<PAGE>   1
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997


[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM 
                                     TO
                         -----------    -----------


                         COMMISSION FILE NUMBER 0-11871

                          AMERICAN EXPLORATION COMPANY
             (Exact Name of Registrant as Specified in Its Charter)

          DELAWARE                                               74-2086890
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


    1331 LAMAR, SUITE 900
       HOUSTON, TEXAS                                                 77010
(Address of Principal Executive Offices)                            (Zip Code)



      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:   (713) 756-6000



         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
                                                ---     ---

         ON APRIL 18, 1997, THERE WERE OUTSTANDING 15,695,008 SHARES OF THE
REGISTRANT'S COMMON STOCK, PAR VALUE $0.05 PER SHARE.


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

<PAGE>   2
                 AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
                         Quarterly Report on Form 10-Q
                      for the Quarter Ended March 31, 1997

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         Number 
                                                                                                         ------
<S>                                                                                                       <C>
PART I.   FINANCIAL INFORMATION

   Item 1.    Financial Statements

              Condensed Consolidated Balance Sheets as of March 31, 1997 and
                 December 31, 1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1

              Condensed Consolidated Statements of Operations for the Three Months
                 Ended March 31, 1997 and 1996  . . . . . . . . . . . . . . . . . . . . . . . . .          2

              Condensed Consolidated Statements of Cash Flows for the Three Months
                 Ended March 31, 1997 and 1996  . . . . . . . . . . . . . . . . . . . . . . . . .          3

              Notes to Condensed Consolidated Financial Statements  . . . . . . . . . . . . . . .          4

   Item 2.    Management's Discussion and Analysis of Financial Condition and
                 Results of Operations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6


PART II.   OTHER INFORMATION

   Item 6.    Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . . . . . . . .          9



SIGNATURES      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         10
</TABLE>


<PAGE>   3




                 AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                    (In thousands, except for share amounts)

<TABLE>
<CAPTION>
                                                                               March 31,           December 31,
                                                                                1997                  1996      
                                                                           ---------------      --------------
                                                                             (Unaudited)
                                         ASSETS
<S>                                                                        <C>                    <C>    
Current assets:                                                                                              
   Cash and temporary cash investments  . . . . . . . . . . . . . . .      $    10,244            $     8,358
   Accounts receivable  . . . . . . . . . . . . . . . . . . . . . . .           12,901                 18,449
   Receivable from partnerships . . . . . . . . . . . . . . . . . . .              909                  -    
   Assets held for sale . . . . . . . . . . . . . . . . . . . . . . .            4,832                  -    
   Other current assets . . . . . . . . . . . . . . . . . . . . . . .            1,032                  1,335
                                                                           -----------            -----------
      Total current assets  . . . . . . . . . . . . . . . . . . . . .           29,918                 28,142
                                                                           -----------            -----------
                                                                                                             
Property, plant and equipment:                                                                               
   Oil and gas properties, based on successful efforts accounting . .          352,130                356,626
   Other property and equipment . . . . . . . . . . . . . . . . . . .           13,623                 13,420
                                                                           -----------            -----------
                                                                               365,753                370,046
   Less:   Accumulated depreciation, depletion and amortization . . .          149,677                159,507
                                                                           -----------            -----------
      Property, plant and equipment, net  . . . . . . . . . . . . . .          216,076                210,539
                                                                           -----------            -----------
                                                                                                             
Other assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,914                  1,947
                                                                           -----------            -----------
                                                                                                             
          Total assets  . . . . . . . . . . . . . . . . . . . . . . .      $   247,908            $   240,628
                                                                           ===========            ===========
                                                                                                             
                                                                                                             
               LIABILITIES AND STOCKHOLDERS' EQUITY                                                          
                                                                                                             
Current liabilities:                                                                                         
   Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . .      $    22,638            $    21,647
   Accrued liabilities  . . . . . . . . . . . . . . . . . . . . . . .           20,452                 25,049
   Payable to partnerships  . . . . . . . . . . . . . . . . . . . . .          -                          608
                                                                           -----------            -----------
      Total current liabilities . . . . . . . . . . . . . . . . . . .           43,090                 47,304
                                                                           -----------            -----------
                                                                                                             
Long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . . . .           70,000                 60,000
                                                                           -----------            -----------
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .            3,578                  2,945
                                                                           -----------            -----------
                                                                                                             
Stockholders' equity:                                                                                        
   Convertible preferred stock, $1.00 par value; 4,000 shares                                                
      issued and outstanding (1997 and 1996)  . . . . . . . . . . . .                4                      4
   Common stock, $.05 par value; 15,695,008 shares                                                           
      issued and outstanding (1997); 15,694,430 shares issued and                                            
      outstanding (1996)  . . . . . . . . . . . . . . . . . . . . . .              785                    785
   Additional paid-in capital . . . . . . . . . . . . . . . . . . . .          322,631                322,598
   Accumulated deficit  . . . . . . . . . . . . . . . . . . . . . . .         (192,138)              (192,948)
   Unearned compensation  . . . . . . . . . . . . . . . . . . . . . .              (42)                   (60)
                                                                           -----------            -----------
      Total stockholders' equity  . . . . . . . . . . . . . . . . . .          131,240                130,379
                                                                           -----------            -----------
          Total liabilities and stockholders' equity  . . . . . . . .      $   247,908            $   240,628
                                                                           ===========            ===========
</TABLE>
  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                      1
<PAGE>   4

                 AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except for per share amounts)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                       For the Three Months
                                                                                          Ended March 31,   
                                                                                  ------------------------------
                                                                                     1997              1996     
                                                                                  ------------      ------------
<S>                                                                               <C>               <C>
REVENUES:
   Oil and gas sales  . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $     25,017      $     15,913
   Gain (loss) on sales of oil and gas properties . . . . . . . . . . . . . .             (540)              656
   Other revenues (costs), net  . . . . . . . . . . . . . . . . . . . . . . .              260                (4)
                                                                                  ------------      ------------ 
      Total revenues  . . . . . . . . . . . . . . . . . . . . . . . . . . . .           24,737            16,565
                                                                                  ------------      ------------

COSTS AND EXPENSES:
   Production and operating . . . . . . . . . . . . . . . . . . . . . . . . .            6,494             6,094
   Depreciation, depletion and amortization . . . . . . . . . . . . . . . . .            9,734             6,450
   General and administrative . . . . . . . . . . . . . . . . . . . . . . . .            2,167             1,841
   Exploration, including impairments . . . . . . . . . . . . . . . . . . . .            3,990             1,588
                                                                                  ------------      ------------
      Total costs and expenses  . . . . . . . . . . . . . . . . . . . . . . .           22,385            15,973
                                                                                  ------------      ------------

INCOME FROM OPERATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . .            2,352               592
                                                                                  ------------      ------------

OTHER INCOME (EXPENSE):
   Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (957)             (789)
   Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (135)              (18)
                                                                                  ------------      ------------ 
      Total other expense . . . . . . . . . . . . . . . . . . . . . . . . . .           (1,092)             (807)
                                                                                  ------------      ------------ 

NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,260              (215)

Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . .             (450)             (450)
                                                                                  ------------      ------------ 

NET INCOME (LOSS) TO COMMON STOCK . . . . . . . . . . . . . . . . . . . . . .     $        810      $       (665)
                                                                                  ============      ============ 

NET INCOME (LOSS) PER COMMON SHARE:
   Primary and fully diluted  . . . . . . . . . . . . . . . . . . . . . . . .     $       0.05      $      (0.06)
                                                                                  ============      ============ 

NUMBER OF COMMON AND EQUIVALENT SHARES:
   Primary and fully diluted  . . . . . . . . . . . . . . . . . . . . . . . .           15,695            11,812
                                                                                  ============      ============
</TABLE>


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





                                       2
<PAGE>   5
                 AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                     For the Three Months
                                                                                        Ended March 31,      
                                                                                  ------------------------------                  
                                                                                     1997              1996     
                                                                                  ------------      ------------
<S>                                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)  . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $      1,260      $       (215)
   Adjustments to arrive at net cash provided by operating activities:
      Depreciation, depletion and amortization  . . . . . . . . . . . . . . .            9,734             6,450
      (Gain) loss on sales of oil and gas properties  . . . . . . . . . . . .              540              (656)
      Exploration expense, including impairments  . . . . . . . . . . . . . .            3,990             1,404
      Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               73               152
   Changes in operating working capital:
      Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . .            4,170               153
      Other current assets  . . . . . . . . . . . . . . . . . . . . . . . . .             (103)               68
      Accounts payable and accrued liabilities  . . . . . . . . . . . . . . .              147            (5,770)
   Other operating  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              146              (512)
                                                                                  ------------      ------------ 

      NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . .           19,957             1,074
                                                                                  ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of oil and gas properties  . . . . . . . . . . . . . . . . . .           (5,145)          (14,521)
   Development and exploration expenditures . . . . . . . . . . . . . . . . .          (21,797)           (4,861)
   Proceeds from (settlements of) sales of oil and gas properties, net  . . .              (92)            1,135
   Other investing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (210)              (59)
                                                                                  ------------      ------------ 

      NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . . .          (27,244)          (18,306)
                                                                                  ------------      ------------ 

CASH FLOWS FROM FINANCING ACTIVITIES:
   Bank debt borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .           21,000            17,000
   Bank debt repayments . . . . . . . . . . . . . . . . . . . . . . . . . . .          (11,000)           (1,000)
   Preferred stock dividends  . . . . . . . . . . . . . . . . . . . . . . . .             (450)             (450)
   Other financing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (377)              (53)
                                                                                  ------------      ------------ 

      NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . . . . . .            9,173            15,497
                                                                                  ------------      ------------

NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS  . . . . . . .            1,886            (1,735)

CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD  . . . . . . . . .            8,358             7,496
                                                                                  ------------      ------------

CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD  . . . . . . . . . . . .     $     10,244      $      5,761
                                                                                  ============      ============
</TABLE>


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





                                       3
<PAGE>   6
                 AMERICAN EXPLORATION COMPANY AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


(1)   BASIS OF PRESENTATION

   The condensed consolidated financial statements included herein have been
prepared by American Exploration Company ("American" or the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the "Commission").  The financial statements reflect adjustments of
a normal recurring nature which are, in the opinion of management, necessary to
present fairly such information.  Although the Company believes that the
disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including significant accounting
policies, normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.  It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.  Certain amounts in the prior
year financial statements have been reclassified to conform with current
classifications.


(2)   ASSETS HELD FOR SALE

   In April 1997, the Company closed the sale of over 50 minor properties. 
During the first quarter of 1997, the Company's results of operations included
an aggregate net loss of approximately $250,000 related to the operation of
these properties.  In addition, the Company recognized a first quarter net loss
on property sales of approximately $500,000, which is subject to adjustment. The
estimated net realizable value of $4.8 million for these properties was reported
as assets held for sale on the accompanying balance sheet as of March 31, 1997.


(3)   CASH FLOW INFORMATION

   Net cash provided by operating activities included cash payments for
interest totaling $550,000 and $233,000, net of capitalized interest of
$577,000 and $379,000, for the first three months of 1997 and 1996,
respectively.  No income taxes were paid by the Company in the first three
months of 1997 or 1996.


(4)   SUBSEQUENT EVENTS

EAST CAMERON BLOCK 328

   On April 1, 1997, a blowout and fire occurred during the drilling of a
horizontal development well at East Cameron Block 328 located in federal waters
offshore Louisiana.  As of April 18, 1997, the fire had been extinguished, and
the well had ceased to flow but had not yet been capped.  As of such date, the
Company was attempting to cap the well from the platform.  A relief well was
spudded but has been suspended pending efforts to cap the well.  No personnel
were injured in the accident, and no pollution has been detected except for
minor, naturally dissipating oil sheens caused by water washing down the
platform as the fire was extinguished.

   The upper structure of the platform, which was owned by the Company, was
severely damaged and may have been destroyed.  In addition, the drilling rig
operated by a third party contractor and various other subcontractors'
equipment were damaged or destroyed.  The Company is still assessing the extent
of damage to the platform, the existing production wells and third party
equipment.  The Company carries various types of insurance relating to the
blowout; however, the Company cannot estimate the full extent of damages at
this time and is not in a position to determine whether all insurance coverages
will be sufficient.

   During the first quarter of 1997, the Company had successfully drilled two
development wells and completed a previously drilled subsea well.  While the
drilling was in progress, an existing well on the platform was shut in for most
of the first quarter.  Accordingly, first quarter 1997 results included
approximately 300 BOE per day of production from East Cameron Block 328;
however, prior to the blowout and fire, the existing well and the three new
wells were producing





                                       4
<PAGE>   7
at a combined rate of approximately 1,900 BOE per day.  All of these wells are
now shut in, and the commencement of production will probably be delayed for
the remainder of the year.

LIQUIDATION OF NYLOG PROGRAMS

   As previously reported, the Company and a subsidiary (together, the
"American Parties") and NYLIFE Inc. ("NYLIFE") entered into an agreement, dated
February 1, 1996 (the "Indemnity Agreement"), relating to certain litigation
arising out of certain limited partnerships for which the Company's subsidiary
and an affiliate of NYLIFE serve as managing general partners (the "NYLOG
Programs").  In particular, the Indemnity Agreement addressed settlement and
indemnities with respect to that litigation and other matters bearing on the
dissolution and liquidation of the NYLOG Programs.  On April 1, 1997, the
American Parties and NYLIFE entered into an amendment of the Indemnity
Agreement pursuant to which NYLIFE agreed to pay the Company $2.5 million upon
the liquidation of the NYLOG Programs in consideration of certain remaining
contingent liabilities of the NYLOG Programs being borne (i) up to an aggregate
amount of $2.5 million by the American Parties, (ii) in excess of $2.5 million
through $4 million  by NYLIFE, (iii) in excess of $4 million through $8 million
by the American Parties and (iv) thereafter equally by NYLIFE and the American
Parties.  The managing general partners agreed to assume responsibility for
contingencies related to the NYLOG Programs in order to facilitate the final
liquidation of the partnerships, which is expected to be completed in the
second quarter of 1997.  Although no assurance can be given regarding the
ultimate outcome of the matters underlying such contingencies, the Company
anticipates that the costs, if any, to resolve these matters will not have a
material adverse effect upon the financial condition of the Company.





                                       5
<PAGE>   8
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

   The following table sets forth certain operating information of the Company
for the periods presented in the accompanying financial statements.

<TABLE>
<CAPTION>
                                                                                       For the Three Months
                                                                                          Ended March 31,          
                                                                                 -------------------------------
                                                                                    1997               1996     
                                                                                 ------------       ------------
<S>                                                                              <C>                <C>
Average Sales Price (a):
------------------------
   Gas ($/Mcf)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $       2.56       $       1.86
   Oil ($/Bbl)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             18.59              16.58
   BOE ($/BOE)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             16.17              13.16

Production Data:
----------------
   Gas (MMcf) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             6,892              4,600
   Oil (MBbls)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               398                442
   MBOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,547              1,209

Average Cost Data ($/BOE):
--------------------------
   Production and operating costs . . . . . . . . . . . . . . . . . . . . .      $       4.20       $       5.04
   General and administrative expense . . . . . . . . . . . . . . . . . . .              1.40               1.52
   Depreciation, depletion and amortization . . . . . . . . . . . . . . . .              6.29               5.33
</TABLE>

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

(a)  Prices reflect impact of hedging gains and losses.

REVENUES

   Oil and gas sales totaled $25 million for the first quarter of 1997 or 57%
above first quarter 1996 sales of $15.9 million.  A 23% increase in the
Company's average price realization for oil and gas sales and a 50% increase in
gas production added approximately $5.6 million and approximately $4.2 million,
respectively, to first quarter 1997 sales, as compared to the same period of
1996.  The Company's average gas price climbed 38% to $2.56 per Mcf for the
first quarter of 1997 from $1.86 per Mcf for the comparable 1996 period.
American's realized oil price averaged $18.59 per barrel and $16.58 per barrel
for the first quarter of 1997 and 1996, respectively.

   During the first quarter of 1997, the Company had in effect numerous
commodity price hedging arrangements that covered approximately 44% of
American's gas production and approximately 77% of its oil production.  As a
result of the price hedges, the Company's oil and gas sales were reduced by
approximately $3.3 million during the first quarter of 1997.  Excluding the
effect of the hedging loss, the Company's average oil and gas prices for the
1997 period would have been $21.27 per barrel and $2.88 per Mcf, respectively.
During the first quarter of 1996, hedging losses totaled $1.4 million.  Average
prices for the 1996 first quarter would have been $17.96 per barrel and $2.04
per Mcf exclusive of the hedging results.

   Gas production totaled 6.9 Bcf for the 1997 quarter, or 76.6 MMcf per day.
The increase from the first quarter 1996 average daily production rate of 50.5
MMcf primarily reflected additional production averaging 20.5 MMcf per day from
the offshore properties acquired in March 1996 and September 1996 (the
"Offshore Properties") and subsequent development activities on those
properties.  American's 1997 production rate also reflected the impact of new
wells drilled in 1996 at the Bradshaw Field, High Island Block 13-L, Yoakum
Gorge and High Island 98-L, which together added average daily production of
9.8 MMcf.  These production increases were partially offset by the impact of
property sales completed in December 1996 in connection with the liquidation of
the NYLOG Programs.

   Oil production totaled 398 MBOE, or 4,422 BOE per day, for the first quarter
of 1997, declining 9% from the average daily rate of 4,857 BOE for the same
quarter of 1996.  The decline was mainly attributable to the impact of 1996





                                       6
<PAGE>   9
property sales and production declines on other fields.  These factors were
partially offset by the impact of additional oil production from the Offshore
Properties, particularly at South Marsh Island Block 133.  The net decrease in
oil production negatively impacted oil and gas sales by approximately $700,000.

COSTS AND EXPENSES

   Production and operating costs totaled $6.5 million and $6.1 million for the
first quarter of 1997 and 1996, respectively.  The Company's average operating
cost per unit declined to $4.20 per BOE in the 1997 quarter from $5.04 per BOE
in the comparable period of 1996.  The reduction in unit costs primarily
reflected the impact of the Offshore Properties, which generally have higher
production rates and lower operating costs per unit of production than the
Company's onshore properties.  In addition, operating efficiencies have been
achieved through the 1996 property sales by which numerous low margin
properties were divested.

   Depreciation, depletion and amortization ("DD&A") expense increased to $9.7
million for the first quarter of 1997, compared to $6.5 million for the same
quarter of 1996.  Higher DD&A expense was due to increased production volumes
and the impact of higher depletion rates for the Offshore Properties, which
rates include a provision for platform abandonment costs.

   General and administrative ("G&A") expense totaled $2.2 million for the
first quarter of 1997 compared to first quarter 1996 expense of $1.8 million.
The increase in G&A expense primarily reflected the loss of management fees
related to various partnerships for which the Company had served as general
partner.  However, due to higher production volumes, G&A expense per unit
averaged $1.40 per BOE for the 1997 quarter, representing an 8% improvement
over the comparable period of 1996.

   Exploration expense totaled $4 million and $1.6 million for the first three
months of 1997 and 1996, respectively.  The Company recorded $1.9 million of
dry hole costs in the first quarter of 1997 primarily related to an
unsuccessful offshore well.  In the first quarter of 1996, dry hole costs
totaled $1 million for three unsuccessful wells including one offshore well.
Exploration expense for 1997 also included $1.1 million of impairment expense
primarily related to an offshore property.

NET INCOME (LOSS)

   The Company reported net income of $810,000, or $.05 per share, for the
first quarter of 1997, compared to a net loss of $665,000, or $.06 per share,
for the first quarter of 1996.  The Company's operating margin in 1997 was
greatly improved by higher oil and gas price realizations coupled with
continued reductions in operating and overhead costs.  This increased operating
margin more than offset the impact of higher DD&A and exploration expenses in
1997.  The Company's results for the first quarter of 1997 do not reflect any
impact from the blowout and fire that occurred at an offshore location on April
1, 1997, which is discussed in more detail below under "Capital Resources and
Liquidity" and in Note 4 to the Consolidated Financial Statements.  The Company
does not anticipate any material adverse impact on its results of operations
due to the accident.

CAPITAL RESOURCES AND LIQUIDITY

   The Company's principal sources of capital are net cash provided by
operating activities and proceeds from financing activities.  The Company's
primary uses of capital are to fund its development and exploration programs
and acquisition activity.  The Company also has financial obligations related
to its preferred stock and subordinated notes.

   Net cash provided by operating activities totaled approximately $20 million
during the first quarter of 1997 compared to $1.1 million during the same
period of 1996.  Cash flow for the first quarter of 1997 reflected increased
production and improved operating margins due to increased oil and gas prices
early in the year and lower operating and overhead costs per unit.  Net cash
provided by operating activities was increased in the 1997 quarter by the
effect of a $4.2 million positive working capital adjustment due to the
collection of accounts receivable.  In contrast, net cash provided by operating
activities for the same period of 1996 was reduced by a $5.8 million negative
working capital adjustment due to the timing of cash payments.  Excluding the
impact of working capital adjustments, the Company's cash flow from operations
for the first quarter of 1997 was about two times the amount reported in the
first quarter of 1996.





                                       7
<PAGE>   10
   As of March 31, 1997, outstanding bank debt totaled $35 million.  The
semi-annual redetermination of the Company's borrowing base under its bank
credit facility was recently completed, and effective May 1, 1997, the
borrowing base will be set at $86 million, compared to $75 million at year-end
1996.

   During the first quarter of 1997, cash expenditures for the acquisition of
oil and gas properties totaled $5.1 million, compared to $14.5 million for the
same period of 1996.  The 1997 cash flow statement includes $3.3 million paid
in January for acreage in the Cotton Valley Reef Trend in East Texas that was
acquired in a December 1996 transaction.  Other acquisition expenditures in
1997 mainly related to the purchase of additional leasehold interests in South
Texas, most notably in the Yoakum Gorge area.  Acquisition expenditures during
the first quarter of 1996 included the $14 million purchase of five proved
offshore blocks in the Gulf of Mexico.

   Development and exploration expenditures for the first three months of 1997
and 1996 totaled $21.8 million and $4.9 million, respectively.  During the
first quarter of 1997, cash expenditures for development activities totaled
approximately $12.1 million.  During that period, the Company drilled 10 (6.6
net) development wells, of which 90% were successfully completed.  The
Company's development activities were primarily focused at East Cameron Block
328 in the Gulf of Mexico where three wells were successful.  As more fully
discussed in Note 4 to the Consolidated Financial Statements, a blowout and
fire during the drilling of a fourth well at East Cameron damaged the
production facility and delayed the commencement of production from these
wells.  In South Texas, American also completed two wells in the AWP Field and
participated in two successful wells at the Charline Field.

   Cash expenditures for exploration totaled approximately $9.7 million for the
first quarter of 1997.  Exploratory activities during the quarter were
concentrated in the Gulf of Mexico and in the Yoakum Gorge area of South Texas.
The Company completed two successful onshore exploratory wells in the first
quarter of 1997 but drilled one dry hole at Vermilion Block 348 in the Gulf of
Mexico.  The Company plans an active exploration program for the rest of 1997;
however, there can be no assurances regarding the success of any wells drilled,
and exploratory wells involve greater risks than development wells.  Under
successful efforts accounting, the costs incurred for the drilling of
unsuccessful exploratory wells are recorded as exploration expense which
negatively impacts net income in the period in which incurred.

   The Company expects its 1997 capital expenditures for development and
exploration activities to total approximately $80 million depending on various
factors, including the level of exploration success and subsequent development
activity.  Of this amount, approximately $21 million of costs were incurred
during the first quarter of 1997.  The Company intends to fund its planned
capital expenditures, commitments and working capital requirements through cash
flows from operations and, to the extent necessary, borrowings under the Credit
Agreement.  However, if there are changes in oil and gas prices, which
correspondingly affect cash flows and the borrowing base under the Credit
Agreement, or if additional development and exploration opportunities arise,
American has the discretion and ability to adjust its capital budget
accordingly.  Other potential sources of capital for the Company include
property sales and financings through the placement of notes or the sale of
equity. Management believes that the Company will have sufficient capital
resources and liquidity to fund its capital expenditures and meet its financial
obligations as they are due.





                                       8
<PAGE>   11
                                    PART II


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a)   Exhibits.

         10(a) Agreement dated as of April 1, 1997 by and among American
               Exploration Company, American Exploration Production Company and
               NYLIFE Inc.

         27    Financial Data Schedule.

   (b)   Reports on Form 8-K.

         The Company did not file any Reports on Form 8-K during the first
quarter of 1997.





                                       9
<PAGE>   12
                                   SIGNATURES


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


                                          AMERICAN EXPLORATION COMPANY
                                    
                                    
                                    
                                    
                                    
Date:   April 23, 1997                      By:   /s/ MARK ANDREWS            
                                                  -----------------------------
                                                  Mark Andrews
                                                  Chairman of the Board
                                                  and Chief Executive Officer
                                    
                                    
                                    
                                    
                                    
Date:   April 23, 1997                      By:   /s/ JOHN M. HOGAN           
                                                  -----------------------------
                                                  John M. Hogan
                                                  Senior Vice President
                                                  and Chief Financial Officer
                                                  (Also Principal Accounting 
                                                  Officer)
                                    
                                    
                                    
                                    

                                       10




<PAGE>   13


                               INDEX TO EXHIBITS


         10(a) Agreement dated as of April 1, 1997 by and among American
               Exploration Company, American Exploration Production Company and
               NYLIFE Inc.


         27    Financial Data Schedule