UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                                   (Mark One)
                |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                   For the fiscal year ended December 31, 1997

                                       OR

               o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                          Commission file number 0-610
                               EQUITY OIL COMPANY
             [Exact name of registrant as specified in its charter]

                Colorado                       87-0129795
         (State or other jurisdiction of     (I.R.S. Employer
          incorporation or organization)   Identification Number)

          10 West Broadway, Suite 806              84101
             Salt Lake City, Utah               (Zip Code)
    (Address of principal executive offices)

       Registrant's telephone number, including area code: (801) 521-3515

          Securities registered pursuant to Section 12 (b) of the Act:
     Title of each class          Name of each exchange on which registered

          None                                     None

          Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock (par value, $1 per share)
                                [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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation  S-K is contained  herein and will be contained to the best of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No

     As of February 24, 1998, 12,596,500 common shares were outstanding, and the
aggregate market value of voting stock held by  non-affiliates of the registrant
was approximately $33,000,000.

                       Documents Incorporated by Reference

     1.  Definitive  proxy  statement to be filed in  connection  with  Issuer's
Annual  Stockholders'  Meeting to be held on May 13, 1998 and more  particularly
the  information  contained on pages 2 through 5 are  incorporated  by reference
into Part III of this report.

Total Pages 75.

                                        

<PAGE>

                                     PART I
ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

     Equity Oil Company ("Equity" or "the Company") was originally  incorporated
in the state of Utah in 1923. In 1958, it was merged into its subsidiary,  Weber
Oil Company,  a Colorado  corporation.  The surviving  company  adopted the name
Equity Oil Company.

     Equity is an independent oil and gas  exploration  and production  company,
currently  conducting  its business in nine states and two  Canadian  provinces.
Equity  is also a 50%  shareholder  in  Symskaya  Exploration,  Inc.,  which  is
licensed  to operate  in Russia.  Headquartered  in Salt Lake  City,  Utah,  the
Company also maintains an exploration  office in Denver,  Colorado,  and a field
office in Vernal, Utah. The Company has 18 full-time employees.

     More than 90% of the Company's revenues come from the sale of crude oil and
natural gas. Accordingly,  the Company continually seeks to increase its oil and
gas production.  The keys to increasing  production are the  replacement,  on an
annual basis, of current  production,  as well as achieving  additional  reserve
growth.

     The  Company's  strategy to replace  production  and  increase  its oil and
natural gas reserves on an ongoing basis is comprised of a balanced  approach in
four areas. The four elements of that strategy are:

         *Focused exploration drilling
         *Development drilling and exploitation
         *Acquisition of proved reserves
         *International exploration in Russia

     The  Company's   exploration  office  in  Denver  is  responsible  for  the
generation  and  review  of  exploration  prospects,  and  participates  in  the
planning,  where  necessary,  to drill the  prospects.  These include  prospects
developed in-house, as well as those presented by independent third parties. The
general drilling  practice of the Company is to participate in projects on a 25%
to 50% working interest basis. Participation varies with each prospect depending
on location and the attendant financial and technical risk.

     In addition to its exploration  ventures,  the Company works in conjunction
with other working interest owners in producing  properties to identify projects
that will develop and exploit the  productive  capacities of existing  wells and
fields.  These projects include development  drilling,  production  enhancement,
operating cost reductions, and other types of activities.

     The  Company  also  investigates  opportunities  to purchase  interests  in
properties with existing  production.  During the last three years,  the Company
has  replaced a  significant  amount of its  production  through the purchase of
producing  properties.  These  purchases  have,  in  turn,  produced  additional
developmental and enhancement projects.

     The Company  conducts its  international  exploration in Russia through its
50% ownership of Symskaya Exploration, Inc. (Symskaya). Symskaya operations were
significantly  curtailed  during 1997.  Further  discussion  of this venture and
other  Company  activities  is found in ITEM 2.  PROPERTIES,  under the  caption
Present Activity.

NARRATIVE DESCRIPTION OF BUSINESS

PRINCIPAL PRODUCTS AND MARKETS

     The Company produces crude oil and natural gas. During the last five years,
revenues from the sales of these  products  have  accounted for more than 90% of
the total revenues of the Company, while remaining revenues have come from other
sources,  including  interest  income on  invested  funds,  partnership  income,
operating  overhead  reimbursements,  and the  sales of  various  developed  and
undeveloped properties.

     The majority of the Company's oil  production  occurs in Colorado and other
Rocky  mountain  states,  and the  Canadian  provinces  of Alberta  and  British
Columbia.  The Company's crude oil production is sold under short-term contracts
at current posted prices for each geographic  area,  less applicable  quality or
transportation   tariffs  plus  negotiated  bonuses.   Prices  are  set  by  oil
purchasers,  and their methods of determining  prices are not within the control
of the Company, but it is assumed they are influenced by regional,  national and
international  factors relating to oil supply and demand.  (See discussion under
Major Customers)

     The  bulk of the  Company's  natural  gas  production  occurs  in  Wyoming,
California, the Canadian province of Alberta, and the Gulf Coast of Texas. While
the areas where the  Company has its major gas  reserves  are  characterized  by
large reserves of other  companies,  the Company has  historically  been able to
sell all of its productive capacity, and expects to be able to continue to do so
in the near  future.  The  majority of gas sold in Wyoming is  marketed  under a
contract  at an index price that  changes  monthly.  The  contract is subject to
renegotiation on an annual basis. The majority of gas produced by the Company in
other geographic  areas is sold on the spot market,  where prices also vary on a
monthly basis.

     The Company has not historically  hedged significant  amounts of either oil
or gas production.

                                        
SEASONALITY

     The Company  experiences some seasonality in gas sales revenues.  Net sales
prices and production tend to rise during the winter months compared to the rest
of the year. However,  since over 70% of the Company's oil and gas revenues come
from the sale of oil, the seasonal impact on gas sales is not significant.

MAJOR CUSTOMERS

     All oil and gas  produced  in the U.S.  or Canada  is sold to  unaffiliated
pipeline,  refining, or crude oil purchasing  companies.  These companies may be
the  operators  of the fields  where the product is  produced,  or owners of the
pipelines which transport the products. Previous changes of ownership or changes
in  operator   have  not  resulted  in  an   interruption   of   production   or
transportation,  and consequently  have not had a material adverse effect on the
business of the Company.

     Approximately  56% of the Company's total oil production,  originating from
several different fields, is sold to or marketed through JN Petroleum Marketing,
Inc (JN).  The Company does not believe that the loss of JN as a customer  would
have any material  impact on the  Company,  as oil  production  from the various
fields could readily be sold to other crude oil  purchasers.  No other  customer
accounts for more than 10% of the Company's sales.

COMPETITION

     Equity is part of a highly competitive  industry composed of many companies
that are  significantly  larger and possess greater  resources than the Company.
These include major oil companies as well as large  independent  exploration and
production  companies.  Their  size and  resources  may allow  these  parties to
operate at a greater competitive advantage than Equity.

     During 1997 the Company did not  experience any  competitive  factors which
impaired  its  production  or  sale  of oil  and  gas,  nor  did  it  experience
significant difficulties in contracting for drilling and related equipment.

GOVERNMENT REGULATION

     Drilling  activities of the Company are  regulated by several  governmental
agencies  in  the  United  States,   both  federal  and  state,   including  the
Environmental  Protection Agency,  Forest Service,  Department of Wildlife,  and
Bureau of Land  Management,  as well as state oil and gas  commissions for those
states in which the Company has operations.  Canadian and Russian operations are
subject to similar requirements.

     The Company  believes that it is currently in compliance  with all federal,
state,  and local  environmental  regulations,  both  domestically  and  abroad.
Further, the Company does not believe that any current environmental regulations
will have a material impact on its capital  expenditures  or earnings,  nor will
they result in any competitive disadvantage to the Company.

FINANCIAL INFORMATION ABOUT FOREIGN OPERATIONS

     Foreign  operations of the Company are currently  conducted in the Canadian
provinces  of Alberta and British  Columbia.  Financial  information  concerning
these operations can be found in Footnotes 5 and 9 to the financial  statements.
For financial reporting purposes,  the Company does not allocate any general and
administrative  expenses to its Canadian operations,  nor are they burdened with
indirect exploration overhead expenses.  Direct exploration expenses are charged
to the  geographic  area in  which  they  occur.  Because  the  majority  of the
Company's   exploration   efforts  occur  in  the  United  States,  very  little
exploration  expenses are allocated to the Canadian  operations.  As a result of
these and other  factors,  the  operating  profit of the Canadian  operations is
significantly  greater  than the  operating  profit in the  United  States.  The
Company does not believe that its Canadian operations are attended with any more
risk than those in the United States.

     Symskaya  Exploration,  Inc., in which the Company owns a 50% interest,  is
licensed to operate in Russia.  Further  discussion  of this venture is found in
ITEM 2. PROPERTIES, under the caption Present Activity, and in Footnotes 6 and 9
in the financial statements.

ITEM 2. PROPERTIES

     The  principal   properties  of  the  Company   consist  of  developed  and
undeveloped oil and gas leasehold  interests.  Developed leases are comprised of
properties with existing  production,  where lease terms continue as long as oil
and/or gas is produced.  Undeveloped  leases  include  unproven  acreage on both
public and private  lands.  The leases have set terms and  terminate at the time
specified  in  each  lease  unless  oil  and gas in  commercial  quantities  are
discovered prior to that time.

     The Company  also has a fee  interest in 6,996 net acres of oil shale lands
in Colorado.  These  properties have not generated  significant  revenue for the
Company.  In 1994,  the Company  entered  into a lease  agreement  with  another
company for a five year oil and gas lease on these lands.


RESERVES

     The information found in Footnote 9 to the financial statements  concerning
proved  reserves  represents the Company's  best estimate of product  quantities
expected to be produced from the  properties  based on geologic and  engineering
data, as well as current economic and operating conditions.  The presentation is
made in accordance with Securities and Exchange  Commission  guidelines,  and is
based on prices and costs in effect on December 31, 1997.

     Estimates  of  reserve  quantities  and  related  future net cash flows are
calculated  using  unescalated  year-end oil and gas prices and operating costs,
and may be subject to substantial  fluctuations based on the prices in effect at
the end of each  year.  Reserve  revisions  occur when the  economic  limit of a
property is  lengthened or shortened  due to changes in commodity  pricing.  The
following  table sets forth a  comparison  of year-end  reserves,  the  weighted
average prices used in calculating  estimated reserve  quantities and future net
cash  flows,  future net cash  flows  discounted  at 10%,  and per barrel of oil
equivalent  discounted cash flows at the end of 1997, 1996, and 1995 (quantities
in thousands, except for pricing and per barrel of oil equivalent amounts):

                                                                        
                      Year-end                                           SEC-10
                   Proved reserves                Year-end      SEC-10   pre-tax
                  Oil      Gas                     prices       pre-ta   values
                (MBBLs)   (MMCF)     BOE*      Oil       Gas    values   per BOE
                 ----     -----      ---       ---       ---    ------   -------

12/31/97 ......  8,420    18,909    11,571    $14.99    $2.03   $37,409    $3.23

12/31/96 ......  8,369    17,617    11,305    $24.36    $2.84   $79,002    $7.00

12/31/95 ......  7,750    18,024    10,754    $18.02    $1.38   $42,772    $3.98

No estimates  of reserves  have been filed with or included in any report to any
other federal agency during 1997.

* - gas converted at 6,000 Mcf per barrel.



<PAGE>



PRODUCTION

The following table sets forth the Company's  production,  average sales prices,
and average lifting costs by geographic area for 1997, 1996, and 1995:


<TABLE>
<CAPTION>

                            1997            1996            1995           1997           1996           1995
                             Oil             Oil             Oil            Gas            Gas            Gas
                           (Bbls)          (Bbls)          (Bbls)         (MMCF)         (MMCF)         (MMCF)
                           ------          ------          ------         ------         ------         ------
Production
 
Area
<S>                       <C>             <C>             <C>                <C>            <C>             <C>
 Colorado                 366,319         363,080         373,766            170            106             84
 Texas                     25,359          29,186          32,861            211            315            356
 Montana                   26,103          32,845          23,385             16             17              9
 Utah                      18,745          16,769          10,069              -              -              -
 Wyoming                   76,190          68,924          44,283            660            519            422
 North Dakota               7,007           6,768           5,869              3              3              2
 Oklahoma                     435             607             640              -              -              -
 California                     -               -               -            560            365              5
 Other States                   7              13               6              -              -              2
                          -------         -------         -------          -----          -----            ---
 Total U.S.               520,165         518,192         490,879          1,620          1,325            880
                          

 Alberta                   92,376         113,756         116,252            439            586            568
 B.C.                      23,371           4,769          12,249             10              2              3
                           ------           -----          ------             --              -              -
 Total Canada             115,747         118,525         128,501            449            588            571
                          -------         -------         -------            ---            ---            ---
Grand Total               635,912         636,717         619,380          2,069          1,913          1,451
                          =======         =======         =======          =====          =====          =====


Average Price
                                                                                                        -------------
  U.S.                    $19.49          $21.49          $17.44          $ 2.21         $1.79          $1.67
  Canada                  $15.36          $16.99          $15.49          $ 1.34         $1.01          $ .74
  Total                   $18.74          $20.65          $17.00          $ 2.02         $1.55          $1.31

Lifting Costs

  U.S.                    $ 7.53          $ 7.92          $ 7.75          $  .85         $ .66          $ .74
  Canada                  $ 4.15          $ 6.09          $ 3.75          $  .36         $ .37          $ .19
                          ------          ------          ------          ------         -----          -----
  Total                   $ 6.92          $ 7.58          $ 6.85          $  .75         $ .57          $ .53
                          ======          ======          ======          ======         =====          =====

</TABLE>


PRODUCTIVE WELLS AND ACREAGE

     The location and  quantity of Equity's  productive  wells and acreage as of
December 31, 1997 are as follows:


 Productive Wells:                           Gross                      Net
    Oil:
        United States                         747                    100.932
        Canada                                243                     11.625
    Gas:
        United States                          71                     19.768
        Canada                                  9                      1.604
                                            -----                    -------
    Total Productive Wells                  1,070                    133.929
                                            =====                    =======

    Developed Acreage
        United States                     126,314                     12,408
        Canada                            126,440                      2,696
                                          -------                      -----
    Total Developed Acreage               252,754                     15,104
                                          =======                     ======

<PAGE>

UNDEVELOPED LEASEHOLD ACREAGE

     The following table sets forth the Company's  undeveloped oil and gas lease
acreage as of December 31, 1997 by geographic area:



                                        Gross                    Net
Area                                   Acreage                 Acreage
----                                   -------                 -------
Colorado                                 22,744                 15,479
Texas                                     3,992                  1,211
Montana                                  58,673                  7,527
Utah                                      7,950                    880
Wyoming                                  26,573                 15,943
California                               18,775                 13,497
North Dakota                             13,809                  7,706
                                         ------                  -----
Total U.S.                              152,516                 62,243

Alberta                                  18,877                  3,763
                                         ------                  -----
Total Canada                             18,877                  3,763
                                         ------                  -----
Grand Total                             171,393                 66,006
                                        =======                 ======

     Through its 50% ownership in Symskaya  Exploration,  Inc., the Company also
has an indirect 50% interest in an additional  1,100,000  gross acres in Russia.
Further  discussion  of this venture is found in ITEM 2.  PROPERTIES,  under the
caption Present Activity, and in Footnotes 6 and 9 to the financial statements.

DRILLING ACTIVITY

     During 1997, the Company participated in the drilling of 30 gross wells. Of
this total, 18 were completed as producing oil and gas wells and 12 were plugged
and abandoned as dry holes.



Gross exploratory wells      Status             1997          1996          1995
drilled:
     United States           Productive           13            15             8
                             Dry                  12             6             4
     Canada                  Productive            -             -             -
                             Dry                   -             -             -
Gross development wells
drilled:
     United States           Productive            5             3             3
                             Dry                   -             -             -
     Canada                  Productive            -             1             5
                             Dry                   -             -             -



Net exploratory wells        Status             1997          1996          1995
drilled:
     United States           Productive         4.21          3.95          1.05
                             Dry                5.99          1.64          1.08
     Canada                  Productive            -             -             -
                             Dry                   -             -             -
Net development wells
drilled:
     United States           Productive         1.74          1.19          1.30
                             Dry                   -             -             -
     Canada                  Productive            -           .50          2.14
                             Dry                   -             -             -




PRESENT ACTIVITY

DOMESTIC EXPLORATION

     In  1997,  the  Company  participated  in the  drilling  of a  total  of 25
exploratory  wells  resulting  in  12  gas  wells  and 1 oil  well,  an  overall
completion success rate of 52%.

     As in 1996,  drilling for gas on 3-D seismic  prospects  in the  Sacramento
Basin of northern  California  was the major focus of drilling  activity for the
Company.  Over the last three years,  Equity has participated in a total of nine
3-D seismic surveys in this area,  covering a total of 131 square miles. A total
of 40 wells,  including  the 11  drilled  in 1997,  have been  drilled  on these
surveys  through the end of this year. Of those,  25 have been  completed as gas
wells for an overall 63% success rate.  Equity's  working  interest in the wells
and the associated surveys ranges from 18.75% to 60%.

     Equity is the operator of two of the surveys,  Davis Ranch and Merlin.  The
Company  drilled  three  wells in the Merlin  survey in 1997,  resulting  in one
completion,  the Henning  #1-15.  That well was placed on production in February
1998,  producing  from  perforations  at 5,565  to  5,568  feet at a rate of 1.2
million  cubic feet per day.  During  drilling,  additional  zones from 5,518 to
5,557 feet drill stem tested at a rate of 5.9 million  cubic feet per day.  This
interval will be completed in March of 1998.  Equity has a 50% working  interest
in the well and the survey.  A fourth well is currently  scheduled to be drilled
on the Merlin prospect in the second quarter of 1998.

     Should  oil prices  strengthen  from their  early 1998 low  levels,  Equity
expects to participate in the drilling of 11 more wells in the Sacramento  Basin
in 1998 in addition to the Merlin well,  including 2 in the Davis Ranch prospect
where Equity operates with a 60% working interest,  and 9 in other surveys where
Equity has a 25% working interest.  Further, the Company believes that there may
be another 40 prospective locations on the surveys that may be drilled in future
years.

     In an effort to add oil exploration to existing California  activities,  in
1997 the Company  participated  in a 36 square mile 3- D survey in the  Southern
San Joaquin Basin. The survey area includes several producing oil fields as well
as numerous  undrilled 2-D seismic leads.  Shooting for the survey was completed
in  January  of  1998.  Evaluation  of the  data  from  the  shoot  should  take
approximately  three  months,  and it is  presently  expected  that at least one
exploratory  well will be drilled on the survey in the second  half of the year.
Equity has a 30% working interest in the survey.

     The  Company  participated  in two  exploratory  wells in  Wyoming in 1997,
resulting  in one oil  completion.  Although  exploration  drilling in the Rocky
Mountains was limited in 1997,  work on several Rocky  Mountain  prospects  will
lead to drilling in 1998. The largest of these is the O'Brien Springs prospect.

     This  prospect,  developed  in house by Equity,  covers a 19,200 acre lease
block on which a 35 square  mile 3-D survey was  conducted  in the fall of 1997.
The  project  is  located  in  Carbon  County,  Wyoming,  in an area of  complex
structural geology. The prospect area has been lightly explored in the past, and
includes  potential   multiple  pays  in  the  Tensleep,   Nugget  and  Frontier
formations.  The processing and evaluation of the survey data has been completed
and the initial exploratory wells on the prospect are scheduled to be drilled in
mid-1998. Equity maintains a 50% operated working interest in the prospect.

     Early 1998 drilling on another Rocky  Mountain  prospect  assembled in 1997
has met with  initial  success.  On March 3rd casing was set on a well in Golden
Valley  County,  North  Dakota.  The well,  in which Equity has a 32.5%  working
interest,  was  drilled  on  acreage  adjacent  to a  recompletion  that  Equity
participated  in during  1997.  During  drilling,  the well  tested oil from two
formations,  and is being  completed as an oil well. In addition,  electric logs
and other tests have  identified  two  additional  zones in the well that may be
productive.

EXPLOITATION & DEVELOPMENT DRILLING

     In 1997, Equity completed 100% of its five development wells,  resulting in
four gas wells and one oil well.  Three  development  wells were  drilled in the
Siberia Ridge gas field in  Sweetwater  County,  Wyoming.  The Company has a 50%
working  interest in two of the wells,  and a 40%  interest in the other.  These
wells are currently on  production  with a combined  productive  capacity of 3.3
million cubic feet and 30 barrels of condensate  per day. The oil well, in which
Equity has a 46% working  interest,  was drilled and completed in the Sage Creek
Unit in the Bighorn Basin of Wyoming.  In each case,  these wells represent part
of the Company's ongoing effort to develop the potential of existing properties.

     In addition to development  drilling,  the Company  participated in a broad
range of workovers on existing properties, and committed to a 3-D seismic survey
of the core  producing  area of the Cessford  Field in Alberta,  Canada in which
Equity has a 50% working interest.  Workover activity in the Milligan Creek Unit
#2, British Columbia,  resulted in a dramatic increase in production from 440 to
1,025 barrels per day. Equity maintains a 11.44% working interest in the Unit.

ACQUISITIONS

     Equity made one  significant  acquisition in 1997, the purchase in December
of proved  reserves of 1.1 million  barrels of oil and 438 million cubic feet of
gas for a total cost of $3.28 million. The reserves are located primarily in the
Bighorn  Basin of  northwestern  Wyoming  and  consist of 73 active  wells in 14
fields.  The Company's  working interest in the properties range from 17% to 74%
and average approximately 38%. In each case, in addition to the proved producing
reserves,  the  Company  believes  there are  substantial  reserves  that can be
developed by further exploitation and drilling in an improved economic climate.

SYMSKAYA EXPLORATION

     During 1997,  the Company  operated its Symskaya  project in a  maintenance
mode,  focusing on two objectives.  First,  the successful sale or farmout of an
interest in Symskaya to support further  drilling,  and second,  the approval of
the project by the Russian  parliament in accordance  with the Law on Production
Sharing that was adopted subsequent to the time the original  Production Sharing
Agreement was signed.  Neither objective has yet been accomplished.  The Company
will continue to pursue the same objectives in 1998.

     The area covered by Symskaya's  License is located in a country that may be
considered  economically  and politically  unstable.  As a result,  the Symskaya
project is subject to all the risks of frontier  exploration  in addition to the
economic and political risks  associated  with the Russian  Federation and local
government,  including  but  not  necessarily  limited  to the  cancellation  or
renegotiation of contracts,  expropriation,  tax and royalty increases,  foreign
exchange controls, import and export regulations,  environmental regulations and
other  laws that may have an  adverse  impact on the  operation.  There are also
increased  logistical problems and costs associated with exploration  activities
in such a remote region.

DELIVERY COMMITMENTS

     The Company is not obligated to provide any fixed or determinable  quantity
of oil or gas in the future under any existing contracts or agreements.

ITEM 3. LEGAL PROCEEDINGS

No material legal proceedings are pending.


ITEM 4. Submission of Matters to a Vote of Security Holders

     During the fourth  quarter of the fiscal year  covered by this  report,  no
matters were  submitted to the security  holders for a vote, and no proxies were
solicited.


                                     PART II

ITEM 5. Market for the Company's Common Stock and Related Matters

     The  Company's  stock is traded on the  over-the-counter  market and quoted
over the NASDAQ  National  Market  System  using the symbol  EQTY.  High and low
prices for 1997 and 1996 are as follows:



Quarter                                      High                    Low

1997 - 4th                                   3 15/16                2 3/4
       3rd                                   4 1/8                  3 3/16
       2nd                                   3 3/8                  2 3/4
       1st                                   4 5/16                 2 11/16

1996 - 4th                                   3 5/8                  2 13/16
       3rd                                   5                      3 1/16
       2nd                                   6 1/2                  4 3/8
       1st                                   5 7/8                  4

     The  approximate  number of  registered  stockholders  of the Company as of
March 6, 1998 is 1,684.

     No unregistered  equity  securities of the registrant have been sold during
the period covered by this report.


<PAGE>


<TABLE>
<CAPTION>

ITEM 6. Selected Financial Data
                                  1997            1996            1995            1994            1993
---------------------------------------------------------------------------------------------------------
<S>                          <C>             <C>             <C>             <C>             <C>         
Net Sales ................   $ 16,457,048    $ 16,115,125    $ 12,259,739    $ 11,713,498    $ 12,729,899

Other Income .............      1,023,037         312,759         457,837         196,431          43,096

Lease Operating
Costs ....................      5,940,808       5,912,128       5,093,782       4,658,115       5,293,628

DD&A .....................      4,675,411       4,292,237       3,843,442       5,011,155       5,090,744

Impairment of
Proved Oil and
Gas Properties ...........        411,894         237,279       2,471,146             -0-             -0-

Equity Loss and Impairment
of Investment in Symskaya
Exploration, Inc. ........        356,661       9,204,394             -0-             -0-             -0-

Property
Writedowns ...............            -0-             -0-             -0-             -0-       3,292,624

3-D Seismic ..............        626,525         757,964         237,604             -0-             -0-

Exploration
Expense ..................      3,026,550       2,336,405       1,633,612       1,718,339       1,737,923

General and
Administrative ...........      2,048,194       2,030,811       1,908,778       1,560,675       1,607,892

Basic Income (Loss) Before
Cumulative Effect
of Accounting
Changes ..................       (211,156)     (5,502,646)     (1,254,812)       (360,830)     (2,476,631)

Basic Income (Loss) Per
Common Share Before
Cumulative Effect of
Accounting Changes .......   $       (.02)   $       (.43)   $       (.10)   $       (.03)   $       (.20)
                            
Total Assets .............   $ 53,541,639    $ 50,181,437    $ 53,947,050    $ 51,908,336    $ 53,322,749

Long-Term Debt ...........     13,978,830       8,878,830       4,918,830         460,000         920,000

Cash Dividends
Per Share ................   $        .00    $        .00    $        .00    $        .00    $        .05

</TABLE>


<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

     The following  discussion provides information on the results of operations
for the  three  years  ended  December  31,  1997 and the  financial  condition,
liquidity  and  capital  resources  as  of  December  31,  1997.  The  financial
statements and the notes thereto  contain  detailed  information  that should be
referred to in conjunction with this discussion.

The  profitability  of the  Company's  operations in any  particular  accounting
period will be directly  related to the average  realized  prices of oil and gas
sold,  the  volume  of oil and gas  produced  and the  results  of  acquisition,
development and exploration  activities.  The average realized prices of oil and
gas will  fluctuate  from one period to another  due to market  conditions.  The
aggregate  amount of oil and gas produced may fluctuate based on development and
exploitation  of oil and gas  reserves  and  other  factors.  Production  rates,
value-based  production taxes, labor and maintenance expenses are expected to be
the  principal  influences  on  operating  costs.  Accordingly,  the  results of
operations of the Company may fluctuate from period to period.

OIL AND GAS RESERVES

     Excluding  revisions to previous  estimates,  1997 drilling and acquisition
activities  in the United  States and Canada added 1.72  million  barrels of oil
equivalent  to the  Company's  proved  reserve  base,  replacing  175%  of  1997
production.  Sharply lower oil prices caused year-end downward  revisions in the
estimates of oil reserves of 555,000 barrels. In total, the Company's proved oil
and gas reserves inreased 5% over 1996 levels. At year end 1997, proved reserves
stood at 8.42 million barrels of oil and 18.9 billion cubic feet of natural gas.
Using a 10% discount rate and year-end oil and gas prices and operating costs as
prescribed by the  Securities and Exchange  Commission,  the pre-tax net present
value of the Company's  reserves at year-end 1997 totaled $37 million,  compared
to $79 million at year-end 1996.  The principal  cause of the decline in pre-tax
values are the lower year-end prices in 1997 used to estimate oil reserves.

In 1996 the Company added 1.30 million barrels of oil equivalent,  equal to 136%
of 1996 oil and gas  production.  Year end 1996 proved reserves of oil were 8.37
million  barrels,  an increase of 8% over year end 1995 reserves of 7.75 million
barrels.  Natural gas proved  reserves at year end 1996 were 17.62 billion cubic
feet,  2% lower  than at year end  1995.  Barrel  equivalent  reserves  of 11.31
million barrels were 5% higher on a year to year basis.

EQUITY LOSS AND IMPAIRMENT OF INVESTMENT IN SYMSKAYA EXPLORATION,  INC.

     In 1996,  Symskaya plugged and abandoned the Lemok #1 well, and charged the
drilling  costs of the  well to  expense.  Due to the  uncertainty  relating  to
Symskaya's   obtaining   additional   outside   financing  and  proceeding  with
development  of the License  area,  all other  capitalized  costs related to the
Company's  investments  in and  advances  to  Symskaya  were also  written  off,
resulting in a total charge to expense of $9,204,394. The Company has no current
plans to fund future exploratory  drilling in Russia. The Company's 50% share of
Symskaya's  net  loss  in 1997  was  $356,661,  which  resulted  primarily  from
administrative  related epenses.  Further discussion of this venture is found in
ITEM 2. PROPERTIES, under the caption PRESENT ACTIVITY, and in Footnotes 6 and 9
to the financial statements.

ADOPTION OF SFAS NO. 121

     As discussed in Note 2 to the  financial  statements,  the Company  adopted
SFAS No. 121, Accounting for the Impairment of Long Lived Assets and Assets Held
for Disposal,  effective July 1, 1995. The adoption of this accounting  standard
resulted in non-cash charges for the impairment of proved oil and gas properties
in the amount of $2,471,146  ($1,557,563  after tax) in 1995.  Non-cash SFAS No.
121 impairment  charges of $411,894  ($259,493 after tax) and $237,279 ($149,557
after  tax) were  recorded  during  1997 and 1996,  respectively.  SFAS No.  121
requires  successful  efforts  companies to evaluate the  recoverability  of the
carrying costs of their proved oil and gas  properties at a field level,  rather
than on a  company-wide  level  as  previously  allowed  by the  Securities  and
Exchange  Commission.  The SFAS No. 121 test compares the expected  undiscounted
future net revenues from each producing  field with the related net  capitalized
costs at the end of each  period.  When the net  capitalized  costs  exceed  the
undiscounted  future net  revenues,  the cost of the property is written down to
fair value,  which is determined using  discounted  future net revenues from the
producing field. These are non-cash  financial  statement events only. There has
been no  decrease  in the  quantity  or  expected  future net  revenue  from the
Company's reserves, nor is there any impact on the Company's cash flows.


RESULTS OF OPERATIONS

COMPARISON OF 1997 WITH 1996

OIL AND GAS  PRODUCTION  AND SALES

     The  Company's  1997  increases  in oil and gas  sales are due  largely  to
increases in natural gas production  and prices.  During 1997, the Company's gas
production increased 8%, from 1.9 Bcf in 1996 to 2.1 Bcf in 1997. Average prices
of $2.02 per Mcf in 1997 were 30% higher than the $1.55  received  in 1996.  The
increase in gas production  reflects the ongoing success and rising contribution
from the  Company's  exploration  and  development  programs in  California  and
Wyoming.

Offsetting  the increases in gas  production  and pricing,  oil  production  was
essentially  flat from year to year,  with  636,000  barrels  produced  in 1997,
compared to 637,000 barrels in 1996. While 1997 year-end oil prices  experienced
a sharp  decline  from the prior year,  the decline in average  prices  received
throughout  the year was somewhat  milder.  Average  prices of $18.74 per barrel
were 10% lower than the $20.65 per barrel  received in 1996.  Further details of
production  and  pricing  are found in Item 2.  PROPERTIES,  under  the  caption
PRODUCTION.

OTHER INCOME

     During the first half of 1997,  the Company  recorded a gain on the sale of
certain oil and gas properties of  approximately  $325,000.  The properties sold
had  reserves of less than  15,000  barrels of oil.  There was no  corresponding
event in 1996. In addition,  during the third quarter of 1997,  the Company sold
its minority interest in an oil field technology research company. In connection
with the sale, the Company  recognized a gain of approximately  $200,000.  These
two transactions combined to increase other income by 227% over 1996 levels.

LEASE  OPERATING  COSTS

     Despite a higher number of wells on  production  during 1997 as compared to
1996,  lease operating costs declined on a per-unit basis. The primary factor in
the decline was a  reduction  in  value-based  production  taxes.  As 65% of the
Company's  production on a barrel of oil equivalent  basis comes from crude oil,
the decline in average  oil prices in 1997  brought  about a similar  decline in
production taxes.

In addition, operating costs associated with natural gas properties are lower on
a  barrel  of oil  equivalent  basis  than  for oil  producing  properties.  The
Company's  ratio of gas to oil production is increasing,  and as it does so, per
unit costs are likely to decline.

DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A)

     Increased  DD&A charges in 1997 were a direct  reflection of lower year-end
oil prices  used in  calculating  reserves.  Generally  speaking,  as oil prices
decline,  economic  oil  reserves  also  decline.  As  these  reserves  decline,
extraction percentages increase, resulting in higher DD&A charges.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES

     As discussed  previously,  included in the Statement of Operations for 1997
and  1996  are  non-cash  charges  for  the  impairment  of  proved  oil and gas
properties in the amount of $411,894 and $237,239, respectively.


EQUITY  LOSS AND  IMPAIRMENT  OF  INVESTMENT  IN SYMSKAYA  EXPLORATION,  INC.

     As discussed  above, in 1996,  Symskaya  plugged and abandoned the Lemok #1
well,  and  charged  the  drilling  costs  of the  well to  expense.  Due to the
uncertainty  relating to Symskaya's  obtaining  additional outside financing and
proceeding  with  development of the License area, all other  capitalized  costs
related to the  Company's  investments  in and  advances to  Symskaya  were also
written off,  resulting in a total charge to expense of  $9,204,394  ($6,592,206
after tax). The Company's 50% share of Symskaya's net loss in 1997 was $356,661,
which resulted primarily from administrative related epenses.

3-D SEISMIC AND EXPLORATION EXPENSES

     During 1997, the Company incurred  $626,525 in 3-D seismic costs related to
its exploration  programs,  compared to $757,964 in 1996.  Exploration  expenses
increased as the Company drilled 12 exploratory dry holes in 1997, compared to 6
dry  holes  in 1996.  Successful  efforts  accounting,  the  method  used by the
Company,  requires  both 3D seismic costs and  exploratory  dry hole costs to be
expensed on a current basis.

GENERAL  AND  ADMINISTRATIVE   EXPENSES

     The Company recorded  increases in compensation  expense,  along with small
increases in other administrative charges during 1997.

INTEREST EXPENSE

     During  1996,  because of its ongoing  exploration  project in Russia,  the
Company was required to capitalize most of its interest  expense.  With activity
in Russia  curtailed in 1997,  interest is now being  charged to expense.  Along
with increased borrowing on the Company's revolving credit facility, this caused
interest expense to increase during 1997 over 1996 levels.

INCOME TAX  BENEFIT

     Income tax expense for 1997 includes additional taxes arising from an audit
of the Company's Canadian tax returns. The adjustment resulted in the accrual of
approximately  $375,000 in  additional  Canadian  taxes  related to prior years.
Details  concerning the components of the tax expense can be found in Footnote 3
to the financial statements.


COMPARISON OF 1996 WITH 1995

OIL AND GAS PRODUCTION AND SALES

     The Company  recorded  increases in oil and gas production and sales during
1996,  compared to 1995. Oil production rose 3%, from 619,380 barrels in 1995 to
636,717  barrels in 1996. Gas production rose 32%, from 1.45 Bcf in 1995 to 1.91
Bcf in 1996.  The  production  increases  were a direct  result of the Company's
successful  exploration  and  development  drilling  and  acquisition  programs.
Increases in production  were augmented by increases in both oil and gas average
prices received during the year. The Company's average gas price received during
1996 was $1.55, up 18% from $1.31 received during 1995. Oil prices increased 21%
from $17.00 in 1995 to $20.65 in 1996. The  combination of increased  production
and  increased  prices  resulted  in an increase of 31% in oil and gas sales for
1996. Further details of production and pricing are found in Item 2. Properties,
under the caption Production.

OTHER INCOME

     Other income in 1995 included the  recognition of $178,553 of lease revenue
deferred in 1994.  There was no similar  transaction in 1996.  This reduction in
other income was  partially  offset by  increased  overhead  fees from  operated
properties.

LEASE  OPERATING  COSTS

     Lease operating costs increased 16% in 1996 over 1995 levels.  The increase
was directly attributable to the increases in production discussed above, higher
value-based  production  taxes associated with increased  product prices,  and a
greater  number  of  wells  on  production.  1996  was the  first  full  year of
operations  for the wells  drilled and acquired  during 1995.  In addition,  the
Company added approximately 40 wells during 1996.

DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A)

     Increased  DD&A  charges  in 1996  were a direct  reflection  of  increased
production  and the addition of new wells to the  Company's  depletion  base. As
discussed  above,  1996 was the  first  full  year of  operations  for the wells
drilled and acquired during 1995. In addition,  the Company added  approximately
40 wells during 1996.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES

     As discussed  previously,  included in the Statement of Operations for 1996
and  1995  are  non-cash  charges  for  the  impairment  of  proved  oil and gas
properties  in the amount of $237,279  and  $2,471,146,  respectively.  The 1995
charge resulted from the Company's  adoption of SFAS No. 121,  effective July 1,
1995.

EQUITY  LOSS AND  IMPAIRMENT  OF  INVESTMENT  IN SYMSKAYA  EXPLORATION,  INC.

     As discussed  above, In 1996,  Symskaya  plugged and abandoned the Lemok #1
well,  and  charged  the  drilling  costs  of the  well to  expense.  Due to the
uncertainty  relating to Symskaya's  obtaining  additional outside financing and
proceeding  with  development of the License area, all other  capitalized  costs
related to the  Company's  investments  in and  advances to  Symskaya  were also
written off,  resulting in a total charge to expense of  $9,204,394  ($6,592,206
after tax).

3-D SEISMIC AND EXPLORATION EXPENSES

     During 1996, the Company incurred  $757,964 in 3-D seismic costs related to
its California  exploration programs,  compared to $237,604 in 1995. Exploration
expenses increased as the Company drilled 6 dry holes in 1996, including one dry
hole which cost approximately $500,000, compared to 4 dry holes in 1995.

GENERAL  AND  ADMINISTRATIVE   EXPENSES

     The Company recorded  increases in compensation  expense,  along with small
increases in other administrative charges during 1996.

INTEREST  EXPENSE

     Subsequent  to the  plugging  of the Lemok  #1,  the  Company  discontinued
capitalizing  interest expense on the investment in Symakaya  Exploration,  Inc.
Along with increased borrowing on the Company's revolving credit facility,  this
caused interest expense to increase 126% during 1996 over 1995 levels.

     INCOME TAX BENEFIT

     The  Company's  income  tax  benefit  was a  function  of the loss in 1996.
Details  concerning the components of the tax benefit can be found in Footnote 3
to the financial statements.
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

                                1997          1996          1995
----------------------------------------------------------------
Cash, cash equivalents,
  and temporary cash
  investments              $  378,801   $  837,763    $1,467,219

Working capital             2,652,023    2,809,086     3,721,049

Cash provided by
  operating activities      4,181,477    5,807,986     4,143,390

Cash (used in)
  investing activities     (9,260,988)  (9,476,999)   (8,414,086)

Cash provided by 
  financing activities      4,670,351    3,945,722     4,418,606


CASH AND WORKING CAPITAL

     Total cash balances  dropped by 55% from 1996, as a result of a combination
of  several  events  discussed  in the  following  paragraphs.  Working  capital
decreased by 6%. The Company's  ratio of current  assets to current  liabilities
was 2.33 to 1 at December 31, 1997,  compared to 2.17 to 1 at December 31, 1996.
The Company  believes  that  existing cash  balances,  cash flow from  operating
activities,  and the remaining  borrowing  capacity  under its revolving  credit
facility will provide adequate resources to meet its capital,  exploration,  and
acquisition spending objectives in 1998.

CASH FLOW  FROM  OPERATING  ACTIVITIES

     Cash flow from  operating  activities  declined  in 1997  compared  to 1996
levels, primarily as a result of a reduction in accounts payable balances, which
is mainly a function  of timing.  Higher  oil and gas  sales,  which  arose from
increased oil and gas production and higher product  prices,  were the principal
factors behind an increase in cash flow from operating  activities  from 1995 to
1996.

CASH FLOWS FROM  INVESTING  ACTIVITIES

     Capital  expenditures  in 1997 were 30% higher than the amount  recorded in
1996.  Included in the 1997  figures were $3.2  million  associated  with proved
property  acquisitions,  and $1.2  million  associated  with  unproved  property
acquisitions.  During  1996,  the Company  recorded  costs of $2 million and $.5
million,  respectively,  for  these  property  acquisitions.  Subsequent  to the
plugging  of  the  Lemok  #1  in  1996,  the  Company's   advances  to  Symskaya
Exploration,  Inc.  decreased  significantly.  During 1997 the Company  advanced
approximately  $357,000 to Symskaya,  compared to approximately  $3.0 million in
1996.  The  Company  expects  that  advances  to  Symskaya in 1998 will again be
minimal as the Company has no current  plans to fund any  exploratory  drilling.
The  investment  activity  was  partially  funded by  proceeds  from the sale of
properties in 1997, and by the sale of temporary cash investments in both years.
1996  capital  expenditures  increased 2% over 1995  levels.  Funds  advanced to
Symskaya Exploration increased from $2,745,319 in 1995 to $3,043,952 in 1996, an
increase of 11%.

CASH FLOWS FROM FINANCING  ACTIVITIES

     In March of 1995, the Company obtained a $20 million  Borrowing Base Credit
Facility (the Facility),  with an initial commitment of $10 million. The Company
used proceeds of $5,100,000,  $3,960,000  and $4,918,830 in 1997,  1996 and 1995
respectively,  from  the  Facility  to fund  capital  expenditures,  retire  its
previous  outstanding  Note Payable in the amount of  $920,000,  and for working
capital  purposes.  As of December 31, 1997 the  outstanding  balance  under the
Facility was  $13,978,830 at an average  interest rate of 7.69%.  On October 17,
1997,  the  Company  amended  its  credit  agreement,   increasing  the  current
commitment from $10 million to $15 million.

The Company purchased 135,600 shares of its stock on the open market during 1997
at an average price of $3.17 per share.  The  purchases  were made pursuant to a
share  repurchase  program  adopted by the Company in June of 1997.  The Company
purchased  29,000  shares of its stock during 1996 at an average  price of $3.40
per share.

COMMITMENTS

     Under the terms of  Symskaya's  License  and  Production  Sharing  Contract
(PSC),  Equity was committed to advance  Symskaya a minimum of $6 million during
the first 5 contract years,  representing 50% of the minimum expenditures called
for in the License and PSC, with the remainder being funded by Leucadia National
Corporation,  Symskaya's  other 50%  shareholder.  The first contract year began
November 15, 1993.  The amounts spent through  November 14, 1997, the end of the
fourth contract year, have satisfied all minimum commitments  required.  Further
discussion  of this  venture is found in ITEM 2.  Properties,  under the caption
Present Activity, and in Footnotes 6 and 9 to the financial statements.

OTHER ITEMS

     The  Company  has  reviewed  all  recently  issued,  but not  yet  adopted,
accounting standards in order to determine their effects, if any, on the results
of operations or financial  position of the Company.  Based on that review,  the
Company  believes that none of these  pronouncements  will have any  significant
effects on current or future earnings or operations.

YEAR 2000

     The  Company  uses  computers  principally  for  processing  and  analyzing
geophysical and geological data, map making, and  administrative  functions such
as word processing, accounting, and financial reporting. The Company's principal
computer systems have been purchased since December 31, 1995. The Company has an
ongoing program to ensure that its operational and financial systems will not be
adversely affect by year 2000 software  failures.  While the Company believes it
is taking all appropriate steps to assure year 2000 compliance,  it is dependent
substantially  on vendor  compliance.  The Company  intends to modify or replace
those  systems that are not year 2000  compliant.  The Company is requiring  its
systems  and  software  vendors to  represent  that the  services  and  products
provided are, or will be, year 2000 compliant, and has planned a program to test
compliance.  The Company anticipates completing that test no later than year-end
1998. The Company estimates that any cost to redevelop,  replace,  or repair its
technology will not be material.

FORWARD-LOOKING STATEMENTS

     Forward-looking statements in this Form 10-K, future filings by the Company
with the Securities and Exchange  Commission,  the Company's  press releases and
oral statements by authorized officers of the Company are intended to be subject
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking  statements involve risks
and uncertainty, including without limitation, the risk of a significant natural
disaster,  the inability of the Company to ensure  against  certain  risks,  the
adequacy of its loss reserves,  fluctuations in commodity  prices,  the inherent
limitations  in the  inability  to  estimate  oil  and  gas  reserves,  changing
government  regulations,  as well as general market conditions,  competition and
pricing.  The Company  believes that  forward-looking  statements made by it are
based upon  reasonable  expectations.  However,  no assurances can be given that
actual  results  will  not  differ  materially  from  those  contained  in  such
forward-looking     statements.    The    words    "estimate",     "anticipate",
"expect","predict",  "believe" and similar  expressions are intended to identify
forward-looking statements.


                                       

<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                        Report of Independent Accountants

To the Stockholders and Board of
Directors of Equity Oil Company:

We have audited the financial statements of Equity Oil Company as listed in Item
14(a) of this Form 10-K. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Equity Oil  Company as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 1997 in conformity
with generally accepted accounting principles.

As discussed in Note 2 to the financial statements,  in 1995 the Company changed
its method of measuring impairment of proved oil and gas properties.



                                        Coopers & Lybrand L.L.P.

                                        Salt Lake City, Utah
                                        January 16, 1998



                                       

<PAGE>
<TABLE>
<CAPTION>

                               EQUITY OIL COMPANY
                                  BALANCE SHEET
                           December 31, 1997 and 1996

        ASSETS                                                        1997             1996
                                                                      ----             ----

Current assets:
<S>                                                            <C>              <C>          
   Cash and cash equivalents ...............................   $     378,801    $     787,961
   Temporary cash investments ..............................            --             49,802
   Accounts receivable .....................................       2,957,677        2,911,637
   Operator advances .......................................         683,858          749,033
   Federal, state and foreign income
     taxes receivable ......................................          88,174          311,393
   Deferred income taxes ...................................          18,934           31,053
   Other current assets ....................................         514,713          372,701
                                                               -------------    -------------
           Total current assets ............................       4,642,157        5,213,580
                                                               -------------    -------------

Property and equipment, at cost (successful efforts method):
   Unproved oil and gas properties .........................       3,504,362        2,565,727
   Proved oil and gas properties:
     Developed leaseholds ..................................      13,049,597       10,548,580
     Intangible drilling costs .............................      68,324,359       65,983,136
     Equipment .............................................      27,733,805       26,284,602
   Other property and equipment ............................         759,768          765,100
                                                               -------------    -------------
                                                                 113,371,891      106,147,145
        Less accumulated depreciation,
           depletion and amortization ......................     (64,846,514)     (61,732,014)
                                                               -------------    -------------
                                                                  48,525,377       44,415,131
                                                               -------------    -------------
Other assets:
   Investment in Raven Ridge Pipeline
     Partnership ...........................................         268,821          405,328
   Other assets ............................................         105,284          147,398
                                                               -------------    -------------
                                                                     374,105          552,726
                                                               -------------    -------------

           Total assets ....................................   $  53,541,639    $  50,181,437
                                                               =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY ....................        
                                                            
Current liabilities:
   Accounts payable ........................................   $   1,327,120    $   1,880,418
   Accrued liabilities .....................................         120,039          153,467
   Federal, state and foreign income
     taxes payable .........................................         354,002          191,509
   Accrued profit-sharing contribution .....................         188,973          179,100
                                                               -------------    -------------
           Total current liabilities .......................       1,990,134        2,404,494
                                                               -------------    -------------


Revolving credit facility ..................................      13,978,830        8,878,830
Deferred income taxes ......................................       4,851,966        5,565,973
                                                               -------------    -------------
                                                                  18,830,796       14,444,803
                                                               -------------    -------------
Commitments (Note 6)

Stockholders' equity:
   Common stock, $1 par value:
     Authorized:  25,000,000 shares
     Issued:  12,761,100 shares in 1997
        and 12,751,100 shares in 1996 ......................      12,761,100       12,751,100
   Paid in capital .........................................       3,667,707        3,648,333
   Retained earnings .......................................      16,820,204       17,031,360
                                                               -------------    -------------
                                                                  33,249,011       33,430,793
   Less treasury stock, at cost ............................        (528,302)         (98,653)
                                                               -------------    -------------
                                                                  32,720,709       33,332,140
                                                               -------------    -------------
        Total liabilities and
           stockholders' equity ............................   $  53,541,639    $  50,181,437
                                                               =============    =============
</TABLE>

     The accompanying notes are an integral part of the financial statements

<PAGE>

<TABLE>
<CAPTION>

                               EQUITY OIL COMPANY

                             STATEMENT OF OPERATIONS
              for the years ended December 31, 1997, 1996 and 1995




                                                        1997            1996            1995
                                                        ----            ----            ----

Revenues:
<S>                                               <C>             <C>             <C>         
    Oil and gas sales .........................   $ 16,457,048    $ 16,115,125    $ 12,259,739
    Partnership income ........................        311,215         306,114         311,960
    Interest ..................................        153,672         140,053         221,020
    Other income ..............................      1,023,037         312,759         457,837
                                                  ------------    ------------    ------------
                                                    17,944,972      16,874,051      13,250,556
                                                  ------------    ------------    ------------

Expenses:
    Oil and gas leasehold operating costs .....      5,940,808       5,912,128       5,093,782
    Depreciation, depletion and amortization ..      4,675,411       4,292,237       3,843,442
    Impairment of proved oil and gas properties        411,894         237,279       2,471,146
    Equity loss and impairment of investment
      in Symskaya Exploration, Inc. ...........        356,661       9,204,394            --
    Leasehold abandonments ....................         86,542          87,464          30,597
    3-D seismic ...............................        626,525         757,964         237,604
    Exploration ...............................      3,026,550       2,336,405       1,633,612
    General and administrative ................      2,048,194       2,030,811       1,908,778
    Interest, net of interest capitalized
      of $364,637 in 1996 and $70,000 in 1995 .        733,980         164,678          72,625
                                                  ------------    ------------    ------------
                                                    17,906,565      25,023,360      15,291,586
                                                  ------------    ------------    ------------

         Income (loss) before income taxes ....         38,407      (8,149,309)     (2,041,030)

Provision for (benefit from) income taxes .....        249,563      (2,646,663)       (786,218)
                                                  ------------    ------------    ------------

         Net loss .............................   $   (211,156)   $ (5,502,646)   $ (1,254,812)
                                                  ============    ============    ============

Basic and diluted net loss per common share ...   $       (.02)   $       (.43)   $       (.10)
                                                  ============    ============    ============

Basic and diluted weighted
   average shares outstanding .................     12,686,211      12,733,864      12,597,238
                                                  ============    ============    ============
</TABLE>

     The accompanying notes are an integral part of the financial statements
                                  
                                       
                                  
<PAGE>


<TABLE>
<CAPTION>
                                          
                               EQUITY OIL COMPANY

                             STATEMENT OF CHANGES IN
                    STOCKHOLDERS' EQUITY for the years ended
                        December 31, 1997, 1996 and 1995


                                                       Common Stock              Paid in         Retained        Treasury Stock
                                                  Shares          Amount         Capital         Earnings     Shares         Cost
<S>                <C>                          <C>           <C>             <C>             <C>             <C>      <C>          
Balance at January 1, 1995 ................     12,593,631    $ 12,593,631    $  2,934,792    $ 23,788,818    52,031   $   (112,210)
   Net loss ...............................                                                     (1,254,812)
   Treasury stock purchased,
     $3.79 per share ......................                                                                   13,500        (51,181)
   Common stock issued for services,
     $3.88 per share ......................         12,000          12,000          34,500
   Treasury stock canceled, $2.49 per share        (65,531)        (65,531)        (97,860)                  (65,531)       163,391
   Common stock issued on exercise
     of incentive stock options ...........        171,000         171,000         510,525
   Income tax benefit from exercise
     of incentive stock options ...........                                        103,530


Balance at December 31, 1995 ..............     12,711,100      12,711,100       3,485,487      22,534,006      --             --

   Net loss ...............................                                                     (5,502,646)
   Treasury stock purchased,
     $3.40 per share ......................                                                                   29,000        (98,653)
   Common stock issued for services,
     $5.04 per share ......................         20,500          20,500          82,813
   Common stock issued on exercise
     of incentive stock options ...........         19,500          19,500          64,875
   Income tax benefit from exercise
     of incentive stock options ...........                                         15,158

Balance at December 31, 1996 ..............     12,751,100      12,751,100       3,648,333      17,031,360    29,000        (98,653)

   Net loss ...............................                                                       (211,156)
   Treasury stock purchased,
     $3.17 per share ......................                                                                  135,600       (429,649)
   Common stock issued for services,
     $2.94 per share ......................         10,000          10,000          19,374

Balance at December 31, 1997 ..............     12,761,100    $ 12,761,100    $  3,667,707    $ 16,820,204   164,600   $   (528,302)
                                              ============    ============    ============    ============ =========    ===========
</TABLE>

     The accompanying notes are an integral part of the financial statements
                                                                
                                       
                                  
<PAGE>

<TABLE>
<CAPTION>

                              
                               EQUITY OIL COMPANY

                             STATEMENT OF CASH FLOWS
              for the years ended December 31, 1997, 1996 and 1995

                                                                             1997                 1996                1995
                                                                             ----                 ----                ----
Cash flows from operating activities:
<S>                                                                                <C>            <C>            <C>         
   Net loss ....................................................................   $  (211,156)   $(5,502,646)   $(1,254,812)
   Adjustments to reconcile net loss
     to net cash provided by operating activities:
       Impairment of proved oil and gas properties .............................       411,894        237,279      2,471,146
       Equity loss and impairment of investment
          in Symskaya Exploration, Inc. ........................................       356,661      9,204,394           --
       Depreciation, depletion and amortization ................................     4,675,411      4,292,237      3,843,442
       Partnership distributions in excess of income ...........................       136,508        134,892        144,717
       (Gain) loss on property dispositions ....................................      (243,423)        87,464         43,227
       Change in other assets ..................................................        42,114         42,113         21,057
       Deferred income tax benefit .............................................      (701,888)    (3,130,574)    (1,374,414)
       Common stock issued for services ........................................        29,374        103,313         46,500
            Cash provided by operating activities before                           -----------    -----------    -----------
               changes in working capital items                                      4,495,495      5,468,472      3,940,863
       Increase (decrease) from changes in:
          Accounts receivable and operator advances ............................        19,135       (406,805)       133,624
          Other current assets .................................................      (142,012)         5,893           (784)
          Accounts payable and accrued liabilities .............................      (576,853)       735,915         11,438
          Deferred lease rental revenue ........................................          --             --         (178,553)
          Income taxes payable/receivable ......................................       385,712          4,511        236,802
                                                                                   -----------    -----------    -----------
            Net cash provided by operating activities ..........................     4,181,477      5,807,986      4,143,390
                                                                                   -----------    -----------    -----------
Cash flows from investing activities:
   Sale of temporary cash investments ..........................................        49,802        906,165      1,510,761
   Advances to Symskaya Exploration ............................................      (356,661)    (3,043,952)    (2,745,319)
   Capital expenditures ........................................................    (9,547,036)    (7,339,212)    (7,179,528)
   Proceeds from sale of oil and gas property ..................................       592,907           --             --
                                                                                   -----------    -----------    -----------
            Net cash used in investing activities ..............................    (9,260,988)    (9,476,999)    (8,414,086)
                                                                                   -----------    -----------    -----------
Cash flows from financing activities:
   Exercise of incentive stock options .........................................          --           84,375        681,525
   Increase in other assets ....................................................          --             --         (210,568)
   Purchase of treasury stock ..................................................      (429,649)       (98,653)       (51,181)
   Borrowings under revolving credit facility ..................................     5,100,000      3,960,000      4,918,830
   Payments on note payable ....................................................          --             --         (920,000)
                                                                                   -----------    -----------    -----------
          Net cash provided by financing activities ............................     4,670,351      3,945,722      4,418,606
                                                                                   -----------    -----------    -----------
Net (decrease) increase in cash and cash equivalents ...........................      (409,160)       276,709        147,910
Cash and cash equivalents at beginning of year .................................       787,961        511,252        363,342
                                                                                   -----------    -----------    -----------
Cash and cash equivalents at end of year .......................................   $   378,801    $   787,961    $   511,252
                                                                                   ===========    ===========    ===========
Cash, cash equivalents and temporary
  cash investments at end of year ..............................................   $   378,801    $   837,763    $ 1,467,219
                                                                                   ===========    ===========    ===========

Supplemental  disclosures  of cash flow  information:  Cash paid during the year
   for:
     Income taxes ..............................................................   $   701,694    $   419,121    $   355,993
     Interest ..................................................................   $   733,980    $   164,678    $    72,625

                                  
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       

<PAGE>


                               EQUITY OIL COMPANY

                          NOTES TO FINANCIAL STATEMENTS


1.       Significant Accounting Policies:

         A.    The Company:

               Equity  Oil  Company  (the  Company)  is a  Colorado  corporation
               engaged in oil and gas exploration, development and production in
               the United States, Canada and Russia.

         B.    Temporary Cash Investments and Cash Equivalents:

               Temporary cash investments  consist of U.S. Treasury Notes stated
               at cost which  approximates  market.  The Company  considers  all
               highly  liquid  debt  instruments   purchased  with  an  original
               maturity of three months or less to be cash equivalents.

         C.    Accounting for Oil and Gas Operations:

               The Company  reports  using the  "successful  efforts"  method of
               accounting  for oil and gas  operations.  The use of this  method
               results in  capitalization  of those  costs  identified  with the
               acquisition,  exploration  and  development  of  properties  that
               produce revenue or, if in the development  stage, are anticipated
               to produce  future  revenue.  Costs of  unsuccessful  exploration
               efforts are expensed in the period in which it is determined that
               such  costs  are  not   recoverable   through  future   revenues.
               Exploratory  geological  and  geophysical  costs are  expensed as
               incurred.  The costs of development wells are capitalized whether
               productive or nonproductive.

               The Company annually assesses  undeveloped oil and gas properties
               for impairment.  The annual  impairment  represents  management's
               estimate of the decline in realizable  value  experienced  during
               the  year.  The  costs  of  proved  properties  which  management
               determines  are not  recoverable  are written  down in the period
               such  determination is made. The net capitalized  costs of proved
               oil and gas  properties are measured for impairment in accordance
               with SFAS No. 121 (see Note 2).

               The provision for  depreciation,  depletion and  amortization  of
               proved  oil and gas  properties  is  computed  using  the unit of
               production method, based on


                                    Continued
                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



1.       Significant Accounting Policies, Continued:

               proved oil and gas reserves. Estimated dismantlement, restoration
               and  abandonment  costs are  expected  to be offset by  estimated
               residual values of lease and well equipment. Thus, no accrual for
               such costs has been recorded.


         D.    Concentration of Credit Risk:

               Substantially all of the Company's accounts receivable are within
               the oil and gas industry,  primarily  from  purchasers of oil and
               gas (see Note 5).  Although  diversified  within many  companies,
               collectibility is dependent upon the general economic  conditions
               of the industry.  The receivables are not collateralized  and, to
               date, the Company has experienced minimal bad debts. The majority
               of the  Company's  cash,  cash  equivalents  and  temporary  cash
               investments is held by three  financial  institutions  located in
               Salt  Lake  City,  Utah,  and by  one  financial  institution  in
               Calgary, Alberta.

         E.    Equipment:

               The provision for  depreciation of equipment  (other than oil and
               gas equipment) is based on the  straight-line  method using asset
               lives as follows:

                                    Office equipment                    10 years
                                    Automobiles                          3 years

               When equipment is retired or otherwise  disposed of, the cost and
               accumulated  depreciation  are removed  from the accounts and any
               resulting   gain  or  loss  is  included  in  the   Statement  of
               Operations.

         F.    Foreign Operations:

               Operations and  investments in Canada have been  translated  into
               U.S. dollar equivalents at the average rate of exchange in effect
               at the transaction date.  Foreign exchange gains or losses during
               1997, 1996 and 1995 were not material.

                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued




1.       Significant Accounting Policies, Continued:

         G.    Income (Loss) Per Common Share:

               In 1997,  the  Company  adopted the  provisions  of SFAS No. 128,
               "Earnings  per Share".  All prior  periods have been  restated to
               conform to the new  requirements.  Basic  earnings  per share was
               computed by dividing the net loss by the weighted  average number
               of  common  shares   outstanding   and  the  effect  of  dilutive
               unexercised  stock  options.   Options  to  purchase   1,141,000,
               1,076,000  and 904,000  shares of common stock at prices  ranging
               from $3.56 to $6.00 per share were  outstanding  at December  31,
               1997, 1996 and 1995,  respectively,  but were not included in the
               computation  of diluted  earnings  per share  because  the effect
               would have been antidilutive.

         H.    Estimates:

               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.

2.       Impairment of Proved Oil and Gas Properties:

         Included in the Statement of Operations  for 1995 is a non-cash  charge
         for the  impairment  of proved oil and gas  properties in the amount of
         $2,471,146  ($1,557,563  after tax),  which  results from the Company's
         adoption of SFAS No.121,  Accounting  for the  Impairment of Long Lived
         Assets and for Assets Held for Disposal (SFAS No. 121),  effective July
         1, 1995. SFAS No.121 requires  successful efforts companies to evaluate
         the recoverability of the net capitalized costs of their proved oil and
         gas properties at a field level, rather than on a company-wide level as
         previously allowed by the Securities and Exchange Commission.  The SFAS
         No.121  impairment test compares the expected  undiscounted  future net
         revenues  from each  producing  field with the related net  capitalized
         costs at the end of each period.  When the net capitalized costs exceed
         the  undiscounted  future net  revenues,  the cost of the  property  is
         written down to fair value, which is determined using discounted future
         net revenues from the producing field.


                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



         The Company recorded  non-cash  impairment  charges of $411,894 and
         $237,279 for 1997 and 1996, respectively.

3.       Income Taxes:

<TABLE>
<CAPTION>
         The  provision  for  (benefit   from)  income  taxes  consists  of  the
         following:

                                                 1997                 1996                1995
                                                 ----                 ----                ----
         Currently payable (receivable):   
           U.S. income taxes (including
<S>                                         <C>                    <C>             <C>          
              alternative minimum tax)      $    18,584            $ 185,082       $     188,666
           State income taxes                    70,512              108,463              26,262
           Canadian income taxes                471,064              190,366             373,268
           Taxes due from Canadian audit        391,291                    -                  -
         Deferred tax benefit                  (701,888)          (3,130,574)         (1,374,414)
                                              ---------           ----------       -------------

                                              $ 249,563       $   (2,646,663)       $   (786,218)
                                               ========        =============         ===========
</TABLE>


         The Company  accounts for income taxes in accordance with SFAS No. 109.
         Deferred  income taxes are provided on the  difference  between the tax
         basis of an asset or liability and its reported amount in the financial
         statements that will result in taxable or deductible  amounts in future
         years when the  reported  amount of the asset or liability is recovered
         or settled, respectively.



                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



3.       Income Taxes, Continued:

         The  components  of the net deferred  tax  liability as of December 31,
         1997 and 1996 were as follows:

                                                             1997        1996
                                                             ----        ----

         Deferred tax assets:                          
           AMT credit carryforward                      $   293,789   $ 326,104
           State income taxes                                26,068      42,347
           Deferred compensation                             13,370       9,211
           Geological and geophysical costs                 637,371     439,306
           Capitalized interest                             433,750     204,755
           Foreign tax credit carryforward                  501,257     265,301
           Equity loss and impairment of investment
             in Symskaya Exploration, Inc.                2,687,806   3,283,105
                                                          ---------   ---------
                                                          4,593,411   4,570,129
           Valuation allowance                             (501,257)   (992,458)
                                                          ---------   ---------
           Total deferred tax asset                       4,092,154   3,577,671
                                                          ---------   ---------

         Deferred tax liabilities:
           Deferred income                                   95,465      20,505
           Property and equipment                         8,802,389   9,012,408
           Pipeline partnership                              27,332      79,678
                                                          ---------   ---------
           Total deferred tax liability                   8,925,186   9,112,591
                                                          ---------   ---------

         Net deferred tax liability                      $4,833,032  $5,534,920
                                                          =========   =========


         The net  deferred  tax  liability  as of December  31, 1997 and 1996 is
         reflected in the balance sheet as follows:

           Current deferred tax asset                       (18,934)    (31,053)
           Long-term deferred tax liability               4,851,966   5,565,973
                                                          ---------   ---------

                                                         $4,833,032  $5,534,920
                                                          =========   =========





                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



3.       Income Taxes, Continued:

<TABLE>
<CAPTION>
         The provision  for (benefit  from) income taxes differs from the amount
         that would be provided by applying the statutory  U.S.  Federal  income
         tax rate to the income  (loss)  before  income taxes for the  following
         reasons:

                                                  1997         1996            1995
                                                  ----         ----            ----

<S>                                         <C>            <C>            <C>         
Federal statutory tax expense (benefit) .   $    13,058    $(2,770,765)   $  (693,948)
Increase (reduction) in taxes
  resulting from:
     State taxes (net of federal
      benefit) ..........................        (5,323)      (198,849)       (68,376)
     Canadian taxes (net of foreign
        tax credits) ....................       113,882       (107,549)       287,670
     Excess allowable percentage
      depletion .........................      (162,297)      (171,724)      (166,509)
     Investment tax and other credits ...       (84,136)      (124,933)      (145,055)
     Taxes due from Canadian audit ......       374,379            --            --
     Unrecognized capital loss related
        to impairment of investment
        in Symskaya Exploration, Inc. ...          --          727,157           --
                                            -----------    -----------    -----------

Provision for (benefit from) income taxes   $   249,563    $(2,646,663)   $  (786,218)
                                            ===========    ===========    ===========
</TABLE>


         At  December  31,  1997,  the  Company  had  approximately  $294,000 of
         alternative  minimum  tax  credit  carryforwards  which can be  carried
         forward indefinitely,  and approximately $501,000 of foreign tax credit
         carryforwards which expire in 2001.

4.       Stock-Based Compensation Plan:

         At December  31,  1997,  the Company had one  stock-based  compensation
         plan,  which is described below. The Company applies APB Opinion No. 25
         and related Interpretations in accounting for its plan. Accordingly, no
         compensation  cost has been recognized for its fixed stock option plan.
         Had compensation cost for the Company's  stock-based  compensation plan
         been  determined  based on the fair value at the grant dates for awards
         under  the  plan  consistent  with the  method  of SFAS  No.  123,  the
         Company's net loss and loss per share would have been  increased to the
         pro forma amounts indicated below:





                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



4.      Stock-Based Compensation Plan, Continued:

<TABLE>
<CAPTION>
                                                         1997            1996            1995
                                                     ------------    -----------        ---------

<S>                                                 <C>            <C>              <C>           
Net loss ..........................   As reported   $  (211,156)   $  (5,502,646)   $  (1,254,812)
                                      Pro forma     $  (336,511)   $  (5,635,133)   $  (1,297,811)

Net loss per share ................   As reported   $      (.02)   $        (.43)   $        (.10)
                                      Pro forma     $      (.03)   $        (.44)   $        (.10)
</TABLE>


         Note: Basic and diluted loss per share are the same.

         Under the 1993 Equity Oil Company  Incentive  Stock  Option  Plan,  the
         Company may grant options to its employees for up to 1.4 million shares
         of common  stock.  The  options  may take the form of  incentive  stock
         options,  non-qualified stock options,  and non-qualified stock options
         with tandem  stock  appreciation  rights.  The  exercise  price of each
         option  equals the market price of the  Company's  stock on the date of
         grant,  and an option's  maximum term is 10 years.  Options are granted
         from time to time at the discretion of the Board of Directors, and vest
         over periods of one to five years from the grant date.

         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black-Scholes   option-pricing  model  with  the  following
         weighted-average  assumptions  used for grants in 1997,  1996, and 1995
         respectively:  expected volatility of 50, 67 and 65 percent,  risk-free
         interest  rates of 6.3, 5.4 and 7.2 percent;  expected  life of 5 years
         and dividend yield of zero for all three years.












                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued





4.      Stock-Based Compensation Plan, Continued:

<TABLE>
<CAPTION>

                                                  1997                               1996                                1995
                                  -------------------------------------------------------------------------------------------
                                        Shares   Weighted-Average    Shares   Weighted-Average     Shares   Weighted-Average
Fixed Options                          (000)       Exercise Price    (000)       Exercise Price    (000)       Exercise Price
-------------                        ---------   ---------------------------   ---------------------------   ----------------
<S>                                    <C>              <C>              <C>           <C>           <C>             <C>     
Outstanding at beginning of year       1,076            $4.42            904           $4.22         1,047           $4.28
Granted ........................         121             3.56            222            5.13           102            3.63
Exercised ......................         --               --             (39)           3.94          (171)           3.98
Forfeited ......................         (56)            4.37            (11)           4.38           (74)           4.75
                                         ---             ----            ---            ----           ---            ----
Outstanding at end of  year ....       1,141             4.33          1,076            4.42           904            4.22
                                                                  
Options exercisable at year-end          880                             775                           743
                                       =====                           =====                         =====
Weighted-average fair value of
   options granted during the year     $1.56                           $3.06                         $2.18
</TABLE>
<TABLE>
<CAPTION>


     The  following  table  summarizes  information  about fixed  stock  options
outstanding at December 31, 1997:

                                                           Options Outstanding                  Options Exercisable
                          Number           Weighted-Average                                Number
    Range of            Outstanding            Remaining        Weighted-Average         Exercisable        Weighted-Average
  Exercise Prices       at 12/31/97        Contractual Life      Exercise Price          at 12/31/97          Exercise Price
-------------------   ---------------    --------------------  ------------------      ---------------      ----------------
<C>                        <C>                  <C>                 <C>                     <C>                 <C>  
$3.56 to $3.56             260,500              7.98   years        $3.56                   139,000             $3.56
$3.63 to $4.00             290,000              5.52                $3.86                   263,600             $3.88
$4.22 to $5.00             292,000              6.44                $4.51                   263,200             $4.53
$5.13 to $5.50             257,500              8.64                $5.18                   172,700             $5.20
$6.00 to $6.00              41,000              2.16                $6.00                    41,000             $6.00
                         ---------              ----                -----                   -------             -----
                         1,141,000              6.90                $4.33                   879,500             $4.38
                         =========              ====                =====                   =======             =====
</TABLE>




5.           Geographic Segment Information:

             The  Company  has oil and gas  operations  in the U.S.,  Canada and
             Russia.  Operating profit is total revenue less operating expenses.
             In computing operating profit, general and administrative  expenses
             and interest  expense have not been deducted.  Identifiable  assets
             are those  assets of the  Company  that are  identifiable  with the
             operations of each geographical area.


                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



5.           Geographic Segment Information, Continued:

             Revenue from a major U.S. oil company  accounted for  approximately
             38 percent of total  revenues in 1997, 45 percent of total revenues
             in 1996, and 51 percent of total revenues in 1995.

<TABLE>
<CAPTION>
             Information about the Company's  operations in the U.S., Canada and
             Russia for the years ended December 31, 1997,  1996, and 1995 is as
             follows:

              1997:                              United States              Canada            Russia                 Total

<S>                                             <C>                   <C>                <C>                 <C>               
              Revenues                          $        15,631,738   $       2,313,234  $               -   $       17,944,972
                                                 ==================    ================   ================     ================
          
              Operating profit (loss)           $         1,815,391   $       1,361,851     $     (356,661)  $        2,820,581
              General and administrative
                expenses                                 (2,048,194)                  -                  -           (2,048,194)
              Interest expense                             (733,980)                  -                  -             (733,980)
                                                  -----------------    ----------------   ----------------     ----------------

                Income (loss) before
                  income taxes                  $          (966,783)  $       1,361,851  $        (356,661)  $           38,407
                                                 ==================    ================   ================     ================

              Identifiable assets at
                December 31, 1997               $        49,661,110   $       3,880,529  $               -   $       53,541,639
                                                 ==================    ================   ================     ================
              Additions to property and
                equipment                       $         9,291,931   $         255,105  $               -   $        9,547,036
                                                 ==================    ================   ================     ================
              Depreciation, depletion and
                amortization                    $         4,385,013   $         290,398  $               -   $        4,675,411
                                                 ==================    ================   ================     ================
</TABLE>


                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



5.            Geographic Segment Information, Continued:

<TABLE>
<CAPTION>

              1996:                              United States              Canada            Russia                 Total

<S>                                                     <C>                 <C>              <C>                    <C>       
              Revenues                                  $14,230,763         $ 2,643,288      $           -          $16,874,051
                                                         ==========           =========          =========          ===========

              Operating profit (loss)                   $ 2,024,752         $ 1,225,822      $  (9,204,394)         $(5,953,820)
              General and administrative
                expenses                                 (2,030,811)                  -                   -          (2,030,811)
              Interest expense                             (164,678)                  -                   -            (164,678)
                                                         ----------           ---------          ----------          -----------

                Income (loss) before
                  income taxes                          $  (170,737)        $ 1,225,822       $ (9,204,394)         $(8,149,309)
                                                 
              Identifiable assets at
                December 31, 1996                       $46,031,896         $ 4,149,541       $          -          $50,181,437
                                                 
              Additions to property and
                equipment                               $ 7,241,452         $    97,760       $          -          $ 7,339,212
                                                         ==========           =========          =========           ==========
              Depreciation, depletion and
                amortization                            $ 3,838,202         $   454,035       $          -          $ 4,292,237
                                                         ==========           =========          =========           ==========




              1995:                                 United States          Canada              Russia               Total

              Revenues                                  $10,819,553         $ 2,431,003       $          -          $13,250,556
                                                         ==========           =========          =========           ==========

              Operating profit (loss)                   $(1,391,469)        $ 1,331,842                  -          $   (59,627)
              General and administrative
                expenses                                 (1,908,778)                  -                  -           (1,908,778)
              Interest expense                              (72,625)                  -       $          -          $   (72,625)
                                                         ----------           ---------          ---------           ----------

                Income (loss)
                  before income taxes                   $(3,372,872)        $ 1,331,842       $          -          $(2,041,030)
                                                         ==========           =========          =========           ==========

              Identifiable assets at
                December 31, 1995                       $43,512,850         $ 4,273,758       $  6,160,442          $53,947,050
                                                         ==========           =========          =========           ==========
              Additions to property and
                equipment                               $ 6,127,455         $ 1,052,073       $          -          $ 7,179,528
                                                         ==========           =========          =========           ==========
              Depreciation, depletion and
                amortization                            $ 3,406,947         $   436,495       $          -          $ 3,843,442
                                                         ==========           =========          =========           ==========

</TABLE>




                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



6.            Symskaya Exploration:

              Symskaya Exploration, Inc., a company in the development stage and
              a Texas corporation  (Symskaya),  was formed on November 25, 1991,
              and is engaged  in oil and gas  exploration  in  Russia.  Symskaya
              holds a Combined  License  (License) which grants it the exclusive
              right to explore,  develop and produce  hydrocarbons on a contract
              area  totaling  approximately  1,100,000  acres  in  the  Yenisysk
              District of the Krasnoyarsk  Krai in the Russian  Federation.  The
              License has a primary term of 25 years from November 15, 1993.

              The  work  to be  performed  and the  obligations  and  rights  of
              Symskaya  are set forth in the  License and a  Production  Sharing
              Agreement  (PSA) which is an integral  part of the License.  Under
              the  License  and  PSA,  Symskaya  will  provide  funding  for all
              exploration  and development and will recover these costs from 80%
              of  hydrocarbon  production  after  payment of an 8% royalty.  The
              remaining 20% of any hydrocarbon production,  net of royalty, will
              be shared by Symskaya and the Russian government based on the rate
              of production.  As of December 31, 1997, the Symskaya area had not
              received   approval  by  the  Russian  federal   government  as  a
              production sharing area.

              Minimum  expenditures  required  under the  License  and PSA total
              $12,000,000 during the first five years of the License term, which
              began on November 15, 1993. As of December 31, 1997,  Symskaya had
              satisfied all of the minimum expenditures required.

              Symskaya  is owned 50% each by Equity  Oil  Company  (Equity)  and
              Leucadia National Corporation,  (Leucadia).  Leucadia acquired 50%
              of the stock of Symskaya  effective  January 1, 1994,  in exchange
              for their commitment to spend up to $6,000,000, in an amount equal
              to that spent by Equity,  towards the Symskaya project through the
              drilling,  completion  and/or  plugging  and  abandonment  of  the
              initial  test  well,  the Lemok #1.  Pursuant  to a  Shareholders'
              Agreement,  Leucadia  was  not  required  to pay  any  part of the
              amounts previously  advanced by Equity under a Loan Agreement with
              Symskaya,  with the exception of one-half (1/2) of the interest on
              a $1,740,519  loan between Equity and Symskaya.  The loan reflects
              the initial  investment by Equity in Symskaya  prior to Leucadia's
              ownership.

              Amounts  advanced by Equity and Leucadia after January 1, 1994 are
              treated as  interest-bearing  notes payable or equity, as mutually
              agreed upon by the respective companies. The shareholder agreement
              with Leucadia  also  requires  that Leucadia  share equally in the
              payment of the one (1%)  percent  royalty  obligation  in favor of
              Coastline  Exploration,  Inc. on future revenues from the Symskaya
              project.  The Company's  President  serves on Leucadia's  Board of
              Directors.



                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



6.            Symskaya Exploration, Continued:


              The Company's  investment in Symskaya is being accounted for using
              the equity method of accounting.

              In 1996,  Symskaya  plugged and abandoned  the Lemok #1 well,  and
              charged  the  drilling  costs of the well to  expense.  Due to the
              uncertainty  relating to Symskaya's  obtaining  additional outside
              financing and proceeding with development of the License area, all
              other  capitalized  costs were also  written  off,  resulting in a
              total charge to expense of $9,204,394.  Subsequent to the plugging
              of the Lemok #1 well,  the Company and Leucadia  agreed to suspend
              interest payments on Symskaya's note with the Company. The Company
              has no current  plans to fund  future  exploratory  drilling.  The
              Company's 50% share of Symskaya's net loss in 1997 was $356,661.

              Summarized financial information concerning Symskaya Exploration,
              Inc. is as follows:

                                                As of                As of
                                             December 31,         December 31,
                                                 1997                 1996
                                         
              Current assets             $       87,695       $      249,692

              Non-current assets              6,053,629            5,876,700

              Total assets                    6,141,324            6,126,392

              Current liabilities                13,699               98,210

              Non-current liabilities        14,242,094           12,653,243

              Accumulated deficit           (12,776,251)         (11,102,325)

              Total liabilities and
                stockholders' equity       $  6,141,324         $  6,126,392



                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



6.            Symskaya Exploration, Continued:

                                        For the year ended   For the year ended
                                            December 31,        December 31,
                                                 1997              1996
                                                                 
              Gross revenues               $     14,217         $     59,405
              Net (loss)                   $ (1,673,926)        $(10,974,120)
   



7.            Note Payable:

              In March of 1995,  the Company  obtained a $20  million  Borrowing
              Base Credit Facility (the Facility), with an initial commitment of
              $10 million. The commitment was raised to $15 million during 1997.
              The terms of the Facility call for interest  payments only, at the
              lower of prime or LIBOR  plus 2%,  until June 30,  1999,  at which
              time it converts to a 4 year term note. An unused  commitment  fee
              of 3/8% will be charged to the Company  based on the average daily
              unused portion of the Facility.  The Facility is collateralized by
              all assets of the Company. As of December 31, 1997 the outstanding
              balance under the Facility was $13,978,830 at an average  interest
              rate of 7.69%.

              Future  maturities  on the Facility as of December 31, 1997 are as
follows:

                        1998       $               -
                        1999               1,747,354
                        2000               3,494,708
                        2001               3,494,708
                        2002               3,494,708
                        2003               1,747,352
                                           ---------

                                         $13,978,830

              The  Facility  contains  provisions  relating  to  maintenance  of
              certain financial  ratios,  as well as restrictions  governing its
              use. Under  covenants  contained in the Facility,  the Company has
              agreed,  among other things,  not to advance any proceeds from the
              Facility to Symskaya, not to pay dividends,  and not to merge with
              or acquire any other  company  without  the prior  approval of the
              bank.



                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



7.            Note Payable, Continued:

              As of December 31, 1997,  the Company was in  compliance  with all
              covenants  contained in the  Facility.  Facility  fees,  which are
              reflected as other assets in the  accompanying  Balance Sheet, are
              being amortized on a straight line basis over 60 months.

8.            Quarterly Financial Data (Unaudited):

<TABLE>
<CAPTION>
              Quarterly  financial  information for the years ended December 31,
              1997 and 1996 is as follows:

               1997 Quarter Ended: .   December 31    September 30       June 30      March 31
                                       -----------    -----------    -----------   -----------

<S>                                    <C>            <C>            <C>           <C>        
               Net revenues ........   $ 4,038,890    $ 3,833,655    $ 3,978,440   $ 4,917,278

               Gross margin ........      (844,586)      (415,603)       712,019     1,531,928

               Net income (loss) ...    (1,104,583)       (48,158)       161,210       780,375

               Net income (loss) per
                  common share .....   $      (.09)   $      (.00)   $       .01   $       .06
                                        ===========    ===========    ===========   ===========




               1996 Quarter Ended: .   December 31    September 30       June 30      March 31
                                       -----------    -----------    -----------   -----------

               Net revenues ........   $ 4,653,388    $ 4,049,173    $ 3,985,332   $ 3,733,346

               Gross margin ........    (4,056,478)    (4,401,235)     1,372,329       678,753

               Net income (loss) ...    (3,563,431)    (2,760,271)       715,349       105,707

               Net income (loss) per
                  common share .....   $      (.28)   $      (.22)   $       .06   $       .01
                                       ===========    ===========    ===========   ===========

</TABLE>


               Note:  Third quarter gross margin in 1996 includes the effects of
               the equity  loss in Symskaya  Exploration,  Inc.  Fourth  quarter
               gross  margin in 1996  includes the  writedown  of the  Company's
               remaining investment in Symskaya Exploration, Inc. See Note 6.




                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            Disclosures About Oil and Gas Producing Activities:

<TABLE>
<CAPTION>
               Capitalized Costs:
                                               United States           Canada           Russia          Total
              1997:

              Unproved oil and gas
<S>                                            <C>                <C>               <C>              <C>         
                properties                     $   3,471,138      $      33,224                      $  3,504,362
              Proved oil and gas
                properties                        99,863,977          9,243,784                       109,107,761
                                                 -----------         ----------                       -----------
                                                 103,335,115          9,277,008                       112,612,123
              Accumulated depreciation,
                depletion and amortization       (58,065,779)        (6,292,480)                      (64,358,259)
                                                 -----------         ----------                       -----------

              Net capitalized costs             $ 45,269,336        $ 2,984,528                      $ 48,253,864
                                                 ===========         ==========                       ===========
              Symskaya, equity method
                (see Note 6)                                                        $         -
                                                                                     ==========


              1996:

              Unproved oil and gas
                properties                     $   2,532,503      $      33,224                      $  2,565,727
              Proved oil and gas
                properties                        93,837,818          8,978,498                       102,816,316
                                                 -----------         ----------                       -----------
                                                  96,370,321          9,011,722                       105,382,043
              Accumulated depreciation,
                depletion and amortization       (55,259,210)        (5,996,677)                      (61,255,887)
                                                 -----------         ----------                       -----------

              Net capitalized costs             $ 41,111,111       $  3,015,045                      $ 44,126,156
                                                 ===========         ==========                       ===========
              Symskaya, equity method
                (see Note 6)                                                        $         -
                                                                                     ==========

              1995:

              Unproved oil and gas
                 properties                    $   2,378,122       $     90,290                      $  2,468,412
              Proved oil and gas
                 properties                       87,200,659          8,894,955                        96,095,614
                                                 -----------         ----------                        -----------
                                                  89,578,781          8,985,245                        98,564,026
              Accumulated depreciation,
                 depletion and amortization      (51,531,172)        (5,601,882)                      (57,133,054)
                                                 -----------         ----------                       -----------

              Net capitalized costs            $  38,047,609        $ 3,383,363                      $ 41,430,972
                                                 ===========         ==========                       ===========
              Symskaya, equity method
                 (see Note 6)                                                       $ 6,160,442      $  6,160,442
                                                                                     ==========       ===========


</TABLE>




                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            Disclosures About Oil and Gas Producing Activities, Continued:

<TABLE>
<CAPTION>
              Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities:

              1997:                                     United States           Canada             Russia                Total

              Acquisition of properties:
<S>                                                     <C>                  <C>                  <C>                 <C>        
                Proved                                  $  3,226,494                  -                   -           $ 3,226,494
                Unproved                                   1,227,117                  -                   -             1,227,117
              Exploration costs                            4,468,531         $   25,103                   -             4,493,634
              Development costs                            4,169,802             43,125                   -             4,212,927
              Symskaya, equity method                              -                  -           $ 356,661               356,661


              1996:

              Acquisition of properties:
                Proved                                  $  2,038,244                  -                   -           $ 2,038,244
                Unproved                                     474,757                  -                   -               474,757
              Exploration costs                            4,492,876         $   30,838                   -             4,523,714
              Development costs                            3,287,637             43,728                   -             3,331,365
              Symskaya, equity method                              -                  -          $3,043,952             3,043,952


              1995:

              Acquisition of properties:
                 Proved                                 $  2,654,651          $ 405,410                   -           $ 3,060,061
                 Unproved                                    674,146                  -                   -               674,146
              Exploration costs                            1,654,022             30,969                   -             1,684,991
              Development costs                            2,709,192            835,415                   -             3,544,607
              Symskaya, equity method                              -                  -          $2,745,319             2,745,319


</TABLE>







                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            Disclosures About Oil and Gas Producing Activities, Continued:

<TABLE>
<CAPTION>
              Results of Operations (Unaudited):

1997:                                                   United States          Canada             Russia            Total

<S>                                                     <C>                   <C>               <C>                <C>        
Oil and gas sales                                       $14,150,670           $2,306,378                           $16,457,048
Production costs                                         (5,300,909)            (639,899)                           (5,940,808)
Exploration expenses                                     (3,718,531)             (21,086)                           (3,739,617)
Depreciation, depletion and amortization                 (4,385,015)            (290,398)                           (4,675,413)
Impairment of proved
    oil and gas properties                                 (411,894)                                                  (411,894)
Equity loss in Symskaya Exploration, Inc.                                                       $  (356,661)          (356,661)
                                                        -----------            ---------         ----------         ----------
                                                            334,321            1,354,995           (356,661)         1,332,655
Imputed income tax benefit (expense)                         77,745             (245,790)           133,748            (34,297)
                                                        -----------            ---------         ----------         ----------
Results of operations from producing activities        $    412,066           $1,109,205        $  (222,913)      $  1,298,358
                                                        ===========            =========         ==========         ==========

1996:

Oil and gas sales                                       $13,508,077           $2,607,048                           $16,115,125
Production costs                                         (4,976,633)            (935,495)                           (5,912,128)
Exploration expenses                                     (3,153,897)             (27,936)                           (3,181,833)
Depreciation, depletion and amortization                 (3,838,202)            (454,035)                           (4,292,237)
Impairment of proved
    oil and gas properties                                 (237,279)                                                  (237,279)
Equity loss and impairment of investment
    in Symskaya Exploration, Inc.                                                               $(9,204,394)        (9,204,394)
                                                         ----------           ----------        -----------        -----------
                                                          1,302,066            1,189,582         (9,204,394)        (6,712,746)
Imputed income tax benefit (expense)                       (239,514)            (258,048)         3,283,105          2,785,543
                                                         ----------           ----------        -----------        -----------
Results of operations from producing activities         $ 1,062,552          $   931,534        $(5,921,289)      $ (3,927,203)
                                                         ===========          ==========         ==========        ===========

1995:

Oil and gas sales                                       $ 9,803,677           $2,456,062                           $12,259,739
Production costs                                         (4,455,069)            (638,713)                           (5,093,782)
Exploration expenses                                     (1,877,840)             (23,973)                           (1,901,813)
Depreciation, depletion and amortization                 (3,406,947)            (436,495)                           (3,843,442)
Impairment of proved
    oil and gas properties                               (2,471,146)                                                (2,471,146)
                                                         ----------           ----------                           -----------
                                                         (2,407,325)           1,356,881                            (1,050,444)
Imputed income tax benefit (expense)                      1,056,755             (534,319)                              522,436
                                                         ----------           ----------                           -----------
Results of operations from producing activities         $(1,350,570)         $   822,562                         $    (528,008)
                                                         ==========           ==========                           ===========

</TABLE>


The imputed income tax benefit (expense) is hypothetical and determined  without
regard to the Company's  deduction for general and  administrative  and interest
expense.




                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.               Disclosures About Oil and Gas Producing Activities, Continued:

                 Reserves and Future Net Cash Flows (Unaudited):
                 Estimates  of reserve  quantities  and related  future net cash
                 flows are  calculated  using  unescalated  year-end oil and gas
                 prices and operating  costs,  and may be subject to substantial
                 fluctuations  based on the  prices in effect at the end of each
                 year.  Reserve  revisions  occur when the  economic  limit of a
                 property is lengthend or shortened  due to changes in commodity
                 pricing.  The following  table sets forth the weighted  average
                 prices used in  calculating  estimated  reserve  quantities and
                 future net cash flows at the end of 1997, 1996, and 1995:

<TABLE>
<CAPTION>

                                            United States           Canada              Total
                                            Oil       Gas        Oil       Gas       Oil      Gas

<S>                       <C>             <C>        <C>       <C>        <C>      <C>       <C>  
                 December 31, 1997        $15.49     $2.13     $12.35     $1.51    $14.99    $2.03

                 December 31, 1996        $24.80     $3.28     $22.26     $1.52    $24.36    $2.84

                 December 31, 1995        $19.04     $1.52     $14.48     $1.10    $18.02    $1.38
</TABLE>



               Estimates of Proved Oil and Gas Reserves:
               The  following  tables  present the  Company's  estimates  of its
               proved oil and gas reserves.  The Company emphasizes that reserve
               estimates  are  inherently  imprecise  and that  estimates of new
               discoveries  are more  imprecise  than those of producing oil and
               gas properties. Accordingly, the estimates are expected to change
               as future information  becomes  available.  Reserve estimates are
               prepared by the Company, and audited by the Company's independent
               petroleum reservoir  engineers,  Fred S. Reynolds and Associates,
               who have  issued  a  report  expressing  their  opinion  that the
               reserve  information  in the following  tables  complies with the
               applicable  rules  promulgated  by the  Securities  and  Exchange
               Commission  and the Financial  Accounting  Standards  Board.  The
               volumes  presented  on the  following  pages are in  thousands of
               barrels for oil and thousands of mcf for gas.






                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



<TABLE>
<CAPTION>
9.             Estimates of Proved Oil and Gas Reserves, Continued:

                                                                  United States            Canada                 Total
December 31, 1997:                                               Oil        Gas        Oil        Gas        Oil        Gas
------------------------------------------------------------   -------    -------    -------    -------    -------    -------
  Proved developed and undeveloped reserves:
<S>                                                              <C>       <C>         <C>        <C>        <C>       <C>   
  Beginning of year ........................................     7,252     14,910      1,117      2,707      8,369     17,617
  Revisions of previous estimates ..........................      (806)      (694)       251      1,194       (555)       500
  Acquisition of minerals in place .........................     1,085        438       --         --        1,085        438
  Extensions and discoveries ...............................       202      2,423       --         --          202      2,423
  Sales of minerals in place ...............................       (45)      --         --         --          (45)      --
  Production ...............................................      (520)    (1,620)      (116)      (449)      (636)    (2,069)
                                                               -------    -------    -------    -------    -------    -------
  End of year ..............................................     7,168     15,457      1,252      3,452      8,420     18,909
                                                               =======    =======    =======    =======    =======    =======

Proved developed reserves:
  Beginning of year ........................................     7,219     11,133      1,117      2,707      8,336     13,840
  End of year ..............................................     6,972     11,932      1,252      3,452      8,224     15,384


                                                                 United States            Canada                 Total
December 31, 1996:                                               Oil        Gas        Oil        Gas        Oil        Gas
------------------------------------------------------------   -------    -------    -------    -------    -------    -------
  Proved developed and undeveloped reserves:
  Beginning of year ........................................     6,563     14,819      1,187      3,205      7,750     18,024
  Revisions of previous estimates ..........................       176       (234)        49        104        225       (130)
  Acquisitions of minerals in place ........................       949         38       --         --          949         38
  Sales of minerals in place ...............................        (6)      (214)      --          (54)        (6)      (268)
  Extensions and discoveries ...............................        88      1,827       --           40         88      1,867
  Production ...............................................      (518)    (1,326)      (119)      (588)      (637)    (1,914)
                                                               -------    -------    -------    -------    -------    -------
  End of year ..............................................     7,252     14,910      1,117      2,707      8,369     17,617
                                                               =======    =======    =======    =======    =======    =======

Proved developed reserves:
  Beginning of year ........................................     6,527     11,238      1,139      3,068      7,666     14,306
  End of year ..............................................     7,219     11,133      1,117      2,707      8,336     13,840


                                                                 United States            Canada                  Total
December 31, 1995:                                               Oil        Gas        Oil        Gas        Oil        Gas
------------------------------------------------------------   -------    -------    -------    -------    -------    -------
Proved developed and undeveloped reserves:
  Beginning of year ........................................     6,252     13,673      1,055      3,539      7,307     17,212
  Revisions of previous estimates ..........................        98        (23)         4       (189)       102       (212)
  Acquisition of minerals in place .........................       701      1,129         61        152        762      1,281
  Extensions and discoveries ...............................         3        920        196        274        199      1,194
  Production ...............................................      (491)      (880)      (129)      (571)      (620)    (1,451)
                                                               -------    -------    -------    -------    -------    -------
  End of year ..............................................     6,563     14,819      1,187      3,205      7,750     18,024
                                                               =======    =======    =======    =======    =======    =======
Proved developed reserves:
  Beginning of year ........................................     6,185      8,490      1,042      3,539      7,227     12,029
  End of year ..............................................     6,527     11,238      1,139      3,068      7,666     14,306

</TABLE>




                                    Continued
                                       
                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.             Disclosures About Oil and Gas Producing Activities, Continued:


<TABLE>
<CAPTION>

               Standardized  Measure  of  Discounted  Future  Net Cash Flows and
               Changes   Therein   Relating  to  Proved  Oil  and  Gas  Reserves
               (Unaudited):

                                                        Thousands of Dollars
1997:                                           United States    Canada        Total

<S>                                               <C>          <C>          <C>      
Future cash inflows ...........................   $ 149,066    $  19,350    $ 168,416
Future production and development costs .......     (93,945)      (8,470)    (102,415)
                                                  ---------    ---------    ---------
Future net cash flows before income taxes .....      55,121       10,880       66,001
10% annual discount for estimated timing
   of cash flows ..............................     (24,778)      (3,814)     (28,592)
                                                  ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows before income taxes .........      30,343        7,066       37,409
Future income taxes, net of 10% annual discount      (6,071)      (2,439)      (8,510)
                                                  ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows .............................   $  24,272    $   4,627    $  28,899
                                                  =========    =========    =========


                                                        Thousands of Dollars
1996:                                           United States    Canada        Total

Future cash inflows ...........................   $ 230,760    $  28,073    $ 258,833
Future production and development costs .......     (98,696)      (6,263)    (104,959)
                                                  ---------    ---------    ---------
Future net cash flows before income taxes .....     132,064       21,810      153,874
10% annual discount for estimated timing
   of cash flows ..............................     (64,955)      (9,917)     (74,872)
                                                  ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows before income taxes .........      67,109       11,893       79,002
Future income taxes, net of 10% annual discount     (19,462)      (4,804)     (24,266)
                                                  ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows .............................   $  47,647    $   7,089    $  54,736
                                                   =========    =========    =========
</TABLE>



                                    Continued
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued




9.             Disclosures About Oil and Gas Producing Activities, Continued:

<TABLE>
<CAPTION>
               Standardized  Measure  of  Discounted  Future  Net Cash Flows and
               Changes   Therein   Relating  to  Proved  Oil  and  Gas  Reserves
               (Unaudited), Continued:


                                                         Thousands of Dollars
1995:                                           United States    Canada        Total
    
<S>                                               <C>          <C>          <C>      
Future cash inflows ...........................   $ 148,257    $  20,381    $ 168,638
Future production and development costs .......     (76,234)      (4,705)     (80,939)
                                                  ---------    ---------    ---------
Future net cash flows before income taxes .....      72,023       15,676       87,699
10% annual discount for estimated timing
   of cash flows ..............................     (38,438)      (6,489)     (44,927)
                                                  ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows before income taxes .........      33,585        9,187       42,772
Future income taxes, net of 10% annual discount      (8,756)      (3,569)     (12,325)
                                                  ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows .............................   $  24,829    $   5,618    $  30,447
                                                  =========    =========    =========
</TABLE>


               Future net cash flows were  computed  using  year-end  prices and
               costs,  and year-end  statutory tax rates with  consideration  of
               future  tax rates  already  legislated  (adjusted  for  permanent
               differences that related to proved oil and gas reserves).


<TABLE>
<CAPTION>
               Principal  Sources  of  Change  in the  Standardized  Measure  of
               Discounted Future Net Cash Flow:
                                                         Thousands of Dollars
                                                    1997        1996        1995

Sales and transfers of oil and gas produced,
<S>                                              <C>         <C>         <C>      
   net of production costs ...................   $(10,516)   $(10,203)   $ (7,166)
Net changes in prices and production costs ...    (45,280)     27,483       3,147
Extensions and discoveries, less related costs      1,639       2,374       1,274
Purchases of minerals in place ...............      3,787       7,174       3,804
Sales of minerals in place ...................       (339)       (116)       --
Changes in estimated future development costs      (1,447)        938        (203)
Revisions of previous quantity estimates .....     (1,573)      1,495         369
Accretion of discount ........................      7,912       4,286       3,409
Net change in income taxes ...................     18,100     (12,045)     (1,969)
Changes in production rates (timing) and other      1,880       2,903       3,561
                                                 --------    --------    --------

                                                 $(25,837)   $ 24,289    $  6,226
                                                 ========    ========    ========

</TABLE>
                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



ITEM 9.  Disagreements on Accounting and Financial Disclosures:

None

                                    PART III

ITEM 10.  Directors and Executive Officers of Company:

The  information   contained  under  the  headings  Election  of  Directors  and
Continuing  Directors and Executive  Officers  contained on pages 2 and 3 in the
definitive  proxy statement to be filed in connection with the Company's  annual
meeting on May 13, 1998 is  incorporated  herein by refer ence in answer to this
item.

ITEM 11.  Executive Compensation

The information  contained under the heading  Executive  Compensation on pages 6
through 9 in the definitive  proxy  statement to be filed in connection with the
Company's annual meeting on May 13, 1998 is incorporated  herein by reference in
answer to this item.

ITEM 12.  Security Ownership of Certain Beneficial Owners and
          Management:

The information  contained under the headings  Security  Ownership of Management
and Voting Securities & Principal  Holders Thereof,  contained on pages 4 and 11
in the definitive  proxy  statement to be filed in connection with the Company's
annual meeting on May 13, 1998 is incorporated  herein by reference in answer to
this item.

ITEM 13.  Certain Relationships and Related Transactions

None.



                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



                                     PART IV

ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K:



(a) (1)  Financial Statements:                                        Page

     Report of Independent Accountants                                 16  

     Financial Statements:

          Balance Sheet as of December 31, 1997 and 1996               17

          Statement of Operations for the years ended
            December 31, 1997, 1996 and 1995                           18

          Statement of Changes in Stockholders' Equity
            for the years ended December 31, 1997, 1996
            and 1995                                                   19 

          Statement of Cash Flows for the years ended
            December 31, 1997, 1996 and 1995                           20  

          Notes to Financial Statements                                21  

    (3)  Exhibits

          (3) (i) Restated Articles of Incorporation.  Incorporated by reference
          from the  annual  report on Form 10K for the year ended  December  31,
          1995.

             (ii) Amended By-Laws.                                     45

          (10) Material Contracts. Change in Control Compensation Agreements
          for Paul M. Dougan, James B. Larson, and Clay Newton.        56

          (21) Subsidiaries. Incorporated by reference from the annual report on
          Form 10K for the year ended December 31, 1995.

          (23) Consent of Experts. Consent of Coopers & Lybrand L.L.P.
          regarding Form S-8 Registration.                             74

(b)Reports on Form 8-K

          None



                                       

                                     <PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

     EQUITY OIL COMPANY


     By  /s/ Paul M. Dougan
         Paul M. Dougan
         President
         Chief Executive Officer


     By  /s/ Clay Newton
         Clay Newton
         Treasurer
         Chief Financial Officer
         Principal Accounting Officer

Date:    March 10, 1998

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.



 /s/ Douglas W. Brandrup                  /s/ Joseph C. Bennett
        Director                                Director
      March 10, 1997                           March 10, 1998
--------------------------              ---------------------
          Date                                     Date

 /s/ William D. Forster                   /s/ Philip J. Bernhisel
        Director                                Director
      March 10, 1997                           March 10, 1998
--------------------------              ---------------------
          Date                                     Date

 /s/ Randolph G. Abood                    /s/ W. Durand Eppler
        Director                                Director
      March 10, 1997                           March 10, 1998
--------------------------              ---------------------
          Date                                     Date

 /s/ William P. Hartl
        Director
      March 10, 1997
---------------------------
          Date