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 September 30, 1999

[   ]    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 September 30, 1999: 20,184,486.

<PAGE>

                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements

     The condensed consolidated financial statements of Magnum Hunter Resources,
Inc. ("Magnum  Hunter"or the "Company") follow "Item 2. Management's  Discussion
and Analysis of Financial Condition and Results of Operations".

Item 2.  Management's Discussion and Analysis of Financial Condition and 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,  1998.  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.

     On May 29, 1997, the Company placed,  through a Rule 144A private placement
offering,  $140 million in Senior  Notes due 2007.  The Notes have a 10% coupon,
with interest  payable on June 1 and December 1, which  commenced on December 1,
1997. Except for Bluebird Energy,  Inc.  ("Bluebird"),  the Company's 100% owned
subsidiary  formed in December  1998,  there is no restriction on the ability of
any consolidated or  unconsolidated  subsidiary to transfer funds to the Company
in the form of cash dividends, loans or advances.

     On January 28, 1998, the Company  commenced a cash purchase offer for Units
of TEL Offshore Trust ("TEL").  Previous to the offer, the Company owned 161,500
Units representing 3.4% of the Units outstanding.  As amended,  the offer was to
purchase  between  forty  percent  (40%) and sixty  percent (60%) of the Trust's
outstanding  Units at $5.50 per Unit. On March 27, 1998,  the Company  purchased
1,745,353  Units for $10.4  million  pursuant to the tender offer and,  together
with the Units it previously owned, became the owner of approximately 40% of the
total number of Units outstanding.

     On  December  31,  1998,  the Company  through its newly  formed 100% owned
subsidiary,  Bluebird,  acquired from Spirit Energy 76 ("Spirit 76") natural gas
reserves and associated assets in producing fields located in Oklahoma and Texas
producing approximately 12 million cubic feet of natural gas equivalent per day.
The net purchase  price was  approximately  $25 million after  certain  purchase
price adjustments,  including preferential rights exercised by third parties and
other customary  adjustments.  As part of the  capitalization  of Bluebird,  the
Company  contributed  1,840,271  units of TEL Offshore  Trust.  Bluebird,  as an
"unrestricted subsidiary" as defined under certain credit agreements, is neither
a guarantor of the Company's 10% Senior Notes due 2007 nor can it be included in
determining  compliance  with certain  financial  covenants  under the Company's
credit agreements.  To finance the Spirit 76 acquisition,  Bluebird borrowed $26
million  under a bridge loan facility  with several  banks.  The bridge loan was
replaced on June 7, 1999 with  permanent  financing  from banks  providing for a
revolving credit facility of $75 million with an initial borrowing base of $41.5
million, due three years from June 7, 1999 with interest rates based upon either
"LIBOR" or "Base Rate"  (Prime).  The loan is  non-recourse  to the Company.  In
addition  to  retiring  the  bridge  loan,  a portion of the  proceeds  from the
permanent  financing  was used to finance the  acquisition  of  properties  from
Vastar Resources, Inc. ("Vastar") discussed below.

     On  February  3, 1999,  the  Company  sold $50  million of its  Convertible
Preferred  Stock in a private  placement.  The Preferred Stock has a liquidation
value of $50 million and is convertible into the Company's common stock at $5.25
per share.  Dividends on the preferred  stock are payable in cash at the rate of
8% per annum and are  cumulative.  The Company  used the net  proceeds  from the
transaction, approximately $46.3 million, to repay senior bank indebtedness.

     On June 8, 1999,  the Company  acquired  oil and gas  reserves  and related
assets from Vastar for a total  purchase  price of $32.5 million after  purchase
price adjustments.  The effective date of the acquisition was April 1, 1999. The
acquisition  included Vastar's interest in 476 wells, a gas processing plant and
two gas gathering systems located in the states of Texas, Oklahoma and Arkansas.

<PAGE>

     On August 11, 1999,  the Company  announced the execution of a purchase and
sale  agreement to acquire 50% ownership  interest in the Madill Gas  Processing
Plant and associated  gathering system from Dynegy Midstream  Services,  L.P., a
wholly-owned  subsidiary of Dynegy.  This modern  cryogenic plant includes 3,350
horsepower of high-speed  compression and will have  gas-processing  capacity of
approximately  18,000 Mcf/d.  The  facilities  are located in Marshall and Bryan
counties,  Oklahoma and are being acquired in conjunction with the Company's 50%
industry  partner,  Carrera Gas Gathering Co.,  L.L.C. of Tulsa,  Oklahoma.  The
closing is expected to occur during November of 1999.

     The Company uses the full cost method of accounting  for its  investment in
oil and gas properties.  Under the full cost method of accounting,  all costs of
acquisition, exploration and development of oil and gas reserves are capitalized
into a "full cost pool" as incurred, and properties in the pool are depleted and
charged to operations using the unit-of-production  method based on the ratio of
current production to total proved oil and gas reserves. To the extent that such
capitalized costs (net of accumulated depreciation,  depletion and amortization)
less deferred taxes exceed the SEC PV-10 of estimated  future net cash flow from
proved  reserves of oil and gas, and the lower of cost or fair value of unproved
properties  after  income  tax  effects,   such  excess  costs  are  charged  to
operations.  Once  incurred,  a  write-down  of oil  and gas  properties  is not
reversible at a later date even if oil or gas prices increase. The Company's SEC
PV-10 property valuation at September 30, 1999 exceeded the capitalized costs at
that date.  Significant  downward revisions of quantity estimates or declines in
oil and gas prices, which are not offset by other factors, could possibly result
in write-down for impairment of oil and gas properties in the future.

Results  of  Operations for the Three Month Periods Ended September 30, 1999 and
1998

     The results of  operations  for the three month period ended  September 30,
1999,  included  three months of operations  for Spirit 76 and Vastar  purchased
properties,  while the corresponding  period in 1998 did not include any results
of operations from these acquisitions. Unless otherwise stated, the increases in
the 1999 interim  period over the 1998 period were  substantially  the result of
these acquisitions as well as the Company's drilling  activities since the third
quarter of 1998.

     Oil and natural gas sales were $17,575,000,  a 51% increase over 1998 sales
of  $11,634,000.  The Company sold 352,000  barrels of oil, a 14% increase  over
1998 sales of 308,000  barrels,  and  5,130,000  Mcf of gas, a 36% increase over
1998 sales of 3,778,000  Mcf.  The price  received for oil was $15.86 per barrel
and for  natural gas was $2.34 per Mcf in 1999 versus an oil price of $12.23 per
barrel and a gas price of $2.08 per Mcf in 1998,  representing a 30% increase in
oil price and a 13%  increase  in gas  price.  Oil and  natural  gas  production
lifting costs  increased two percent to $4,235,000 in 1999 versus  $4,153,000 in
1998 while  production taxes and other costs increased 87% to $2,327,000 in 1999
from $1,243,000 in 1998  principally due to higher  production taxes as a result
of higher oil and natural  gas sales.  The gross  operating  margin from oil and
natural gas  production  was  $11,013,000  in 1999, a 77% increase over the 1998
operating  margin of $6,238,000.  On an equivalent unit basis,  the gross margin
was $1.54 per Mcfe in 1999 versus $1.11 in 1998, a 39% increase. The sales price
increased  17% to $2.43 per Mcfe in 1999  versus  $2.07  per Mcfe in 1998  while
production  lifting costs decreased 22% to $0.58 per Mcfe in 1999 from $0.74 per
Mcfe in 1998 due in part to lower  repair  costs  and  greater  efficiencies  of
scale. Production taxes and other costs, including overhead, were $0.31 per Mcfe
in 1999  versus  $0.22 per Mcfe in 1998,  a 41%  increase  chiefly due to higher
production  taxes.  Total Mcfe sold  increased 29% to 7,245,000  Mcfe, or 78,700
Mcfe per day in 1999 from 5,626,000 Mcfe, or 61,200 Mcfe per day in 1998.

     Gas gathering,  marketing,  and processing  revenues were $2,039,000 in the
1999 period,  a 20% increase from 1998 revenues of $1,697,000,  principally as a
result of an increase in natural gas and natural gas liquids prices.  Costs from
these activities were $1,442,000 in 1999, a six percent decrease from 1998 costs
of $1,535,000.  Gross  operating  margin was $597,000 in 1999 versus $162,000 in
1998, a 269% increase.  Gathering system throughput  decreased 15% to 17,387 Mcf
per day in 1999  compared  to 20,365  Mcf per day in 1998,  due to the sale of a
non-strategic  gathering  system in July of 1999.  Natural gas plant  processing
throughput  was 15,439 Mcf per day in 1999 versus  15,907 Mcf per day in 1998, a
three percent  decrease.  Gross operating  margin from gathering  operations was
$0.11 per Mcf in 1999 versus $0.10 per Mcf in 1998. The gross  operating  margin
from natural gas processing was $0.27 per Mcf in 1999

                                        2

<PAGE>

versus  $0.02 per Mcf in 1998  principally  due to a 69%  increase  in the value
received for natural gas liquids in the 1999 period.

     Revenues from oil field services and  international  sales were $250,000 in
1999 versus $249,000 in 1998.  Operating costs decreased to $98,000 in 1999 from
$121,000  in 1998.  The gross  operating  margin  was  $152,000  in 1999  versus
$128,000 in 1998. Depreciation and depletion expense increased 20% to $5,768,000
in 1999 versus $4,805,000 in 1998 due to higher production volumes.  General and
administrative  expense was  $683,000 in 1999,  a 9% decrease  from  $750,000 in
1998.  Operating  profit  increased  446% to $5,311,000 in 1999 from $973,000 in
1998. The Company booked equity in loss of affiliate of $3,000 in 1999 versus an
$8,000 loss in 1998.  Other income was $281,000 in 1999 versus  $50,000 in 1998,
including  a $200,000  gain from the sale of a gas  gathering  system.  Interest
expense  increased  15% to  $5,377,000  in 1999 from  $4,656,000  in 1998 due to
higher  levels  of debt in the 1999  period.  The  Company  reported  a net loss
applicable  to common  shares of  $1,028,000,  or $0.05 per common share in 1999
versus a loss of  $2,491,000,  or $0.12 per common  share in 1998.  The  Company
accrued  $1,241,000 in dividends on its preferred  stock in 1999 versus $219,000
in 1998 due to the increase in preferred stock in the first quarter of 1999.

Results of Operations  for the Nine Month Periods Ended  September 30, 1999  and
1998

     As discussed above, the Company acquired its interest in Tel in March 1998,
completed the Spirit 76  acquisition  in December 1998, and completed the Vastar
acquisition in June 1999.  Unless  otherwise  stated,  the increases in the 1999
interim period over the 1998 interim period were a result of these  acquisitions
as well as success from the Company's drilling program during these periods.

     Oil and natural gas sales were $42,263,000 in 1999, a 25% increase over the
1998 amount of  $33,698,000.  The  Company  sold  937,000  barrels of oil versus
852,000  barrels,  a 10% increase,  and 14,276,000 Mcf of gas versus  10,535,000
Mcf, a 36% increase, in 1999 as compared to 1998. The price received for oil was
$13.89 per barrel and for gas was $2.05 per Mcf in 1999  compared  to $13.23 per
barrel  of oil and  $2.08 per Mcf of gas in 1998,  representing  a five  percent
increase in oil price and a one percent  decrease in gas price in 1999  compared
to 1998. Oil and gas sales for the 1998 period also included $541,000  resulting
from the  settlement of gas imbalances  with another  producer on several of the
Company's gas wells. Oil and natural gas production  lifting costs increased two
percent to $11,052,000  while  production taxes and other costs increased 20% to
$5,504,000 in 1999 over 1998.  The gross  operating  margin from oil and natural
gas  production  was  $25,707,000  in 1999  versus  $18,251,000  in 1998,  a 41%
increase.  On an equivalent  unit basis,  the gross margin was $1.29 per Mcfe in
1999, a 13%  increase.  The sales price was $2.12 per Mcfe in both periods while
production  lifting costs  decreased  19% to $0.56 per Mcfe in 1999.  Production
taxes and other  costs  including  overhead,  were $0.27 per Mcfe in 1999,  a 7%
decrease from 1998. The overall  increase in the gross operating  margin in 1999
compared  to  1998  was  principally  due to a 27%  increase  in  Mcfe  sold  to
19,897,000 Mcfe from 15,645,000 Mcfe.

     Gas gathering,  marketing,  and processing  revenues were $5,516,000 in the
1999 period, a six percent increase from 1998,  principally due to higher prices
received  for natural gas and natural gas liquids.  Costs from these  activities
were $4,024,000 in 1999, an eight percent  decrease.  Gross operating margin was
$1,492,000 in 1999, an 85% increase.  The increase in gross operating margin was
due to increased  marketing  margins and more  favorable  processing  economics.
Gathering  system  throughput  decreased  nine  percent to 18,818 Mcf per day in
1999, due to the sale in July of 1999 of a non-strategic  gas gathering  system.
Natural gas plant  processing  throughput  was 15,558 Mcf per day in 1999 versus
15,511 in 1998. Gross operating  margin from gathering and marketing  operations
was $0.14 per Mcf in 1999,  a 47%  increase.  The gross  operating  margin  from
natural gas processing was $0.16 per Mcf in 1999, a 119% increase.

                                        3

<PAGE>

     Revenues from oil field services and  international  sales were $549,000 in
1999 versus $703,000 in 1998. Operating costs decreased to $234,000 in 1999 from
$361,000 in 1998. The gross operating margin from these activities  decreased by
eight percent to $315,000 in 1999 versus the 1998 period.

     Depreciation  and depletion  expense  increased 20% to  $16,383,000 in 1999
primarily due to the increase in production as a result of acquisitions. General
and  administrative  expense was  $2,015,000  in 1999, a 10% decrease over 1998.
Operating profit increased 158% to $9,116,000 in 1999 from 1998.  Equity in loss
of affiliate was $100,000 in 1999 versus a loss of $53,000 in 1998. Other income
increased  31% to  $569,000 in 1999 versus  $433,000 in 1998.  Interest  expense
increased 24% to $16,588,000 in 1999 due to increased  levels of borrowing under
the Company's revolving credit lines with banks. The Company incurred a net loss
before  income  tax and  minority  interest  of  $7,003,000  in  1999,  versus a
$9,499,000  loss in 1998,  principally  due to  higher  oil  prices  and  higher
production  volumes  due to  acquisitions.  The  Company  did not  provide for a
deferred  income tax  benefit on the 1999 period  loss due to its  inability  to
predict future tax utilization of its net operating loss  carryforward.  In the
1998 period, the Company provided for a tax loss benefit of $3,589,000.

     Minority interest in subsidiary  earnings  increased to $86,000 in the 1999
period from $25,000 in the 1998 period. The net loss to common  shareholders for
the 1999  period was  $7,089,000  versus a net loss of  $5,935,000  for the 1998
period.  The Company  accrued  dividends of $3,291,000 on its preferred stock in
1999 versus $657,000 in 1998 due to the increase in preferred stock in the first
quarter of 1999. The net loss applicable to common  shareholders was $10,380,000
($0.51 per share) in 1999 compared to a net loss of $6,592,000 ($0.31 per share)
in 1998.

Liquidity and Capital Resources

     The Company has three principal operating sources of cash: (i) sales of oil
and gas, (ii) revenues from gas gathering,  processing, and marketing, and (iii)
revenues from petroleum management and consulting  services.  The Company's cash
flow is highly dependent upon oil and gas prices.  Decreases in the market price
of oil and gas could result in  reductions  of both cash flow and the  borrowing
base under the Company's Credit Facility,  which would result in decreased funds
available, including funds for capital expenditures.

     In September 1998, the Company  announced a stock repurchase  program of up
to one million shares at a cost not to exceed $4 million.  At December 31, 1998,
the Company had repurchased  625,600 shares for approximately  $1.9 million.  In
February 1999, the program was revised to remove the share limitation  discussed
above.  Since December 31, 1998, the Company has purchased an additional 601,472
shares for approximately $1.7 million.

     In December 1998, the Company's 100% owned subsidiary,  Bluebird,  acquired
for approximately  $25 million,  certain natural gas reserves and related assets
from Spirit 76.  Additionally,  the Company capitalized  Bluebird with 1,840,271
units of TEL  Offshore  Trust.  To finance the Spirit 76  acquisition,  Bluebird
borrowed $26 million under a bridge loan facility with several banks. The bridge
loan was replaced on June 7, 1999 with permanent  financing from banks providing
for a revolving credit facility of $75 million with an initial borrowing base of
$41.5  million,  due three years from the date of closing  with  interest  rates
based upon either "LIBOR" or "Base Rate" (Prime).  The loan is  non-recourse  to
the Company.  In addition to retiring the bridge loan, a portion of the proceeds
from the permanent  financing was used to finance the  acquisition of properties
from Vastar discussed below.

     In December 1998, the Company  announced a letter of intent for a strategic
alliance with ONEOK Resources Company ("ONEOK"),  which included the purchase by
ONEOK of $50 million of the Company's  Convertible  Preferred Stock. In February
1999, this  transaction was  consummated.  The Preferred Stock has a liquidation
value of $50 million and is convertible into the Company's common stock at $5.25
per share.  Dividends on the Preferred  Stock are payable in cash at the rate of
8% per annum and are cumulative. The net proceeds of $46.3 million received from
the sale of Preferred Stock was used to repay senior bank indebtedness.

                                        4

<PAGE>

     On June 8, 1999,  the Company  acquired  oil and gas  reserves  and related
assets from Vastar for a total  purchase  price of $32.5 million after  purchase
price adjustments.  The effective date of the acquisition was April 1, 1999. The
acquisition  included Vastar's interest in 476 wells, a gas processing plant and
two gas gathering systems located in the states of Texas, Oklahoma and Arkansas.

     For the nine  months  ended  September  30,  1999,  the  Company  had a net
decrease in cash of $3.0 million.  The Company's  operating  activities provided
net  cash  of  $8.5  million.  The  Company  used  $46.5  million  in  investing
activities,  principally  for  additions  to property and  equipment.  Financing
activities  provided  $35.0  million  of cash,  principally  from the  aggregate
proceeds from the issuance of preferred stock of $46.3 million. The Company also
paid $3.0 million in cash dividends on preferred stock and accrued an additional
$333,000 for  dividends  earned  through  September  1999 but not payable  until
November 1999.

Capital Requirements

     For fiscal  1999,  the Company has budgeted  approximately  $25 million for
development and exploration activities,  including $12 million for participation
in a new drilling program in twelve separate outer  continental  shelf blocks in
the shallow  water area of the Gulf of Mexico.  Commencement  of the drilling of
the first well in this  program  was in May 1999.  Six  prospects  have now been
drilled  resulting  in four natural gas  discoveries  for a success rate of 67%.
Production  equipment is now being  installed on two of these  discoveries  with
first sales  expected near year-end 1999. Up to eight  additional  wells will be
necessary to fully develop these new producing areas.

     The  Company is not  contractually  obligated  to  proceed  with any of its
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 and changes
in oil and gas  prices.  Due to the decline in oil prices  experienced  over the
past year,  the Company  redirected a significant  portion of its budgeted funds
from oil projects to natural gas. As a result,  actual capital  expenditures may
vary significantly from current expectations.

     On June 8, 1999, the Company purchased from Vastar oil and gas reserves and
related equipment, a gas processing plant and two gas gathering systems, located
in Texas,  Oklahoma and Arkansas for approximately  $32.5 million after purchase
price adjustments.

     On June 8, 1999, the Company's  borrowing  base under its revolving  credit
line was reduced from $65 million to $60 million as a result of the December 31,
1998 reserve engineering report.

     Based upon the  Company's  anticipated  level of  operations,  the  Company
believes that cash flow from operations together with the availability under the
Credit Facility  (approximately  $10.5 million as of September 30, 1999) will be
adequate  to meet its  anticipated  requirements  for working  capital,  capital
expenditures  and scheduled  interest and dividend  payments for the foreseeable
future.

     In  addition,   the  Company's  wholly-owned   subsidiary,   Bluebird,  has
availability  under its own credit  facility  (non-recourse  to the  Company) of
approximately  $1.8 million at September 30, 1999.  The Company  expects that it
will acquire an interest in the Madill Gas Processing  Plant from Dynegy through
Bluebird.   The  Company  anticipates  that  Bluebird's  lenders  will  increase
Bluebird's  availability  under its credit line to allow  Bluebird to consummate
the transaction.  The Company believes such availability,  after the anticipated
increase, will be adequate for Bluebird to meet its anticipated requirements for
working  capital,  capital  expenditures  and debt  service for the  foreseeable
future.

     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.

                                        5

<PAGE>

Inflation and Changes in Prices

     During 1998,  the Company  experienced a significant  erosion in prices for
oil (a  decline  of 28%) and for  natural  gas (a  decline  of 10%).  Due to the
severity of the decrease in commodity prices, the Company experienced a loss due
primarily  from the  write-down of its full cost pool in December  1998. Oil and
gas prices recovered  dramatically  during the third quarter of 1999, rising 68%
and 31%,  respectively  (before hedging  activity) from the same period in 1998.
Oil and gas  prices  for the  first  nine  months of 1999 were 25% and 4% higher
(before  hedging  activity)  than the  comparable  1998  period.  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 12 months.

     The Company  markets  oil and gas for its own  account,  which  exposes the
Company  to  the  attendant  commodities  risk.  A  substantial  portion  of the
Company's gas production is currently sold to NGTS, LLC (a gas marketing company
owned  30%  by  the  Company)  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.

Market Risk Disclosures

Fixed and Variable Debt

     The  Company  has fixed rate bond debt and  variable  bank debt in its debt
portfolio. 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 a  floating  rate debt
over the next three years and to  effectively  lower  interest  expense over the
next twelve months. The effect of these transactions,  which are discussed under
Interest Rate Swaps below,  will be to save  approximately  $316,000 in interest
expense over the next nine months.  Thereafter,  the economic  impact depends on
whether or not variable (LIBOR) rates increase significantly.


                     [REST OF PAGE INTENTIONALLY LEFT BLANK]

                                        6

<PAGE>

Hedging Activity

Crude Oil and Natural Gas Hedges

     Periodically,  the Company enters into futures, options, and swap contracts
to mitigate the effects of significant fluctuations in crude oil and natural gas
prices. At September 30, 1999, the Company had the following open contracts:


           Type              Volume/Month         Duration          Avg. Price
Oil
         Collar...........    15,000 Bbl       Oct 99 - Dec 99    Floor - $15.00
                                                                  Cap -   $19.20
         Option...........    15,000 Bbl       Oct 99 - Dec 99            $19.20
         Swap.............    15,000 Bbl       Oct 99 - Dec 99            $15.12
         Collar...........    15,000 Bbl       July 99 - Dec 99   Floor - $15.00
                                                                  Cap -   $17.12
         Swap (1).........    30,000 Bbl       Oct 99 - Dec 00            $17.60
         Collar...........    30,000 Bbl       Jan 00 - Mar 00    Floor - $18.00
                                                                  Cap -   $22.65
         Collar...........    30,000 Bbl       Jan 00 - Mar 00    Floor - $18.00
                                                                  Cap -   $23.87
Gas
         Swap.............   600,000 MMBtu         Oct 99               $   2.04
         Collar (2).......   300,000 MMBtu         Oct 99        Floor - $  1.70
                                                                 Cap -   $  2.50
         Collar ..........   300,000 MMBtu     Apr 00 - Oct 00   Floor - $  1.80
                                                                 Cap -   $  2.25

         (1) The swap  includes an option  granted to the  counterparty  for any
month between  October 1999 and December 1999 in which oil prices  average below
$16.50/Bbl  whereby  the  hedge  would  not be  effective  for that  period.  In
addition,  the  counterparty  was granted an option  exercisable on December 30,
1999 to cancel the swap for calendar year 2000.

         (2) The  counterparty  was  granted an option,  which it  exercised  on
October 22,  1999,  to continue the hedge for the period  November  1999 through
March 2000 for 300,000 MMBtu's per month with a floor price of $2.00/MMBtu and a
ceiling price of $2.32/MMBtu.

     Net gains or losses related to derivative  transactions for the three month
periods ended  September 30, 1999 and 1998 were a loss of $2,087,000  and a gain
of $838,000,  respectively. For the nine month periods ending September 30, 1999
and  1998,  the  gains  or  losses  were  a loss  of  $1,022,000  and a gain  of
$2,079,000,  respectively.  At September  30,  1999,  the  unrealized  loss from
derivative transactions was $6,361,000.

                                        7

<PAGE>

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 next twelve months.

<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

Pay Fixed/Receive Variable            $50,000,000             06/01/00          9.16% fixed       LIBOR + 3.34%
</TABLE>

     The pay  variable/receive  fixed  swap has an early  termination  provision
granting the  counterparty  the right to terminate  the swap on June 1, 2000, in
exchange for a fee payment to the Company of $125,000.  As a result of these two
swaps, the Company saved  approximately  $104,000 in interest expense during the
three  months  ended  September  30, 1999.  The  unrealized  savings in interest
expense at September 30, 1999 calculated  through May 31, 2000 was approximately
$316,000.  Thereafter, the economic impact depends on whether or not LIBOR rates
increase significantly.

Year 2000 Compliance

     Year 2000 issues relate to the ability of computer programs or equipment to
accurately  calculate,  store or use dates after December 31, 1999.  These dates
can be handled or interpreted in a number of different ways, but the most common
errors are for the system to contain a two digit year which may cause the system
to interpret  the year 2000 as 1900 or 1980,  and the system will not  recognize
the  year  2000 as a leap  year.  Errors  such as these  can  result  in  system
failures,  miscalculations  and the disruption of operations,  including,  among
other things, a temporary  inability to process  transactions,  send invoices or
engage in similar  normal  business  activities.  In  response  to the Year 2000
issues,  the Company has  developed a strategic  plan divided into the following
phases:  inventory,  product  compliance  based on  vendor  representations  and
in-house testing, third party integration and development of a contingency plan.

     All of the Company's  processing  needs are handled by third party systems,
none of which  have  been  substantially  modified  and all of which  have  been
purchased  or  upgraded  within the last few  years.  Therefore,  the  Company's
initial review of its in-house  systems with regard to Year 2000 issues required
an  inventory  of its  systems and a review of the vendor  representations.  The
Company  has  completed  this  initial  review  of  its   information   systems.
Non-information  technology has also been thoroughly  reviewed.  Based on vendor
representations,  all systems are either  compliant,  will be compliant prior to
December 31, 1999 or are not date specific.

     The Company's non-information  technology consists primarily of various oil
and gas exploration and production equipment. The initial review has established
that the primary  non-information  technology  systems  functions are either not
date sensitive or are Year 2000 compliant based on vendor  representations,  and
are  therefore  predicted to operate in  customary  manners when faced with Year
2000 issues.  However, the Company has determined that in the event such systems
are unable to address the Year 2000, employees can manually perform most, if not
all, functions.

     In  anticipation  of Year 2000 issues,  the Company is also  evaluating the
Year 2000 readiness status of its third party service suppliers.  In addition to
reviewing Year 2000 readiness  statements  issued by the third parties  handling
the Company's  processing needs, to date the Company has received and is relying
upon, Year 2000 readiness reports  periodically issued by its financial services
and electrical  service  providers,  vendors and purchasers of the Company's oil
and  natural  gas  products.  The  Company  is  continuing  to review  Year 2000
readiness of third party service suppliers

                                        8

<PAGE>

and  based  on  their  representations,  does  not  currently  foresee  material
disruptions  in  the  Company's  business  as a  result  of  Year  2000  issues.
Unanticipated  prolonged losses of certain  services,  such as electrical power,
could cause material disruptions for which no economically  feasible contingency
plan has been developed.

     The  Company  has  completed  in-house  testing  of the  core  systems  and
non-information  technology.  The vast majority of all systems tested adequately
address possible Year 2000 scenarios. The Company has remedied the systems which
did not adequately address the Year 2000 issues. All systems are fully Year 2000
compliant at the end of the third quarter of 1999.

     Although  the  effects  of  Year  2000  issues  cannot  be  predicted  with
certainty,  the Company  believes  that the  potential  impact,  if any, of such
events will, at most, require employees to manually complete otherwise automated
tasks or  calculations,  other than those which  might  occur in a "worst  case"
scenario as described below, which the Company does not anticipate will occur.

     After  considering  Year 2000 effects on in-house  operations,  the company
expects a minimal  level of  additional  training  would be  required to perform
these tasks on a manual basis due to the level of  experience  of its  personnel
and the routine nature of the tasks being performed. If, based on the results of
its in-house testing,  the Company should determine that certain systems are not
Year 2000  compliant  and it  appears  as though  the system is not likely to be
compliant  within a  reasonable  time  period,  the Company will either elect to
perform  the task  manually or will  attempt to purchase a different  system for
that  particular task and convert before December 31, 1999. The Company does not
believe  that  either  option  would  impact the  Company's  ability to continue
exploration  drilling,  production or sales  activities,  although the tasks may
require  additional  time and  personnel to complete  the same  functions or may
require  incremental  time and  personnel  during 1999 for a conversion to a new
system.

     The Company's core business consists primarily of oil and gas acquisitions,
development  and exploration  activities.  The equipment that is deemed "mission
critical" to the Company's  activities  requires  external power sources such as
electricity  supplied by third parties.  Although the Company  maintains limited
on-site  secondary  power  sources such as  generators,  it is not  economically
feasible to maintain  secondary  power  supplies for any major  component of its
"mission critical" equipment.  Therefore,  the most reasonable likely worst case
Year 2000  scenario for the Company  would  involve a disruption  of third party
supplied  electrical power, which would result in a substantial  decrease in the
Company's  oil  production.  Such event could result in a business  interruption
that could  materially  affect the  Company's  operations,  liquidity or capital
resources.

     The  Company  has  initiated  the third  party  integration  phase and will
continue to have formal communications with its significant suppliers,  business
partners  and key  customers  to  determine  the extent to which the  Company is
vulnerable  to either the third parties or its own failure to correct their Year
2000 issues.  The Company has been communicating with such third parties to keep
them informed of the Company's  internal  assessment of its Year 2000 review and
plans.  This  portion of the  review and  discussions  with third  parties  have
provided certain favorable  representations  as to their Year 2000 readiness and
received  similar  representations  from the Company.  There can be no guarantee
that the  systems of the other  companies  on which the  Company  relies will be
timely  converted or that the conversion  will be compatible  with the Company's
systems. However, after reviewing and estimating the effects of such events, the
Company's contingency plan involves identifying and arranging for other vendors,
purchasers and third party  contractors to provide such services,  if necessary,
in order to maintain its normal operations.

     The Company has, and will  continue to,  utilize both internal and external
resources to complete  tasks and perform  testing  necessary to address the Year
2000 issue.  The Company has not incurred,  and does not anticipate that it will
incur, any significant  costs relating to the assessment and remediation of Year
2000 issues.

                                        9

<PAGE>

Recently Issued Accounting Pronouncements

     In June 1998,  the FASB  issued  SFAS No. 133,  Accounting  for  Derivative
Instruments and Hedging Activities, which established a new model for accounting
for  derivatives and hedging  activities.  SFAS No. 133, which will be effective
for the Company's fiscal year 2001,  requires that all derivatives be recognized
in the balance sheet as either assets or liabilities and measured at fair value.
The  Statement  also requires that changes in fair value be reported in earnings
unless  specific  hedge  accounting  criteria  are met. The Company is currently
evaluating  the effect of the  adoption  of the  Statement  on its  consolidated
financial position and results of operations.

                     [REST OF PAGE INTENTIONALLY LEFT BLANK]

                                       10

<PAGE>

                 Magnum Hunter Resources, Inc. And Subsidiaries
                      Condensed Consolidated Balance Sheets
                            (in thousands of dollars)
<TABLE>
<CAPTION>
<S>                                                                             <C>                         <C>
                                                                                   September 30,              December 31,
                                                                                       1999                      1998
                                                                                ----------------------------------------------------
                                                                                    (Unaudited)
                                      ASSETS
Current Assets
         Cash and cash equivalents..............................................$        1,894               $      4,853
         Restricted cash .......................................................         1,422                        459
         Accounts receivable
              Trade, net of allowance of $166 for 1999 and 1998.................        11,447                      5,686
              Due from affiliates...............................................           122                        310
         Notes receivable from affiliate........................................           687                        747
         Current portion of long-term notes receivable, net of allowance of $790
           for 1999 and 1998....................................................            57                         57
         Prepaid and other......................................................           991                      1,577
                                                                                ----------------------------------------------------
               Total Current Assets.............................................        16,620                     13,689
                                                                                ----------------------------------------------------
Property, Plant, and Equipment
         Oil and gas properties, full cost method
               Unproved.........................................................         3,572                      1,655
               Proved...........................................................       341,266                    296,545
         Pipelines..............................................................         8,281                      9,131
         Other property.........................................................         1,790                      1,554
                                                                                ----------------------------------------------------
         Total Property, Plant and Equipment....................................       354,909                    308,885
               Accumulated depreciation, depletion, amortization and impairment.       (96,619)                   (80,449)
                                                                                ----------------------------------------------------
         Net Property, Plant and Equipment......................................       258,290                    228,436
                                                                                ----------------------------------------------------
Other Assets
         Deposits and other assets..............................................         6,150                      6,644
         Investment in unconsolidated affiliate.................................         4,166                      4,266
         Deferred tax asset ....................................................        13,351                     13,351
         Long-term notes receivable, net of imputed interest....................         1,279                        756
                                                                                ----------------------------------------------------
         Total Assets                                                           $      299,856               $    267,142
                                                                                ----------------------------------------------------

                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
         Trade payables and accrued liabilities.................................$       13,493               $     11,821
         Dividends payable......................................................           552                        219
         Suspended revenue payable..............................................         1,150                        359
         Current maturities of long-term debt...................................             9                         13
         Notes payable..........................................................           -                        2,000
                                                                                ----------------------------------------------------
               Total Current Liabilities........................................        15,204                     14,412
                                                                                ----------------------------------------------------
Long-Term Liabilities
         Long-term debt -with  recourse, less current maturities................       189,500                    231,007
         Long-term debt - nonrecourse...........................................        39,700                        -
         Production payment liability...........................................           558                        633
         Minority interest......................................................           184                         98
Commitments and Contingencies
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
           issued and outstanding, liquidation amount $10,000,000...............             1                          1
           50,000 designated as 1999 Series A 8% Convertible; 50,000 issued
           and outstanding, liquidation amount $50,000,000......................           -                          -
         Common Stock - $.002 par value; 100,000,000 shares authorized,
           21,738,320 shares issued.............................................            43                         43
         Additional paid-in capital.............................................       123,043                     80,000
         Accumulated other comprehensive loss...................................        (1,943)                    (1,429)
         Accumulated deficit....................................................       (62,803)                   (55,714)
                                                                                ----------------------------------------------------
                                                                                        58,341                     22,901
Treasury stock, at cost (1,553,834 and 1,054,507 shares of common stock,
respectively)                                                                           (3,631)                    (1,909)
                                                                                ----------------------------------------------------
Total Stockholders' Equity......................................................        54,710                     20,992
                                                                                ----------------------------------------------------
Total Liabilities and Stockholders' Equity......................................$      299,856               $    267,142
                                                                                ----------------------------------------------------
</TABLE>

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

                                       11


<PAGE>

                 Magnum Hunter Resources, Inc. And Subsidiaries
     Condensed Consolidated Statements Of Operations And Comprehensive Loss
                                   (Unaudited)
                  (in thousands, except for per share amounts)

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

                                                                                  Three Months Ended             Nine Months Ended
                                                                                    September 30,                  September 30,
                                                                                ----------------------------------------------------
                                                                                   1999        1998            1999         1998
                                                                                ----------------------------------------------------
Operating Revenues:
   Oil and gas sales.........................................                   $  17,575    $   11,634      $   42,263   $  33,698
   Gas gathering, marketing and processing...................                       2,039         1,697           5,516       5,193
   Oil field services and international sales................                         250           249             549         703
                                                                                ----------------------------------------------------
        Total Operating Revenues.............................                      19,864        13,580          48,328      39,594
                                                                                ----------------------------------------------------
Operating Costs and Expenses:
   Oil and gas production lifting costs......................                       4,235         4,153          11,052      10,854
   Production taxes and other costs..........................                       2,327         1,243           5,504       4,593
   Gas gathering, marketing and processing...................                       1,442         1,535           4,024       4,387
   Oil field services and international sales................                          98           121             234         361
   Depreciation and depletion................................                       5,768         4,805          16,383      13,621
   General and administrative................................                         683           750           2,015       2,250
                                                                                ----------------------------------------------------
        Total Operating Costs and Expenses...................                      14,553        12,607          39,212      36,066
                                                                                ----------------------------------------------------
Operating Profit ............................................                       5,311           973           9,116       3,528
   Equity in loss of affiliate, net of income tax............                          (3)           (8)           (100)        (53)
   Other income..............................................                         281            50             569         433
   Interest expense..........................................                      (5,377)       (4,656)        (16,588)    (13,407)
                                                                                ----------------------------------------------------
Net Income (Loss) before income tax and minority interest....                         212        (3,641)         (7,003)     (9,499)
   Benefit for deferred income tax...........................                         -           1,381             -         3,589
                                                                                ----------------------------------------------------
Net Income (Loss) before minority interest...................                         212        (2,260)         (7,003)     (5,910)
   Minority interest in subsidiary earnings .................                           1           (12)            (86)        (25)
                                                                                ----------------------------------------------------
Net Income (Loss)............................................                         213        (2,272)         (7,089)     (5,935)
   Dividends Applicable to Preferred Stock...................                      (1,241)         (219)         (3,291)       (657)
                                                                                ----------------------------------------------------
Loss Applicable to Common Shares.............................                   $  (1,028)   $   (2,491)     $  (10,380)  $  (6,592)
                                                                                ----------------------------------------------------
Net Income (Loss)............................................                   $     213    $   (2,272)     $   (7,089)  $  (5,935)
Other Comprehensive Loss, net of tax
   Unrealized Loss on Investments............................                        (258)          -              (514)       (883)
                                                                                ----------------------------------------------------
Comprehensive Loss...........................................                   $     (45)   $   (2,272)     $   (7,603)  $  (6,818)
                                                                                ----------------------------------------------------
Loss per Common Share - Basic and Diluted                                       $   (0.05)   $    (0.12)     $    (0.51)  $   (0.31)
                                                                                ----------------------------------------------------
Common Shares Used in Per Share Calculation..................
   Basic and Diluted ........................................                   20,114,261   21,259,867      20,165,315   21,226,367
                                                                                ----------------------------------------------------

</TABLE>

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

                                       12

<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
            Condensed Consolidated Statements of Stockholders' Equity
                     For the Period Ended September 30, 1999
                                   (Unaudited)
                             (dollars in thousands)

<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, 1998........................   1,080,000     $  1       21,738,320  $   43       (1,054,507)  $ (1,909)

   Issuance of 1999 Series A 8% Convertible
     Preferred Stock, net of offering costs.........      50,000        -
   Exercise of employees' common stock options......                                                        102,145        -
   Purchase of treasury stock.......................                                                       (601,472)    (1,722)
   Dividends declared or accrued on preferred
     stock..........................................
   Net income (loss)................................
   Unrealized (loss) on investment..................
                                                    --------------------------------------------------------------------------------
Balance at September 30, 1999.......................   1,130,000     $  1       21,738,320  $   43       (1,553,834)  $ (3,631)
                                                    --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S>                                                     <C>                       <C>                          <C>
                                                             Additional           Accumulated Other
                                                               Paid-In              Comprehensive                Accumulated
                                                              Capital                   Loss                       Deficit
                                                    --------------------------------------------------------------------------------
Balance at December 31, 1998........................    $     80,000               $       (1,429)              $    (55,714)

   Issuance of 1999 Series A 8% Convertible
     Preferred Stock, net of offering costs.........          46,260
   Exercise of employees' common stock options......              74
   Purchase of treasury stock.......................
   Dividends declared or accrued on preferred
     stock..........................................          (3,291)
   Net income (loss)................................                                                                  (7,089)
   Unrealized (loss) on investment..................                                         (514)

                                                    --------------------------------------------------------------------------------
Balance at September 30, 1999.......................    $    123,043               $       (1,943)              $    (62,803)
                                                    --------------------------------------------------------------------------------
</TABLE>

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

                                       13

<PAGE>

                 Magnum Hunter Resources, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                             <C>                             <C>
                                                                                             Nine Months Ended
                                                                                               September 30,
                                                                                ----------------------------------------------------
                                                                                    1999                            1998
                                                                                ----------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
   Net Loss.....................................................................$     (7,089)                   $     (5,935)
   Adjustments to reconcile net loss to cash provided by
   operating activities:
        Depreciation and depletion..............................................      16,383                          13,621
        Amortization of financing fees..........................................       1,852                             538
        Deferred income taxes...................................................         -                            (3,636)
        Equity in unconsolidated affiliate......................................         100                              86
        Minority interest.......................................................          86                             39
        (Gain) Loss on sale of assets...........................................        (228)                             82
        Changes in certain assets and liabilities
              Accounts and notes receivable.....................................      (5,763)                          4,739
              Other current assets..............................................         586                             435
              Accounts payable and accrued liabilities..........................       2,564                           1,533
                                                                                ----------------------------------------------------
   Net Cash Provided By Operating Activities....................................       8,491                          11,502
                                                                                ----------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of assets.................................................       1,125                             318
   Additions to property and equipment..........................................     (47,066)                        (36,537)
   Increase in deposits and other assets........................................         -                            (3,567)
   Increase in long-term note receivable........................................        (523)                           (543)
   Investment in unconsolidated affiliate.......................................         -                               (83)
                                                                                ----------------------------------------------------
   Net Cash Used In Investing Activities........................................     (46,464)                        (40,412)
                                                                                ----------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from the issuance of long-term debt and production payment..........      86,000                          36,500
   Fees paid related to financing activities....................................      (1,791)                            -
   Payments of principal on long-term debt and production payment...............     (87,886)                         (8,480)
   Payment of short-term notes payable .........................................      (2,000)                            -
   Proceeds from issuance of common and preferred stock, net of offering costs..      46,334                              79
   Purchase of treasury stock ..................................................      (1,722)                            -
   Increase in segregated funds for payment of notes payable ...................        (963)                            -
   Cash dividends paid..........................................................      (2,958)                           (656)
                                                                                ----------------------------------------------------
   Net Cash Provided By Financing Activities....................................      35,014                          27,443
                                                                                ----------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS.......................................      (2,959)                         (1,467)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................       4,853                           3,030
                                                                                ----------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......................................$      1,894                    $      1,563
                                                                                ----------------------------------------------------
</TABLE>

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

                                       14

<PAGE>

                 Magnum Hunter Resources, Inc. And Subsidiaries
              Notes To Condensed Consolidated Financial Statements
                               September 30, 1999
                                   (Unaudited)

NOTE 1 - MANAGEMENT'S REPRESENTATION

     The condensed  consolidated  balance  sheet as of September  30, 1999,  the
condensed  consolidated  statements of operations and comprehensive loss for the
three  and nine  months  ended  September  30,  1999  and  1998,  the  condnesed
consolidated  statement of  stockholders'  equity for the period ended September
30, 1999 and the  condensed  consolidated  statements of cash flows for the nine
months  ended  September  30,  1999 and 1998 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, results of
operations,  changes in  stockholders'  equity and changes in cash flows for the
three and nine month periods.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
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, 1998 annual  report on Form 10-K for the
Company.  The results of  operations  for the three and nine month periods ended
September 30, 1999, 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
inconsequential  subsidiaries),  and  the  Company  has not  presented  separate
financial  statements and other  disclosures  concerning each Guarantor  because
management  has determined  that such  information is not material to investors.
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 - RECENT EVENTS

     On  February  3, 1999,  the  Company  sold $50  million of its  Convertible
Preferred  Stock in a private  placement.  The Preferred Stock has a liquidation
value of $50 million and is convertible into the Company's common stock at $5.25
per share.  Dividends on the preferred  stock are payable in cash at the rate of
8% per annum and are  cumulative.  The Company  used the net  proceeds  from the
transaction, approximately $46.3 million, to repay senior bank debt.

     On February 17, 1999, the Company  revised its previously  announced  stock
repurchase  program  to  spend  up to $4  million  without  a share  limitation.
Subsequent to December 31, 1998, the Company  repurchased  601,472 shares of its
common stock for approximately $1.7 million.

     On June  8,  1999,  Bluebird  entered  into a $75  million  Senior  Secured
Revolving  Credit Facility with certain banks.  The revolving line of credit has
an  initial  borrowing  base of $41.5  million,  is for a term of  three  years,
provides for both "LIBOR" and "Base Rate"  (Prime)  interest rate options and is
non-recourse  to the  Company  and its  other  subsidiaries.  The  new  facility
refinanced a bridge loan facility used to acquire properties in December 1998.

     On June 9, 1999,  the Company  executed an agreement  with an April 1, 1999
effective  date to purchase oil and gas reserves  and related  equipment,  a gas
processing plant and two gas gathering systems,  located in Texas,  Oklahoma and
Arkansas for approximately $32.5 million after purchase price adjustments.

                                       15

<PAGE>

                          Magnum Hunter Resources, Inc.
        Notes To Condensed Consolidated Financial Statements (continued)
                               September 30, 1999
                                   (Unaudited)

     On July 16, 1999, the Company issued a total of 10,512,150  warrants on the
basis of one warrant for every three common  shares owned,  .63492  warrants for
every  share of 1996  Series A  Convertible  Preferred  Stock  owned and  63.492
warrants for every share of 1999 Series A 8% Convertible  Preferred Stock owned.
The warrants have an exercise price of $6.50 per share,  expire on June 30, 2002
and are  redeemable  by the Company at any time at $.01 per share.  The warrants
are publicly traded on the American Stock Exchange.

     On August 11, 1999,  the Company  announced the execution of a purchase and
sale  agreement to acquire 50% ownership  interest in the Madill Gas  Processing
Plant and associated  gathering system from Dynegy Midstream  Services,  L.P., a
wholly-owned  subsidiary of Dynegy.  This modern  cryogenic plant includes 3,350
horsepower of high-speed  compression and will have  gas-processing  capacity of
approximately  18,000 Mcf/d.  The  facilities  are located in Marshall and Bryan
counties,  Oklahoma and are being acquired in conjunction with the Company's 50%
industry  partner,  Carrera Gas Gathering Co.,  L.L.C. of Tulsa,  Oklahoma.  The
closing is expected to occur during November of 1999.

NOTE 3 - SEGMENT DATA

     The Company has three reportable  segments.  The Exploration and Production
segment  is  engaged  in  exploratory  and  development  drilling,  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
Company's  gathering  systems  and two natural  gas  liquids  processing  plants
located in two  geographic  areas that are  aggregated.  The Oil Field  Services
segment  has  seven  geographic  areas  that  are  aggregated.  The  reason  for
aggregating  the segments,  in each case, was 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.

                     [REST OF PAGE INTENTIONALLY LEFT BLANK]

                                       16

<PAGE>

                          Magnum Hunter Resources, Inc.
        Notes To Condensed Consolidated Financial Statements (continued)
                               September 30, 1999
                                   (Unaudited)

     Segment data for the periods ended  September 30, 1999 and 1998 follows (in
thousands):
<TABLE>
<CAPTION>
<S>                                       <C>             <C>            <C>         <C>            <C>            <C>


                                                         Gas Gathering,
                                         Exploration &    Marketing &    Oil Field
 Three Months Ended September 30, 1999:   Production      Processing     Services    All Other      Elimination      Consolidated
 --------------------------------------   ----------      ----------     ---------   ---------      -----------    -----------------
Revenue from external customers........   $    17,575     $     2,039    $     250   $    -         $      -       $     19,864
Intersegment revenues...................          -             4,041        1,762        -             (5,803)             -
Depreciation, depletion, amortization and
   impairment ..........................        5,563             148           51          6                             5,768

Segment profit (loss).................          4,128             408          799        (24)                            5,311
Equity earnings (losses) of affiliates..                                                   (3)                               (3)
Interest expense........................                                               (5,377)                           (5,377)
Other income............................                                                   281                              281
                                                                                                                   -----------------
Loss before income taxes................                                                                                    212
Benefit for deferred income tax.........                                                   -                                -
Minority interest.......................                                                     1                                1
                                                                                                                   -----------------
Net income..............................                                                                           $        213
                                                                                                                   -----------------

Capital expenditures (net of asset sales  $     5,930     $      (880)   $     104   $     -                       $      5,154
</TABLE>

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

                                                          Gas Gathering,
                                          Exploration &    Marketing &   Oil Field
 Three Months Ended September 30, 1998:    Production      Processing    Services    All Other      Elimination      Consolidated
 --------------------------------------    ----------      ----------    ---------   ---------      -----------    -----------------
Revenue from external customers........   $     11,634    $      1,697   $     249   $    -         $      -       $     13,580
Intersegment revenues...................           -             3,353       1,150        -             (4,503)             -
Depreciation, depletion, amortization and
   impairment...........................         4,592             163          43          7                             4,805

Segment profit (loss).................           1,017              32         209       (285)                              973
Equity earnings (losses) of affiliates..                                                   (8)                               (8)
Interest expense........................                                               (4,656)                           (4,656)
Other income............................                                                   50                                50
                                                                                                                   -----------------
Loss before income taxes................                                                                                 (3,641)
Benefit for deferred income tax ........                                                1,381                             1,381
Minority interest.......................                                                  (12)                              (12)
                                                                                                                   -----------------
Net loss................................                                                                           $     (2,272)
                                                                                                                   -----------------

Capital expenditures (net of asset sales  $     10,115    $         16   $      32   $    -                        $     10,163
</TABLE>


                                       17

<PAGE>

                          Magnum Hunter Resources, Inc.
        Notes To Condensed Consolidated Financial Statements (continued)
                               September 30, 1999
                                   (Unaudited)


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

                                                          Gas Gathering,
                                          Exploration &    Marketing &   Oil Field
 Nine Months Ended September 30, 1999:     Production      Processing    Services    All Other      Elimination      Consolidated
 -------------------------------------     ----------      ----------    ---------   ---------      -----------    -----------------
Revenue from external customers........   $     42,263    $      5,516   $     549   $    -         $     -        $      48,328
Intersegment revenues...................           -            10,212       4,485        -           (14,697)               -
Depreciation, depletion, amortization and
   impairment...........................        15,748             474         147         14                             16,383

Segment profit (loss).................           7,209             879       2,541     (1,513)                             9,116
Equity earnings (losses) of affiliates..                                                 (100)                              (100)
Interest expense........................                                              (16,588)                           (16,588)
Other income............................                                                  569                                569
                                                                                                                   -----------------
Loss before income taxes................                                                                                  (7,003)
Benefit for deferred income tax ........                                                                                     -
Minority interest.......................                                                  (86)                               (86)
                                                                                                                   -----------------
Net loss................................                                                                           $      (7,089)
                                                                                                                   -----------------

Capital expenditures (net of asset sales  $     46,638    $       (850)  $     236   $    -                        $      46,024
</TABLE>

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

                                                          Gas Gathering,
                                          Exploration &    Marketing &   Oil Field
 Nine Months Ended September 30, 1998:     Production      Processing    Services    All Other      Elimination      Consolidated
 -------------------------------------     ----------      ----------    ---------   ---------      -----------    -----------------
Revenue from external customers........   $    33,698     $      5,193   $     703   $    -         $      -       $       39,594
Intersegment revenues...................          -              9,551       3,333        -            (12,884)               -
Depreciation, depletion, amortization and
   impairment...........................       12,998              490         118         15                              13,621

Segment profit (loss).................          3,594              319         642     (1,027)                              3,528
Equity earnings (losses) of affiliates..                                                  (53)                                (53)
Interest expense........................                                              (13,407)                            (13,407)
Other income............................                                                  433                                 433
                                                                                                                   -----------------
Loss before income taxes................                                                                                   (9,499)
Benefit for deferred income tax ........                                                3,589                               3,589
Minority interest.......................                                                  (25)                                (25)
                                                                                                                   -----------------
Net loss................................                                                                           $       (5,935)
                                                                                                                   -----------------

Capital expenditures (net of asset sales  $    37,307     $         45   $     182   $    -                        $       37,534

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

                                                          Gas Gathering,
                                          Exploration &    Marketing &   Oil Field
       As of September 30, 1999:           Production      Processing    Services    All Other      Elimination      Consolidated
       -------------------------           ----------      ----------    ---------   ---------      -----------    -----------------
Segment assets..........................     $ 271,374       $ 12,980     $   7,114   $   8,388                       $ 299,856
Equity subsidiary investments...........                                                  4,166                           4,166

       As of December 31, 1998:
Segment assets..........................     $ 233,824       $ 13,729     $   7,230   $  12,359                       $ 267,142
Equity subsidiary investments...........                                                  4,266                           4,266

</TABLE>

                                       18

<PAGE>
                          PART II -- OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

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  year  ended
              December 31, 1998)
4.11          Form  of  10% Senior Note due  2007 (Incorporated by  reference to
              Registration Statement on Form S-4, File No. 333-2290)
4.12          Form  of Warrant Agreement by and between Magnum Hunter Resources,
              Inc.  and  Securities  Transfer  Corporation  as  warrants   agent
              (including form of warrant certificate)(Incorporated by  reference
              to Registration Statement on Form S-3, File No. 333-79139)
4.13          Form  of   warrant  certificate  (Incorporated  by   reference  to
              Registration Statement on Form S-3, File No. 333-79139)
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 year ended December 31, 1998)
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 year ended December 31, 1998)
10.5          Employment Agreement for Gary C. Evans (Incorporated  by reference
              to Registration Statement on Form S-4, File No. 333-2290)
10.6          Employment   Agreement  for   Matthew  C.  Lutz  (Incorporated  by
              reference to Registration Statement on Form S-4, File No.333-2290)

                                       19

<PAGE>

10.7          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)
10.8          Registration Rights Agreement, dated May 29, 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)
10.9          Purchase and Sale Agreement,  dated May 17, 1996 between  Meridian
              Oil, Inc. and ConMag Energy Corporation (Incorporated by reference
              to Form 8-K, dated June 28, 1996, filed July 12, 1996)
10.10         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)
10.11         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)
10.12         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  year  ended
              December 31, 1998)
10.13         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)
27*           Financial Data Schedule

* Filed herewith.

(B) Form 8-K's - None.

                                       20

<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                                          November 10, 1999
  -------------------------------------------------------
      Gary C. Evans
      President and Chief Executive Officer


By /s/ Chris Tong                                             November 10, 1999
  --------------------------------------------------------
     Sr. Vice President and
     Chief Financial Officer


By  /s/ David S. Krueger                                      November 10, 1999
    ------------------------------------------------------
      David S. Krueger
      Vice President and
      Chief Accounting Officer


By /s/ Morgan F. Johnston                                     November 10, 1999
   -------------------------------------------------------
      Morgan F. Johnston
      Vice President,  General Counsel and
      Secretary



                                       21