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

                                    Form 10-Q

(Mark one)
[X]       Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
          Act of 1934 For the Quarterly Period Ended March 31, 2001
                                 --------------

[ ]       Transition Report Under Section 13 or 15(d) of the Securities Exchange
          Act of 1934 For the Transition Period from .......... to ..........


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


                          MAGNUM HUNTER RESOURCES, INC.
              Exact name of registrant as specified in its charter


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


           600 East Las Colinas Blvd., Suite 1100, Irving, Texas 75039
                     Address of principal executive offices

                                 (972) 401-0752
               Registrant's telephone number, including area code


     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

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of May 14, 2001: 35,526,739.

<PAGE>
                         PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements

                 Magnum Hunter Resources, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                            (in thousands of dollars)
<TABLE>
<S>                                                                              <C>                                <C>
                                                                                    March 31,                       December 31,
                                                                                      2001                             2000
                                                                                ----------------------------------------------------
                                      ASSETS                                      (unaudited)
Current Assets
  Cash and cash equivalents..................................................      $         791                    $           9
  Restricted cash ...........................................................              1,268                            1,820
  Accounts receivable
       Trade, net of allowance of $50 for 2001 and 2000......................             27,927                           30,442
       Due from affiliates...................................................                120                              107
  Notes receivable from affiliate............................................                  4                              377
  Current portion of long-term notes receivable, net of allowance of $1,170..                  -                               50
  Derivative assets..........................................................              2,355                                -
  Prepaid and other..........................................................              1,814                            2,033
                                                                                ----------------------------------------------------
        Total Current Assets.................................................             34,279                           34,838
                                                                                ----------------------------------------------------
Property, Plant, and Equipment
  Oil and gas properties, full cost method
        Unproved.............................................................             14,659                            5,534
        Proved...............................................................            387,562                          367,822
  Pipelines..................................................................             12,587                           12,581
  Other property.............................................................              3,447                            2,459
                                                                                ----------------------------------------------------
  Total Property, Plant and Equipment........................................            418,255                          388,396
        Accumulated depreciation, depletion, amortization and impairment.....           (135,279)                        (127,864)
                                                                                ----------------------------------------------------
  Net Property, Plant and Equipment..........................................            282,976                          260,532
                                                                                ----------------------------------------------------
Other Assets
  Deposits and other assets..................................................              5,984                            6,570
  Investment in unconsolidated affiliate.....................................              7,923                            8,054
  Deferred tax asset ........................................................                  -                            5,618
                                                                                ----------------------------------------------------
  Total Assets                                                                     $     331,162                    $     315,612
                                                                                ====================================================
                           LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Trade payables and accrued liabilities........................................   $     27,474                     $      27,094
  Dividends payable.............................................................              -                               169
  Suspended revenue payable.....................................................          2,560                             3,201
  Current income taxes payable..................................................          1,217                               234
  Current maturities of long-term debt, with recourse...........................             19                                19
                                                                                ----------------------------------------------------
        Total Current Liabilities...............................................         31,270                            30,717
                                                                                ----------------------------------------------------
Long-Term Liabilities
  Long-term debt, with recourse, less current maturities........................        172,163                           170,520
  Long-term debt, non-recourse..................................................         17,000                            20,600
  Production payment liability..................................................            331                               359
Deferred income taxes payable...................................................          1,141                                 -
Stockholders' Equity
  Preferred stock - $.001 par value; 10,000,000 shares
     authorized, 216,000 designated as Series A; 80,000 issued
     and outstanding, liquidation amount $0.....................................              -                                 -
     1,000,000 designated as 1996 Series A Convertible; 1,000,000 purchased and
        held for remarketing by subsidiary, liquidation amount $10,000,000......              1                                 1
     50,000 designated as 1999 Series A 8% Convertible; none and 25,000 issued
        and outstanding, respectively, liquidation amount $0 and $50,000,000,
        respectively............................................................              -                                 -
  Common Stock - $.002 par value; 100,000,000 shares authorized,
     35,803,502 and 30,705,398 shares issued, respectively......................             72                                61
  Additional paid-in capital....................................................        150,406                           148,580
  Accumulated other comprehensive income (loss).................................           (661)                             (466)
  Accumulated deficit...........................................................        (36,124)                          (50,152)
  Receivable from stockholder...................................................           (442)                             (442)
  Unearned common stock in ESOP, at cost (680,282 shares).......................         (2,780)                           (2,780)
                                                                                ----------------------------------------------------
                                                                                        110,472                            94,802
  Treasury stock, at cost (398,763 and 455,063 shares of common stock,
     respectively)..............................................................         (1,215)                           (1,386)
                                                                                ----------------------------------------------------
  Total Stockholders' Equity....................................................        109,257                            93,416
                                                                                ----------------------------------------------------
  Total Liabilities and Stockholders' Equity....................................   $    331,162                     $     315,612
                                                                                ====================================================
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-2

<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
                                   (Unaudited)
                  (in thousands, except for per share amounts)
<TABLE>
<CAPTION>
<S>                                                      <C>                                 <C>
                                                                     Three Months Ended
                                                                            March 31,
                                                 ---------------------------------------------------------------
                                                             2001                                2000
                                                 ---------------------------------------------------------------

Operating Revenues:
      Oil and gas sales..............................     $    43,137                        $     21,365
      Gas gathering, marketing and processing........           7,102                               3,830
      Oil field management services..................             515                                 198
                                                     ---------------------------------------------------------
                  Total Operating Revenues...........          50,754                              25,393
                                                     ---------------------------------------------------------


Operating Costs and Expenses:
      Oil and gas production lifting costs...........           4,650                               4,616
      Production taxes and other costs...............           4,015                               2,840
      Gas gathering, marketing and processing........           6,572                               2,776
      Oil field management services..................             362                                 115
      Depreciation, depletion and amortization.......           7,415                               5,971
      Gains on sale of assets........................              (2)                                (18)
      General and administrative.....................           1,712                                 954
                                                     ---------------------------------------------------------
                  Total Operating Costs and Expenses.          24,724                              17,254
                                                     ---------------------------------------------------------

Operating Profit.....................................          26,030                               8,139

      Equity in earnings of affiliate................             618                                  40
      Other income...................................              94                                  76
      Interest expense...............................          (4,161)                             (5,736)
                                                     ---------------------------------------------------------
Income before income tax and minority interest.......          22,581                               2,519
      Provision for income tax.......................          (8,553)                               (939)
                                                     ---------------------------------------------------------
Net Income...........................................          14,028                               1,580
      Dividends Applicable to Preferred Stock........               -                              (1,218)
                                                     ---------------------------------------------------------
Income Applicable to Common Shares...................     $    14,028                        $        362
                                                     ---------------------------------------------------------
Net Income...........................................     $    14,028                        $      1,580
Other Comprehensive Income (Loss), net of tax
      Cumulative effect on prior years of a change in
        accounting principle........................           (1,757)                                  -
      Gain on derivatives...........................            1,903                                   -
      Reclassification adjustment related to
        derivative contracts........................             (137)                                  -
      Unrealized Gain (Loss) on Investments.........             (204)                                155
                                                     ---------------------------------------------------------
Comprehensive Income................................      $    13,833                        $      1,735
                                                     =========================================================

Income per Common Share - Basic.....................      $      0.41                        $       0.02
                                                     =========================================================
Income per Common Share - Diluted...................      $      0.37                        $       0.02
                                                     =========================================================
Common Shares Used in Per Share Calculation
      Basic ........................................       34,582,683                          19,704,943
                                                     =========================================================
      Diluted .......................................      37,410,509                          20,010,970
                                                     =========================================================
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

                                        3

<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                    For the Three Months Ended March 31, 2001
                                   (Unaudited)
                             (dollars in thousands)
                            (as restated, see Note 6)

<TABLE>
<CAPTION>
<S>                                                    <C>        <C>        <C>        <C>         <C>         <C>

                                                         Preferred Stock        Common Stock           Treasury Stock
                                                        Shares     Amount      Shares    Amount      Shares      Amount
                                                      -----------------------------------------------------------------------------

Balance at December 31, 2000.......................... 1,105,000    $   1    30,705,398   $  61     (455,063)    $ (1,386)
      Conversion of 1999 Series A 8% convertible
                  preferred stock.....................   (25,000)             4,761,904      10
      Exercise of employees' common stock options.....                          336,200       1       56,300          171
      Deferred tax benefit on exercise of employee
                  stock options.......................
      Net income......................................
      Cumulative effect on prior years of a change
                  in accounting principle.............
      Gain on hedges..................................
      Unrealized loss on investments..................
                                                      -----------------------------------------------------------------------------
Balance at March 31, 2001............................. 1,080,000    $   1    35,803,502   $  72     (398,763)    $ (1,215)
                                                      =============================================================================
</TABLE>

<TABLE>
<CAPTION>
<S>                                               <C>            <C>                 <C>          <C>           <C>       <C>
                                                   Additional    Accumulated Other                  Receivable   Unearned Shares in
                                                    Paid-In       Comprehensive      Accumulated      from              ESOP
                                                    Capital       Income (Loss)        Deficit     Stockholder   Shares      Amount
                                                   --------------------------------------------------------------------------------
Balance at December 31, 2000....................... $ 148,580      $  (466)          $  (62,198)     $ (442)    (680,282)  $(2,780)
      Conversion of 1999 Series A 8% convertible
                  preferred stock..................       (10)
      Exercise of employees' common stock options..     1,443
      Deferred tax benefit on exercise of employee
                  stock options....................       393
      Net income...................................                                      14,028
      Cumulative effect on prior years of a change
                  in accounting principle..........                  (1,757)
      Gain on derivatives..........................                   1,903
      Reclassification adjustment related to
        derivative contracts.......................                    (137)
      Unrealized loss on investments...............                    (204)
                                                   --------------------------------------------------------------------------------
Balance at March 31, 2001.......................... $ 150,406      $   (661)         $  (35,615)     $ (442)    (680,282)  $(2,780)
                                                   ================================================================================
</TABLE>

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

                                        4

<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                                    <C>                         <C>
                                                                                              For the Three Months
                                                                                                    Ended
                                                                                                  March 31,
                                                                               ----------------------------------------------------
                                                                                         2001                        2000
                                                                               ----------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
      Net Income...................................................................     $      14,028                 $      1,580
      Adjustments to reconcile net income to cash provided by operating activities
                  Depreciation, depletion and amortization.........................             7,415                        5,971
                  Amortization of financing fees...................................               268                          240
                  Deferred income taxes............................................             7,270                          939
                  Equity in income of unconsolidated affiliate.....................              (618)                         (40)
                  Gains on sale of assets..........................................                (2)                         (18)
                  Changes in certain assets and liabilities
                                    Accounts and notes receivable..................             2,502                       (2,595)
                                    Hedge assets...................................            (2,192)                           -
                                    Other current assets...........................               219                           (1)
                                    Accounts payable and accrued liabilities.......              (261)                         158
                                    Current income taxes payable...................               983                            -
                                                                                   ------------------------------------------------
      Net Cash Provided By Operating Activities....................................            28,192                        6,234
                                                                                   ------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sale of assets.................................................                 2                          408
      Additions to property and equipment..........................................           (29,859)                      (5,930)
      Increase in deposits and other assets........................................                 2                            -
      Loan made for promissory note receivable.....................................                 -                           (3)
      Payments received on promissory note receivable..............................                63                            -
      Distribution from unconsolidated affiliate...................................               749                            -
                                                                                   ------------------------------------------------
      Net Cash Used In Investing Activities........................................           (29,043)                      (5,525)
                                                                                   ------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from the issuance of long-term debt and production payment..........            27,500                       10,555
      Fees paid related to financing activities....................................               (12)                         (29)
      Payments of principal on long-term debt and production payment...............           (29,633)                      (8,031)
      Repayment of stockholder loan................................................               360                          225
      Loan made to ESOP............................................................                 -                          (24)
      Proceeds from issuance of common stock, net of offering costs................             1,615                           29
      Decrease in restricted cash for payment of notes payable ....................               552                          835
      Cash dividends paid..........................................................              (169)                      (1,218)
                                                                                   ------------------------------------------------
      Net Cash Provided By Financing Activities....................................               213                        2,342
                                                                                   ------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS..........................................               782                        3,051
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...................................                 9                        1,565
                                                                                   ------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.........................................   $           791                 $      4,616
                                                                                   ================================================

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

                                        5
</TABLE>

<PAGE>


                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2001
                                   (Unaudited)

NOTE 1 - MANAGEMENT'S REPRESENTATION

     The  consolidated  balance  sheet as of March 31,  2001,  the  consolidated
statements of income and  comprehensive  income for the three months ended March
31, 2001 and 2000, the consolidated  statement of  stockholders'  equity for the
period ended March 31, 2001 and the  consolidated  statements  of cash flows for
the three months ended March 31, 2001 and 2000 are unaudited.  In the opinion of
management,  all  necessary  adjustments  (which  include only normal  recurring
adjustments)  have been made to present  fairly the financial  position at March
31, 2001, results of operations,  changes in stockholders' equity and cash flows
for the three month periods.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America have been condensed or omitted.  It is suggested
that  these  condensed  financial  statements  be read in  conjunction  with the
financial  statements and notes thereto included in the December 31, 2000 annual
report and on Form 10-K for the Company. The results of operations for the three
month  period  ended  March  31,  2001  are not  necessarily  indicative  of the
operating results for the full year.

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

     The Company is a holding  company with no significant  assets or operations
other than its investments in its subsidiaries. The wholly-owned subsidiaries of
the  Company,  except  for  Bluebird  Energy,  Inc.  ("Bluebird"),   are  direct
guarantors of the Company's 10% senior notes and have fully and  unconditionally
guaranteed the notes on a joint and several basis.  The guarantors  comprise all
of the direct and indirect  subsidiaries  of the Company (other than  Bluebird),
and  the  Company  has  presented  separate  condensed  consolidating  financial
statements  and other  disclosures  concerning  each guarantor and Bluebird (See
Note  5).  Except  for  Bluebird,  there is no  restriction  on the  ability  of
consolidated or unconsolidated  subsidiaries to transfer funds to the Company in
the form of cash dividends, loans, or advances.

NOTE 2 - EARNINGS PER SHARE INFORMATION

     The  following is a  reconciliation  of the basic and diluted  earnings per
share computations.

<TABLE>
<CAPTION>
<S>                                       <C>        <C>         <C>             <C>         <C>          <C>
                                                                     Three Months Ended
                                        ----------------------------------------------------------------------------
                                                   March 31, 2001                          March 31, 2000
                                        -------------------------------------   ------------------------------------
                                                                  Per Share                              Per Share
                                           Income      Shares      Amount          Income      Shares      Amount
-----------------------------------------------------------------------------   ------------------------------------
                                                           (Thousands, except per share amounts)

Basic EPS
   Income available to common
     stockholders.......................   $  14,028      34,583     $   0.41     $    362      19,705      $  0.02
                                                                     =========                              =========
Effect of Dilutive Securities
   Warrants.............................           -         274                         -           -
   Options..............................           -       2,554                         -         306
                                        ---------------------------               ----------------------
Diluted EPS
   Income available to common
     stockholders and assumed
     conversions........................   $  14,028      37,411     $   0.37     $    362      20,011      $  0.02
                                        ==============================================================================
</TABLE>

                                        6

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

     At March 31, 2001, warrants representing 644,749 shares of common stock and
options  representing  4,337,900  shares of common  stock were  outstanding.  On
January  1,  2001,  the  remaining  $25.0  million  (liquidation  value)  of the
Company's  1999  Series A 8%  convertible  preferred  stock was  converted  into
4,761,904  shares of common  stock.  At March 31,  2000,  warrants  representing
10,587,149 shares of common stock and options  representing  3,858,092 shares of
common  stock were  outstanding.  Additionally  at March 31,  2000,  convertible
preferred  stock  representing a total of 11,428,572  shares of common stock, if
converted,  was excluded from the  calculation of diluted  earnings per share as
the effect was anti- dilutive.

NOTE 3 - NEW ACCOUNTING STANDARD

     Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative  Instruments and Hedging  Activities"  (SFAS No. 133), as extended by
SFAS No. 137 (June 1999) and amended by SFAS No. 138 (June 2000),  was effective
for the Company beginning  January 1, 2001. SFAS No. 133 establishes  accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
the recognition of derivatives in the balance sheet and the measurement of those
instruments at fair value.

     The Company was  obligated to four crude oil  derivatives,  one natural gas
derivative, and one interest rate derivative on January 1, 2001. The Company has
determined that interest rate derivative does not qualify for hedge treatment as
defined within SFAS No. 133. The crude oil and natural gas  derivatives  qualify
as cash-flow  hedges,  which require the Company to record the derivative assets
or  liabilities at their fair value on its balance sheet with an offset to other
comprehensive  income.  Future hedge ineffectiveness on the cash-flow hedge will
be recorded in earnings.

     At January 1, 2001,  all  derivatives  within the Company  were  identified
pursuant  to  SFAS  No.  133  requirements,  and  the  Company  has  designated,
documented and assessed all hedging  relationships.  Adoption of this accounting
standard  resulted in the  recognition  of $179  thousand of a derivative  asset
related to the interest rate derivative and an increase in the carrying value of
long-term  debt  with  recourse  of $179  thousand.  At  March  31,  2001,  this
derivative asset is recorded at its fair value of $2.2 million.

     With respect to the cash-flow  hedges, at transition the Company recorded a
derivative  asset of $648 thousand  related to the crude oil derivatives  with a
cumulative effect increase to other  comprehensive  income of $403 thousand (net
of income  taxes) and a  derivative  liability  of $3.5  million  related to the
natural gas derivatives with a cumulative effect decrease to other comprehensive
income of $2.2 million (net of income taxes).

     At March 31, 2001, the Company's  crude oil and natural gas derivatives had
a  fair  value  of  $118  thousand  and  $81  thousand,  respectively.  For  the
three-month period ended March 31, 2001, the income statement includes a loss of
$206 thousand  related to the crude oil  derivatives and a loss of $798 thousand
related to the natural gas derivatives, net of amounts reclassified out of other
comprehensive  income.  The Company expects that the remaining  balance in other
comprehensive  income at March 31,  2001 will be  reclassified  into the  income
statement within the next nine months.

                                        7

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

NOTE 4 - SEGMENT DATA

     The Company has three reportable  segments.  The Exploration and Production
segment is engaged in exploratory drilling and acquisition, production, and sale
of crude oil,  condensate,  and natural gas. The Gas  Gathering,  Marketing  and
Processing  segment is engaged in the gathering and  compression  of natural gas
from the wellhead,  the purchase and resale of natural gas which it gathers, and
the processing of natural gas liquids. The Oil Field Services segment is engaged
in the managing and operation of producing oil and gas  properties  for interest
owners.

     The Company's  reportable  segments are strategic business units that offer
different  products  and  services.  They are managed  separately  because  each
business requires different technology and marketing strategies. The Exploration
and Production  segment has six geographic  areas that are  aggregated.  The Gas
Gathering,  Marketing and Processing  segment includes the activities of the two
gathering  systems  and three  natural gas  liquids  processing  plants in three
geographic  areas that are  aggregated.  The Oil Field Services  segment has six
geographic  areas that are aggregated.  The reason for aggregating the segments,
in each case, is due to the similarity in nature of the products, the production
processes, the type of customers, the method of distribution, and the regulatory
environments.

     The  accounting  policies  of the  segments  are the same as those  for the
Company as a whole. The Company  evaluates  performance  based on profit or loss
from operations  before income taxes. The accounting for intersegment  sales and
transfers is done as if the sales or transfers were to third  parties,  that is,
at current market prices.

     Segment  data for the periods  ended  March 31,  2001 and 2000  follows (in
thousands):

<TABLE>
<CAPTION>
<S>                                      <C>             <C>               <C>          <C>          <C>            <C>
                                                         Gas Gathering,
                                         Exploration &   Marketing &       Oil Field
   Three Months Ended March 31, 2001:     Production         Processing     Services    All Other    Elimination    Consolidated
-----------------------------------------------------------------------------------------------------------------------------------

Revenue from external customers........    $    43,137     $     7,102     $   515      $    -       $                  $  50,754
Intersegment revenues...................                         7,560       1,439           -         (8,999)                  -
Depreciation, depletion and amortization         7,097             220          93           5                              7,415

Segment profit (loss).................          27,375             311        (556)     (1,100)                            26,030
Equity in earnings (losses) of affiliates                                                  618                                618
Interest expense........................                                                (4,161)                            (4,161)
Other income............................                                                    94                                 94
                                                                                                                        -----------

Income before income taxes..............                                                                                $  22,581
Provision for income tax................                                                (8,553)                            (8,553)
                                                                                                                        -----------

Net income..............................                                                                                $  14,028
                                                                                                                        ===========


Segment assets (as of March 31, 2001)...   $   281,104     $    16,211     $24,599      $9,248                          $ 331,162
Capital expenditures (net of asset sales)       28,865               6         134         854                             29,857

</TABLE>

                                        8

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                     <C>             <C>                <C>           <C>           <C>            <C>
                                                         Gas Gathering,
                                         Exploration &    Marketing &       Oil Field
   Three Months Ended March 31, 2000:     Production        Processing       Services      All Other   Elimination    Consolidated
-----------------------------------------------------------------------------------------------------------------------------------
Revenue from external customers........     $   21,365      $    3,830      $   198      $        -     $               $   25,393
Intersegment revenues...................                         3,373        1,669               -        (5,042)               -
Depreciation, depletion and amortization         5,680             218           68               5                          5,971
Segment profit (loss).................           8,255             861         (117)           (860)                         8,139
Equity in earnings (losses) of affiliates                                                        40                             40
Interest expense........................                                                     (5,736)                        (5,736)
Other income............................                                                         76                             76
                                                                                                                        -----------
Income before income taxes..............                                                                                $    2,519
Provision for income tax................                                                       (939)                          (939)
                                                                                                                        -----------
Net income..............................                                                                                $    1,580
                                                                                                                        ===========

Segment assets (as of March 31, 2000)...    $  274,031      $   17,186        4,502      $   11,732                     $  307,451
Equity subsidiary investments
   (as of March 31, 2000)...............                                                      4,195                          4,195
Capital expenditures (net of asset sales)        5,508              13           20              56                          5,597

</TABLE>

                                        9

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

NOTE 5 -- CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

     The Company and its wholly owned subsidiaries,  except Bluebird, are direct
guarantors of the Company's 10% senior notes and have fully and  unconditionally
guaranteed  the notes on a joint and several  basis.  In addition to not being a
guarantor of the  Company's  10% senior  notes,  Bluebird  cannot be included in
determining  compliance  with certain  financial  covenants  under the Company's
credit agreements.  The Company has concluded that separate financial statements
related to the  guarantors  are not included  because  management has determined
that they are not  material  to  investors.  Condensed  consolidating  financial
information for Magnum Hunter  Resources,  Inc. and subsidiaries as of March 31,
2001 and December  31,  2000,  and for the three months ended March 31, 2001 and
2000, was as follows:

                 Magnum Hunter Resources, Inc. and Subsidiaries
                     Condensed Consolidating Balance Sheets

<TABLE>
<CAPTION>
<S>                                          <C>                      <C>              <C>                <C>
                              As of March 31, 2001
----------------------------------------------------------------------------------------------------------------------------------
                                                Magnum Hunter
                                               Resources, Inc.         Bluebird                           Magnum Hunter
                                               And Guarantor Subs     Energy, Inc.      Eliminations      Resources, Inc.
 Amounts in Thousands                                                (Non Guarantor)                       Consolidated
----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets..............................    $       29,423          $  4,856                                $       34,279
Property and equipment
  (using full cost accounting)..............           227,230            55,746                                       282,976
Investment in subsidiaries
 (equity method)............................            32,098               -              (32,098)                       -
Other assets................................            13,645               262                                        13,907
                                                -----------------------------------------------------------------------------------
   Total assets.............................    $      302,396          $ 60,864           $(32,098)            $      331,162
                                                ===================================================================================

LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities.........................    $       30,134          $  1,136                                $       31,270
Long-term liabilities.......................           163,005            27,630                                       190,635
Shareholders' equity........................           109,257            32,098            (32,098)                   109,257
                                                -----------------------------------------------------------------------------------
   Total liabilities and shareholders' equity   $      302,396          $ 60,864           $(32,098)            $      331,162
                                                ===================================================================================
</TABLE>

                                       10
<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                          <C>                      <C>              <C>                <C>

                             As of December 31, 2000
----------------------------------------------------------------------------------------------------------------------------------

                                               Magnum Hunter           Bluebird                           Magnum Hunter
                                               Resources, Inc.        Energy, Inc.                        Resources, Inc.
 Amounts in Thousands                          And Guarantor Subs    (Non Guarantor)    Eliminations       Consolidated
----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets..............................  $         33,556          $  6,894        $   (5,612)             $    34,838
Property and equipment
  (using full cost accounting)..............           208,115            52,417               -                    260,532
Investment in subsidiaries
 (equity method)............................            25,574               -             (25,574)                     -
Other assets................................            27,173               319            (7,250)                  20,242
                                              ------------------------------------------------------------------------------------
 Total assets.............................    $        294,418          $ 59,630        $  (38,436)             $   315,612
                                              ====================================================================================

LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities.........................  $         30,123          $  6,206        $   (5,612)             $    30,717
Long-term liabilities.......................           170,879            27,850            (7,250)                 191,479
Shareholders' equity........................            93,416            25,574           (25,574)                  93,416
                                              ------------------------------------------------------------------------------------
   Total liabilities and shareholders' equity $        294,418          $ 59,630        $  (38,436)             $   315,612
                                              ====================================================================================
</TABLE>

                                       11

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

                 Magnum Hunter Resources, Inc. and Subsidiaries
                Condensed Consolidating Statement of Operations

<TABLE>
<CAPTION>
<S>                                             <C>                     <C>             <C>             <C>

                    For the Three Months ended March 31, 2001
----------------------------------------------------------------------------------------------------------------------------------

                                                Magnum Hunter          Bluebird                        Magnum Hunter
                                               Resources, Inc.       Energy, Inc.                     Resources, Inc.
Amounts in Thousands                         And Guarantor Subs     (Non Guarantor)   Eliminations     Consolidated
----------------------------------------------------------------------------------------------------------------------------------

Revenues...................................     $      32,627           $   18,282      $   (155)       $     50,754
Expenses...................................            20,547                7,781          (155)             28,173
                                           ---------------------------------------------------------------------------------------
Income before                                          12,080               10,501           -                22,581
 Equity in net earnings of subsidiary......             6,524                  -          (6,524)                -
                                           ---------------------------------------------------------------------------------------
Income before income taxes.................            18,604               10,501        (6,524)             22,581
Income tax provision.......................            (4,576)              (3,977)          -                (8,553)
                                           ---------------------------------------------------------------------------------------
  Net income...............................     $      14,028           $    6,524      $ (6,524)       $     14,028
                                           =======================================================================================
</TABLE>

<TABLE>
<CAPTION>
<S>                                             <C>                     <C>             <C>             <C>

                    For the Three Months ended March 31, 2000
----------------------------------------------------------------------------------------------------------------------------------

                                                Magnum Hunter          Bluebird                        Magnum Hunter
                                               Resources, Inc.       Energy, Inc.                     Resources, Inc.
Amounts in Thousands                         And Guarantor Subs     (Non Guarantor)   Eliminations     Consolidated
----------------------------------------------------------------------------------------------------------------------------------

Revenues...................................     $      17,333           $ 8,158         $    (98)       $     25,393
Expenses...................................            17,279             5,693              (98)             22,874
                                           ---------------------------------------------------------------------------------------
Income before                                              54             2,465               -                2,519
 Equity in net earnings of subsidiary......             1,531               -             (1,531)                -
                                           ---------------------------------------------------------------------------------------
Income before income taxes.................             1,585             2,465           (1,531)              2,519
Income tax provision.......................                (5)             (934)              -                 (939)
                                           ---------------------------------------------------------------------------------------
  Net income...............................     $       1,580           $ 1,531         $ (1,531)       $      1,580
                                           =======================================================================================
</TABLE>

                                       12

<PAGE>

                 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 2001
                                   (Unaudited)

                 Magnum Hunter Resources, Inc. and Subsidiaries
                Condensed Consolidating Statements of Cash Flows

<TABLE>
<CAPTION>
<S>                                             <C>                     <C>             <C>             <C>
                    For the Three Months Ended March 31, 2001
----------------------------------------------------------------------------------------------------------------------------------
                                                 Magnum Hunter          Bluebird                       Magnum Hunter
                                                Resources, Inc.       Energy, Inc.                    Resources, Inc.
Amounts in Thousands                           And Guarantor Subs    (Non Guarantor)   Eliminations    Consolidated
----------------------------------------------------------------------------------------------------------------------------------
Cash flow from operating activities..........   $        20,772         $   8,840       $      -        $   29,612
Cash flow from investing activities..........           (23,251)           (5,792)             -           (29,043)
Cash flow from financing activities..........             3,261            (3,600)           552               213
                                             -------------------------------------------------------------------------------------
Net increase (decrease) in cash..............               782              (552)           552               782
Cash at beginning of period..................                 9             1,820         (1,820)                9
                                             -------------------------------------------------------------------------------------
Cash at end of period........................   $           791         $   1,268       $ (1,268)       $      791
                                             =====================================================================================
</TABLE>

<TABLE>
<CAPTION>
<S>                                             <C>                     <C>             <C>             <C>
                    For the Three Months Ended March 31, 2000
-----------------------------------------------------------------------------------------------------------------------
                                                 Magnum Hunter          Bluebird                       Magnum Hunter
                                                Resources, Inc.       Energy, Inc.                    Resources, Inc.
Amounts in Thousands                           And Guarantor Subs    (Non Guarantor)   Eliminations    Consolidated
-----------------------------------------------------------------------------------------------------------------------
Cash flow from operating activities..........   $        5,897          $       337     $     -         $    6,234
Cash flow provided by investing activities...           (3,853)              (1,672)          -             (5,525)
Cash flow used by financing activities.......            1,007                  500         835              2,342
                                             --------------------------------------------------------------------------
Net increase (decrease) in cash..............            3,051                 (835)        835              3,051
Cash at beginning of period..................            1,565                2,145      (2,145)             1,565
                                             --------------------------------------------------------------------------
Cash at end of period........................   $        4,616          $     1,310     $(1,310)        $    4,616
                                             ==========================================================================
</TABLE>

                                       13

<PAGE>

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

     The following  discussion and analysis  should be read in conjunction  with
Magnum Hunter's consolidated  financial statements and the notes associated with
them  contained  in its Form 10-K for the year ended  December  31,  2000.  This
discussion  should not be construed to imply that the results  discussed  herein
will necessarily  continue into the future or that any conclusion reached herein
will necessarily be indicative of actual operating  results in the future.  Such
discussion  represents only the best present  assessment by management of Magnum
Hunter.

     Throughout  this  document  we  make  statements  that  are  classified  as
"forward-looking."  Please refer to the "Forward-Looking  Statements" section of
this document for an explanation of these types of assertions.

     The Company's results of operations have been significantly affected by our
past success in acquiring oil and gas  properties and our ability to maintain or
increase oil and natural gas production  through  exploration  and  exploitation
activities.  Fluctuations in oil and gas prices have also significantly affected
the results of operations.

     The following table sets forth certain  information with respect to our oil
and gas operations and our gas gathering, marketing and processing operations.

<TABLE>
<CAPTION>
<S>                                                                <C>               <C>
                                                                        Three Months Ended
                                                                            March 31,
                                                                     2001                2000
                                                               ----------------------------------------
Oil and Gas Operations
-------------------------------------------------------------------------------------------------------
Reported Production:
   Oil (MBbls).................................................              302                370
   Gas (MMcf)..................................................            5,537              4,994
   Oil and Gas (MMcfe).........................................            7,351              7,216
   Equivalent Daily Rate (MMcfe/day)...........................             81.7               79.3
Underlying Production (*):
   Oil (MBbls).................................................              302                300
   Gas (MMcf)..................................................            5,537              4,222
   Oil and Gas (MMcfe).........................................            7,351              6,023
   Equivalent Daily Rate (MMcfe/day)...........................             81.7               66.2
   (*) Adjusted for the sale of properties in June and September 2000.

Average Sale Prices (after hedging)
   Oil (per Bbl)...............................................        $   26.89          $   21.73
   Gas (per Mcf)...............................................             6.32               2.67
   Oil and Gas (per Mcfe)......................................             5.87               2.96
Effect of hedging activities (per Mcfe)........................            (0.14)             (0.27)
Lease Operating Expense (per Mcfe)
   Lifting costs...............................................             0.63               0.64
   Production tax and other costs..............................             0.55               0.39
Gross margin (per Mcfe)........................................        $    4.69          $    1.93

Gas Gathering, Marketing and
   Processing Operations
-------------------------------------------------------------------------------------------------------
Throughput Volumes (Mcf per day)
   Gathering...................................................           16,245             16,679
   Processing..................................................           11,856             18,469
Gross margin (in thousands)....................................        $     530          $   1,054
   Gathering (per Mcf throughput)..............................        $       -          $    0.14
   Processing (per Mcf throughput).............................        $    0.44          $    0.48
</TABLE>
Period to Period Comparison

For the Three Months Ended March 31, 2001 and 2000

     We reported  record net income of $14.0  million for the three months ended
March 31, 2001 as compared to net income of $1.6  million for the same period in
2000.  Total  operating  revenues  increased  100% to a record $50.8 million and
operating  profit  increased  220% to a record  $26.0  million  in  2001.  A 98%
increase in the price  received  for oil and gas sold (on a thousand  cubic feet
equivalent,  or  Mcfe,  basis),  combined  with a 2%  increase  in oil  and  gas
production (on a million cubic feet equivalent,  or MMcfe, basis) in our oil and
gas  exploration  and  production  segment was primarily  responsible  for these
record results. We also reported significant  increases in revenues from our gas
gathering,  marketing and processing and oil field services segments in the 2001
period  compared  to the 2000  period  due to  improved  product  prices  and an
increase in  customers  for whom we are  providing  field  management  services.
Income  applicable  to common shares was $14.0 million in the 2001 period versus
income  applicable to common shares of $362 thousand in the 2000 period.  Income
per common share - basic was $0.41 per share and income per common share-diluted
was $0.37 per share in the 2001 period  compared to income  applicable to common
shares of $0.02 per  share,  both  basic and  diluted,  in the 2000  period.  No
dividends  were  recorded  in the 2001  period  due to the  conversion  of $25.0
million (liquidation value) of our 1999 Series A 8% Convertible  preferred stock
on January 1, 2001 into approximately 4.8 million shares of our common stock. We
had previously  redeemed $25.0 million  (liquidation value) of the 1999 Series A
8% Convertible  preferred stock in December,  2000 and Bluebird acquired 100% of
our $10.0 million  (liquidation  value) in 1996 Series A  Convertible  preferred
stock during May, 2000.

Oil and Gas Operations:

     For the three months ended March 31, 2001,  we reported oil  production  of
302 Mbbls  (thousand  barrels) and gas  production of 5,537 MMcf (million  cubic
feet),  which  represents  a decline of 18% in oil and an increase of 11% in gas
produced from the comparable period in 2000. Our reported  equivalent daily rate
of production on a million cubic feet per day basis (MMcfe/day)  increased 3% to
81.7  MMcfe/day in the 2001 period.  The reported  production in the 2000 period
was impacted by the sale of certain  non-core oil and gas properties  which took
effect in June and September 2000.  Excluding the production of these properties
from both periods, our underlying oil production increased 2% and our underlying
gas  production  increased  31% in the 2001 period  compared to the 2000 period,
with the underlying  equivalent daily rate of production  increasing 23% to 81.7
MMcfe/day  . These  increases  were the result of the  success  of our  drilling
program offsetting normal production declines.

     The  increase  in oil  and  gas  prices  was the  most  significant  factor
affecting the increase in net income in the 2001 period.  Prices realized in the
2001  period  averaged  $26.89 per barrel of oil and $6.32 per Mcf of gas.  This
represents  a 98%  increase on a thousand  cubic feet of gas  equivalent  (Mcfe)
basis over the 2000 period average  realized  prices of $21.73 per barrel of oil
and $2.67 per Mcf of gas.  The unit  prices  realized  include  the  effects  of
hedging.

        From time to time, we enter into various hedging contracts in order to
reduce our exposure to the  possibility of declining oil and gas prices.  During
the 2001 period,  hedging reduced the average price we received for oil by $0.68
per  barrel  and for gas by $0.15  per Mcf.  Beginning  January  1,  2001 we had
approximately  14% of our expected  natural gas production  hedged for 2001 at a
weighted average price using cost-less  collars of $4.50 to $6.15 per Mcf and we
had  approximately 45% of our expected crude oil and plant liquid production for
the first six months of 2001 hedged at a weighted  average price using cost-less
collars of $25.00 to $34.73 per barrel.

     Primarily  as a result  of higher  realized  prices,  oil and gas  revenues
increased 102% to $43.1 million in the 2001 period  compared to $21.4 million in
the 2000 period.

     Lease operating expenses consist of two primary  components,  lifting costs
and production  tax and other costs.  For the 2001 period,  lifting costs,  on a
unit of production  basis,  were $0.63 per Mcfe as compared to $0.64 per Mcfe in
the 2000 period, a decrease of 2%. Production tax and other costs were $0.55 per
Mcfe in the 2001  period  compared  to $0.39  per  Mcfe in the 2000  period,  an
increase of 41%.  This was  principally  due to an increase of $0.10 per Mcfe in
production taxes, which are a function of higher oil and gas prices.

                                       14

<PAGE>

     Our gross  margin for oil and gas  operations  (oil and gas  revenues  less
lease  operating  expenses) for the 2001 period was $34.5 million,  or $4.69 per
Mcfe,  compared  to $13.9  million,  or $1.93  per Mcfe in the 2000  period,  an
increase of 143% on a per unit of  production  basis,  primarily  as a result of
higher oil and gas prices.

Gathering, Marketing and Processing Operations:

     For the three months ended March 31, 2001, our gathering system  throughput
was 16.2 MMcf per day versus  16.7 MMcf per day for the same  period in 2000,  a
decline  of 3%  due  to  normal  production  declines  behind  the  system.  Gas
processing  throughput was 11.9 MMcf per day in 2001 versus 18.5 MMcf per day in
2000, a decrease of 36%. Our reported  throughput in the 2001 period was reduced
due to i) the sale in June 2000 of a substantial  ownership  interest in oil and
gas properties supplying one of our plants and ii) due to the voluntary shutdown
of one gas  processing  plant for a portion  of the 2001  period  due to adverse
processing economics as a result of high natural gas prices.

     Revenues from  gathering,  marketing and  processing  increased 85% to $7.1
million in 2001 versus $3.8 million in 2000.  We received  significantly  higher
prices for  natural  gas  liquids  and plant  products  sold in the 2001  period
compared to the 2000 period.  Operating  costs for the gathering,  marketing and
processing  segment  increased 136% to $6.6 million in 2001 from $2.8 million in
2000.  Higher  natural gas prices paid  affected  the cost of gas  marketed  and
processed.

     The gross margin realized from gathering, marketing and processing for 2001
was $530  thousand  versus $1.1  million in 2000,  a decrease of 50%.  Gathering
margin was reduced to zero per Mcf gathered in 2001 versus $0.14 per Mcf in 2000
due to a decrease in marketing  spreads.  Processing margin was $0.44 per Mcf in
2001  compared  to $0.48 per Mcf in 2000 due to higher  prices,  less  favorable
processing economics, and the temporary shutdown of a plant for a portion of the
2001 period.

Oil Field Management Services Operations:

     Revenues from oil field management  services were $515 thousand in the 2001
period  versus $198  thousand in the 2000 period due to an increase in customers
for  whom we  provided  management  and  operations  services.  Operating  costs
increased  to $362  thousand  in 2001 from $115  thousand  in 2000 due to higher
costs for labor and overhead. The gross margin for this segment in 2001 was $153
thousand versus $83 thousand in 2000, an increase of 84%.

Other Income and Expenses:

     Depreciation  and  depletion  expense  was $7.4  million in the 2001 period
versus $6.0 million in the 2000 period.  Depreciation  and  depletion on oil and
gas  properties  was $0.97 per Mcfe in 2001 versus $0.79 per Mcfe in 2000.  This
23% increase in the  equivalent  unit cost was  primarily  due to an increase in
development costs associated with our exploration efforts in the Gulf of Mexico.

     General and  administrative  expense for 2001 increased 79% to $1.7 million
from $954 thousand in 2000. The principal cause of this increase was an increase
in  salary,  benefits  and  retirement  plan  expenses  and an  increase  in the
Company's  overall headcount  associated with its increased  activity levels. We
recorded  equity in earnings of affiliate of $618 thousand in 2001 versus a gain
of $40 thousand in 2000.  This  increase was due to increased  net earnings from
gas marketing  operations of one of the  Company's  30% owned  affiliate.  Other
income was $94 thousand  for 2001 versus $76 thousand in 2000.  The increase was
caused by a slight increase in interest income.

     Interest  expense was $4.2  million for 2001 versus $5.7  million for 2000.
During the 2001  period, the  interest  rate on our  LIBOR-  based bank debt was
higher than in 2000.  This was more than offset by a decrease in the outstanding
balance of LIBOR-based bank debt in the 2001 period compared to the 2000 period.
In addition, interest expense was reduced in the 2001 period by $706 thousand as
a result of adjusting our interest rate derivative to its fair value.

     We recorded a total  provision  for income tax  expense of $8.6  million in
2001 versus $939  thousand in 2000.  The 2001 period  provision  included a $1.3
million current provision due to alternative minimum tax regulations.

     There were no dividends  applicable to preferred  stock in 2001 as compared
to  $1.2  million  for the  2000  period.  The  elimination  of the  outstanding
preferred stock was due to the purchase, redemption and conversion of all of the
Company's dividend paying preferred stock.

                                       15

<PAGE>

Liquidity and Capital Resources

     CASH FLOW AND WORKING  CAPITAL.  Net cash provided by operating  activities
for the three month  periods in 2001 and 2000 was $29.6  million  $6.2  million,
respectively.  The substantial increase in our operating cash flows in 2001 over
2000 is  primarily  the result of higher  realized  oil and gas prices.  Our net
working  capital  position  at March 31,  2001 was $3.0  million.  On that date,
Magnum  Hunter also had  available  $21.0  million  under its senior bank credit
line,  and Bluebird  had $17.0  million  available  under its senior bank credit
line for a total combined availability of $38.0 million.

     INVESTING  ACTIVITIES.  Net cash  used in  investing  activities  was $29.0
million in the 2001 period.  We made cash capital  expenditures of $29.9 million
under our capital budget during 2001, of which $5.8 million was  attributable to
Bluebird.  Our capital  expenditures  are  discussed  in further  detail  below.
Additionally, we received a distribution of $750 thousand from an unconsolidated
affiliate.  We received  payments on promissory  notes  receivable  totaling $63
thousand during the 2001 period.

     In the 2000 period, net cash used in investing activities was $5.5 million,
which  included   proceeds  from  asset  sales  of  $408  thousand  and  capital
expenditures of $5.9 million.

     FINANCING  ACTIVITIES.  Net cash provided by financing  activities was $213
thousand  in the 2001  period.  We borrowed a total of $27.5  million  under our
senior bank credit lines, none of which was attributable to Bluebird.  We repaid
borrowings  under our senior bank credit lines by $29.6  million,  of which $3.6
million was attributable to Bluebird.  We received $1.6 million in cash from the
issuance of common  stock.  We paid $12  thousand  for fees related to financing
activities.  Cash dividends paid were $169 thousand in 2001.  Bluebird had a net
decrease in cash of $552 thousand.

     In the 2000  period,  net cash  provided by financing  activities  was $2.3
million.  We  borrowed a total of $10.6  million  under our senior  bank  credit
lines, of which $1.5 million was attributable to Bluebird.  We repaid borrowings
under our senior bank credit  lines by $8.0  million,  of which $1.0 million was
attributable to Bluebird.  We realized proceeds from issuance of common stock of
$29 thousand. We also paid fees related to financing activities of $29 thousand,
loaned the ESOP $24  thousand  and paid  preferred  dividends  of $1.2  million.
Bluebird  had a  net  decrease  in  cash  of  $835  thousand.  Loans  repaid  by
stockholders were $225 thousand.

     BLUEBIRD'S  CAPITAL  RESOURCES.  Internally  generated  cash  flow  and the
borrowing  capacity  under its senior  bank  credit  line are  Bluebird's  major
sources of liquidity.  From time to time,  Bluebird may also sell  properties in
order to increase liquidity.

     At March 31, 2001,  Bluebird's  senior credit line borrowing base was $37.0
million and borrowings under the senior credit line were $17.0 million,  leaving
borrowing  availability of $20.0 million at that date. We believe that this bank
credit  line,  along  with cash flow from  operations,  provides  Bluebird  with
sufficient  liquidity to meet interest payments as well as carry out its capital
spending budget plans through 2001.

     MAGNUM  HUNTER'S  CAPITAL  RESOURCES.  The  following  discussion of Magnum
Hunter's  capital  resources refers to the Company and its affiliates other than
Bluebird,  whose capital resources were discussed  separately above.  Internally
generated cash flow and the borrowing capacity under its senior bank credit line
are the Company's major source of liquidity.  From time to time, the Company may
also sell properties in order to increase  liquidity.  In addition,  the Company
may use other  sources of capital,  including  the issuance of  additional  debt
securities  or equity  securities,  as  sources  to fund  acquisitions  or other
specific  needs.  In the past,  the Company has accessed both public and private
capital  markets  to provide  liquidity  for  specific  activities  and  general
corporate purposes.

     In December  2000,  the Company used $10.0 million in cash to purchase 100%
of its 1996 Series A Convertible preferred stock outstanding from Bluebird. This
preferred stock was held by another 100% owned  affiliate for possible  re-issue
at a later  date.  Also in  December  2000,  the  Company  spent  $30.5  million
(including a $5.5 million  redemption  premium) to redeem 50% of its outstanding
1999 Series A 8% Convertible preferred stock. In January, 2001 the remaining 50%
of this  preferred  stock was  converted by the holder to the  Company's  common
stock at the conversion price of $5.25 per share. As a result of these preferred
stock transactions, the

                                       16

<PAGE>

     Company no longer has any  dividend  paying  preferred  stock  outstanding,
which will result in annual savings of  approximately  $4.9 million in dividends
paid.  The Company's  borrowing base under its senior bank credit line was $53.0
million at March 31, 2001 and its borrowings  under this line were $32.0 million
on  that  date,  leaving  availability  of  $21.0  million  on that  date.  On a
semiannual basis, the borrowing base is redetermined by the banks based on their
review of the  Company's oil and gas reserves.  If the  outstanding  senior bank
debt exceeds the redetermined borrowing base, the Company must repay the excess.

     On April 19, 2001 the Company  announced  that it had received a commitment
for a new $225 million  Senior Bank Credit  Facility,  of which  $112.5  million
would be available  under the current  borrowing  base. This new credit facility
will  consolidate  and replace the  Company's  and  Bluebird's  previous  credit
facilities.

     The Company's  internally  generated cash flow, results of operations,  and
financing for its operations are dependent on oil and gas prices. As a result of
substantial  increases in oil and gas prices in the first quarter of 2001 versus
2000,  our  earnings  and cash  flows in the 2001  period  have been  materially
increased  compared  to the 2000  period.  To the extent that oil and gas prices
decline,  the  Company's  earnings  and cash  flows may be  adversely  affected.
However,  the  Company  believes  that its cash flow from  operations,  existing
working capital and  availability  under its new senior bank credit line will be
sufficient to meet interest payments and to fund the capital  expenditure budget
for the year 2001.

     CAPITAL  EXPENDITURES.  During the 2001 period, the Company's total capital
expenditures  were $29.9  million.  Exploration  activities  accounted for $13.4
million,  development  activities  accounted for $15.5 million, and additions to
other assets accounted for $1.0 million of the capital expenditures. As of March
31, 2001 the  Company had total  unproved  oil and gas  property  costs of $14.7
million,   consisting  of  property   acquisition  costs  of  $6.6  million  and
exploratory costs of $8.1 million.

     For the year 2001, the Company has budgeted  approximately  $85 million for
exploration  and  development  activities.  The  Company  is  not  contractually
obligated to proceed with any of its material budgeted capital expenditures. The
amount and allocation of future capital  expenditures will depend on a number of
factors  that are not  entirely  within  the  Company's  control  or  ability to
forecast,  including drilling results, oilfield costs and changes in oil and gas
prices. As a result,  actual capital  expenditures may vary  significantly  from
current expectations.

     In the normal course of business, the Company reviews opportunities for the
possible  acquisition  of oil and gas reserves and activities  related  thereto.
When  potential  acquisition   opportunities  are  deemed  consistent  with  the
Company's growth  strategy,  bids or offers in amounts and with terms acceptable
to the Company may be submitted. It is uncertain whether any such bids or offers
which may be submitted by the Company  from time to time will be  acceptable  to
the sellers. In the event of a future significant  acquisition,  the Company may
require additional financing in connection therewith.

     FORWARD-LOOKING STATEMENTS. This Form 10-Q and the information incorporated
by reference  contain  statements that constitute  "forward-looking  statements"
within the meaning of Section 27A of the  Securities  Act and Section 21E of the
Securities Exchange Act. The words "expect", "project",  "estimate",  "believe",
anticipate,  "intend", "budget", "plan", "forecast", "predict" and other similar
expressions  are  intended  to  identify   forward-looking   statements.   These
statements  appear in a number of places and include  statements  regarding  our
plans,  beliefs,  or current  expectations,  including the plans,  beliefs,  and
expectations of our officers and directors.

     When considering any forward-looking statement, you should keep in mind the
risk factors that could cause our actual results to differ materially from those
contained in any forward-looking  statement.  Important factors that could cause
actual results to differ materially from those in the forward-looking statements
herein include the timing and extent of changes in commodity  prices for oil and
gas, operating risks and other risk factors as described in our Annual Report on
Form 10-K as filed with the Securities and Exchange Commission. Furthermore, the
assumptions  that  support  our   forward-looking   statements  are  based  upon
information  that  is  currently   available  and  is  subject  to  change.   We
specifically  disclaim all  responsibility  to publicly  update any  information
contained in a forward-looking statement or any forward-looking statement in its
entirety and therefore disclaim any resulting  liability for potentially related
damages.

                                       17

<PAGE>

     All  forward-looking  statements  attributable to Magnum Hunter  Resources,
Inc. are expressly  qualified in their  entirety by this  cautionary  statement.

Inflation and Changes in Prices

     During the 2001 period,  the Company  experienced  substantial  increase in
prices for oil and gas  compared to the same period in the  previous  year.  The
results of operations  and cash flow of the Company have been, and will continue
to be,  affected by the  volatility  in oil and gas  prices.  Should the Company
experience a significant increase in oil and gas prices that is sustained over a
prolonged  period,  it would  expect  that there  would also be a  corresponding
increase in oil and gas finding costs,  lease  acquisition  costs, and operating
expenses.  Periodically  the Company  enters  into  futures,  options,  and swap
contracts to reduce the effects of fluctuations in crude oil and gas prices.  It
is the  policy of the  Company  not to enter  into any such  arrangements  which
exceed 75% of the Company's oil and gas production  during the next projected 12
months.

     The Company  markets  oil and gas for its own  account,  which  exposes the
Company  to  the  attendant  commodities  risk.  A  significant  portion  of the
Company's gas production is currently sold to a 30% owned  affiliate,  NGTS, LLC
or end-users either on the spot market on a  month-to-month  basis at prevailing
spot market  prices or under  long-term  contracts  based on current spot market
prices. The Company normally sells its oil under  month-to-month  contracts to a
variety of purchasers.

New Accounting Standard

     Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative  Instruments and Hedging  Activities"  (SFAS No. 133), as extended by
SFAS No. 137 (June 1999) and amended by SFAS No. 138 (June 2000),  was effective
for the Company beginning  January 1, 2001. SFAS No. 133 establishes  accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
the recognition of derivatives in the balance sheet and the measurement of those
instruments at fair value.

     The Company was  obligated to four crude oil  derivatives,  one natural gas
derivative, and one interest rate derivative on January 1, 2001. The Company has
determined that interest rate derivative does not qualify for hedge treatment as
defined within SFAS No. 133. The crude oil and natural gas  derivatives  qualify
as cash-flow  hedges,  which require the Company to record the derivative assets
or  liabilities at their fair value on its balance sheet with an offset to other
comprehensive  income.  Future hedge ineffectiveness on the cash-flow hedge will
be recorded in earnings.

     At January 1, 2001,  all  derivatives  within the Company  were  identified
pursuant  to  SFAS  No.  133  requirements,  and  the  Company  has  designated,
documented and assessed all hedging  relationships.  Adoption of this accounting
standard  resulted in the  recognition  of $179  thousand of a derivative  asset
related to the interest rate derivative and an increase in the carrying value of
long-term  debt  with  recourse  of $179  thousand.  At  March  31,  2001,  this
derivative asset is recorded at its fair value of $2.2 million.

     With respect to the cash-flow  hedges, at transition the Company recorded a
derivative  asset of $648 thousand  related to the crude oil derivatives  with a
cumulative effect increase to other  comprehensive  income of $403 thousand (net
of income  taxes) and a  derivative  liability  of $3.5  million  related to the
natural gas derivatives with a cumulative effect decrease to other comprehensive
income of $2.2 million (net of income taxes).

     At March 31, 2001, the Company's  crude oil and natural gas derivatives had
a  fair  value  of  $118  thousand  and  $81  thousand,  respectively.  For  the
three-month period ended March 31, 2001, the income statement includes a loss of
$206 thousand  related to the crude oil  derivatives and a loss of $798 thousand
related to the natural gas derivatives, net of amounts reclassified out of other
comprehensive  income.  The Company expects that the remaining  balance in other
comprehensive  income at March 31,  2001 will be  reclassified  into the  income
statement within the next nine months.


                                       18

<PAGE>

Item 3. Qualitative and Quantitative Disclosure About Market Risk

     The Company's  operations are exposed to market risks primarily as a result
of changes in  commodity  prices and  interest  rates.  The Company does not use
derivative financial instruments for speculative or trading purposes.

     Energy swap agreements.  The Company produces,  purchases,  and sells crude
oil,  natural  gas,  condensate,  and  natural  gas  liquids.  As a result,  the
Company's  financial  results can be  significantly  impacted as these commodity
prices fluctuate  widely in response to changing market forces.  The Company has
previously  engaged in oil and gas hedging activities and intends to continue to
consider  various  hedging  arrangements  to realize  commodity  prices which it
considers  favorable.  The Company engages in futures  contracts with certain of
its oil and gas production  through various contracts ("Swap  Agreements").  The
primary  objective  of  these  activities  is  to  protect  against  significant
decreases in price during the term of the hedge.

     The Swap  Agreements  provide for separate  contracts  tied to the New York
Mercantile  Exchange  ("NYMEX")  light sweet oil and the Inside FERC natural gas
index price posting ("Index").  The Company has contracts which contain specific
contracted  prices  ("Swaps") that are settled  monthly based on the differences
between  the  contract  prices  and the  specified  Index  prices for each month
applied to the related  contract  volumes.  To the extent the Index  exceeds the
contract  price,  the Company  pays the spread,  and to the extent the  contract
price exceeds the Index price, the Company receives the spread. In addition, the
Company has combined  contracts which have agreed upon price floors and ceilings
("Costless  Collars").  To the  extent  the Index  price  exceeds  the  contract
ceiling,  the  Company  pays the spread  between the ceiling and the Index price
applied to the  related  contract  volumes.  To the extent  the  contract  floor
exceeds the Index,  the Company  receives the spread  between the contract floor
and the Index price applied to the related contract volumes.

     To the extent the Company  receives the spread  between the contract  floor
and the Index  price  applied to related  contract  volumes,  the  Company has a
credit risk in the event of nonperformance of the counterparty to the agreement.
The Company does not anticipate any material impact to its results of operations
as a result of nonperformance by such parties.

At March 31, 2001, the Company had the following open contracts:


               Type         Volume/Month        Duration           Avg. Price
          ----------------------------------------------------------------------
Oil
------
          Collar.........     30,000 Bbl      Apr 01 - Jun 01     Floor - $25.00
                                                                  Cap -   $33.50
          Collar.........     15,000 Bbl      Apr 01 - Jun 01     Floor - $25.00
                                                                  Cap -   $34.35
          Collar.........     15,000 Bbl      Apr 01 - Jun 01     Floor - $25.00
                                                                  Cap -   $35.50
          Collar.........     15,000 Bbl      Apr 01 - Jun 01     Floor - $25.00
                                                                  Cap -   $36.80
Gas
------
          Collar.........    300,000 MMBtu    Apr 01 - Dec 01     Floor - $ 4.50
                                                                  Cap -   $ 6.15

     Based on future  market  prices at March 31,  2001,  the fair value of open
contracts to the Company was an asset of $198 thousand.  If future market prices
were to increase 10% from those in effect at March 31,  2001,  the fair value of
open  contracts  to the Company  would be an asset of $198  thousand.  If future
market  prices were to decline 10% from those in effect at March 31,  2001,  the
fair  value  of the  open  contracts  to the  Company  would be an asset of $518
thousand.

                                       19

<PAGE>

     The  Company  currently  intends  to  commit  no more than 75% of its daily
production on a Bcfe basis to such  arrangements at any point in time. A portion
of the  Company's  oil and  natural  gas  production  will be  subject  to price
fluctuations unless the Company enters into additional hedging transactions.

Interest Rate Swaps

     On June 30, 1999, the Company entered into two interest rate swaps in order
to shift a  portion  of the  fixed  rate bond debt to  floating  rate  debt,  to
capitalize on what was perceived as a market  overreaction  to pending  interest
rate increases by the Federal  Reserve,  and to effectively  lower interest rate
expense over the following  twelve  months.  On June 1, 2000 one of the interest
rate swaps  terminated.  The following table reflects the terms of the remaining
swap.

<TABLE>
<CAPTION>
<S>                             <C>                  <C>                <C>                    <C>
            Type                 Notional Amount      Termination Date         Pay Rate            Receive Rate
-----------------------------  -------------------   ------------------   ------------------   --------------------
 Pay Variable/Receive Fixed        $50,000,000            06/01/02          LIBOR + 3.34%           10% fixed
                                                                           through 05/31/00

                                                                            LIBOR + 3.69%
                                                                           from 06/01/00 to
                                                                               06/01/02
</TABLE>

     Based on future  market  rates at March 31,  2001,  the fair  value of open
contracts to the Company was an asset of $2,156,000. If future market rates were
to increase 10% from those in effect at March 31,  2001,  the fair value of open
contracts to the Company would be an asset of $2,064,000. If future market rates
were to decline  10% from those in effect at March 31,  2001,  the fair value of
the open contracts to the Company would be an asset of $2,682,000.

     Fixed and  Variable  Debt.  The  Company  uses fixed and  variable  debt to
partially finance budgeted expenditures.  These agreements expose the Company to
market risk related to changes in interest rates.

     The following  table  presents the carrying and fair value of the Company's
debt along with average  interest  rates.  Fair values are calculated as the net
present value of the expected cash flows of the  financial  instruments,  except
for the fixed rate senior  notes,  which are valued at their last  traded  value
before March 31, 2001.

<TABLE>
<CAPTION>
<S>                           <C>        <C>         <C>           <C>           <C>         <C>           <C>
   Expected Maturity Dates
        (in thousands)          2001        2002        2003        2004-2006      2007        Total       Fair Value
                              --------    --------    ---------     ---------    --------    ---------     ----------
Variable Rate Debt:
Bank Debt with Recourse (a)...  $     -    $       -   $ 32,000      $    -       $      -     $  32,000   $  32,000
Bank Debt without Recourse (b)  $     -    $  17,000   $      -      $    -       $      -     $  17,000   $  17,000
Fixed Rate Debt:
Senior Notes (c)..............  $95,000    $  15,000   $      -      $    -       $ 140,147    $ 140,147   $ 138,950
Bank Debt with Recourse (d)...  $    15    $      19   $      1      $    -       $      -     $      35   $      35
</TABLE>

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

(a)  The average interest rate on the bank debt with recourse is 8.52%.
(b)  The average interest rate on the bank debt without recourse is 9.48%.
(c)  The interest rate on the senior notes is a fixed 10%.
(d)  The interest rate on the bank debt is a fixed 7.9%.

                                       20

<PAGE>

                          PART II -- OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
<S>             <C>
Number                     Description of Exhibit

3.1 & 4.1         Articles of Incorporation (Incorporated by reference to Registration Statement on Form S-18, File No.
                  33-30298-D)
3.2 & 4.2         Articles of Amendment to Articles of Incorporation (Incorporated by reference to Form 10-K for the
                  year ended December 31, 1990)
3.3 & 4.3         Articles of Amendment to Articles of Incorporation (Incorporated by reference to Registration
                  Statement on Form SB-2, File No. 33-66190)
3.4 & 4.4         Articles of Amendment to Articles of Incorporation (Incorporated by reference to Registration
                  Statement on Form S-3, File No. 333-30453)
3.5 & 4.5         By-Laws, as Amended (Incorporated by reference to Registration Statement on Form SB-2, File
                  No. 33-66190)
3.6 & 4.6         Certificate of Designation of 1996 Series A Preferred Stock (Incorporated by reference to Form 8-K
                  dated December 26, 1996, filed January 3, 1997)
3.7 & 4.7         Amendment to Certificate of Designations for 1996 Series A Convertible Preferred Stock
                  (Incorporated by reference to Registration Statement on Form S-3, File No. 333-30453)
3.8 & 4.8         Certificate of Designation for 1999 Series A 8% Convertible Preferred Stock (Incorporated by reference
                  to Form 8-K, dated February 3, 1999, filed February 11, 1999)
4.9               Indenture dated May 29, 1997 between Magnum Hunter Resources, the subsidiary guarantors named
                  therein and First Union National Bank of North Carolina, as Trustee (Incorporated by reference to
                  Registration Statement on Form S-4, File No. 333-2290)
4.10              Supplemental Indenture dated January 27, 1999 between Magnum Hunter Resources, the subsidiary
                  guarantors named therein and First Union National Bank of North Carolina, as Trustee (Incorporated
                  by reference to Form 10-K for the fiscal year-end December 31, 1998 filed April 14, 1999)
4.11              Form of 10% Senior Note due 2007 (Incorporated by reference to Registration Statement on Form S-4,
                  File No. 333-2290)
10.1              Amended and Restated Credit Agreement, dated April 30, 1997, between Magnum Hunter Resources,
                  Inc. and Bankers Trust Company, et al. (Incorporated by reference to Registration Statement on Form
                  S-4, File No. 333-2290)
10.2              First Amendment to Amended and Restated Credit Agreement, dated April 30, 1997, between Magnum
                  Hunter Resources, Inc. and Bankers Trust Company, et al. (Incorporated by reference to Registration
                  Statement on Form S-4, File No. 333-2290)
10.3              Second Amendment to Amended and Restated Credit Agreement, dated April 30, 1997, between
                  Magnum Hunter Resources, Inc. and Bankers Trust Company, et al (Incorporated by reference to Form
                  10-K for the fiscal year-end December 31, 1998 filed April 14, 1999)
10.4              Third Amendment to Amended and Restated Credit Agreement, dated April 30, 1997, between Magnum
                  Hunter Resources, Inc. and Bankers Trust Company, et al (Incorporated by reference to Form 10-K for
                  the fiscal year-end December 31, 1998 filed April 14, 1999)
10.5              Employment Agreement for Gary C. Evans (Incorporated by reference to Form 10-K for the fiscal year-
                  end December 31, 1999 filed March 30, 2000)
10.6              Employment Agreement for Matthew C. Lutz (Incorporated by reference to Form 10-K for the fiscal
                  year-end December 31, 1999 filed March 30, 2000)
10.7              Employment Agreement for Richard R. Frazier (Incorporated by reference to Form 10-K for the fiscal
                  year-end December 31, 1999 filed March 30, 2000)
10.8              Stock Purchase Agreement among Magnum Hunter Resources, Inc.
                  and Trust Company of the West and TCW Asset Management
                  Company, in the capacities described herein, TCW Debt and
                  Royalty Fund IVB and TCW Debt and Royalty Fund IVC, dated as
                  of December 6, 1996 (Incorporated by reference to Form 8-K
                  dated December 26, 1996, filed January 3, 1997)

                                       21

<PAGE>

10.9              Purchase and Sale Agreement, dated February 27, 1997 among Burlington Resources Oil and Gas
                  Company, Glacier Park Company and Magnum Hunter Production, Inc. (Incorporated by reference to
                  Form 8-K, dated April 30, 1997, filed May 12, 1997)
10.10             Purchase and Sale Agreement between Magnum Hunter Resources, Inc. , NGTS, et al., dated December
                  17, 1997  (Incorporated by reference to Form 8-K, dated December 17, 1997, filed December 29, 1997)
10.11             Purchase and Sale Agreement dated November 25, 1998 between Magnum Hunter Production, Inc. and
                  Unocal Oil Company of California (Incorporated by reference to Form 10-K for the fiscal year-end
                  December 31, 1998 filed April 14, 1999)
10.12             Stock Purchase Agreement dated February 3, 1999 between ONEOK Resources Company and Magnum
                  Hunter Resources, Inc. (Incorporated by reference to Form 8-K, dated February 3, 1999, filed
                  February 11, 1999)
10.13             Agreement of Limited Partnership of Mallard Hunter, L.P., dated May 23, 2000 (Incorporated by reference to
                  Form 10-Q/A for the period ended June 30, 2000, filed November 30, 2000)
</TABLE>


(B) Form 8-K's - None


                                       22

<PAGE>

                                    SIGNATURE

     In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

MAGNUM HUNTER RESOURCES, INC.



By /s/ Gary C. Evans                                               May 15, 2001
  -----------------------------------------------------
      Gary C. Evans
      President and Chief Executive Officer


By /s/ Chris Tong                                                  May 15, 2001
  --------------------------------------------------------
     Sr. Vice President and
     Chief Financial Officer


By  /s/ David S. Krueger                                           May 15, 2001
    ---------------------------------------------------
      David S. Krueger
      Vice President and
      Chief Accounting Officer


By /s/ Morgan F. Johnston                                          May 15, 2001
   --------------------------------------------------
      Morgan F. Johnston
      Vice President,  General Counsel and
      Secretary


                                       23