FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

(MARK ONE)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended    SEPTEMBER 30, 1996

                                                        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
--------------------------------------------------------------------------------

              DELAWARE                                        75-2629477
   -------------------------------                        ------------------
   (State or other jurisdiction of                         (I.R.S. Employer
   incorporation or organization)                         Identification No.)

       1625 BROADWAY, DENVER, COLORADO                          80202
   ----------------------------------------               ------------------
   (Address of principal executive offices)                   (Zip Code)

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

--------------------------------------------------------------------------------

Former name,former address and former fiscal year, if changed since last report.

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

     There were 19,295,832 Common Shares outstanding as of November 7, 1996,
          of which 2,000,000 are designated as Series A Common Shares.



<PAGE>




PART I.  FINANCIAL INFORMATION

         Patina  Oil & Gas  Corporation  (the  "Company")  was  incorporated  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.

         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>

<TABLE>


                                           PATINA OIL & GAS CORPORATION

                                            CONSOLIDATED BALANCE SHEETS
                                                  (IN THOUSANDS)
<CAPTION>
                                                                                  DECEMBER 31,     SEPTEMBER 30,
                                                                                      1995              1996
                                                                                  ------------    -------------
                                                                                                   (UNAUDITED)
                                                      ASSETS
<S>                                                                               <C>               <C>  
  Current assets
     Cash and equivalents ......................................................  $     1,000       $     9,469
     Accounts receivable .......................................................        6,611            15,387
     Inventory and other .......................................................        2,000             2,669
                                                                                  -----------       -----------
                                                                                        9,611            27,525
                                                                                  -----------       -----------

Oil and gas properties, successful efforts method ..............................      333,513           551,908
     Accumulated depletion, depreciation and amortization ......................     (118,919)         (148,826)
                                                                                  -----------       -----------
                                                                                      214,594           403,082
                                                                                  -----------       -----------

Gas facilities and other .......................................................        4,775             6,034
     Accumulated depreciation ..................................................       (4,459)           (4,811)
                                                                                 ------------       -----------
                                                                                          316             1,223
                                                                                 ------------       -----------

Other assets, net ..............................................................       -                  3,528
                                                                                 ------------       -----------
                                                                                 $    224,521       $   435,358
                                                                                 ============       ===========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Accounts payable .......................................................... $      3,852       $    15,480
     Accrued liabilities .......................................................          415             8,742
     Payable to parent .........................................................        5,344                56
                                                                                 ------------       -----------
                                                                                        9,611            24,278
                                                                                 ------------       -----------

Senior debt ....................................................................       -                101,250
Subordinated notes .............................................................       -                103,264
Debt to parent .................................................................       75,000            -
Other noncurrent liabilities ...................................................       26,247             6,657

Preferred stock of subsidiary ..................................................       -                  9,729
Commitments and contingencies

Stockholders' equity
     Preferred stock, $.01 par, 5,000,000 shares
         authorized, -0- and 1,204,847 shares issued
         and outstanding .......................................................       -                     12
     Common stock, $.01 par, 40,000,000 shares
         authorized, 14,000,000 and 19,867,232 shares
          issued and outstanding ...............................................          140               199
     Capital in excess of par value ............................................       -                193,387
     Investment by parent ......................................................      113,523            -
     Retained earnings (deficit) ...............................................       -                 (3,418)
                                                                                 ------------       -----------
                                                                                      113,663           190,180
                                                                                 ------------       -----------
                                                                                 $    224,521       $   435,358
                                                                                 ============       ===========


                         The  accompanying  notes are an integral  part of these statements.
</TABLE>


                                                         3

<PAGE>

<TABLE>


                                           PATINA OIL & GAS CORPORATION

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



<CAPTION>
                                                                 THREE MONTHS                 NINE MONTHS
                                                             ENDED SEPTEMBER 30,          ENDED SEPTEMBER 30,
                                                          ------------------------       ---------------------
                                                            1995            1996           1995         1996
                                                          --------        --------       --------     --------
                                                                                (UNAUDITED)
<S>                                                       <C>             <C>            <C>          <C> 
Revenues
     Oil and gas sales .................................. $ 11,423        $ 22,729       $ 38,571     $ 52,546
     Other ..............................................        -             368             29          661
                                                          --------        --------       --------     --------

 ........................................................   11,423          23,097         38,600       53,207
                                                          --------        --------       --------     --------

Expenses
     Direct operating ...................................    2,201           4,161          6,967        9,562
     Exploration ........................................      194              18            333          167
     General and administrative .........................    1,071           1,547          4,613        4,661
     Interest and other .................................    1,349           4,808          4,118        9,787
     Depletion, depreciation and amortization ...........    7,372          13,232         24,323       31,955
                                                          --------        --------       --------     --------

Income (loss) before taxes ..............................     (764)           (669)        (1,754)      (2,925)
                                                          --------        --------       --------     --------

Provision (benefit) for income taxes
     Current ............................................   -               -              -            -
     Deferred ...........................................     (267)         -                (614)        (394)
                                                          --------        --------       --------     --------
                                                              (267)         -                (614)        (394)
                                                          --------        --------       --------     --------

Net income (loss) ....................................... $   (497)       $   (669)      $ (1,140)    $ (2,531)
                                                          ========        ========       ========     ========

Net income (loss) per common share ...................... $   (.04)       $   (.07)      $   (.08)    $   (.23)
                                                          ========        ========       ========     ========
 
Weighted average shares outstanding .....................   14,000          19,866         14,000       17,271
                                                          ========        ========       ========     ========


                         The  accompanying  notes are an integral  part of these statements.
</TABLE>

                                                         4

<PAGE>
<TABLE>


                                           PATINA OIL & GAS CORPORATION

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


<CAPTION>
                                           PREFERRED STOCK       COMMON STOCK        CAPITAL 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, 1994 ...............   -      $  -        14,000   $  140       $   -         $ 115,706      $   -

Credit in lieu of taxes ..................   -         -          -         -             -             1,107          -

Change in investment by parent ...........   -         -          -         -             -            (1,196)         -

Net loss .................................   -         -          -         -             -            (2,094)         -
                                           ------   ------      ------   ------       ---------      ---------     ---------

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 .......................  -          -             2      -               18           -             -

Repurchase of common .....................  -          -          (135)      (1)          (922)          -            -

Preferred dividends ......................  -          -          -         -             -              -          (1,419)

Net loss subsequent to the Merger ........  -          -          -         -             -              -          (1,999)
                                          ------   ------      ------   ------       ---------      ---------     ---------

Balance, September 30, 1996
         (Unaudited)                       1,205   $   12      19,867   $  199       $ 193,387      $    -        $ (3,418)
                                          ======   ======      ======   ======       =========      =========     ========



                         The  accompanying  notes are an integral  part of these statements.
</TABLE>

                                                                 5

<PAGE>


<TABLE>
                                           PATINA OIL & GAS CORPORATION

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (IN THOUSANDS)


<CAPTION>
                                                                                      NINE MONTHS
                                                                                  ENDED SEPTEMBER 30,
                                                                            ------------------------------
                                                                               1995                1996
                                                                            ----------          ----------
                                                                                     (UNAUDITED)

<S>                                                                         <C>                 <C>
Operating activities
     Net income (loss) .................................................... $   (1,140)         $   (2,531)
     Adjustments to reconcile net income (loss) to net
         cash provided by operations
              Exploration expense .........................................        333                 167
              Depletion, depreciation and amortization ....................     24,323              31,955
              Deferred taxes ..............................................       (614)               (394)
              Amortization of deferred credits ............................     (1,606)               (605)
              Changes in current and other assets and liabilities
                  Decrease in
                      Accounts receivable .................................      3,151               4,904
                      Inventory and other .................................       -                    304
                  Increase (decrease) in
                      Accounts payable ....................................     (8,032)             (4,085)
                      Accrued liabilities .................................        535               1,428
                      Other liabilities ...................................     -                    2,357
                                                                            ----------           ---------

              Net cash provided by operations .............................     16,950              33,500
                                                                            ----------           ---------

Investing activities
     Acquisition, development and exploration .............................    (20,625)             (3,042)
     Merger expenditures, net of cash acquired ............................          -              (2,019)
     Sale of  oil and gas properties ......................................        782               1,111
                                                                            ----------           ---------

              Net cash used by investing ..................................    (19,843)             (3,950)
                                                                            ----------           ---------

Financing activities
     Increase (decrease) in payable/debt to parent                                   -             (80,288)
     Increase (decrease) in indebtedness ...................................    (4,333)             79,783
     Deferred credits ......................................................     2,961                 814
     Change in investment by parent ........................................     4,265              (7,514)
     Cost of common stock issuance .........................................      -                (11,534)
     Repurchase of common stock ............................................      -                   (923)
     Preferred dividends ...................................................      -                 (1,419)
                                                                            ----------           ----------

              Net cash realized (used) by financing ........................     2,893             (21,081)
                                                                            ----------           ----------

Increase in cash ...........................................................      -                  8,469
Cash and equivalents, beginning of period ..................................     1,000               1,000
                                                                            ----------           ---------
Cash and equivalents, end of period                                         $    1,000           $   9,469
                                                                            ==========           =========



                         The  accompanying  notes are an integral  part of these statements.

</TABLE>
                                                         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
incorporated  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 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 73% of the common stock of the Company.
In conjunction  with the Merger,  the Company  offered to exchange the Company's
preferred  stock for GOG's preferred stock (the "Original  Exchange  Offer").  A
total of 1,204,847 shares were issued in exchange for approximately 75% of GOG's
preferred stock.  Subsequent to quarter end, GOG's  certificate of incorporation
was amended to provide that all shares of GOG's preferred stock not exchanged in
the Original  Exchange Offer be exchanged for the Company's  preferred  stock on
the same terms as the Original  Exchange Offer. The expected  dividend  payments
resulting  from this  exchange  have been  accrued at September  30, 1996.  Upon
consummation of this exchange,  the Company will have  approximately 1.6 million
preferred shares outstanding.

       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

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 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.  Subsequent to September 30, 1996,  both oil and natural gas prices
have  increased  considerably,  however,  there can be no  assurance  that these
increases  will be sustained.  Increases or decreases in prices  received  could
have a significant impact on the Company's future results of operations.

       The  preparation  of financial  statements in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

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


                                                         7

<PAGE>


unsuccessful.  Costs of productive  wells,  unsuccessfuldevelopmental  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 6 Mcf to 1
barrel.  Amortization of capitalized  costs has generally been provided over the
entire DJ Basin as the wells are  located  in the same  reservoir.  The  Company
expects to review the  appropriateness  of this policy in the fourth  quarter of
1996.  No accrual has been provided for estimated  future  abandonment  costs as
management estimates that salvage value will approximate such costs.

       During the fourth  quarter of 1995,  the  Company  adopted  Statement  of
Financial  Accounting  Standards  No.  121  ("SFAS  121"),  "Accounting  for the
Impairment of Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of ".
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 nine months ended  September 30, 1995 and 1996,  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.

       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  nine  months  ended  September  30,  1996  was
$1,603,000. Scheduled amortization for the next five years is $1,029,000 for the
remainder of 1996, $1,500,000 in 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 $1.6  million  and $1.2  million  during the nine months  ended
September 30, 1995 and 1996,  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,
1995 and September 30, 1996 were insignificant.

Financial Instruments

       The book value and estimated fair value of cash and  equivalents was $1.0
million and $9.5 million at December 31, 1995 and September  30, 1996.  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  debt to parent and
senior debt combined was $75.0  million and $101.3  million at December 31, 1995
and  September  30,  1996.  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 $103.3  million and the  estimated  fair
value was $104.2  million at  September  30,  1996.  The fair value is estimated
based on their price on the New York Stock Exchange.

       In  September  and October  1996,  the Company  entered into various swap
sales  contracts  with a weighted  average oil price (NYMEX based) of $22.87 for
contract  volumes of 295,000  barrels of oil for October 1996  through  February
1997.  The Company  also sold calls for  $255,000 on its  production  of 255,000
barrels of oil for October  1996  through  March 1997 at a weighted  average oil
price of $23.51 (NYMEX based).

Other

       All liquid  investments with an original maturity of three months or less
are considered to be cash equivalents.


       All cash  payments  for income  taxes  were made by SOCO  during the nine
months  ended  September  30,  1995 and  through  May 2, 1996 at which point the
Company began paying its own taxes. The Company was charged interest by  SOCO on

                                                         8

<PAGE>


its debt to SOCO of $4.1  million and $1.6  million  for the nine  months  ended
September  30, 1995 and through May 2, 1996,  which was reflected as an increase
in debt to SOCO.

       Certain amounts in prior period  consolidated  financial  statements have
been reclassified to conform with current classification.

       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 Proxy  Statement/Prospectus  dated April 2, 1996 (SEC Registration No.
333-572).

(3)    OIL AND GAS PROPERTIES

       The cost of oil and gas properties at December 31, 1995 and September 30,
1996 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>
                                                                                          NINE
                                                                     YEAR ENDED       MONTHS ENDED
                                                                     DECEMBER 31,      SEPTEMBER 30,
                                                                         1995                1996
                                                                     ------------      -----------
                                                                            (IN THOUSANDS)
          <S>                                                         <C>               <C>   
          Acquisition .............................................   $      650        $ 216,864
          Development .............................................       12,141            2,642
          Exploration .............................................          416              167
          Other ...................................................           13               47
                                                                      ----------        ---------
                                                                      $   13,220        $ 219,720
                                                                      ==========        =========
</TABLE>


       Due to  management's  focus  on  effectively  combining  the  predecessor
companies,  minimal  development  activity was undertaken  during the first nine
months of 1996.  With the recent  increase in commodity  prices and  significant
progress made in  consolidating  the operations of GOG and SWAT, the Company has
begun to increase development  expenditures.  The Company anticipates  incurring
development  expenditures of  approximately  $5 million in the fourth quarter of
1996.

       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, 1995 and 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.
<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED SEPTEMBER 30,
                                                                                 1995                   1996
                                                                            -------------            -----------
                                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)

       <S>                                                                       <C>                    <C>     
       Total revenues ........................................................   $ 80,005               $ 70,157
       Gross operating margin ................................................   $ 65,886               $ 57,396
       Depletion, depreciation and amortization ..............................   $ 49,968               $ 40,607
       Net income (loss) .....................................................   $ (8,815)              $ (6,191)
       Net income (loss) per common share ....................................   $   (.44)              $   (.31)
       Weighted average shares outstanding ...................................     20,000                 19,943

</TABLE>


                                                         9

<PAGE>

(4)    INDEBTEDNESS

       The following indebtedness was outstanding on the respective dates:
<TABLE>
<CAPTION>
                                                                      DECEMBER 31,             SEPTEMBER 30,
                                                                             1995                    1996
                                                                      -------------            -------------
                                                                                  (IN THOUSANDS)
           <S>                                                        <C>                        <C> 
           Bank facilities ........................................   $      -                   $   101,250
           Less current portion ...................................          -                          -
                                                                      -------------              -----------
                Senior debt, net ..................................   $      -                   $   101,250
                                                                      =============              ===========
           Subordinated notes .....................................   $      -                   $   103,264
                                                                      =============              ===========
           Debt to parent .........................................   $      75,000              $      -
                                                                      =============              ===========
</TABLE>

       As of November 4, 1996, the Company had  approximately  $195.2 million of
debt outstanding,  consisting of $92.0 million of senior debt and $103.2 million
of Subordinated Notes.

       Simultaneously  with the Merger,  the Company  entered into a bank credit
agreement.  The agreement consists of (a) a facility provided to the Company and
SOCO Wattenberg (the "Company Facility") and (b) a facility provided to GOG (the
"GOG Facility").

       The  Company  Facility  is a revolving  credit  facility in an  aggregate
amount up to $102 million.  The amount available for borrowing under the Company
Facility is limited to a semiannually  adjusted borrowing base that equaled $102
million at  September  30,  1996.  At  September  30,  1996,  $73.3  million was
outstanding under the Company Facility.  On November 1, 1996, the borrowing base
was adjusted to $85 million. Prior to September 30, 1996, the Company had a term
loan  facility  in an amount up to $87  million.  This  term loan  facility  was
available to fund GOG's repurchases of the Subordinated  Notes. At September 30,
1996, the Company had not utilized the term loan facility and it was cancelled.

       The GOG Facility is a revolving credit facility in an aggregate amount up
to $51 million.  The amount  available for  borrowing  under the GOG Facility is
limited to a  semiannually  adjusted  borrowing base that equaled $51 million at
September 30, 1996. At September 30, 1996,  $28.0 million was outstanding  under
the GOG Facility.  On November 1, 1996,  the borrowing  base was adjusted to $35
million.  The GOG Facility was used  primarily to refinance  GOG's previous bank
credit facility and pay costs associated with the Merger.

       The  borrowers  may elect that all or a portion of the credit  facilities
bear  interest  at a rate per annum  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
applicable  borrower)  are  offered in the  interbank  eurodollar  market in the
approximated  amount of the requested  borrowing  (the  "Eurodollar  Rate") plus
1.25% (the  "Eurodollar  Margin").  During the period  subsequent  to the Merger
through  September  30, 1996,  the average  interest  rate under the  facilities
approximated 6.9%.

       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.

       Simultaneously  with the Merger,  the Company  recorded  $100  million of
Senior  Subordinated  Notes due July 15, 2004 issued by GOG on July 1, 1994.  In
connection with the Merger, the Company repurchased $1.2 million of the

                                                        10

<PAGE>

Notes. The Company has also repurchased an additional $1.3 million of the Notes.
As part of the purchase  accounting,  the remaining Notes have been reflected in
the  accompanying  financial  statements at a market value of $103.3  million or
105.875% of their principal amount. Interest is payable each January 15 and July
15. The Notes are  redeemable  at the option of GOG, in whole or in part, at any
time on or after July 15, 1999, initially at 105.875% of their principal amount,
declining to 100% on or after July 15, 2001.  Upon the occurrence of a change of
control,  as defined in the Notes,  GOG would be  obligated  to make an offer to
purchase  all  outstanding  Notes  at a price  of 101% of the  principal  amount
thereof. In addition, GOG 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. The Notes are unsecured general obligations of GOG and are subordinated
to all senior indebtedness of GOG and to any existing and future indebtedness of
GOG's subsidiaries.

       The Notes contain  covenants that, among other things,  limit the ability
of GOG 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 GOG 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,  GOG'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 GOG. GOG currently  does not meet the interest  coverage  ratio
necessary to incur indebtedness in excess of approximately $51 million.

       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 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 (7.0% and 6.9% for
the nine months ended  September 30, 1995 and the five months ended May 2, 1996,
respectively).

       Scheduled maturities of indebtedness for the next five years are zero for
the remainder of 1996,  1997 and 1998,  $101.3 million in 1999 and zero in 2000.
The long-term portions of the credit facilities are scheduled to expire in 1999;
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 zero and $8.2 million for the nine months
ended September 30, 1995 and 1996, respectively.

(5)    STOCKHOLDERS' EQUITY

       A total of 40 million  common shares,  $.01 par value,  are authorized of
which 19.9  million were issued and  outstanding  at  September  30,  1996.  The
Company issued 6.0 million shares in exchange for all of the  outstanding  stock
of GOG upon consummation of the Merger. Of the 19.9 million shares  outstanding,
2 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  upon  certain
conditions.  During the second  quarter 1996,  the Company  repurchased  135,400
shares of common  stock for  $923,000.  Subsequent  to  September  30,  1996 the
Company repurchased  571,400 shares of common stock,  500,000 warrants issued to
Gerrity's  former  chief  executive  officer,  and  80,549  warrants  for  total
consideration of $5.1 million. No dividends have been paid on common stock as of
September 30, 1996.

       A total of 5 million preferred shares,  $.01 par value, are authorized of
which 1.2 million  were issued and  outstanding  at September  30, 1996.  In May
1996,  1.2 million shares of 7.125%  preferred  stock were issued to certain GOG
preferred  shareholders  electing  to  exchange  their  preferred  shares in the
Original  Exchange Offer.  Thus there were no proceeds  received related to this
issuance.  The stock is  convertible  into common stock at any time at $8.61 per
share.

                                                        11

<PAGE>

The 7.125%  preferred  stock is  redeemable  at the option of the Company at any
time after May 2, 1998 if the average  closing  price of the Patina 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 $1.1  million  ($1.78 per 7.125%  convertible  share per annum) in
preferred  dividends  during the nine months  ended  September  30, 1996 and had
accrued an additional $701,000 at September 30, 1996 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 May 1996  with an  exercise  price of $7.75 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 (the
"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 2,632  shares have been issued to date in 1996.  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.  The options vest over a three-year  period (30%,  60%,  100%) and
expire five years from date of grant.

       Earnings per share are computed by dividing net income, less dividends on
preferred  stock,  by  weighted  average  common  shares  outstanding.  Net loss
applicable to common for the nine months ended  September 30, 1995 and 1996, was
$1,140,000 and $3,950,000,  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 the tax return of
SOCO.  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 the tax return of SOCO.

       A reconciliation of the statutory rate to the Company's effective rate as
they apply to the benefit for the nine months ended  September 30, 1995 and 1996
follows:
<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED SEPTEMBER 30,
                                                                        1995                 1996
                                                                     ----------           ----------
<S>                                                                     <C>                   <C>
Federal statutory rate ...........................................      (35%)                 (35%)
Loss in excess of net deferred tax liability .....................        -                    22%
                                                                     ----------           ----------
Effective income tax rate                                               (35%)                 (13%)
                                                                     ==========           ==========
</TABLE>

         For  tax  purposes,   the  Company  had  regular  net  operating   loss
carryforwards of $44.9 million and alternative minimum tax loss carryforwards of
$3.2 million at December 31, 1995. These  carryforwards  expire between 2005 and
2009.  No cash  payments  were made by the Company for federal taxes during 1994
and 1995. 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. The effect of such items has been reflected as
a charge or credit in lieu of taxes in the  Company's  statement  of  changes in
stockholder's equity.

(7)      MAJOR CUSTOMERS

         During the nine months ended  September  30, 1995 and 1996,  PanEnergy,
Inc.  accounted for 54% and 33%, Amoco Production  Company accounted for 22% and
20%, and  Total  Petroleum  accounted for 17% and 12% of revenues, respectively.

                                                        12

<PAGE>

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.


(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 will continue to provide
certain services to Patina under a corporate services agreement.

(9)      COMMITMENTS AND CONTINGENCIES

         In August 1995,  SOCO was sued in the United States  District  Court of
Colorado by  plaintiffs  purporting  to  represent  all persons who, at any time
since January 1, 1960,  have had  agreements  providing  for royalties  from gas
production  in  Colorado  to be paid by SOCO  under  various  lease  provisions.
Substantially  all  liability  under this suit was  assumed  by Patina  upon its
formation.  In January 1996, GOG was also sued in a similar but separate  action
filed in the Colorado State Court.  The plaintiffs,  in both suits,  allege that
the  companies  improperly  deducted  unspecified   "post-production"  costs  in
calculating royalty payments in breach of the relevant lease provisions and that
fact  was  fraudulently  concealed  from the  plaintiffs.  The  plaintiffs  seek
unspecified  compensatory and punitive  damages and a declaratory  judgment that
the  companies  are not  permitted  to  deduct  post-production  costs  prior to
calculating  royalties paid to the class. The Company, SOCO and GOG believe that
costs  deducted in  calculating  royalties  are and have been  proper  under the
relevant lease provisions, and they intend to defend these and any similar suits
vigorously.  At this  time,  the  Company  is  unable to  estimate  the range of
potential  loss, if any.  However,  the Company  believes the resolution of this
uncertainty  should  not have a  material  adverse  effect  upon  the  Company's
financial  position,  although an  unfavorable  outcome in any reporting  period
could have a material impact on results for that period.

         In March 1996,  a complaint  was filed in the Court of Chancery for the
State of Delaware  against GOG and each of its directors,  Brickell  Partners v.
Gerrity Oil & Gas Corporation,  C.A. No. 14888 (Del. Ch.). The complaint alleges
that the "action is brought (a) to restrain the defendants  from  consummating a
merger  which will  benefit the holders of GOG's  common stock at the expense of
the holders of the Preferred  and (b) to obtain a declaration  that the terms of
the  proposed  merger  constitute  a breach  of the  contractual  rights  of the
Preferred." The complaint  seeks,  among other things,  certification as a class
action on behalf of all holders of GOG's preferred stock, a declaration that the
defendants  have committed an abuse of trust and have breached  their  fiduciary
and contractual  duties,  an injunction  enjoining the Merger and money damages.
Defendants  believe that the complaint is without merit and intend to vigorously
defend  against the action.  At this time, the Company is unable to estimate the
range of potential  loss, if any, from this  uncertainty.  However,  the Company
believes the resolution of this  uncertainty  should not have a material adverse
effect upon the Company's financial position, although an unfavorable outcome in
any reporting period could have a material impact on results for that period.

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


                                                        13

<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.

     Total  revenues for the three month and nine month periods ended  September
30, 1996 increased to $23.1 million and $53.2 million.  The amounts  represented
increases of 102% and 38% as compared to the respective prior year periods.  The
revenue  increases  are due to the  effect of the Merger  and  improved  product
prices in 1996. The net loss for the third quarter 1996 was $669,000 compared to
a net loss of $497,000 for the same period in 1995.  The increase in net loss is
primarily  attributed to a significant  increase in interest  expense related to
higher average debt balances  outstanding and higher average  interest rates due
to the Subordinated Notes and higher depletion expense.

     Oil and gas sales less direct operating expenses for the three months ended
September  30,  1996 were $18.6  million,  a 101%  increase  from the prior year
period.  Average daily production in the third quarter of 1996 was 5,529 barrels
and 74.8 MMcf  (18,004  barrels of oil  equivalent),  increases  of 60% and 37%,
respectively.   The  production  increases  resulted  solely  from  the  Merger.
Exclusive of the Merger,  production  continued to decline due to the  Company's
reduced  development  schedule and expected initial declines on the large number
of wells  drilled  and  completed  in 1994 and early  1995.  There were 68 wells
placed on production in the first nine months of 1995 compared to seven wells in
the first nine months of 1996. Total production  volumes  increased in the third
quarter due to the full quarter  effect of the Merger and a modest  drilling and
recompletion  program which was initiated in the third quarter.  However, in the
future,  while  production is not expected to continue to decline at the current
rate,  a  decrease  is  expected  unless   development   drilling   activity  is
substantially increased or additional acquisitions are consummated. The decision
to increase  development  drilling is heavily  dependent on the commodity prices
being received for production.  However,  unless prices increase  significantly,
development drilling is expected to remain limited.

     Average  oil  prices  increased  to $19.92 per  barrel  compared  to $15.90
received in the third quarter of 1995.  Natural gas prices  increased from $1.27
per Mcf in the third  quarter of 1995 to $1.83 in 1996.  The increase in natural
gas prices was  primarily  the result of prior year  production  being  marketed
under term arrangements which were based on Rocky Mountain region pricing (which
was depressed)  whereas the 1996 production  benefitted from several factors.  A
portion  of these term  arrangements  expired  during  1996  which  allowed  the
production  to be sold at local spot prices  which had  increased as a result of
higher demand and overall  declining  production  in the DJ Basin.  In addition,
enhanced  marketing  results  combined  with higher  natural gas liquids  prices
contributed to the overall price increase.  Direct operating  expenses increased
to $2.51 per BOE  compared to $1.91 in the prior year  quarter.  The increase is
primarily  attributed to focusing more attention on enhancing production through
performing  workovers on existing  properties  rather than  through  development
drilling and the overall decline in production.  As a result of the Merger,  the
Company expects to realize  efficiencies  which will help hold direct  operating
expenses per BOE constant even if production continues to decline.

     General and administrative  expenses, net of reimbursements,  for the third
quarter 1996 were $1.5 million, a 44% increase from the same period in 1995. The
increase is the result of the Merger partially offset by reductions in allocated
costs  from  SOCO.  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 $4.8 million compared to $1.3 million in the
third quarter of 1995.  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 climbed to 9.3%  compared to 7.0% in the
third quarter 1995. This increase is due primarily to the Subordinated Notes.


                                                        14

<PAGE>

     Depletion,  depreciation  and  amortization  expense for the third  quarter
totalled $13.2 million,  an increase of $5.9 million or 80% from the same period
in 1995. The increase  resulted from the increase in production and an increased
depletion, depreciation and amortization rate of $7.99 per BOE compared to $6.39
in 1995.  The primary  cause for the increased  rate was a downward  revision in
reserve  quantities  due to proved  undeveloped  reserves  being  classified  as
uneconomic  at year end 1995 prices and the inclusion of the  amortization  of a
noncompete agreement entered into in conjunction with the Merger.

DEVELOPMENT, ACQUISITION AND EXPLORATION

     During the nine months  ended  September  30,  1996,  the Company  incurred
$219.7 million in capital  expenditures.  Of this amount, $216.9 million related
to the  acquisition  of GOG by the  issuance  of stock of the  Company.  Capital
expenditures,  exclusive  of  acquisitions,  totalled  only $2.8  million as the
Company has continued to limit its development  activity based on Rocky Mountain
natural gas prices.  With the recent  increase in commodity  prices,  management
intends to increase the drilling and recompletion activity in the fourth quarter
of 1996. The Company anticipates  incurring  development capital expenditures of
approximately $5 million during this period.

FINANCIAL CONDITION AND CAPITAL RESOURCES

     At  September  30, 1996,  the Company had total  assets of $435.4  million.
Total  capitalization  was  $394.7  million,  of which  48% was  represented  by
stockholder's  equity,  26% by senior debt and 26% by subordinated  debt. During
the nine months ended  September 30, 1996,  net cash provided by operations  was
$33.5  million,  as compared to $16.9 million for the same period in 1995. As of
September 30, 1996,  there were no  commitments  for capital  expenditures.  The
Company  anticipates  that  1996  expenditures  for  development   drilling  and
recompletion  activity  subsequent to the Merger,  will be less than $9 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. Due to restrictions outlined in GOG's various
credit  agreements,  cash  generated  by GOG may need to be  retained by GOG and
might therefore not be available to fund the Company's other operations.

     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 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,  the Company  entered  into a bank credit
agreement.  The agreement consists of (i) a facility provided to the Company and
SOCO  Wattenberg  (the "Company  Facility") and (ii) a facility  provided to GOG
(the "GOG Facility").

     The Company  Facility is a revolving credit facility in an aggregate amount
up to $102  million.  The  amount  available  for  borrowing  under the  Company
Facility is limited to a semiannually  adjusted borrowing base that equaled $102
million at  September  30,  1996.  At  September  30,  1996,  $73.3  million was
outstanding under the Company Facility.  On November 1, 1996, the borrowing base
was adjusted to $85 million. Prior to September 30, 1996, the Company had a term
loan  facility  in an amount up to $87  million.  This  term loan  facility  was
available to fund GOG's repurchases of the Subordinated  Notes. At September 30,
1996, the Company had not utilized the term loan facility and it was cancelled.

     The GOG Facility is a revolving  credit facility in an aggregate  amount up
to $51 million.  The amount  available for  borrowing  under the GOG Facility is
limited to a  semiannually  adjusted  borrowing base that equaled $51 million at
September 30, 1996. At September 30, 1996,  $28.0 million was outstanding  under
the GOG Facility.  On November 1, 1996,  the borrowing  base was adjusted to $35
million.  The GOG Facility was used  primarily to refinance  GOG's previous bank
credit facility and pay costs associated with the Merger.


                                                        15

<PAGE>

     As of November 4, 1996,  the Company had  approximately  $195.2  million of
debt outstanding,  consisting of $92.0 million of senior debt and $103.2 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. 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.

     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 $1.6  million  and $1.2  million  during the nine months  ended
September 30, 1995 and 1996,  respectively.  These  arrangements are expected to
increase revenues through 2002.

     The Company  believes  that its capital  resources are adequate to meet the
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 increased capital expenditures will not be undertaken.


                                                        16

<PAGE>

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 four years and  highlights the price  fluctuations  by quarter for 1995
and 1996.  Average price  computations  exclude  contract  settlements and other
nonrecurring  items to provide  comparability.  Average  prices  per  equivalent
barrel indicate the composite  impact of changes in oil and gas prices.  Natural
gas production is converted to oil equivalents at the rate of 6 Mcf per barrel.
<TABLE>
<CAPTION>

                                                          AVERAGE PRICES
                                            --------------------------------------------
                                                              NATURAL         EQUIVALENT
                                            CRUDE OIL          GAS            BARRELS
                                            ---------        ---------        ---------
                                           (Per Bbl)         (Per Mcf)        (Per BOE)
                  <S>                          <C>                <C>             <C>
                  ANNUAL
                  1992 ......................  $19.06            $1.82           $13.12
                  1993 ......................   15.87             2.08            13.33
                  1994 ......................   14.84             1.70            11.66
                  1995 ......................   16.43             1.34            10.35

                  QUARTERLY

                  1995
                  First .....................  $16.37            $1.37           $10.51
                  Second ....................   17.24             1.19             9.84
                  Third .....................   15.90             1.27             9.91
                  Fourth ....................   16.12             1.55            11.27

                  1996
                  First .....................  $18.31            $1.44           $11.27
                  Second ....................   20.24             1.60            12.75
                  Third .....................   19.92             1.83            13.72
</TABLE>


     In September 1996, the Company received an average of $21.07 per barrel and
$1.82 per Mcf for its production.



                                                        17

<PAGE>



PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a)      Exhibits -

         10.1.2   Second Amendment to Credit Agreement effective October 8, 1996
                  by and among the Company,  Gerrity Oil & Gas  Corporation  and
                  SOCO Wattenberg Corporation,  as Borrowers, and Texas Commerce
                  Bank  National  Association,   as  Administrative  Agent,  and
                  certain commercial lending institutions.

         10.1.3   Third Amendment to Credit Agreement effective November 1, 1996
                  by and among the Company,  Gerrity Oil & Gas  Corporation  and
                  SOCO Wattenberg Corporation,  as Borrowers, and Texas Commerce
                  Bank  National  Association,   as  Administrative  Agent,  and
                  certain commercial lending institutions.

         10.4     Sublease  Agreement dated as of October 7, 1996 by and between
                  Gerrity Oil & Gas Corporation,  as Sublandlord,  and Shadownet
                  Technologies, L.L.C.

         27       Financial Data Schedule






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<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        (DAVID J. KORNDER)
                                        -------------------------------
                                        David J. Kornder, Vice President
                                        and Chief Financial Officer
















November 7, 1996



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