of SOCO's Wattenberg operations. In March 1997, GOG was merged into the
Company.

     The financial statements included herein have been prepared in conformity
with generally accepted accounting principles. The statements are unaudited but
reflect all adjustments which, in the opinion of management, are necessary to
fairly present the Company's financial position and results of operations.

                                       2
<PAGE>
 
                          PATINA OIL & GAS CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                         DECEMBER 31,     JUNE 30,
                                                             1996           1997
                                                         -------------   ----------
                                                                        (UNAUDITED)
<S>                                                      <C>             <C>
                        ASSETS
 Current assets
     Cash and equivalents                                   $   6,153   $  10,568
     Accounts receivable                                       19,977      15,840
     Inventory and other                                        1,457       3,202
                                                            ---------   ---------
                                                               27,587      29,610 
                                                            ---------   ---------
Oil and gas properties, successful efforts method             559,072     564,902
     Accumulated depletion, depreciation and amortization    (160,432)   (183,886)
                                                            ---------   ---------
                                                              398,640     381,016
                                                            ---------   --------- 
Gas facilities and other                                        6,421       5,140
     Accumulated depreciation                                  (4,917)     (3,583)
                                                            ---------   ---------
                                                                1,504       1,557
                                                            ---------   --------- 
Other assets, net                                               2,502       1,334
                                                            ---------   ---------
                                                            $ 430,233   $ 413,517
                                                            =========   =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Accounts payable                                       $  15,063   $  18,854
     Accrued liabilities                                       11,509       8,875
                                                            ---------   ---------
                                                               26,572      27,729
                                                            ---------   ---------
 
Senior debt                                                    94,500      85,000
Subordinated notes                                            103,094      97,685
Other noncurrent liabilities                                    9,831       5,561
 
Commitments and contingencies
 
Stockholders' equity
     Preferred stock, $.01 par, 5,000,000 shares
          authorized, 1,593,608 and 1,467,926 shares issued
          and outstanding                                          16          15
     Common stock, $.01 par, 40,000,000 shares
          authorized, 18,886,932 and 18,820,248 shares
          issued and outstanding                                  189         188
      Capital in excess of par value                          194,066     189,620
     Retained earnings                                          1,965       7,719
                                                            ---------   ---------
                                                              196,236     197,542
                                                            ---------   ---------
                                                            $ 430,233   $ 413,517
                                                            =========   =========
</TABLE>
       The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
 
                          PATINA OIL & GAS CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE> 
<CAPTION> 

                                                THREE MONTHS           SIX MONTHS
                                               ENDED JUNE 30,        ENDED JUNE 30,
                                               --------------        --------------
                                               1996      1997        1996      1997
                                               ----      ----        ----      ----
                                                            (UNAUDITED)
<S>                                          <C>        <C>       <C>        <C>
Revenues
 Oil and gas sales                            $19,182   $22,672    $29,816   $52,113
 Other                                            274       182        294       227
                                              -------   -------    -------   -------
 
                                               19,456    22,854     30,110    52,340
                                              -------   -------    -------   -------
 
Expenses
 Direct operating                               3,446     4,347      5,401     9,322
 Exploration                                       81         3        149        62
 General and administrative                     1,570     1,284      3,113     2,611
 Interest and other                             3,732     4,044      4,979     8,485
 Depletion, depreciation and amortization      11,756    12,348     18,723    24,776
                                              -------   -------    -------   -------
Income (loss) before taxes                     (1,129)      828     (2,255)    7,084
                                              -------   -------    -------   -------
 
Provision (benefit) for income taxes
 Current                                            -         -          -         -
 Deferred                                           -         -       (394)        -
                                              -------   -------    -------   -------
                                                    -         -       (394)        -
                                              -------   -------    -------   ------- 
 
Net income (loss)                             $(1,129)  $   828    $(1,861)  $ 7,084
                                              =======   =======    =======   =======
 
Net income (loss) per common share              $(.10)     $.01      $(.16)     $.30
                                              =======   =======    =======   =======
 
Weighted average shares outstanding            17,919    18,910     15,959    18,921
                                              =======   =======    =======   =======
</TABLE>
       The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
 
                          PATINA OIL & GAS CORPORATION

                     CONSOLIDATED STATEMENTS OF CHANGES IN
                              STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE> 
<CAPTION> 
                                         Preferred       Common        Capital
                                           Stock          Stock           in                 Retained
                                      --------------  --------------  Excess of  Investment  Earnings
                                      Shares  Amount  Shares  Amount  Par Value  By Parent   (Deficit)
                                      ------  ------  ------  ------  ---------  ----------  ---------
<S>                                    <C>     <C>    <C>      <C>     <C>        <C>         <C>
Balance, December 31, 1995                 -    $ -   14,000    $140   $      -   $ 113,523   $     -
 
Credit in lieu of taxes                    -      -        -       -          -         171         -
 
Change in investment by parent             -      -        -       -          -      (7,514)        -
 
Net loss through the Merger date           -      -        -       -          -        (532)        -
 
Merger                                 1,205     12    6,000      60    194,291    (105,648)        -
 
Issuance of common                         -      -        4       -         27           -         -
 
Repurchase of common and warrants          -      -   (1,117)    (11)    (9,722)          -         -
 
Issuance of preferred                    389      4        -       -      9,470           -         -
 
Preferred dividends                        -      -        -       -          -           -    (2,129)
 
Net income subsequent to the Merger        -      -        -       -          -           -     4,094
                                       -----   ----   ------   -----   --------   ---------   -------
 
Balance, December 31, 1996             1,594     16   18,887     189    194,066           -     1,965
 
Issuance of common                         -      -        4       -         31           -         -
 
Repurchase of common and preferred      (126)    (1)     (71)     (1)    (4,477)          -         -
 
Preferred dividends                        -      -        -       -          -           -    (1,330)
 
Net income                                 -      -        -       -          -           -     7,084
                                       -----   ----   ------   -----   --------   ---------   -------
Balance, June 30, 1997 (Unaudited)     1,468    $15   18,820    $188   $189,620   $       -   $ 7,719
                                       =====   ====   ======   =====   ========   =========   =======
</TABLE>
       The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
 
                          PATINA OIL & GAS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
 
 
                                                                              SIX MONTHS ENDED JUNE 30,
                                                                              --------------------------
                                                                                 1996           1997
                                                                              ------------   -----------
                                                                                      (UNAUDITED)
<S>                                                                            <C>          <C>
 
Operating activities
  Net income (loss)                                                            $ (1,861)    $  7,084
  Adjustments to reconcile net income (loss) to net
     cash provided by operations
       Exploration expense                                                          149           62
       Depletion, depreciation and amortization                                  18,723       24,776
       Deferred taxes                                                              (394)           -
       Amortization of deferred credits                                            (646)           -
       Changes in current and other assets and liabilities
          Decrease in
            Accounts receivable                                                   1,384        4,015
            Inventory and other                                                     102           52
          Increase (decrease) in
            Accounts payable                                                     (5,052)       4,042
            Accrued liabilities                                                   1,504       (2,313)
            Other liabilities                                                     1,059       (4,237)
                                                                               --------     --------
       Net cash provided by operations                                           14,968       33,481
                                                                               --------     --------
 
Investing activities
  Acquisition, development and exploration                                       (1,375)      (8,348)
  Other                                                                          (1,040)           -
                                                                               --------     --------
 
       Net cash used by investing                                                (2,415)      (8,348)
                                                                               --------     --------
 
Financing activities
  Decrease in payable/debt to parent                                            (78,615)           -
  Increase (decrease) in indebtedness                                            96,108      (14,909)
  Deferred credits                                                                  624            -
  Change in investment by parent                                                 (7,514)           -
  Cost of common stock issuance                                                  (9,310)           -
  Repurchase of common and preferred stock                                         (923)      (4,479)
  Preferred dividends                                                              (710)      (1,330)
                                                                               --------     --------
 
       Net cash used by financing                                                  (340)     (20,718)
                                                                               --------     --------
 
Increase in cash                                                                 12,213        4,415
Cash and equivalents, beginning of period                                         1,000        6,153
                                                                               --------     --------
Cash and equivalents, end of period                                            $ 13,213     $ 10,568
                                                                               ========     ========
</TABLE>
       The accompanying notes are an integral part of these statements.

                                       6
<PAGE>
 
                         PATINA OIL & GAS CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  ORGANIZATION AND NATURE OF BUSINESS

     Patina Oil & Gas Corporation (the "Company"), a Delaware corporation, was
formed in January 1996 to hold the assets and operations of Snyder Oil
Corporation ("SOCO") in the Wattenberg Field and to facilitate the acquisition
of Gerrity Oil & Gas Corporation ("GOG"). Previously, SOCO's Wattenberg
operations had been conducted through SOCO or its wholly owned subsidiary, SOCO
Wattenberg Corporation ("SWAT"). On May 2, 1996, SOCO contributed the balance of
its Wattenberg assets to SWAT and transferred all of the shares of SWAT to the
Company. Immediately thereafter, GOG merged into another wholly owned subsidiary
of the Company (the "Merger"). As a result of these transactions, SWAT and GOG
became subsidiaries of the Company. In March 1997, GOG was merged into the
Company. The Company's operations currently consist of the acquisition,
development, production and exploration of oil and gas properties in the
Wattenberg Field. SOCO currently owns approximately 74% of the common stock of
the Company.

     The above transactions were accounted for as a purchase of GOG. The amounts
and results of operations of the Company for periods prior to the Merger
reflected in these financial statements include the historical amounts and
results of SOCO's Wattenberg operations. Certain amounts in the accompanying
financial statements have been allocated in a reasonable and consistent manner
in order to depict the historical financial position, results of operations and
cash flows of the Company on a stand-alone basis prior to the Merger.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Producing Activities

     The Company utilizes the successful efforts method of accounting for its
oil and gas properties. Consequently, leasehold costs are capitalized when
incurred. Unproved properties are assessed periodically within specific
geographic areas and impairments in value are charged to expense. Exploratory
expenses, including geological and geophysical expenses and delay rentals, are
charged to expense as incurred. Exploratory drilling costs are initially
capitalized, but charged to expense if and when the well is determined to be
unsuccessful. Costs of productive wells, unsuccessful developmental wells and
productive leases are capitalized and amortized on a unit-of-production basis
over the life of the remaining proved or proved developed reserves, as
applicable. Gas is converted to equivalent barrels at the rate of six Mcf to one
barrel. Amortization of capitalized costs has generally been provided over the
entire D-J Basin as the wells are located in the same reservoir. No accrual has
been provided for estimated future abandonment costs as management estimates
that salvage value will approximate such costs.

     In 1995, the Company adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets." SFAS
121 requires the Company to assess the need for an impairment of capitalized
costs of oil and gas properties on a field-by-field basis. During the six months
ended June 30, 1996 and 1997 the Company did not provide for any impairments.
Changes in the underlying assumptions or the amortization units could, however,
result in impairments in the future.

                                       7
<PAGE>
 
Other Assets

     Other assets reflect the value assigned to a noncompete agreement entered
into as part of the Merger. The value is being amortized over five years at a
rate intended to approximate the decline in the value of the agreement.
Amortization expense for the six months ended June 30, 1996 and 1997 was
$640,000 and $1,167,000, respectively. Scheduled amortization for the next four
years is $334,000 for the remainder of 1997, $500,000 in 1998, and $250,000 in
each of 1999 and 2000.

Section 29 Tax Credits

     The Company from time to time enters into arrangements to monetize its
Section 29 tax credits. These arrangements result in revenue increases of
approximately $.40 per Mcf on production volumes from qualified Section 29
properties. As a result of such arrangements, the Company recognized additional
gas revenues of $646,000 and $942,000 during the six months ended June 30, 1996
and 1997, respectively. These arrangements are expected to increase revenues
through 2002.

Gas Imbalances

     The Company uses the sales method to account for gas imbalances. Under this
method, revenue is recognized based on the cash received rather than the
Company's proportionate share of gas produced. Gas imbalances at December 31,
1996 and June 30, 1997 were insignificant.

Financial Instruments

     The book value and estimated fair value of cash and equivalents was $6.2
million and $10.6 million at December 31, 1996 and June 30, 1997. The book value
approximates fair value due to the short maturity of these instruments. The book
value and estimated fair value of the Company's senior debt was $94.5 million
and $85.0 million at December 31, 1996 and June 30, 1997. The fair value is
presented at face value given its floating rate structure. The book value of the
Senior Subordinated Notes ("Subordinated Notes" or "Notes") was $103.1 million
and $97.7 million at December 31, 1996 and June 30, 1997 and the estimated fair
value was $105.6 million and $101.5 million at December 31, 1996 and June 30,
1997, respectively. The fair value is estimated based on the Notes price on the
New York Stock Exchange.

     From time to time, the Company enters into commodity contracts to hedge the
price risk of a portion of its production. Gains and losses on such contracts
are deferred and recognized in income as an adjustment to oil and gas sales
revenues in the period to which the contracts relate. As of June 30, 1997, the
Company was party to certain commodity contracts as further described below.

     In the second quarter of 1997, the Company entered various swap sales
contracts with terms as follows:
<TABLE>
<CAPTION>
 
                     Quantity    Weighted Average
Period                Product        (MMBtu's)      Price Per MMBtu's (a)  Index
------------------  -----------  -----------------  ---------------------  -----
<S>                 <C>          <C>                <C>                    <C>
July - September    Natural Gas      460,000              $1.75              CIG
July - September    Natural Gas      920,000              $2.14             NGPL
July - September    Natural Gas      920,000              $2.15             PEPL
                                   ---------
                                   2,300,000
                                   =========
</TABLE>
(a)  The average wellhead price related to the above swap contracts taking into
     condiseration the value of the related natural gas liquids, net of any
     gathering, transportation and processing fees, is estimated at $2.05 per
     Mcf.

                                       8
<PAGE>
 
     In the fourth quarter of 1996, the Company entered into various hedging
contracts with a weighted average oil price (NYMEX based) of $22.19 for contract
volumes of 95,000 barrels of oil for January 1997 through February 1997. The
Company recognized $113,000 of losses related to these contracts based on
settlements during the first quarter of 1997. These losses were reflected as
deductions from oil revenue in the period settled.

     In the fourth quarter of 1996 and early 1997, the Company entered into
various hedging contracts with a weighted average natural gas price (CIG-Inside
FERC based) of $3.02 for contract volumes of 2,250,000 MMBtu's of natural gas
for January 1997 through March 1997. The Company recognized $1.6 million of
gains related to these contracts based on settlements during the first quarter
of 1997. These gains were reflected as additions to gas revenues in the period
settled.
 
Risks and Uncertainties

     Historically, the market for oil and gas has experienced significant price
fluctuations. Prices for natural gas in the Rocky Mountain region have
traditionally been particularly volatile and have generally been depressed since
1994. In large part, the decreased prices are the result of mild weather,
increased production in the region and limited transportation capacity to other
regions of the country. Increases or decreases in prices received could have a
significant impact on the Company's future results of operations.

Other

     All liquid investments with an original maturity of three months or less
are considered to be cash equivalents. Certain amounts in prior period
consolidated financial statements have been reclassified to conform with current
classification.

     All cash payments for income taxes were made by SOCO through May 2, 1996 at
which point the Company began paying its own taxes. The Company was charged
interest by SOCO on its debt to SOCO of $1.6 million through May 2, 1996, which
was reflected as an increase in debt to SOCO.

     In the opinion of management, those adjustments to the financial statements
(all of which are of a normal and recurring nature) necessary to present fairly
the financial position and results of operations have been made. These interim
financial statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.

                                       9
<PAGE>
 
(3)  OIL AND GAS PROPERTIES

     The cost of oil and gas properties at December 31, 1996 and June 30, 1997
includes no significant unevaluated leasehold. Acreage is generally held for
exploration, development or resale and its value, if any, is excluded from
amortization. The following table sets forth costs incurred related to oil and
gas properties.
<TABLE>
<CAPTION>
                                                        SIX
                              YEAR ENDED            MONTHS ENDED
                             DECEMBER 31,             JUNE 30,
                                1996                    1997
                             ------------           ------------
                                        (IN THOUSANDS)
     <S>                      <C>                    <C>           
     Acquisition              $218,380                   $  101
     Development                 8,301                    7,972
     Exploration and other         224                       62
                              --------                   ------
                              $226,905                   $8,135
                              ========                   ======
</TABLE>

     On May 2, 1996, the Merger discussed in Note 1 was consummated. The
following table summarizes the unaudited pro forma effects on the Company's
financial statements assuming that the Merger and the Exchange Offer had been
consummated on January 1, 1996. Future results may differ substantially from pro
forma results due to changes in these assumptions, changes in oil and gas
prices, production declines and other factors. Therefore, pro forma statements
cannot be considered indicative of future operations. The pro forma results for
the six months ended June 30, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
 
     <S>                                             <C>            
     Total revenues                                  $ 47,060
     Total expenses                                  $ 50,713
     Depletion, depreciation and amortization        $ 27,945
     Net income (loss)                               $ (3,653)
     Net income (loss) per common share              $   (.27)
     Weighted average shares outstanding               18,921

</TABLE> 
 
(4)  INDEBTEDNESS
 
     The following indebtedness was outstanding on the respective dates:
<TABLE>
<CAPTION>  
                                         DECEMBER 31,     JUNE 30,
                                            1996            1997
                                        --------------   ---------- 
                                               (IN THOUSANDS)
     <S>                                 <C>            <C> 
     Bank facility                         $ 94,500       $85,000
     Less current portion                      -             -
                                           --------      --------
         Senior debt, net                  $ 94,500       $85,000
                                           ========      ========  
     Subordinated notes                    $103,094       $97,685
                                           ========      ========  
 </TABLE>

                                       10
<PAGE>
 
     Simultaneously with the merger of GOG into the Company in March 1997, the
Company entered into an amended bank credit agreement (the "Facility"). The
Facility is a revolving credit facility in an aggregate amount up to $140.0
million. The amount available under the Facility is adjusted semiannually and
equaled $110.0 million at June 30, 1997.

     The borrower may elect that all or a portion of the credit facility bear
interest at a rate equal to: (i) the higher of (a) prime rate plus a margin
equal to .25% (the "Applicable Margin") or (b) the Federal Funds Effective Rate
plus .5% plus the Applicable Margin, or (ii) the rate at which Eurodollar
deposits for one, two, three or six months (as selected by the Company) are
offered in the interbank Eurodollar market plus a margin which fluctuates from
 .625% to 1.125%, determined by a debt to EBITDA ratio. During the six months
ended June 30, 1997, the average interest rate under the facility approximated
6.8%.

     The bank credit agreement contains certain financial covenants, including
but not limited to, a maximum total debt to capitalization ratio, a maximum
total debt to EBITDA ratio and a minimum current ratio. The bank credit
agreement also contains certain negative covenants, including but not limited to
restrictions on indebtedness; certain liens; guaranties, speculative derivatives
and other similar obligations; asset dispositions; dividends, loans and
advances; creation of subsidiaries; investments; leases; acquisitions; mergers;
changes in fiscal year; transactions with affiliates; changes in business
conducted; sale and leaseback and operating lease transactions; sale of
receivables; prepayment of other indebtedness; amendments to principal
documents; negative pledge clauses; issuance of securities; and non-speculative
commodity hedging.

     In conjunction with the Merger, the Company assumed $100 million of 11.75%
Senior Subordinated Notes due July 15, 2004 issued by GOG in 1994. Under
purchase accounting, the Notes have been reflected in the accompanying financial
statements at a book value of 105.875% of their principal amount. Interest is
payable each January 15 and July 15. The Notes are redeemable at the option of
the Company, in whole or in part, at any time on or after July 15, 1999,
initially at 105.875% of their principal amount, declining to 102.938% on or
after July 15, 2000 and declining to 100% on or after July 15, 2001. Upon a
change of control, as defined in the Notes, the Company is obligated to make an
offer to purchase all outstanding Notes at a price of 101% of the principal
amount thereof. In addition, the Company would be obligated, subject to certain
conditions, to make offers to purchase Notes with the net cash proceeds of
certain asset sales or other dispositions of assets at a price of 101% of the
principal amount thereof. Subsequent to the Merger, the Company repurchased and
retired $7.7 million of the Notes, resulting in $92.3 million of principal
amount of Notes outstanding, or a book value of $97.7 million in the
accompanying financial statements. The Notes are unsecured general obligations
of the Company and are subordinated to all senior indebtedness of the Company
and to any existing and future indebtedness of the Company's subsidiaries.

     The Notes contain covenants that, among other things, limit the ability of
the Company to incur additional indebtedness, pay dividends, engage in
transactions with shareholders and affiliates, create liens, sell assets, engage
in mergers and consolidations and make investments in unrestricted subsidiaries.
Specifically, the Notes restrict the Company from incurring indebtedness
(exclusive of the Notes) in excess of approximately $51 million, if after giving
effect to the incurrence of such additional indebtedness and the receipt and
application of the proceeds therefrom, the Company's interest coverage ratio is
less than 2.5:1 or adjusted consolidated net tangible assets is less than 150%
of the aggregate indebtedness of the Company. The Company currently meets these
ratios and accordingly, is not limited in its ability to incur additional debt.

     Prior to the Merger, SOCO financed all of the Company's activities. A
portion of such financing was considered to be an investment by parent in the
Company with the remaining portion being considered Debt

                                       11
<PAGE>
 
to parent. The portion considered to be Debt to parent versus an investment by
parent was a discretionary percentage determined by SOCO after consideration of
the Company's internally generated cash flows and level of capital expenditures.
Subsequent to the Merger, the $75 million Debt to parent was paid in full and
the Company does not expect SOCO to provide any additional funding.

     On the portion of such financing which was considered to be Debt to parent,
SOCO charged interest at a rate which approximated the average interest rate
being paid by SOCO under its revolving credit facility (6.9% for the four months
ended May 2, 1996).

     Scheduled maturities of indebtedness for the next five years are zero for
the remainder of 1997, 1998 and 1999, and $85.0 million in 2000, and zero in
2001. The long-term portions of the Facility are scheduled to expire in 2000;
however, it is management's intent to review both the short-term and long-term
facilities and extend the maturities on a regular basis.

     Cash payments for interest were $649,000 and $8.7 million for the six
months ended June 30, 1996 and 1997, respectively.


(5)  STOCKHOLDERS' EQUITY

     A total of 40.0 million common shares, $.01 par value, are authorized of
which 18.8 million were issued and outstanding at June 30, 1997. Of the 18.8
million shares outstanding, 2.0 million are designated as Series A Common Stock.
The Series A Common Stock is identical to the common shares except that the
Series A Common Stock is entitled to three votes per share rather than one vote
per share. The Series A Common Stock is owned by SOCO and reverts to regular
common shares under certain conditions. During the first six months of 1997, the
Company repurchased 70,500 shares of common stock and 125,682 preferred shares
for $4.5 million. No dividends have been paid on common stock as of June 30,
1997.

     A total of 5.0 million preferred shares, $.01 par value, are authorized of
which 1.5 million were issued and outstanding at June 30, 1997. The stock is
convertible into common stock at any time at $8.61 per share. The 7.125%
preferred stock pays dividends, when declared by the Board of Directors, based
on an annual rate of $1.78 per share. The preferred stock is redeemable at the
option of the Company at any time after May 2, 1998 if the average closing price
of the Company's common stock for 20 of the 30 days prior to not less than five
days preceding the redemption date is greater than $12.92 per share, or at any
time after May 2, 1999. The liquidation preference is $25 per share, plus
accrued and unpaid dividends. The Company paid $1,330,000 ($.4453 per preferred
share per quarter) in preferred dividends during the six months ended June 30,
1997 and had accrued an additional $327,000 at June 30, 1997 for dividends.

     In 1996, the shareholders adopted a stock option plan for employees
providing for the issuance of options at prices not less than fair market value.
Options to acquire up to three million shares of common stock may be outstanding
at any given time. The specific terms of grant and exercise are determinable by
a committee of independent members of the Board of Directors. A total of 512,000
options were issued in 1996 with an exercise price of $7.75 per common share and
271,000 options were issued in February 1997 with an exercise price of $9.25 per
common share. The options vest over a three-year period (30%, 60%, 100%) and
expire five years from date of grant.

     In 1996, the shareholders adopted a stock grant and option plan
("Directors' Plan") for non-employee Directors of the Company. The Directors'
Plan provides for each non-employee Director to receive common shares having a
market value equal to $2,250 quarterly in payment of one-half their retainer. A
total of 3,632

                                       12
<PAGE>
 
shares were issued in 1996 and 2,076 shares were issued during the first six
months of 1997. It also provides for 5,000 options to be granted annually to
each non-employee Director. A total of 20,000 options were issued in May 1996
with an exercise price of $7.75 per common share and 20,000 options were issued
in May 1997 with an exercise price of $8.625. The options vest over a three-year
period (30%, 60%, 100%) and expire five years from date of grant.

     Earnings per share is computed by dividing net income, less dividends on
preferred stock, by weighted average common shares outstanding. Net income
(loss) applicable to common for the six months ended June 30, 1996 and 1997, was
($2,571,000) and $5,754,000, respectively. Differences between primary and fully
diluted earnings per share were insignificant for all periods presented.

(6)  FEDERAL INCOME TAXES

     Prior to the Merger, the Company had been included in SOCO's tax return.
Current and deferred income tax provisions allocated by SOCO were determined as
though the Company filed as an independent company, making the same tax return
elections used in SOCO's consolidated return. Subsequent to the Merger, the
Company will not be included in SOCO's tax return.

     A reconciliation of the statutory rate to the Company's effective rate as
they apply to the benefit for the six months ended June 30, 1996 and 1997
follows:
<TABLE>
<CAPTION>

                                           SIX MONTHS ENDED JUNE 30,
                                           -------------------------          
                                            1996               1997
                                           ------             ------
<S>                                        <C>                <C>

Federal statutory rate                      (35%)               35%
Utilization of net deferred tax asset          -               (35%)
Tax benefit recognized prior to Merger       18%                  -
                                            ----               ----
Effective income tax rate                   (17%)                 -
                                            ====               ====
 
</TABLE>

     For tax purposes, the Company had regular net operating loss carryforwards
of $70.2 million and alternative minimum tax ("AMT") loss carryforwards of $35.1
million at December 31, 1996. Utilization of $31.9 million regular net operating
loss carryforwards and $31.6 million AMT loss carryforwards will be limited to
$5.2 million per year as a result of the merger of GOG and SOCO Wattenberg
Corporation on May 2, 1996. These carryforwards expire from 2006 through 2011.
At December 31, 1996, the Company had alternative minimum tax credit
carryforwards of $478,000 which are available indefinitely. No cash payments
were made by the Company for federal taxes during 1995 and 1996. As discussed in
Note 1, the accompanying financial statements include certain Wattenberg
operations previously owned directly by SOCO. Accordingly, certain operating
losses generated by these properties were retained by SOCO. In addition, certain
taxable income generated by SOCO did not offset the Company's net operating loss
carryforwards. Prior to the Merger, the effect of such items has been reflected
as a charge or credit in lieu of taxes in the Company's consolidated statement
of changes in stockholders' equity.


(7)  MAJOR CUSTOMERS

     During the six months ended June 30, 1996 and 1997, PanEnergy Field
Services, Inc. accounted for 59% and 42%, Amoco Production Company accounted for
19% and 15%, and Total Petroleum accounted for 14% and 8% of revenues,
respectively.  Management believes that the loss of any individual purchaser
would not have a long-term material adverse impact on the financial position or
results of operations of the Company.

                                       13
<PAGE>
 
(8)  RELATED PARTY

     Prior to the Merger, the Company did not have its own employees. Employees,
certain office space and furniture, fixtures and equipment were provided by
SOCO. SOCO allocated general and administrative expenses to the Company based on
its estimate of expenditures incurred on behalf of the Company. Subsequent to
the Merger, certain field, administrative and executive employees of SOCO and
GOG became employees of the Company. SOCO continues to provide certain services
to Patina under a corporate services agreement. During the six months ended June
30, 1997, the Company paid approximately $898,000 to SOCO under the corporate
services agreement and for office rent, administrative services and insurance.


(9)  COMMITMENTS AND CONTINGENCIES

     The Company leases office space and certain equipment under non-cancelable
operating leases. Future minimum lease payments under such leases approximate
$500,000 per year from 1997 through 2001.

     The Company is a party to various lawsuits and other legal proceedings
incidental to its business, none of which are anticipated to have a material
adverse impact on its financial position or results of operations.

                                       14
<PAGE>
 
                          PATINA OIL & GAS CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     On May 2, 1996, Gerrity Oil & Gas Corporation ("GOG") was merged into a
wholly owned subsidiary of the Company (the "Merger").  This transaction was
accounted for as a purchase of GOG. Accordingly, the results of operations since
the Merger reflect the impact of the purchase.

     Three months ended June 30, 1997 compared to three months ended June 30,
1996.  Total revenues for the three month period ended June 30, 1997 increased
to $22.9 million from $19.5 million, representing an increase of 17% from the
prior year period.  The revenue increase was due to the higher production
associated with the Merger and improved oil and gas prices.  Net income for the
second quarter 1997 was $828,000 compared to a net loss of ($1,129,000) for the
same period in 1996.  The increase in net income is primarily attributed to the
increased revenue, partially offset by increased interest expense and higher
depletion, depreciation and amortization expense.

     Oil and gas sales less direct operating expenses for the three months ended
June 30, 1997 were $18.3 million, a 16% increase from the prior year period.
Average daily production in the second quarter of 1997 was 5,562 barrels and
77.1 MMcf (110.5 MMcfe), increases of 13% and 11%, respectively.  The production
increases resulted solely from the Merger.  Exclusive of the Merger, production
continued to decline due to the Company's limited development schedule and
expected initial declines on the large number of wells drilled and completed in
1994 and early 1995.  In the future, while production has increased from the
first quarter of 1997, a decrease is expected unless development activity is
substantially increased or acquisitions are consummated.  The decision to
increase development activity is heavily dependent on the prices being received
for production.

     Average oil prices decreased from $20.24 per barrel in the second quarter
of 1996 to $19.09 in 1997. Natural gas prices increased from $1.60 per Mcf in
the second quarter of 1996 to $1.85 in 1997.  The increase in natural gas prices
was primarily the result of the 42% increase in the average CIG index for the
three month period.  Direct operating expenses increased to $.43 per Mcfe
compared to $.38 in the prior year quarter.  The increase is primarily
attributed to focusing more attention on enhancing production through increased
well workovers, additional field staff overtime and the overall increase in
production taxes as a result of higher oil and gas prices.

     General and administrative expenses, net of reimbursements, for the second
quarter 1997 were $1.3 million, an 18% decrease from the same period in 1996.
Prior to the Merger, the Company did not have its own employees.  Employees and
certain office space and furniture, fixtures and equipment were provided by
SOCO.  SOCO allocated general and administrative expenses based on estimates of
expenditures incurred on behalf of the Company.

     Interest and other expense was $4.0 million compared to $3.7 million in the
second quarter of 1996. Interest expense increased as a result of higher average
outstanding debt levels due to additional debt recorded as a result of the
Merger as well as debt incurred to finance certain costs related to the Merger.
The Company's average interest rate was 9.4% compared to 9.1% in the second
quarter 1996.

                                      15
<PAGE>
 
     Depletion, depreciation and amortization expense for the second quarter of
1997 totalled $12.3 million, an increase of $592,000 or 5% from the same period
in 1996.  The increase resulted from higher oil and gas production, partially
offset by a decreased depletion, depreciation and amortization rate of $1.23 per
Mcfe compared to $1.30 in 1996.  The decreased rate was attributed to $167,000
of amortization, or $.02 per Mcfe, related to a noncompete agreement entered
into as part of the Merger during the second quarter of 1997 as compared to
$640,000, or $.07 per Mcfe in 1996, and also a decrease in the depletion rate
from $1.22 per Mcfe in 1996 to $1.20 in 1997.

     Six months ended June 30, 1997 compared to six months ended June 30, 1996.
Total revenues for the six month period ended June 30, 1997 increased to $52.3
million from $30.1 million, representing an increase of 74% from the prior year
period.  The revenue increase was due to the higher production associated with
the Merger and improved oil and gas prices.  Net income for the six months ended
June 30, 1997 was $7,084,000 compared to a net loss of ($1,861,000) for the same
period in 1996.  The increase in net income is primarily attributed to the
increased revenue, partially offset by increased interest expense and higher
depletion, depreciation and amortization expense.

     Oil and gas sales less direct operating expenses for the six months ended
June 30, 1997 were $42.8 million, a 75% increase from the prior year period.
Average daily production for the six months ended June 30, 1997 was 5,442
barrels and 75.6 MMcf (108.3 MMcfe), increases of 42% and 33%, respectively. The
production increases resulted solely from the Merger. Exclusive of the Merger,
production continued to decline due to the Company's limited development
schedule and expected initial declines on the large number of wells drilled and
completed in 1994 and early 1995. There was one well placed on production in the
first six months of 1996 compared to 19 wells in the first six months of 1997.
In the future, while production has increased from the first quarter of 1997, a
decrease is expected unless development activity is substantially increased or
acquisitions are consummated. The decision to increase development activity is
heavily dependent on the prices being received for production.

     Average oil prices increased from $19.55 per barrel for the six months
ended June 30, 1996 to $20.29 in 1997.  Natural gas prices increased from $1.58
per Mcf for the six months ended June 30, 1996 to $2.35 in 1997.  The increase
in natural gas prices was primarily the result of the 86% increase in the
average CIG index for the six month period.  Direct operating expenses increased
to $.48 per Mcfe compared to $.37 in the prior year period.  The increase is
primarily attributed to focusing more attention on enhancing production through
increased well workovers, additional field staff overtime and the overall
increase in production taxes as a result of higher oil and gas prices.

     General and administrative expenses, net of reimbursements, for the six
months ended June 30, 1997 totalled $2.6 million, an 16% decrease from the same
period in 1996.   Prior to the Merger, the Company did not have its own
employees.  Employees and certain office space and furniture, fixtures and
equipment were provided by SOCO.  SOCO allocated general and administrative
expenses based on estimates of expenditures incurred on behalf of the Company.

     Interest and other expense was $8.5 million compared to $5.0 million for
the six months ended June 30, 1996.  Interest expense increased as a result of
higher average outstanding debt levels due to additional debt recorded as a
result of the Merger as well as debt incurred to finance certain costs related
to the Merger. The Company's average interest rate was 9.5% compared to 7.5% in
the prior year period. This increase is due primarily to the Subordinated Notes.

     Depletion, depreciation and amortization expense for the six months ended
June 30, 1997 totalled $24.8 million, an increase of $6.1 million or 32% from
the same period in 1996.  The increase resulted from higher oil and gas
production as a result of the Merger, partially offset by a decreased depletion,
depreciation and amortization rate of $1.27 per Mcfe compared to $1.29 in 1996.
The decreased rate was attributed to 

                                      16
<PAGE>
 
a decrease in the depletion rate from $1.23 per Mcfe in 1996 to $1.20 in 1997,
partially offset by $1,167,000 of amortization, or $.06 per Mcfe, related to a
noncompete agreement entered into as part of the Merger during the six months
ended June 30, 1997 as compared to $640,000, or $.04 per Mcfe in 1996.

DEVELOPMENT, ACQUISITION AND EXPLORATION

     During the six months ended June 30, 1997, the Company incurred $8.1
million in capital expenditures, as the Company has continued to limit its
development activity based on Rocky Mountain natural gas prices.  The Company
anticipates incurring development capital expenditures of approximately $6.9
million during the remaining six months of 1997.

FINANCIAL CONDITION AND CAPITAL RESOURCES

     At June 30, 1997, the Company had total assets of $413.5 million.  Total
capitalization was $380.2 million, of which 52% was represented by stockholders'
equity, 22% by senior debt and 26% by subordinated debt.  During the six months
ended June 30, 1997, net cash provided by operations was $33.5 million, as
compared to $15.0 million for the same period in 1996.  As of June 30, 1997,
there were no significant commitments for capital expenditures.  The Company
anticipates that 1997 expenditures for development drilling and recompletion
activity will be approximately $15.0 million, which will allow for a reduction
of indebtedness, provide funds to pursue acquisitions, or additional securities
repurchases.  The level of these and other future expenditures is largely
discretionary, and the amount of funds devoted to any particular activity may
increase or decrease significantly, depending on available opportunities and
market conditions. The Company plans to finance its ongoing development,
acquisition and exploration expenditures using internal cash flow, proceeds from
asset sales and its bank credit facilities.  In addition, joint ventures or
future public and private offerings of debt or equity securities may be
utilized.

     Prior to the Merger, SOCO financed all of the Company's activities.  A
portion of such financing was considered to be an investment by parent in the
Company with the remaining portion being considered debt payable to SOCO.  In
conjunction with the Merger, the $75.0 million debt payable to SOCO was paid in
full and the Company does not expect SOCO to provide any additional funding.

     Simultaneously with the merger of GOG into the Company in March 1997, the
Company entered into an amended bank credit agreement (the "Facility").   The
Facility is a revolving credit facility in an aggregate amount up to $140.0
million.  The amount available under the Facility is adjusted semiannually and
equaled $110.0 million at June 30, 1997.  At June 30, 1997, $85.0 million was
outstanding under the Facility.

     As of July 24, 1997, the Company had approximately $173.7 million of debt
outstanding, consisting of $76.0 million of senior debt and $97.7 million of
Subordinated Notes.

     The bank credit agreement contains certain financial covenants, including
but not limited to a maximum total debt to capitalization ratio, a maximum total
debt to EBITDA ratio and a minimum current ratio and various other negative
covenants that could limit the Company's ability to incur other debt, dispose of
assets, pay dividends or repurchase securities.  Borrowings under the Facility
mature in 2000, but may be prepaid at anytime.  The Company has periodically
renegotiated its loan agreement to extend the Facility; however, there is no
assurance the Company will continue to do so in the future.

     The Company from time to time enters into arrangements to monetize its
Section 29 tax credits. These arrangements result in revenue increases of
approximately $.40 per Mcf on production volumes from qualified Section 29
properties.  As a result of such arrangements, the Company recognized additional
gas revenues of $646,000 and $942,000 during the six months ended June 30, 1996
and 1997, respectively. These arrangements are expected to increase revenues
through 2002.

                                      17
<PAGE>
 
     The Company believes that its capital resources are adequate to meet the
current requirements of its business.  However, future cash flows are subject to
a number of variables including the level of production and oil and gas prices,
and there can be no assurance that operations and other capital resources will
provide cash in sufficient amounts to maintain planned levels of capital
expenditures or that significant increases in capital expenditures related to
acquisitions and active development, recompletion and exploitation, will not be
undertaken.

INFLATION AND CHANGES IN PRICES

     While certain of its costs are affected by the general level of inflation,
factors unique to the oil and gas industry result in independent price
fluctuations.  Over the past five years, significant fluctuations have occurred
in oil and gas prices.  Although it is particularly difficult to estimate future
prices of oil and gas, price fluctuations have had, and will continue to have, a
material effect on the Company.

     The following table indicates the average oil and gas prices received over
the last five years and highlights the price fluctuations by quarter for 1996
and 1997.  Average price computations exclude hedging gains or losses and other
nonrecurring items to provide comparability.  Average prices per equivalent
barrel indicate the composite impact of changes in oil and gas prices.  Oil
production is converted to natural gas equivalents at the rate of one barrel per
six Mcf.
<TABLE>
<CAPTION>
                                 Average Prices
                       -------------------------------------
                                    Natural
                       Crude Oil      Gas          Mcfe
                       ----------  ---------  --------------
                       (Per Bbl)   (Per Mcf)
<S>                    <C>         <C>        <C>
          Annual
          ------
          1992            $19.06      $1.82            $2.19
          1993             15.87       2.08             2.22
          1994             14.84       1.70             1.94
          1995             16.43       1.34             1.73
          1996             20.47       1.99             2.41
 
          Quarterly
          ---------
 
          1996
          ----
          First           $18.31      $1.55            $1.96
          Second           20.24       1.60             2.13
          Third            19.92       1.83             2.29
          Fourth           22.35       2.78             3.07
 
          1997
          ----
          First           $21.79      $2.63            $2.93
          Second           19.09       1.85             2.26
 
</TABLE>



PART II.  OTHER INFORMATION

                                      18
<PAGE>
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a)      Exhibits -

         27   Financial Data Schedule


(b)      No reports on Form 8-K were filed by Registrant during the quarter
         ended June 30, 1997.

                                      19
<PAGE>
 
                                  SIGNATURES



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



                                 PATINA OIL & GAS CORPORATION



                             By  /s/ David J. Kornder
                                 ---------------------------------------------
                                 David J. Kornder, Vice President and
                                 Chief Financial Officer



July 25, 1997

                                      20