<PAGE>   1

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTER ENDED JUNE 30, 2001                  COMMISSION FILE NO. 0-25214


                               CONTOUR ENERGY CO.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                 DELAWARE                                       76-0447267
     (STATE OR OTHER JURISDICTION OF                         (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                         IDENTIFICATION NO.)


            1001 MCKINNEY ST.
                SUITE 900
             HOUSTON, TEXAS                                       77002
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)


       Registrant's telephone number, including area code: (713) 652-5200


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes  X    No
                                                ---      ---
         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.


     TITLE OF CLASS                                OUTSTANDING AT JULY 31, 2001
      Common Stock                                          13,210,935




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<PAGE>   2



                       CONTOUR ENERGY CO. AND SUBSIDIARIES
                                      INDEX

<Table>
<Caption>

                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                              <C>
PART I.  FINANCIAL INFORMATION

   Item 1. Financial Statements:
   Consolidated Balance Sheets as of December 31, 2000 and June 30, 2001 (unaudited).............  2

   Consolidated Statements of Operations for the three months and six months ended
     June 30, 2000 and 2001 (unaudited)..........................................................  3

   Consolidated Statements of Cash Flows for the six months ended
     June 30, 2000 and 2001 (unaudited)..........................................................  4

   Notes to Consolidated Financial Statements (unaudited)........................................  5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 14

PART II.  OTHER INFORMATION...................................................................... 21
</Table>




                                       1
<PAGE>   3


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                       CONTOUR ENERGY CO. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>

                                                                                   DECEMBER 31,      JUNE 30,
                                                                                       2000            2001
                                                                                   ------------    -----------
                                                                                                   (UNAUDITED)
<S>                                                                                <C>             <C>
ASSETS:
   Cash and cash equivalents ....................................................   $  18,431       $  21,924
   Accounts receivable ..........................................................      25,209          25,791
   Accounts receivable - drilling programs ......................................         112              15
   Prepaid expenses and other current assets ....................................         709           9,072
                                                                                    ---------       ---------
     Total current assets .......................................................      44,461          56,802
                                                                                    ---------       ---------
   Oil and gas properties, successful efforts method:
     Unproved properties, net ...................................................      22,229          20,302
     Properties subject to amortization .........................................     416,569         428,762
   Pipelines and other transportation assets, at cost ...........................       1,582           1,582
   Furniture, fixtures and equipment ............................................       3,601           3,606
                                                                                    ---------       ---------
                                                                                      443,981         454,252
   Less:  Accumulated depreciation, depletion and amortization ..................    (307,244)       (318,462)
                                                                                    ---------       ---------
     Total property and equipment, net ..........................................     136,737         135,790
                                                                                    ---------       ---------
   Restricted cash ..............................................................       5,200          13,800
   Other non-current assets, net ................................................       7,288           8,694
                                                                                    ---------       ---------
Total assets ....................................................................   $ 193,686       $ 215,086
                                                                                    =========       =========

LIABILITIES:
   Accounts payable and accrued expenses ........................................   $  24,649       $  26,800
   Accounts payable - drilling programs .........................................          83             285
                                                                                    ---------       ---------
     Total current liabilities ..................................................      24,732          27,085
                                                                                    ---------       ---------
   Long-term debt ...............................................................     256,798         257,393
                                                                                    ---------       ---------
Total liabilities ...............................................................     281,530         284,478
                                                                                    ---------       ---------

STOCKHOLDERS' DEFICIT:
   Preferred stock, $1.50 par value, 2,000,000 shares authorized at December 31,
     2000 and June 30, 2001; 1,365,173 shares issued and outstanding at December
     31, 2000 and June 30, 2001, (liquidation values at December 31, 2000 and
     June 30, 2001 of $45,464 and $47,256, respectively) ........................       2,048           2,048
   Common stock, $.10 par value, 20,000,000 shares authorized at December 31,
     2000 and June 30, 2001; 13,211,449 and 13,210,935 shares issued and
     outstanding at December 31, 2000 and June 30, 2001, respectively ...........       1,321           1,321
   Additional paid-in capital ...................................................     301,513         301,514
   Accumulated deficit ..........................................................    (392,726)       (380,794)
   Accumulated other comprehensive income .......................................          --           6,519
                                                                                    ---------       ---------
Total stockholders' deficit .....................................................     (87,844)        (69,392)
                                                                                    ---------       ---------
Total liabilities and stockholders' deficit .....................................   $ 193,686       $ 215,086
                                                                                    =========       =========
</Table>

                 See Notes to Consolidated Financial Statements.



                                       2
<PAGE>   4
                       CONTOUR ENERGY CO. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<Table>
<Caption>
                                                           THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                                           ---------------------------    -------------------------
                                                              2000             2001          2000           2001
                                                           ---------        ----------    ----------     ----------
<S>                                                        <C>              <C>           <C>            <C>
REVENUES:
   Oil and gas revenues ...............................      $ 17,919       $ 25,814       $ 33,706       $ 56,138
   Interest and other income ..........................           377            374            690            782
   Gain on sale of oil and gas properties .............         3,974              5          7,335              5
   Unrealized gain on derivative instruments ..........            --          3,248             --          4,164
                                                             --------       --------       --------       --------
   Total revenues .....................................        22,270         29,441         41,731         61,089
                                                             --------       --------       --------       --------

EXPENSES:
   Production expenses ................................         3,133          3,596          6,548          6,982
   Exploration expenses ...............................         2,146          3,435          4,467          8,539
   General and administrative expenses ................         1,828          3,092          3,458          5,258
   Interest and other debt expenses ...................         8,548          8,590         17,357         17,160
   Depreciation, depletion and amortization ...........         6,114          5,424         14,137         11,218
                                                             --------       --------       --------       --------
   Total expenses .....................................        21,769         24,137         45,967         49,157
                                                             --------       --------       --------       --------

Income (loss) before income taxes .....................           501          5,304         (4,236)        11,932
Income taxes ..........................................            --             --             --             --
                                                             --------       --------       --------       --------
Net income (loss) .....................................           501          5,304         (4,236)        11,932
   Less: cumulative preferred stock dividends .........          (897)          (896)        (1,792)        (1,792)
                                                             --------       --------       --------       --------
Net (loss) income applicable to common stock ..........      $   (396)      $  4,408       $ (6,028)      $ 10,140
                                                             ========       ========       ========       ========

Basic (loss) income per common share ..................      $   (.03)      $    .33       $   (.46)      $    .77
Diluted (loss) income per common share ................      $   (.03)      $    .33       $   (.46)      $    .76

Basic weighted average common shares outstanding ......        13,211         13,211         13,212         13,211
Diluted weighted average common shares outstanding ....        13,211         13,383         13,212         13,295
</Table>


                 See Notes to Consolidated Financial Statements.



                                       3
<PAGE>   5


                       CONTOUR ENERGY CO. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<Table>
<Caption>
                                                                           SIX MONTHS ENDED JUNE 30,
                                                                          ---------------------------
                                                                            2000               2001
                                                                          --------           --------
<S>                                                                       <C>                <C>
OPERATING ACTIVITIES:
   Net (loss) income .................................................    $ (4,236)          $ 11,932
   Adjustments to reconcile net (loss) income to net cash
     provided by operating activities:
     Gain on sale of assets ..........................................      (7,335)                (5)
     Unrealized gain on derivative instruments .......................          --             (4,164)
     Gain on debt redemption .........................................         (46)                --
     Depreciation, depletion and amortization ........................      14,137             11,218
     Exploration expenses ............................................       4,467              8,539
     Accretion and amortization of debt expenses and other expenses...       1,765              1,753
   Changes in operating assets and liabilities:
     Increase in accounts receivable .................................      (4,077)              (485)
     Increase in prepaid expenses and other current assets ...........      (1,835)              (188)
     Decrease (increase) in other non-current assets .................         500                (56)
     (Decrease) increase in accounts payable and accrued expenses.....        (206)             2,353
                                                                          --------           --------
   Net cash provided by operating activities .........................       3,134             30,897
                                                                          --------           --------

INVESTING ACTIVITIES:
   Expenditures for exploration and development activities ...........     (12,074)           (18,809)
   Change in restricted cash .........................................          --             (8,600)
   Proceeds from sale of properties ..................................      23,807                  5
                                                                          --------           --------
   Net cash provided by (used in) investing activities ...............      11,733            (27,404)
                                                                          --------           --------

FINANCING ACTIVITIES:
   Redemption and retirement of subordinated and senior notes .......       (8,650)                --
   Other ............................................................           (5)                --
                                                                          --------           --------
   Net cash used in financing activities ............................       (8,655)                --
                                                                          --------           --------
Increase in cash and cash equivalents ...............................        6,212              3,493
Cash and cash equivalents, beginning of period ......................       10,370             18,431
                                                                          --------           --------
Cash and cash equivalents, end of period ............................     $ 16,582           $ 21,924
                                                                          ========           ========
</Table>


                 See Notes to Consolidated Financial Statements.



                                       4
<PAGE>   6




                       CONTOUR ENERGY CO. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

         General. The accompanying unaudited interim consolidated financial
statements of Contour Energy Co. (the "Company") have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission in accordance with accounting principles generally accepted in the
United States of America for interim financial information. These financial
statements reflect all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation in all material respects of the
results for the interim periods presented. The results of operations for the
three months and six months ended June 30, 2001 are not necessarily indicative
of results to be expected for the full year. The accounting policies followed by
the Company are set forth in Note 1 to the financial statements in its Annual
Report on Form 10-K for the year ended December 31, 2000. These unaudited
consolidated interim financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's 2000
Annual Report on Form 10-K.

NOTE 2 - SALE OF PROPERTIES

         In March 2000, the Company sold a portion of a volumetric overriding
royalty interest (the "VORI") for net proceeds of $19.8 million. Since the
portion of the VORI sold (approximately 16.5 Bcf) represents production
commencing April 1, 2003, the sale of the VORI will not impact the Company's
operating cash flows until 2003. In the first quarter of 2000, the Company
recognized a gain of approximately $3.4 million related to this transaction. In
the second quarter of 2000, the Company sold its mostly non-producing interests
in the East Cameron offshore area and recorded a $4.0 million gain related to
this sale.

NOTE 3 - HEDGING ACTIVITIES

         In accordance with the Company's Risk Management Policy and its
commodity risk strategy, the Company periodically uses forward sales contracts,
natural gas and crude oil price swap agreements, collars and options to reduce
exposure to downward price fluctuations on its natural gas and crude oil
production. The Company does not engage in speculative transactions. Price swap
agreements generally provide for the Company to receive or make counter-party
payments on the differential between a fixed price and a variable indexed price
for natural gas and crude oil. Collars combine put and call options to establish
a floor and a ceiling. The Company normally employs the average NYMEX price for
the last three days of the contract for natural gas and the monthly average of
closing NYMEX prices for crude oil as the underlying index ("Index Price"). To
the extent the Index Price closes above the established ceiling the Company must
make payments to the counter-party on the differential between the Index Price
and the ceiling. Conversely, if the Index Price closes below the established
floor, the counter-party must make payments to the Company on the differential
between the Index Price and the floor. If the Index Price closes between the
ceiling and the floor, no settlement is due. During the second quarter of 2000,
the Company's hedging activities also covered the oil and gas production
attributable to the interest in such production of the public unitholders in its
subsidiary partnerships. Beginning in 2001, the Company no longer hedges the
production of these subsidiary partnerships.

         The Company accounts for its derivative instruments in accordance with
Statement of Financial Standards No. 133, "Accounting for Derivative and Hedging
Activities ("SFAS 133") effective January 1, 2001. The Company has designated
its crude oil and natural gas derivative instruments as cash flow hedges, as
defined. When designating a derivative instrument as a hedge, SFAS 133 requires,
at inception, that the Company demonstrate that historically the value of the
underlying asset being hedged closely follows the value of the derivative
instrument. The Company used regression analysis to establish the effectiveness
of each of its derivative instruments during transition. It will continue to use
this method for any new hedge transactions in the future, such as those entered
into in May 2001. Once deemed effective and designated as a hedge the change in
the intrinsic value of the derivative instrument is reported through Other
Comprehensive Income ("OCI") with the change in the extrinsic value (time and
market volatility) reported through earnings. The offset is in the Company's
balance sheet in the form of an asset or a liability. Gains or losses on the
derivative instrument reported in OCI will be reclassified to earnings in the
period in which earnings are impacted by the hedged item.


                                       5
<PAGE>   7

          Upon adoption of SFAS 133 on January 1, 2001, the Company recorded a
transition adjustment of $(27.8) million, which was recorded as an adjustment of
the Company's stockholders' deficit. Included in the transition adjustment was
$(5.7) million relating to the value associated with market volatility and time
("extrinsic value") until expiration of the Company's cost less collar
derivative instruments. Of the $(5.7) million, $(4.3) million was associated
with the Company's July through December 2001 collars. SFAS 133 requires that
changes in the extrinsic value be recognized in the earnings of the Company as
such changes in value occur. For the quarter and six months ended June 30, 2001,
the Company recognized unrealized gains of $3.2 million and $4.2 million,
respectively, for the changes in extrinsic value. The $4.2 million unrealized
gains for the six months ended June 30, 2001, is comprised of $4.4 million of
unrealized gains on derivative contracts that will settle in the second half of
2001 and $(0.2) million of unrealized losses associated with derivative
contracts that will settle during 2002. In accordance with SFAS 133, unrealized
gains or losses are reversed as the contracts are settled. This will result in
the recognition of $4.4 million in unrealized losses during the second half of
2001.

         As of June 30, 2001, the fair value of the Company's derivative
instruments was $10.7 million, of which $3.7 million relates to contracts that
will expire during 2001 and $7.0 million relating to contracts that will expire
in 2002. During the next twelve months, the Company will settle derivative
contracts with a fair value at June 30, 2001 of $8.2 million.

         During the quarter and the six months ended June 30, 2001, hedging
activities decreased oil and gas revenues by $0.4 million and $9.3 million,
respectively. Additionally, in the second quarter 2001, the Company recorded a
$13.2 million valuation adjustment to OCI based on changes in the intrinsic
value of its derivative instruments. Of this amount, $6.2 million relates to the
$(27.8) million transition adjustment recorded on January 1, 2001. Hedging
activities decreased oil and gas revenues by approximately $2.3 million and $2.4
million for the three months and six months ended June 30, 2000, respectively,
as compared to estimated revenues had no hedging activities been conducted.

         Through natural gas price swap agreements, the Company hedged 30,000
Mmbtu per day of its natural gas production for the three months ended June 30,
2000 at an average NYMEX quoted price of $2.60 per Mmbtu, before transaction and
transportation costs. Through natural gas collars, the Company hedged 45,000
Mmbtu per day of its natural gas production for the three months ended June 30,
2001 at an average floor of $3.77 per Mmbtu and an average ceiling of $5.11 per
Mmbtu, before transaction and transportation costs. As of June 30, 2001, the
Company has three collars in place totaling 8,280,000 Mmbtus, or 45,000 Mmbtu
per day, of natural gas production for July through December 2001. The first
collar is for 15,000 Mmbtu per day at a floor of $4.00 per Mmbtu and a ceiling
of $5.33 per Mmbtu. The second collar is for 15,000 Mmbtu per day at a floor of
$3.75 per Mmbtu and a ceiling of $5.00 per Mmbtu. However if the Index Price
falls below $3.09 per Mmbtu, the Company receives the Index Price plus $0.66 per
Mmbtu. The third collar is for 15,000 Mmbtu per day at a floor of $3.55 per
Mmbtu and a ceiling of $5.00 per Mmbtu. However if the Index Price falls below
$3.00 per Mmbtu, the Company receives the Index Price plus $0.55 per Mmbtu. On
May 10, 2001, the Company entered into a natural gas commodity swap transaction
to sell 20,000 Mmbtus per day for July through December 2002 at a fixed price of
$4.30 per Mmbtu. As of June 30, 2001, the Company has hedged 20,000 Mmbtu per
day of its natural gas production for calendar year 2002 via two price swaps
agreements at an average price of $4.58 per Mmbtu.

          Through crude oil price swap agreements, the Company hedged 835
barrels per day of its crude oil production for the three months ended June 30,
2000 at an average NYMEX quoted price of $27.65 per bbl, before transaction and
transportation costs. Through crude oil collars, the Company hedged 500 barrels
per day of its crude oil production for the three months ended June 30, 2001 at
a floor price of $25.24 per barrel and a ceiling price of $32.00 per barrel,
before transaction and transportation costs. As of June 30, 2001, 92,000
barrels, or 500 barrels per day, of the Company's crude oil production for July
through December 2001 have been hedged by a crude oil collar agreement with a
floor price of $25.24 per barrel and a ceiling price of $32.00 per barrel.
However, if the Index Price falls below $22.00 per barrel the Company receives
the Index Price plus $3.24 per barrel.

         The Company is required to provide collateral for any hedges (through
swap or other agreements) to cover counter-party risk. Hence, the volume of oil
and/or natural gas production the Company can hedge is limited, thereby reducing
the ability of the Company to mitigate the impact of volatile commodity prices.
The Company has posted $8.0 million in the form of a letter of credit as
collateral required by its counter-party through December 2002 supported by
restricted cash in the same amount. Accordingly, $8.0 million was reclassified
to restricted cash in the second quarter 2001.


                                       6
<PAGE>   8


NOTE 4 - PREFERRED STOCK


         The Company has not declared quarterly dividends of $0.65625 per
preferred share for February 1, 1998 through August 1, 2001, aggregating
approximately $13.4 million. Further dividends on the preferred stock are
restricted under the Company's indentures governing its 103/8% Senior
Subordinated Notes and its 14% Senior Secured Notes. No interest is payable on
preferred stock arrearages. Because the Company has not paid dividends on the
preferred stock for a period of more than six quarters the holders of preferred
stock, as a group, elected two additional directors to the Company's Board of
Directors in July 2000.

NOTE 5 - EARNINGS PER SHARE

         The basic (loss) income per common share as shown on the Consolidated
Statements of Operations reflects net income (loss) less cumulative preferred
stock dividends, whether or not declared, divided by the weighted average number
of common shares outstanding during the respective periods. In calculating
diluted (loss) income per common share, common shares issuable under stock
options and convertible preferred stock are added to the weighted average common
shares outstanding when dilutive. The following table sets forth the components
of the Company's basic and diluted earnings per share calculations:


<Table>
<Caption>
                                                                                 Weighted
                                                                                  Average
                                                                               Common Shares      Per Share
                                                        Net Income (Loss)       Outstanding         Amount
                                                        -----------------      -------------     ------------
                                                          ($/thousands)         (thousands)      (in dollars)
<S>                                                     <C>                    <C>                <C>
   Three Months Ended June 30, 2001
       Basic                                                    4,408              13,211                 .33
       Effect of dilutive stock options                            --                 172                  --
                                                             --------            --------             -------
       Diluted                                                  4,408              13,383                 .33
                                                             ========            ========             =======
   Three Months Ended June 30, 2000
       Basic and diluted                                         (396)             13,211                (.03)
                                                             ========            ========             =======
   Six Months Ended June 30, 2001
       Basic                                                   10,140              13,211                 .77
       Effect of dilutive stock options                            --                  84                (.01)
                                                             --------            --------             -------
       Diluted                                                 10,140              13,295                 .76
                                                             ========            ========             =======
   Six Months Ended June 30, 2000
       Basic and diluted                                       (6,028)             13,212                (.46)
                                                             ========            ========             =======
</Table>


NOTE 6 - OTHER COMPREHENSIVE INCOME

         The Company reports comprehensive income in accordance with Statement
of Financial Accounting Standard No. 130. The Company's comprehensive income
(loss) for the three-month and six-month periods ended June 30, 2000 was $0.5
million and $(4.2) million, respectively, the same as reported net income
(loss). The Company's comprehensive income for the three-month and six-month
periods ended June 30, 2001 was $18.5 million and $18.4 million, respectively,
including other comprehensive income gains of $13.2 million and $6.5 million,
respectively, for valuation changes in the Company's derivative instruments.

NOTE 7 - NEW ACCOUNTING PRONOUNCEMENTS

         In the fourth quarter of 2000, the Company adopted Emerging Issues Task
Force Issue No. 00-10 ("EITF No. 00-10") accounting for Shipping and Handling
Fees and Costs. EITF No. 00-10 addresses how shipping and handling fees should
be classified in the income statement. As a result of EITF No. 00-10, the
Company has reclassified $0.5 million and $1.1 million, respectively, of
transportation and compression expenses in the three-month and six-month periods
ending June 30, 2000 from oil and gas revenues to production expenses.


                                       7
<PAGE>   9


         In July 2001, the Financial Accounting Standards Board ("FASB") issued
two new pronouncements: Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS 141 prohibits the use of the pooling-of-interest method for
business combinations initiated after June 30, 2001 and also applies to all
business combinations accounted for by the purchase method that are completed
after June 30, 2001. SFAS 142, effective for fiscal years beginning after
December 15, 2001, addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition. This Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements. The Company is currently evaluating the provisions of SFAS
141 and SFAS 142 and has not adopted such provisions in its June 30, 2001
financial statements. However, the Company expects no impact on its financial
statements from the adoption of these standards.

NOTE 8 - STOCK OPTION AND STOCK AWARD PLAN

         On March 22, 2001, the Company's board of directors adopted the Contour
Energy Co. 2001 Stock Option and Stock Award Plan (the "2001 Plan"), which was
approved by the Company's stockholders at its Annual Meeting of Stockholders on
May 31, 2001. As of June 30, 2001, stock options covering 760,000 shares of
common stock have been granted and an additional 340,000 shares were available
for options under the 2001 Plan.


                                       8
<PAGE>   10


NOTE 9 - GUARANTOR FINANCIAL STATEMENTS

         Kelley Oil Corporation, a wholly-owned subsidiary of the Company and
Kelley Operating Company Ltd., an indirect wholly-owned partnership of the
Company are guarantors of the Company's Series B 14% Senior Secured Notes due
2002-2003 and of the Company's Series B and Series D 10 3/8% Senior Subordinated
Notes due 2006. Concorde Gas Marketing, Inc. ("Concorde"), a wholly owned
subsidiary of the Company, is also a guarantor of the Company's Series B 14%
Senior Secured Notes due 2002-2003. The following guarantor consolidating
condensed financial statements present:

         1.       Consolidating condensed balance sheets as of December 31, 2000
                  and June 30, 2001, consolidating condensed statements of
                  operations for the three months and six months ended June 30,
                  2000 and 2001 and consolidating condensed statements of cash
                  flows for the six months ended June 30, 2000 and 2001.

         2.       Contour Energy Co. (the "Parent"), combined Guarantor
                  Subsidiaries (other than Concorde), Concorde and combined
                  Non-Guarantor Subsidiaries, all with their investments in
                  subsidiaries accounted for using the equity method.

         3.       Elimination entries necessary to consolidate the Parent and
                  all of its subsidiaries.


                      CONSOLIDATING CONDENSED BALANCE SHEET
                                DECEMBER 31, 2000
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                      COMBINED                         COMBINED
                                                     GUARANTOR                       NON-GUARANTOR
                                          PARENT    SUBSIDIARIES       CONCORDE      SUBSIDIARIES    ELIMINATIONS     CONSOLIDATED
                                        ---------   ------------    -------------    -------------   ------------     ------------
<S>                                     <C>         <C>             <C>              <C>             <C>              <C>
ASSETS:
   Current assets ....................  $ 293,925     $ 106,318        $  10,944       $     424       $(367,150)       $  44,461
   Property and equipment, net .......         --       130,291               --           5,823             623          136,737
   Restricted cash ...................         --         5,200               --              --              --            5,200
   Other non-current assets, net .....   (118,547)       10,221               --              --         115,614            7,288
                                        ---------     ---------        ---------       ---------       ---------        ---------
     Total assets ....................  $ 175,378     $ 252,030        $  10,944       $   6,247       $(250,913)       $ 193,686
                                        =========     =========        =========       =========       =========        =========

LIABILITIES AND STOCKHOLDERS' DEFICIT:
   Current liabilities ...............  $   6,424     $ 378,462        $   5,824       $   1,172       $(367,150)       $  24,732
   Long-term debt ....................    256,798            --               --              --              --          256,798
   Stockholders' (deficit) equity ....    (87,844)     (126,432)           5,120           5,075         116,237          (87,844)
                                        ---------     ---------        ---------       ---------       ---------        ---------
     Total liabilities and
    stockholders' equity (deficit) ...  $ 175,378     $ 252,030        $  10,944       $   6,247       $(250,913)       $ 193,686
                                        =========     =========        =========       =========       =========        =========
</Table>



                                       9
<PAGE>   11
                      CONSOLIDATING CONDENSED BALANCE SHEET
                                  JUNE 30, 2001
                                 (IN THOUSANDS)
<Table>
<Caption>

                                                       COMBINED                     COMBINED
                                                      GUARANTOR                   NON-GUARANTOR
                                           PARENT    SUBSIDIARIES    CONCORDE    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                         ---------   ------------  -----------    -------------  ------------   ------------
<S>                                      <C>         <C>           <C>            <C>            <C>            <C>
ASSETS:
   Current assets ....................   $ 278,452     $  90,526     $   7,916    $   1,367      $(321,459)      $  56,802
   Property and equipment, net .......          --       128,985            --        5,342          1,463         135,790
   Restricted cash ...................          --        13,800            --           --             --          13,800
   Other non-current assets, net .....     (83,778)       14,137            --           --         78,335           8,694
                                         ---------     ---------     ---------    ---------      ---------       ---------
     Total assets ....................   $ 194,674     $ 247,448     $   7,916    $   6,709      $(241,661)      $ 215,086
                                         =========     =========     =========    =========      =========       =========

LIABILITIES AND STOCKHOLDERS' DEFICIT:
   Current liabilities ...............   $   6,673     $ 338,793     $   2,020    $   1,058      $(321,459)      $  27,085
   Long-term debt ....................     257,393            --            --           --             --         257,393
   Stockholders' (deficit) equity ....     (69,392)      (91,345)        5,896        5,651         79,798         (69,392)
                                         ---------     ---------     ---------    ---------      ---------       ---------
     Total liabilities and
       stockholders' equity (deficit).   $ 194,674     $ 247,448     $   7,916    $   6,709      $(241,661)      $ 215,086
                                         =========     =========     =========    =========      =========       =========
</Table>





                CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED JUNE 30, 2000
                                 (IN THOUSANDS)

<Table>
<Caption>

                                                   COMBINED                       COMBINED
                                                  GUARANTOR                     NON-GUARANTOR
                                     PARENT      SUBSIDIARIES      CONCORDE     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                    --------     ------------     ---------     -------------   ------------   ------------
<S>                                 <C>          <C>              <C>           <C>            <C>            <C>
Revenues .........................  $     --       $ 20,837       $    682       $    752       $     (1)        $ 22,270
Costs and expenses ...............    (8,686)       (12,991)          (210)          (539)           657          (21,769)
Equity in earnings (loss) of
  subsidiaries....................     9,187            685             --             --         (9,872)              --
                                    --------       --------       --------       --------       --------         --------
     Net income (loss) ...........  $    501       $  8,531       $    472       $    213       $ (9,216)        $    501
                                    ========       ========       ========       ========       ========         ========
</Table>



                CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED JUNE 30, 2001
                                 (IN THOUSANDS)

<Table>
<Caption>

                                                   COMBINED                       COMBINED
                                                  GUARANTOR                     NON-GUARANTOR
                                     PARENT      SUBSIDIARIES      CONCORDE     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                    --------     ------------     ---------     -------------  ------------   ------------
<S>                                 <C>          <C>             <C>            <C>            <C>            <C>
Revenues .......................... $     --       $ 28,387       $    340       $    714       $     --        $ 29,441
Costs and expenses ................   (8,746)       (14,572)          (128)          (702)            11         (24,137)
Equity in earnings (loss) of
  subsidiaries.....................   14,050            224             --             --        (14,274)             --
                                    --------       --------       --------       --------       --------        --------
    Net income (loss) ............. $  5,304       $ 14,039       $    212       $     12       $(14,263)       $  5,304
                                    ========       ========       ========       ========       ========        ========
</Table>





                                       10

<PAGE>   12

                CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                      COMBINED                       COMBINED
                                                     GUARANTOR                     NON-GUARANTOR
                                        PARENT      SUBSIDIARIES      CONCORDE     SUBSIDIARIES     ELIMINATIONS    CONSOLIDATED
                                       --------     ------------      --------     -------------    ------------    ------------
<S>                                    <C>          <C>               <C>          <C>              <C>             <C>
Revenues ..........................    $     --       $ 38,266        $ 1,337       $  1,550         $    578        $ 41,731
Costs and expenses ................     (17,636)       (27,977)          (445)        (1,096)           1,187         (45,967)
Equity in earnings (loss) of
  subsidiaries ....................      13,400          1,346             --             --          (14,746)             --
                                       --------       --------        -------       --------         --------        --------
    Net (loss) income .............    $ (4,236)      $ 11,635        $   892       $    454         $(12,981)       $ (4,236)
                                       ========       ========        =======       ========         ========        ========
</Table>



                CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2001
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                         COMBINED                       COMBINED
                                                        GUARANTOR                     NON-GUARANTOR
                                           PARENT      SUBSIDIARIES      CONCORDE     SUBSIDIARIES     ELIMINATIONS   CONSOLIDATED
                                          --------     ------------      --------     -------------    ------------   ------------
<S>                                       <C>          <C>               <C>          <C>              <C>            <C>
Revenues .............................    $     --       $ 57,920        $ 1,069       $  2,100         $     --       $ 61,089
Costs and expenses ...................     (17,476)       (31,132)          (293)        (1,095)             839        (49,157)
Equity in earnings (loss) of
  subsidiaries .......................      29,408          1,781             --             --          (31,189)            --
                                          --------       --------        -------       --------         --------       --------
    Net income (loss) ................    $ 11,932       $ 28,569        $   776       $  1,005         $(30,350)      $ 11,932
                                          ========       ========        =======       ========         ========       ========
</Table>



                                       11
<PAGE>   13



                CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                 (IN THOUSANDS)

<Table>
<Caption>

                                                           COMBINED                        COMBINED
                                                           GUARANTOR                    NON-GUARANTOR
                                             PARENT      SUBSIDIARIES      CONCORDE      SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                            --------     ------------      --------     -------------    ------------   ------------
<S>                                         <C>          <C>               <C>          <C>              <C>            <C>
OPERATING ACTIVITIES:
   Net (loss) income ..................... $ (4,236)      $ 11,634         $    892       $    454        $(12,980)      $ (4,236)
   Non-cash (loss) income adjustments ....  (11,681)        11,284               --            405          12,980         12,988
   Changes in operating assets
     and liabilities .....................   24,572        (29,141)            (892)          (157)             --         (5,618)
                                           --------       --------         --------       --------        --------       --------
Net cash provided by (used in)
   operating activities ..................    8,655         (6,223)              --            702              --          3,134
                                           --------       --------         --------       --------        --------       --------

INVESTING ACTIVITIES:
   Expenditures for exploration and
     development activities ..............       --        (12,173)              --             99              --        (12,074)
   Proceeds from the sale of properties...       --         23,807               --             --              --         23,807
   Distributions from partnerships .......       --            801               --             --            (801)            --
                                           --------       --------         --------       --------        --------       --------
Net cash provided by (used in) investing
   activities ...........................        --         12,435               --             99            (801)        11,733
                                           --------       --------         --------       --------        --------       --------

FINANCING ACTIVITIES:
   Redemption and retirement on
     subordinated debentures ............    (8,650)            --               --             --              --         (8,650)
   Distributions to partners ............        --             --               --           (801)            801             --
   Other ................................        (5)            --               --             --              --             (5)
                                           --------       --------         --------       --------        --------       --------
Net cash (used in) provided by financing
   activities ...........................    (8,655)            --               --           (801)            801         (8,655)
                                           --------       --------         --------       --------        --------       --------
Increase in cash and cash
   equivalents ..........................        --          6,212               --             --              --          6,212
Cash and cash equivalents,
   beginning of period ..................        12         10,358               --             --              --         10,370
                                           --------       --------         --------       --------        --------       --------
Cash and cash equivalents,
     end of period ......................  $     12       $ 16,570         $     --       $     --        $     --       $ 16,582
                                           ========       ========         ========       ========        ========       ========
</Table>



                                       12
<PAGE>   14



                CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2001
                                 (IN THOUSANDS)

<Table>
<Caption>

                                                          COMBINED                       COMBINED
                                                         GUARANTOR                     NON-GUARANTOR
                                            PARENT      SUBSIDIARIES      CONCORDE     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                           --------     ------------     ---------     -------------  ------------   ------------
<S>                                        <C>          <C>              <C>           <C>            <C>            <C>
OPERATING ACTIVITIES:
   Net income (loss) ....................  $ 11,932       $ 28,569       $    776         $  1,005       $(30,350)      $ 11,932
   Non-cash income (loss) adjustments ...   (27,655)        14,118             --              528         30,350         17,341
   Changes in operating assets
     and liabilities ....................    15,723        (12,265)          (776)          (1,058)            --          1,624
                                           --------       --------       --------         --------       --------       --------
Net cash provided by operating
    activities ..........................        --         30,422             --              475             --         30,897
                                           --------       --------       --------         --------       --------       --------

INVESTING ACTIVITIES:
   Expenditures for exploration and
     development activities .............        --        (18,763)            --              (46)            --        (18,809)
   Change in restricted cash ............        --         (8,600)            --               --             --         (8,600)
   Proceeds from sale of properties .....        --              5             --               --             --              5
   Distributions from partnerships ......        --            429             --               --           (429)            --
                                           --------       --------       --------         --------       --------       --------
Net cash used in investing activities ...        --        (26,929)            --              (46)          (429)       (27,404)
                                           --------       --------       --------         --------       --------       --------

FINANCING ACTIVITIES:
   Distributions to partners ............        --             --             --             (429)           429             --
                                           --------       --------       --------         --------       --------       --------
   Net cash (used in) provided by
     financing activities ...............        --             --             --             (429)           429             --
                                           --------       --------       --------         --------       --------       --------
Increase in cash and
   cash equivalents .....................        --          3,493             --               --             --          3,493
Cash and cash equivalents,
   beginning of period ..................        --         18,431             --               --             --         18,431
                                           --------       --------       --------         --------       --------       --------
Cash and cash equivalents,
   end of period ........................  $     --       $ 21,924       $     --         $     --       $     --       $ 21,924
                                           ========       ========       ========         ========       ========       ========
</Table>



                                       13
<PAGE>   15

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

          Hedging Activities. In accordance with the Company's Risk Management
Policy and its commodity risk strategy, the Company periodically uses forward
sales contracts, natural gas and crude oil price swap agreements, collars and
options to reduce exposure to downward price fluctuations on its natural gas and
crude oil production. The Company does not engage in speculative transactions.
Price swap agreements generally provide for the Company to receive or make
counter-party payments on the differential between a fixed price and a variable
indexed price for natural gas and crude oil. Collars combine put and call
options to establish a floor and a ceiling. The Company normally employs the
average NYMEX price for the last three days of the contract for natural gas and
the monthly average of closing NYMEX prices for crude oil as the underlying
index ("Index Price"). To the extent the Index Price closes above the
established ceiling the Company must make payments to the counter-party on the
differential between the Index Price and the ceiling. Conversely, if the Index
Price closes below the established floor, the counter-party must make payments
to the Company on the differential between the Index Price and the floor. If the
Index Price closes between the ceiling and the floor, no settlement is due.
During the second quarter of 2000, the Company's hedging activities also covered
the oil and gas production attributable to the interest in such production of
the public unitholders in its subsidiary partnerships. Beginning in 2001, the
Company no longer hedges the production of these subsidiary partnerships.

         The Company accounts for its derivative instruments in accordance with
Statement of Financial Standards No. 133, "Accounting for Derivative and Hedging
Activities ("SFAS 133") effective January 1, 2001. The Company has designated
its crude oil and natural gas derivative instruments as cash flow hedges, as
defined. When designating a derivative instrument as a hedge, SFAS 133 requires,
at inception, that the Company demonstrate that historically the value of the
underlying asset being hedged closely follows the value of the derivative
instrument. The Company used regression analysis to establish the effectiveness
of each of its derivative instruments during transition. It will continue to use
this method for any new hedge transactions in the future, such as those entered
into in May 2001. Once deemed effective and designated as a hedge the change in
the intrinsic value of the derivative instrument is reported through Other
Comprehensive Income ("OCI") with the change in the extrinsic value (time and
market volatility) reported through earnings. The offset is in the Company's
balance sheet in the form of an asset or a liability. Gains or losses on the
derivative instrument reported in OCI will be reclassified to earnings in the
period in which earnings are impacted by the hedged item.

          Upon adoption of SFAS 133 on January 1, 2001, the Company recorded a
transition adjustment of $(27.8) million, which was recorded as an adjustment of
the Company's stockholders' equity. Included in the transition adjustment was
$(5.7) million relating to the value associated with market volatility and time
("extrinsic value") until expiration of the Company's costless collar derivative
instruments. Of the $(5.7) million, $(4.3) million was associated with the
Company's July through December 2001 collars. SFAS 133 requires that changes in
the extrinsic value be recognized in the earnings of the Company as such changes
in value occur. For the quarter and six months ended June 30, 2001, the Company
recognized unrealized gains of $3.2 million and $4.2 million, respectively, for
the changes in extrinsic value. The $4.2 million unrealized gains for the six
months ended June 30, 2001, is comprised of $4.4 million of unrealized gains on
derivative contracts that will settle in the second half of 2001 and $(0.2)
million of unrealized losses associated with derivative contracts that will
settle during 2002. In accordance with SFAS 133, unrealized gains or losses are
reversed as the contracts are settled. This will result in the recognition of
$4.4 million in unrealized losses during the second half of 2001.

         As of June 30, 2001, the fair value of the Company's derivative
instruments was $10.7 million, of which $3.7 million relates to contracts that
will expire during 2001 and $7.0 million relating to contracts that will expire
in 2002. During the next twelve months, the Company will settle derivative
contracts with a fair value at June 30, 2001 of $8.2 million.

         During the quarter and the six months ended June 30, 2001, hedging
activities decreased oil and gas revenues by $0.4 million and $9.3 million,
respectively, and unrealized gains on derivative contracts of $3.2 million and
$4.2 million, respectively, were reported on the Company's Consolidated
Statements of Operations. Additionally, in the second quarter 2001, the Company
recorded a $13.2 million valuation adjustment to OCI based on changes in the


                                       14
<PAGE>   16

intrinsic value of its derivative instruments. Of this amount, $6.2 million
relates to the $(27.8) million transition adjustment recorded on January 1,
2001. Hedging activities decreased oil and gas revenues by approximately $2.3
million and $2.4 million for the three months and six months ended June 30,
2000, respectively, as compared to estimated revenues had no hedging activities
been conducted.

         Through natural gas price swap agreements, the Company hedged 30,000
Mmbtu per day of its natural gas production for the three months ended June 30,
2000 at an average NYMEX quoted price of $2.60 per Mmbtu, before transaction and
transportation costs. Through natural gas collars, the Company hedged 45,000
Mmbtu per day of its natural gas production for the three months ended June 30,
2001 at an average floor of $3.77 per Mmbtu and an average ceiling of $5.11 per
Mmbtu, before transaction and transportation costs. As of June 30, 2001, the
Company has three collars in place totaling 8,280,000 Mmbtus, or 45,000 Mmbtu
per day, of natural gas production for July through December 2001. The first
collar is for 15,000 Mmbtu per day at a floor of $4.00 per Mmbtu and a ceiling
of $5.33 per Mmbtu. The second collar is for 15,000 Mmbtu per day at a floor of
$3.75 per Mmbtu and a ceiling of $5.00 per Mmbtu. However if the Index Price
falls below $3.09 per Mmbtu, the Company receives the Index Price plus $0.66 per
Mmbtu. The third collar is for 15,000 Mmbtu per day at a floor of $3.55 per
Mmbtu and a ceiling of $5.00 per Mmbtu. However if the Index Price falls below
$3.00 per Mmbtu, the Company receives the Index Price plus $0.55 per Mmbtu. On
May 10, 2001, the Company entered into a natural gas commodity swap transaction
to sell 20,000 Mmbtus per day for July through December 2002 at a fixed price of
$4.30 per Mmbtu. As of June 30, 2001, the Company has hedged 20,000 Mmbtu per
day of its natural gas production for calendar year 2002 via two price swaps
agreements at an average price of $4.58 per Mmbtu.

          Through crude oil price swap agreements, the Company hedged 835
barrels per day of its crude oil production for the three months ended June 30,
2000 at an average NYMEX quoted price of $27.65 per bbl, before transaction and
transportation costs. Through crude oil collars, the Company hedged 500 barrels
per day of its crude oil production for the three months ended June 30, 2001 at
a floor price of $25.24 per barrel and a ceiling price of $32.00 per barrel,
before transaction and transportation costs. As of June 30, 2001, 92,000
barrels, or 500 barrels per day, of the Company's crude oil production for July
through December 2001 have been hedged by a crude oil collar agreement with a
floor price of $25.24 per barrel and a ceiling price of $32.00 per barrel.
However, if the Index Price falls below $22.00 per barrel the Company receives
the Index Price plus $3.24 per barrel.

         The Company is required to provide collateral for any hedges (through
swap or other agreements) to cover counter-party risk. Hence, the volume of oil
and/or natural gas production the Company can hedge is limited, thereby reducing
the ability of the Company to mitigate the impact of volatile commodity prices.
The Company has posted $8.0 million in the form of a letter of credit as
collateral required by its counter-party through December 2002 supported by
restricted cash in the same amount. Accordingly, $8.0 million was reclassified
to restricted cash in the second quarter 2001. The Company is exposed to credit
risk from counterparty nonperformance on natural gas forward sales contracts and
derivative financial instruments. The Company has not experienced counterparty
nonperformance on these agreements and does not anticipate any in future
periods.



                                       15
<PAGE>   17


RESULTS OF OPERATIONS

         The following table sets forth certain operating data regarding net
production, average sales prices and expenses associated with the Company's oil
and natural gas operations for the periods indicated.


<Table>
<Caption>

                                                                       THREE MONTHS ENDED         SIX MONTHS ENDED
                                                                             JUNE 30,                 JUNE 30,
                                                                     ---------------------     ---------------------
                                                                       2000         2001         2000         2001
                                                                     --------     --------     --------     --------
<S>                                                                  <C>          <C>          <C>          <C>
NET PRODUCTION DATA:
   Oil and other liquid hydrocarbons (Mbbls)......................      103.6         81.4        215.9        172.5
   Natural gas (Mmcf).............................................      4,623        4,966        9,431        9,933
   Natural gas equivalent (Mmcfe).................................      5,245        5,455       10,726       10,968
AVERAGE SALES PRICE PER UNIT (INCLUDING EFFECTS OF HEDGING):
   Oil and other liquid hydrocarbons (per Bbl)....................   $  28.61     $  25.55     $  26.05     $  25.58
   Natural gas (per Mcf)..........................................       3.13         4.75         2.87         5.19
   Natural gas equivalent (per Mcfe)..............................       3.32         4.71         3.05         5.10
COST PER MCFE:
   Lifting costs..................................................   $    .42     $    .44     $    .44     $    .43
   Transportation and compression expenses........................        .10          .11          .10          .11
   Severance and ad valorem taxes.................................        .08          .11          .08          .10
   General and administrative expenses............................        .35          .57          .32          .48
   Depreciation, depletion and amortization (oil and
     gas activities)..............................................       1.14          .99         1.29         1.02
   Interest expense, excluding accretion and amortization.........       1.47         1.41         1.45         1.40
</Table>

         Three Months Ended June 30, 2001 and 2000. The Company's oil and gas
revenues increased 44% to $25.8 million for the second quarter of 2001 compared
to $17.9 million in the same period of 2000, primarily the result of increased
natural gas prices (52%) and increased natural gas production (7%), partially
offset by decreased crude oil production (21%) and crude oil prices (11%). The
increase in natural gas production is attributable to higher entitlements
received from the Company's volumetric overriding royalty interest ("VORI")
beginning January 1, 2001, that was mostly offset by natural declines in other
producing areas. Lower crude oil production was primarily due to normal declines
in the Company's producing areas. The second quarter of 2000 includes a gain of
$4.0 million related to the sale of mostly non-producing interests in the East
Cameron offshore area.

         Interest and other income in the second quarter of 2001 was $0.4
million, the same as reported in the second quarter of 2000.

         Revenues in the second quarter 2001 included a $3.2 million unrealized
gain relating to the Company's derivative instruments. This represents the
change in the extrinsic value (time and market volatility) of the Company's
derivative contracts during the second quarter 2001 in accordance with SFAS 133.
The transition portion of this amount is $3.4 million and will be reversed in
the second half of 2001.

         Production expenses for the second quarter of 2001 increased by 15% to
$3.6 million from $3.1 million in the same period last year, resulting primarily
from higher insurance costs and higher severance taxes due to increased
production and tax rates in Louisiana.

         Exploration expenses totaled $3.4 million in the second quarter of 2001
and $2.1 million in the corresponding period of 2000, an increase of 60%. This
increase was primarily due to higher dry hole expense, seismic and G&G expense,
and allocated overhead costs.

         General and administrative ("G&A") expenses of $3.1 million in the
second quarter of 2001 increased 69% compared to $1.8 million in the
corresponding period last year. This increase was primarily due to expense under
the Company's Unit Performance Plan, costs associated with the Company's office
move, severance payments associated with staff reorganization and a legal
settlement, partially offset by a higher allocation to exploration expense. On a
unit of production basis, general and administrative expenses were $0.57 per
Mcfe in the second quarter of 2001 compared



                                       16
<PAGE>   18

to $0.35 per Mcfe in the corresponding quarter of 2000. Excluding charges in the
second quarter of 2001 for expense under the Company's Unit Performance Plan,
severance costs, a legal settlement, and cost of the office move, G&A expenses
were $0.32 per Mcfe.

         Interest and other debt expenses of $8.6 million in the current quarter
represents a small increase over the $8.5 million in the same period of 2000.

         Depreciation, depletion and amortization ("DD&A") expenses decreased
11% from $6.1 million in the second quarter of 2000 to $5.4 million in the
current period, primarily as a result of a decrease in the units-of-production
DD&A rate for oil and gas activities from $1.14 per Mcfe in the second quarter
of 2000 to $0.99 per Mcfe in the current period. The impact of the lower
unit-of-production DD&A rate was offset slightly by increased equivalent
production for the current quarter.

         The Company recognized net income of $5.3 million in the second quarter
of 2001 and net income of $0.5 million in the same period last year. The reasons
for the increase in earnings are described in the foregoing discussion.

         Six Months Ended June 30, 2001 and 2000. The Company's oil and gas
revenues of $56.1 million for the first six months of 2001 increased 67%
compared to $33.7 million in the same period of 2000, primarily the result of
increased natural gas prices (81%) and natural gas production (5%), partially
offset by lower crude oil production (20%) and crude oil prices (2%). The
increase in natural gas production is attributable to higher entitlements
received from the Company's VORI beginning January 1, 2001, that was mostly
offset by natural declines in other producing areas. Lower crude oil production
was primarily due to normal declines in the Company's producing areas. The first
six months of 2000 includes a gain of $3.4 million on the sale of a portion of
the Company's VORI, and a $4.0 million gain on the sale of mostly non-producing
interests in the East Cameron offshore area.

         Interest and other income increased slightly from $0.7 million in the
first half of 2000 to $0.8 million in the first half of 2001 due to higher
average cash balances in the current period.

         Revenues for the first six months of 2001 included a $4.2 million
unrealized gain relating to the Company's derivative instruments. This
represents the change in the extrinsic value (time and market volatility) of the
Company's derivative contracts during the first half of 2001. In accordance with
SFAS 133, the transition portion of these unrealized gains will be reversed as
the contracts are settled, resulting in recognizing $4.4 million in unrealized
losses in the second half of 2001.

         Production expenses for the first six months of 2001 increased by 7% to
$7.0 million from $6.5 million in the same period last year, resulting primarily
from higher lifting costs, insurance costs, transportation and compression
expenses and severance taxes due to higher production and tax rates in
Louisiana. These increases were partially offset by lower workover expense.
Lifting costs per Mcfe for the first six months of 2001 was $0.43 compared to
$0.44 for the same period in 2000.

         Exploration expenses totaled $8.5 million in the first half of 2001 and
$4.5 million in the corresponding period of 2000, an increase of 91%. This
increase was primarily due to higher dry hole expense, seismic and G&G expense,
and allocated overhead costs, partially offset by lower delay rentals and
unproved property abandonment expense.

         G&A expense increased by 52% to $5.3 million in the first six months of
2001 compared to $3.5 million in the corresponding period last year. The first
six months of 2001 includes an $0.8 million charge for severance related to the
retirement of the Company's CEO. Additionally, the first half of 2001 includes
an $0.8 million charge relating to the Company's Unit Performance Plan and
charges for severance costs related to staff reorganization, a legal settlement
and the Company's office move, partially offset by a higher allocation to
exploration expense. On a unit of production basis, G&A expenses were $0.48 per
Mcfe in the first half of 2001 compared to $0.32 per Mcfe in the corresponding
period of 2000. Excluding charges in the first six months of 2001 for expense
under the Company's Unit Performance Plan, severance costs, a legal settlement,
and cost of the office move, G&A expenses were $0.28 per Mcfe.


                                       17
<PAGE>   19

         Interest and other debt expenses of $17.2 million in the first half of
2001 decreased from $17.4 million in the same period of 2000. The decrease in
interest and other debt expenses resulted primarily from the retirement and
redemption of the Company's 8 1/2% subordinated debentures in 2000.

         DD&A expenses decreased 21% from $14.1 million in the first six months
of 2000 to $11.2 million in the current period, primarily the result of a lower
unit-of-production rate in the first half of 2001, partially offset by higher
equivalent production volumes. The units-of-production DD&A rate for oil and gas
activities was $1.29 per Mcfe in the first six months of 2000, including a $1.3
million DD&A charge related to the Bayou Sauveur field (Bourg wells). Excluding
the impact of the Bayou Sauveur field, the DD&A rate for the first six months of
2000 was $1.18 per Mcfe compared to $1.02 for the first six months of 2001.

         The Company recognized net income of $11.9 million in the first six
months of 2001 and a net loss of $4.2 million in the same period last year. The
reasons for the increase in earnings are described in the foregoing discussion.

         The results of operations for the quarter and six months ended June 30,
2001 are not necessarily indicative of results to be expected for the full year.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash provided by operating activities during the first six months
of 2001 aggregated $30.9 million. Funds used in investing activities were
comprised of $18.8 million for exploration and development activities and an
$8.6 million increase in restricted cash. The change in the restricted cash was
comprised of $8.0 million relating to collateral requirements for the Company's
derivative instruments and $0.6 million relating to the Company's plugging and
abandonment escrow account. As result of these activities, cash and cash
equivalents increased from $18.4 million at December 31, 2000 to $21.9 million
as of June 30, 2001. As of June 30, 2001, the Company had working capital of
$29.7 million, compared to working capital of $19.7 million at the end of 2000.
On April 16, 2001, the Company paid $15.4 million in interest due on its 14%
Senior Secured Notes and its 10 3/8% Senior Subordinated Notes (collectively,
the "Notes").

         Capital Resources. The Company does not currently have access to a
revolving credit facility to supplement its cash needs. The terms of the Notes
significantly limit the ability of the Company to incur additional funded
indebtedness. Accordingly, funding of the Company's obligations and capital
expenditure program during 2001 will be provided by cash on hand and cash flows
from operations.

         The Company continued to receive the benefit of strong commodity prices
in the second quarter 2001 that has improved the Company's cash flows and
allowed expansion of our capital expenditure program. However, the commodity
markets are volatile and there is no certainty that current oil and natural gas
prices can be sustained at these levels, as recent declines have shown. To help
ensure a base level of cash flow, the Company periodically enters into hedge
contracts. On May 10, 2001, the Company entered into a natural gas commodity
swap transaction to sell 20,000 Mmbtus per day for July through December 2002 at
a fixed price of $4.30 per Mmbtu. The Company's hedging activities are more
fully described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Hedging Activities" and in Note 3 in Notes to
Consolidated Financial Statements contained elsewhere in this Report.

         The Company had $259.8 million principal amount of debt outstanding as
of June 30, 2001 ($257.4 million recorded on the balance sheet), requiring $30.8
million in annual cash interest payments. The Company's outstanding $2.625
Convertible Exchangeable Preferred Stock (the "Preferred Stock") is cumulative,
requiring dividends to accumulate, currently at the rate of $3.6 million
annually, and carries liquidation preferences over the Common Stock totaling
$47.3 million at June 30, 2001, including dividend arrearages of $13.1 million.
The Company has not declared the quarterly dividends of $0.65625 per preferred
share for February 1, 1998 through August 1, 2001, aggregating approximately
$13.4 million. Further dividends are restricted under the Company's indentures
governing its Notes. No interest is payable on Preferred Stock arrearages.
Because the Company has not paid dividends on the preferred stock for a period
of more than six quarters the holders of preferred stock, as a group, elected
two additional directors to the Company's Board of Directors in July 2000.


                                       18
<PAGE>   20

         Capital Commitments. The Company's 2001 capital expenditure budget
provides for $34.5 million to be expended on development and exploratory
activities primarily in Louisiana, south Texas and the shallow waters of the
Gulf of Mexico. An additional $5.4 million is budgeted for delay rentals and
overhead. As with the Company's other obligations discussed above, funding for
this level of capital expenditures will be provided by cash on hand and cash
flow from operations which is dependent on a number of variables, including
commodity prices, production levels and operating costs. In the first six months
of 2001, the Company's capital expenditures totaled $16.2 million, including
$7.4 million for development drilling and recompletions and $7.0 million for
exploration drilling. An additional $2.6 million was expended in the first six
months of 2001 for delay rentals and overhead. In the second quarter 2001, the
Company participated in the drilling of 10 gross (2.8 net) wells, of which 6
gross (1.5 net) were found to be productive.

         Restricted Cash. At June 30, 2001, the Company had a restricted cash
balance of $13.8 million. Of this amount, $5.8 million relates to an established
escrow account to meet future plugging and abandonment liabilities. The Company
is required to fund this account in the amount of $100,000 a month until the
balance reaches $7.5 million. The Company is required to provide collateral for
any hedges (through swap or other agreements) to cover counter-party risk. The
Company has posted $8.0 million in the form of a letter of credit as collateral
required by its counter-party supported by restricted cash in the same amount.

         Inflation and Changing Prices. Oil and natural gas prices, as with most
commodities, are highly volatile, have fluctuated during recent years and
generally have not followed the same pattern as inflation.

         Accounting Pronouncements. In the fourth quarter of 2000, the Company
adopted Emerging Issues Task Force Issue No. 00-10 ("EITF No. 00-10") accounting
for Shipping and Handling Fees and Costs. EITF No. 00-10 addresses how shipping
and handling fees should be classified in the income statement. As a result of
EITF No. 00-10, the Company has reclassified $0.5 million and $1.1 million,
respectively, of transportation and compression expenses in the three-month and
six-month periods ending June 30, 2000 from oil and gas revenues to production
expenses.

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
two new pronouncements: Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS 141 prohibits the use of the pooling-of-interest method for
business combinations initiated after June 30, 2001 and also applies to all
business combinations accounted for by the purchase method that are completed
after June 30, 2001. SFAS 142, effective for fiscal years beginning after
December 15, 2001, addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition. This Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements. The Company is currently evaluating the provisions of SFAS
141 and SFAS 142 and has not adopted such provisions in its June 30, 2001
financial statements. However, the Company expects no impact on its financial
statements from the adoption of these standards.



                                       19
<PAGE>   21

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

           The Company uses its senior and subordinated debt instruments to
finance a significant portion of its operations. The Company currently has no
outstanding floating rate debt and therefore its earnings and cash flows are not
subject to interest rate risk. However, the fair values of the Company's
fixed-rate debt instruments are subject to interest-rate risk. Generally, the
fair market value of debt with a fixed interest rate will increase as interest
rates fall, and the fair market value will decrease as interest rates rise. The
Company is also exposed to market risk from changes in commodity prices. In the
normal course of business the Company enters into hedging transactions,
including forward sales contracts, natural gas and crude oil price swap
agreements, collars and options to mitigate its exposure to commodity price
movements, but not for trading or speculative purposes. See Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Hedging Activities and Note 3 to the Consolidated Financial Statements for
further discussion on the Company's derivative instruments. For debt obligations
the table below presents principal cash flows and weighted average interest
rates by year of maturity.

<Table>
<Caption>

                                             MATURITY DATE
                           --------------------------------------------------
                                                                                                         FAIR VALUE
                             2001      2002       2003       2004      2005    THEREAFTER     TOTAL      @ 6/30/01
                           --------  --------   --------   --------  --------  -----------  --------     ----------
<S>                        <C>       <C>        <C>        <C>       <C>       <C>          <C>          <C>
Fixed Debt:
   14.00% (Maturity)(1)...            $4,120    $100,720                                    $104,840       $103,750
   10.38% (Maturity)......                                                        $155,000   155,000        106,950
                                      ------    --------                          --------  --------       --------
Total Maturity ...........            $4,120    $100,720                          $155,000  $259,840       $210,700
                                      ======    ========                          ========  ========       ========
Blended weighted
   average interest rate..             14.00%      14.00%                           10.38%
</Table>

(1)  The 14% notes mature in 2002 and 2003 at premiums ranging from 103% to
     105% of the stated principal amount.


                                       20
<PAGE>   22


Forward-looking Statements

         Statements contained in this Report and other materials filed or to be
filed by the Company with the Securities and Exchange Commission (as well as
information included in oral or other written statements made or to be made by
the Company or its representatives) that are forward-looking in nature are
intended to be "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, relating to matters such as anticipated
operating and financial performance, business prospects, developments and
results of the Company. Actual performance, prospects, developments and results
may differ materially from any or all anticipated results due to economic
conditions and other risks, uncertainties and circumstances partly or totally
outside the control of the Company, including rates of inflation, natural gas
prices, uncertainty of reserve estimates, rates and timing of future production
of oil and gas, exploratory and development activities, acquisition risks,
changes in the level and timing of future costs and expenses related to drilling
and operating activities and those risk factors described on pages 14 to 16 of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000.

         Words such as "anticipates," "believes," "expects, "estimates,"
"projects" and similar expressions are "intended to identify forward-looking
statements. Forward-looking statements include the risk factors described in the
Company's Form 10-K mentioned above.


                           PART II. OTHER INFORMATION

ITEM 3. ARREARAGES IN PAYMENT OF DIVIDENDS

         As of August 1, 2001, total dividends in arrears on the Company's
$2.625 Convertible Exchangeable Preferred Stock ("Preferred Stock") were $13.4
million.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         As of the close of business on April 16, 2001, the record date for the
Annual Meeting of Stockholders of the Company held on May 31, 2001 (the
"Meeting"), there were issued and outstanding (i) 13,210,935 shares of common
stock, $.10 par value, of the Company (the "Common Stock"), and (ii) 1,365,173
shares of $2.625 convertible exchangeable preferred stock, $1.50 par value, of
the Company (the "Preferred Stock"). The meeting included the election of seven
directors and approval of the Contour Energy Co. 2001 Stock Option and Stock
Award Plan to be voted on by holders of Common Stock and Preferred Stock voting
together as a single class, with each share entitled to one vote, plus the
election of two additional directors to be voted on only by holders of Preferred
Stock voting as a single class with each share entitled to one vote.

         There were represented at the Meeting the holders of 12,533,247 shares
of Common Stock and 968,435 shares of Preferred Stock, of which 12,390,449
shares of Common Stock and 968,435 shares of Preferred Stock were represented by
valid proxies, and the balance were present at the Meeting voting by ballot. All
of the incumbent directors listed in the Company's proxy statement for the
meeting were reelected. The number of votes cast for and against each nominee
are set forth below:

<Table>
<Caption>

                                                             VOTES FOR       VOTES WITHHELD
                                                             ---------       --------------
<S>                                                         <C>              <C>
John J. Conklin, Jr......................................   13,046,198           455,484
Ralph P. Davidson........................................   13,046,293           455,389
Adam P. Godfrey..........................................   13,045,986           455,696
Rick G. Lester..........................................    13,043,794           457,888
Edward Park..............................................   13,045,883           455,799
Kenneth R. Sanders.......................................   13,048,320           453,362
Ward W. Woods............................................   13,042,554           459,128
</Table>


                                       21
<PAGE>   23

     The Contour Energy Co. 2001 Stock Option and Stock Award Plan received
approval of the stockholders with 8,929,430 tabulated votes cast for this
proposal, 542,091 votes cast against this proposal and 359,864 votes abstained.

     The nominees for the two additional director positions voted on by
Preferred Stockholders only and the tabulated votes cast for each nominee are
set forth below:

<Table>
<Caption>
                                                                                    VOTES FOR
                                                                                    ---------
<S>                                                                                 <C>
Lee Balter......................................................................      77,644
Thomas M. Garasic...............................................................      70,249
Seth W. Hamot...................................................................     464,041
Robert D. Kincaid...............................................................     431,772
</Table>


     Mr. Seth W. Hamot and Mr. Robert D. Kincaid received the most votes of the
nominees and hence were re-elected to the two preferred stockholder board
positions.

ITEM 5. OTHER INFORMATION

     The Company reports estimated proven reserves as of July 1, 2001 of 170.8
Bcfe


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits:

         EXHIBIT
         NUMBER:      EXHIBIT
         -------      --------
           10.1       Contour Energy Co. 2001 Stock Option and Stock Award Plan.

     (b) Reports on Form 8-K:

     The Registrant filed no reports on Form 8-K during the second quarter of
2001.



                                       22
<PAGE>   24


                                   SIGNATURES

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


                                                 CONTOUR ENERGY CO.



Date: August 13, 2001               By:             /s/Rick G. Lester
                                         --------------------------------------
                                                     Rick G. Lester
                                                 Chief Financial Officer
                                                (Duly Authorized Officer)
                                             (Principal Accounting Officer)



                                       23
<PAGE>   25


                                 EXHIBIT INDEX

<Table>
<Caption>

         EXHIBIT
         NUMBER       EXHIBIT
         -------      --------
<S>                   <C>
           10.1       Contour Energy Co. 2001 Stock Option and Stock Award Plan.
</Table>