-------------------------------------
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                      ------------------------------------

                                    FORM 10-Q

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

                  For the Quarterly Period Ended March 31, 2002

                                       OR

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

                        For the transition period from to

                          Commission File No. 000-33275


                              WARREN RESOURCES INC.
             (Exact Name of Registrant as Specified in its Charter.)


              New York                                          11-3024080
    -------------------------------                             ----------
    (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                     Identification Number)


 489 Fifth Avenue, New York, New York                            10017
 -------------------------------------                           -----
 (Address of Principal Executive Offices)                     (Zip Code)

               Registrant's telephone number, including area code:

                                 (212) 697-9660

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 and 15 (d) of the Securities  Exchange Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days.

                                 Yes  X  No
                                     ---   ----

The  aggregate  number of  Registrant's  outstanding  shares on May 14, 2002 was
17,539,548 shares of Common Stock, .001 par value.


                               Page 1 of 16 pages



<PAGE>


                              WARREN RESOURCES INC.
                              ---------------------


                                      INDEX
                                      -----


<TABLE>
<CAPTION>

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

               Item 1.     Financial Statements

               Balance sheets as of  December 31, 2001 and March 31, 2002....................................       3

               Statements of operations for the three months ended March  31, 2002 and 2001..................       4

               Statements of cash flows for the three months ended March 31, 2002 and 2001...................       5

               Notes to financial statements................................................................        6

               Item 2.  Management's discussion and analysis of results of operations
                        and financial condition.............................................................       10

               Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........................       13


PART II -      OTHER INFORMATION............................................................................       14

               Item 1. Legal Proceedings....................................................................       14

               Item 2. Changes in Securities................................................................       15

               Item 3. Defaults upon Senior Securities......................................................       15

               Item 4. Submission of Matters to a Vote of Security Holders..................................       15

               Item 5. Other Information....................................................................       15

               Item 6. Exhibits and Report on Form 8-K......................................................       15

               Signatures...................................................................................       16

</TABLE>
                               Page 2 of 16 pages

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                     Warren Resources Inc. and Subsidiaries

                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                    March 31,           December 31,
                                                                                 2002 (Unaudited)          2001
                                                                                -----------------      ------------
<S>                                                                             <C>                    <C>
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                                  $      17,167,045      $ 22,923,605
     Accounts receivable                                                                4,356,374         5,543,326
     Accounts receivable from affiliated partnerships                                     832,308           801,661
     Other investments - trading securities                                                14,089           205,989
     Restricted investments in U.S. Treasury Bonds -
       available-for-sale, at fair value (amortized cost of
       $1,174,315 and $1,142,637 respectively)                                          1,192,766         1,187,123
     Other current assets                                                                 663,187         1,294,986
     Assets held for sale                                                                       -         3,757,900
                                                                                -----------------      ------------
       Total current assets                                                            24,225,769        35,714,590
                                                                                -----------------      ------------
OTHER ASSETS
     Oil and gas properties -  at cost, based on successful
       efforts method of accounting, net of accumulated depletion
       and amortization                                                               41,263,153         39,974,798
     Property and equipment - at cost, net                                               864,059            891,304
     Restricted investments in U.S. Treasury Bonds - available for
       sale, at fair value (amortized cost of $7,434,666 and $7,399,989
       respectively)                                                                   7,565,473          7,791,555
     Deferred bond offering costs (net of accumulated amortization
       of $2,640,062 and $2,535,160 respectively)                                      3,801,006          3,905,908
     Goodwill                                                                          3,430,246          3,430,246
     Other assets                                                                      3,810,347          3,191,813
                                                                                ----------------       ------------
        Total other assets                                                            60,734,284         59,185,624
                                                                                ----------------       ------------
                                                                                $     84,960,053       $ 94,900,214
                                                                                ================       ============
LIABILITIES AND SHAREHOLDERS' (DEFICIT)

CURRENT LIABILITIES
     Current maturities of debentures                                           $      5,748,870          4,747,370
     Current maturities of other long-term liabilities                                         -            392,721
     Accounts payable and accrued expenses                                             2,171,326          6,511,137
     Deferred income - turnkey drilling contracts with affiliated
       partnerships                                                                   29,199,637         32,943,586
                                                                                ----------------       ------------
       Total current liabilities                                                      37,119,833         44,594,814
                                                                                ----------------       ------------
LONG-TERM LIABILITIES
     Debentures, less current portion                                                 52,264,830         53,391,330
     Other long-term liabilities                                                       1,609,500             29,191
     Contingent repurchase obligation                                                          -          3,318,993
                                                                                ----------------       ------------
                                                                                      53,874,330         56,739,514
                                                                                ----------------       ------------
SHAREHOLDERS' DEFICIT
     Common Stock (50,000,000 shares $.001 par value authorized:
       17,539,548 and 17,537,579 shares issued and outstanding,
       respectively)                                                                      17,540             17,538
     Additional paid-in-capital                                                       52,197,667         52,197,669
     Accumulated deficit                                                             (58,329,151)       (58,903,571)
     Accumulated other comprehensive income, net of applicable
       income taxes of $60,000 and $171,792 respectively                                  92,468            264,260
                                                                                ----------------       ------------
                                                                                      (6,021,476)        (6,424,104)

     Less common stock in Treasury - at cost; (5,191 and 4,563
       shares respectively)                                                               12,634             10,010
                                                                                ----------------       ------------
     Total shareholders' deficit                                                      (6,034,110)        (6,434,114)
                                                                                ----------------       ------------
                                                                                $     84,960,053       $ 94,900,214
                                                                                ================       ============
</TABLE>

   The accompanying notes are an integral part of these financial statements

                               Page 3 of 16 pages
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                     Warren Resources Inc. and Subsidiaries

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                          Three months ended March 31,
<TABLE>
<CAPTION>
                                                                                        (Unaudited)
                                                                                ------------------------------
                                                                                     2002               2001
                                                                                -----------        -----------
<S>                                                                             <C>                <C>
REVENUES
     Turnkey contracts with affiliated partnerships                             $ 3,743,949        $ 5,020,204
     Oil and gas sales from marketing activities                                  2,877,611          3,915,958
     Well services                                                                  719,814          1,387,618
     Oil and gas sales                                                               67,835             84,584
     Net gain (loss) on investments                                                 137,332             (1,607)
     Interest and other income                                                      545,851            650,906
                                                                                -----------        -----------
                                                                                  8,092,392         11,057,663
                                                                                -----------        -----------
EXPENSES
     Turnkey contracts                                                            2,724,696          4,462,454
     Cost of marketed oil and gas purchased from affiliated partnerships          2,831,446          4,424,470
     Well services                                                                  399,424            729,825
     Production & exploration                                                     1,543,157            149,518
     Depreciation, depletion and amortization                                       327,363            567,228
     General and administrative                                                   1,288,072            454,772
     Interest                                                                     1,353,475          1,458,955
     Contingent repurchase obligation                                            (3,064,661)                 -
                                                                                -----------        -----------
                                                                                  7,402,972         12,247,222
                                                                                -----------        -----------
Earnings / (loss) before provision for income taxes                                 689,420         (1,189,559)

PROVISION FOR INCOME TAXES
          Deferred income tax expense (benefit)                                     115,000             (4,000)
                                                                                -----------        -----------
                                                                                    115,000             (4,000)
                                                                                -----------        -----------

          NET EARNINGS / (LOSS)                                                 $   574,420        $(1,185,559)
                                                                                ===========        ===========
EARNINGS (LOSS) PER SHARE
     Basic                                                                      $      0.03        $     (0.07)
     Diluted                                                                    $      0.03        $     (0.07)

WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING
     Basic                                                                       17,534,641         17,528,261
     Diluted                                                                     18,344,642         17,528,261

</TABLE>

   The accompanying notes are an integral part of these financial statements


                               Page 4 of 16 pages
<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1 - FINANCIAL STATEMENTS

                     Warren Resources Inc. and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                      For the three months ended March 31,
<TABLE>
<CAPTION>
                                                                                         (Unaudited)
                                                                                ------------------------------
                                                                                      2002              2001
                                                                                ------------      ------------
<S>                                                                             <C>               <C>
Cash flows from operating activities:
Net earnings (loss)                                                             $   574,420       $ (1,185,559)

Adjustments to reconcile net earnings (loss) to net cash
  (used in) operating activities:
  Accretion of discount on available-for-sale debt securities                      (129,565)          (121,234)
  Amortization and write-off of deferred bond offering costs                        104,902            109,506
  Loss on sale of US treasury bonds - available for sale                              3,571                  -
  Depreciation, depletion and amortization                                          327,363            567,228
  Deferred tax expense (benefit)                                                    115,000             (4,000)
  Leases contributed to partnerships                                                254,332
Change in assets and liabilities:
  (Increase) decrease in trading securities                                         191,900           (341,593)
  (Increase) decrease in accounts receivable - trade                              1,636,952            (88,574)
  (Increase) decrease in accounts receivable from affiliated partnerships           (30,647)         3,158,366
  Decrease in other assets                                                           13,265            242,291
  Decrease in accounts payable and accrued expenses                              (4,339,811)        (2,395,226)
  Decrease in deferred income from affiliated partnerships                       (3,743,949)        (5,020,204)
  Decrease in contingent repurchase obligation to affiliated
    partnerships                                                                 (3,318,993)                 -
  Increase in other long term liabilities                                         1,609,500                  -
                                                                                -----------       ------------

          Net cash used in operating activities                                  (6,731,760)        (5,078,999)

Cash flows from investing activities:
  Purchases of U.S. Treasury Bonds - available-for-sale                             (14,906)                 -
  Purchases of oil and gas properties                                            (1,794,920)        (6,640,772)
  Purchases of property and equipment                                                  (241)          (315,900)
  Cash received from the sale of assets, net of selling fees                      3,276,869                  -
  Proceeds from U.S. Treasury Bonds - available-for-sale                             74,546            367,973
                                                                                -----------       ------------

          Net cash provided by (used in) investing activities                     1,541,348         (6,588,699)

Cash flows from financing activities:
  Borrowings (payments) on other long-term debt                                    (563,524)          (235,225)
  Deferred offering costs                                                                 -           (208,650)
  Repurchase of common stock                                                         (2,624)                 -
                                                                                -----------       ------------

          Net cash used in financing activities                                    (566,148)          (443,875)
                                                                                -----------       ------------

          NET DECREASE IN CASH AND CASH EQUIVALENTS                              (5,756,560)       (12,111,573)

Cash and cash equivalents at beginning of period                                 22,923,605         58,969,552
                                                                                -----------       ------------

Cash and cash equivalents at end of period                                      $17,167,045       $ 46,857,979
                                                                                ===========       ============
Supplemental disclosure of cash flow information
  Cash paid for interest, net of amount capitalized                               1,245,277          1,266,012
  Cash paid for income taxes                                                              -                  -

</TABLE>

   The accompanying notes are an integral part of these financial statements


                               Page 5 of 16 pages
<PAGE>

                     WARREN RESOURCES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002


NOTE 1 - ORGANIZATION

Warren Resources Inc. (the  "Company"),  a New York  corporation,  was formed on
June  12,  1990  for  the  purpose  of  acquiring  and  developing  oil  and gas
properties.  Primarily,  these  properties  are  located in New  Mexico,  Texas,
Wyoming, Montana, North Dakota, Oklahoma,  Michigan and California. In addition,
the Company  serves as the managing  general  partner (the "MGP") to  affiliated
partnerships and joint ventures.

The accompanying  unaudited  financial  statements and related notes present our
consolidated  financial position as of March 31, 2002 and December 31, 2001, the
results of our  operations  for the three  months ended March 31, 2002 and March
31, 2001 and cash flows for the three months ended March 31, 2002 and 2001.  The
unaudited  financial  statements have been prepared in accordance with generally
accepted  accounting  principles for interim financial  information and with the
instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating results for the
three months ended March 31, 2002 are not necessarily  indicative of the results
that may be expected  for the fiscal  year ending  December  31,  2002.  Certain
reclassifications  have been made to the 2001  amounts  to  conform  to the 2002
presentation.  The accounting  policies followed by the Company are set forth in
Note A to the  Company's  financial  statements  in Form 10-K for the year ended
December 31, 2001. These interim  financial  statements and notes thereto should
be read  in  conjunction  with  our  annual  consolidated  financial  statements
presented in our 2001 Annual Report on Form 10-K.

NOTE 2 - REPURCHASE OBLIGATION

Certain Company  sponsored oil and gas partnerships  provide investor partners a
right to tender their interest to the Company for repurchase at specified future
dates.  In the event the Company  does  repurchase  the investor  interest,  the
Company  will be entitled  to receive any future cash flows from the  underlying
oil and gas properties.  The  determination  of whether a contingent  repurchase
obligation exists is based upon the estimated discounted present value of future
net revenues of proved developed and undeveloped  reserves of each  partnership,
net of future  capital costs and the Company's  working  interest,  from reserve
studies prepared by petroleum  engineers compared to the formula purchase price.
A contingent  repurchase  obligation  expense and  liability of  $3,318,993  was
recognized  at December 31, 2001 based on oil and gas pricing at March 15, 2002.
During  the first  quarter  of 2002,  the  Company  assigned  additional  proved
undeveloped  leases located in the Wilmington  Unit to various  partnerships  to
satisfy  the  contingent   repurchase   obligation.   The  partnerships'  proved
undeveloped  leases must be drilled by the  Company  using funds from an outside
party  or from  the  Company  to  provide  future  revenues  which  satisfy  the
contingent repurchase  obligation.  At March 31, 2002, the Company has estimated
that the proved undeveloped reserves will require  approximately  $30,500,000 of
future  development  costs during 2002 through 2005 for drilling and  completing
these wells compared to  approximately  $26,800,000 at December 31, 2001.  Based
upon this calculation  using prices at March 31, 2002, the Company's  contingent
repurchase  obligation  was  extinguish.  As a result,  a gain of  approximately
$3,065,000 was recognized for the three-month period ending March 31, 2002.

NOTE 3 - PLUGGING AND ABANDONMENT LIABILITY

Based upon updated information  provided by the Company's engineers in May 2002,
the Company  determined  that a plugging and  abandonment  liability  existed at
March 31, 2002  relating to certain  shut-in  properties  located in Texas,  New
Mexico and Wyoming.  The Company  expects to begin the  remediation  on the well
sites in 2003 and has recorded a liability of approximately $1,371,000, which is
reflected in other long-term  liabilities in the  consolidated  balance sheet at
March 31, 2002 and in production and  exploration  expenses in the  consolidated
statements of operation for the three-months ended March 31, 2002.


                               Page 6 of 16 pages

<PAGE>
                     WARREN RESOURCES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002


NOTE 4 - EARNINGS PER SHARE

Basic net  earnings  (loss) per share is  calculated  by dividing  net  earnings
(loss) by the  weighted  average  number of shares of common  stock  outstanding
during  the  period.  Diluted  earnings  (loss) per share is  determined  on the
assumption that outstanding  stock options have been converted using the average
exercise for the period and all convertible securities have been converted.

The following data show the amounts used in computing  earnings (loss) per share
and the effect on earnings  (loss) and the weighted  average number of shares of
dilutive potential common stock.

<TABLE>
<CAPTION>
                                                                                Three months Ended
                                                                                     March 31,
                                                                                   2002          2001
                                                                                -----------  -----------
<S>                                                                             <C>          <C>
Net earnings (loss)                                                             $   574,420  $(1,185,559)
                                                                                ===========  ===========
Weighted average number of shares outstanding - Basic                            17,534,641   17,528,261

Effect of dilutive stock options                                                    810,001       -
                                                                                -----------  -----------
Weighted average number of common shares and dilutive potential                  18,344,642   17,528,261
  common stock used in EPS, assuming dilution.                                  ===========   ==========

Net earnings (loss) per share - Basic                                                 $0.03      $ (0.07)

Net earnings (loss) per share - Diluted                                               $0.03      $ (0.07)
</TABLE>


Potential  common  shares  of  6,197,773   relating  to  convertible  bonds  and
debentures  were excluded from the  computation of diluted  earnings  (loss) per
share because they are antidilutive.

NOTE 5 - LONG TERM DEBT

The Convertible  Bonds and Debentures may be converted from the date of issuance
until  maturity at 100% of principal  amount into common stock of the company at
prices  ranging  from $4.50 to $50.  Each year the  holders  of the  Convertible
Debentures  may  tender  to the  Company  up to 10% of the  aggregate  Debenture
issued.
<TABLE>
<CAPTION>
                                                                                  March 31       December 31
                                                                                    2002            2001
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
12% Secured Convertible Debentures, due August 31, 2002                         $   470,000     $    470,000
12% Sinking Fund Convertible Debentures, due August 31, 2002                         55,000           55,000
12% Sinking Fund Debentures, due December 31, 2007                               15,390,000       15,390,000
12% Secured Convertible Debentures, due December 31, 2009                           840,000          840,000
12% Secured Convertible Bonds, due December 31, 2009                              1,740,000        1,740,000
13.02% Sinking Fund Convertible Debentures, due December 31, 2010                15,060,200       15,095,200
13.02% Sinking Fund Convertible Debentures, due December 31, 2015                12,647,500       12,737,500
12% Secured Convertible Bonds, due December 31, 2016                              1,580,000        1,580,000
12% Sinking Fund Convertible Debentures, due December 31, 2017                    7,215,000        7,215,000
12% Secured Convertible Bonds, due December 31, 2020                              1,780,000        1,780,000
12% Secured Convertible Bonds, due December 31, 2022                              1,236,000        1,236,000
                                                                                -----------     ------------
                                                                                 58,013,700       58,138,700
Less: Current Portion                                                             5,748,870        4,747,370
                                                                                -----------     ------------
         Long Term Portion                                                      $52,264,830     $ 53,391,330
                                                                                ===========     ============
</TABLE>

                               Page 7 of 16 pages

<PAGE>

                     WARREN RESOURCES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002


NOTE 6 - INCOME TAXES

For the quarters ended March 31, 2002 and 2001, the Company's  effective  income
tax rate  differed  from  the  federal  statutory  rate  due to  changes  in the
valuation allowance for deferred tax assets.

NOTE 7 - SALE OF ASSETS

On February 14th, 2002, the Company  completed the sale of substantially  all of
the assets of Pinnacle, which consists if the  workover/recompletion rig portion
of the Company's well service business,  for a purchase price of $4.2 million to
Basic Energy Services,  Inc. ("Basic Energy") Under the purchase agreement dated
as of December 31,  2001,  Basic Energy paid the Company $3.7 million in cash at
the closing and $500,000 in contract  drilling  services credits issued by Basic
Energy,  which may be utilized  by the  Company  over a three year period with a
maximum of  $25,000  in any month.  Additionally,  the  Company  entered  into a
noncompete agreement with Basic Energy.


NOTE 8 - BUSINESS SEGMENT INFORMATION

The  Company's  operating  activities  can be divided into four major  segments:
turnkey contracts, oil and gas marketing, oil and gas exploration and production
operations and well  services.  The Company drills oil and natural gas wells for
Company-sponsored  drilling  partnerships  and retains an interest in each well.
The Company also markets  natural gas for affiliated  partnerships.  The Company
charges  Company-sponsored  partnerships  and other  third  parties  competitive
industry rates for well  operations and gas gathering.  Segment  information for
the three months ended March 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                  March 2002      March 2001
                                                 ------------    ------------
<S>                                              <C>             <C>
Revenue
Turnkey Contracts                                $ 3,743,949     $ 5,020,204
Oil and Gas Marketing                              2,877,611       3,915,958
Oil and Gas Operations                                67,835          84,584
Well Services                                        719,814       1,387,618
Other                                                683,183         649,299
                                                 -----------     -----------
                                                 $ 8,092,392     $11,057,663
                                                 ===========     ===========
</TABLE>

<TABLE>
<CAPTION>
                                                  March 2002      March 2001
                                                 ------------    ------------
<S>                                              <C>             <C>
Operating Income / (Loss)
Turnkey Contracts                                $ 4,059,763     $    538,181
Oil and Gas Marketing                                 46,165         (508,512)
Oil and Gas Operations                            (1,719,342)        (446,500)
Well Services                                        244,790          285,796
Other                                             (1,941,956)      (1,058,524)
                                                 -----------     ------------
                                                 $   689,420     $ (1,189,559)
                                                 ===========     ============
</TABLE>

                               Page 8 of 16 pages
<PAGE>

                     WARREN RESOURCES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002



NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS:

In July 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial Accounting  Standards (SFAS) No. 141, "Business  Combinations" and No.
142,  "Goodwill  and Other  Intangible  Assets".  These  standards  prohibit the
application  of the  pooling of  interests  method of  accounting  for  business
combinations  effective June 30, 2001 and require  companies to stop  amortizing
existing  goodwill and intangible  assets with indefinite  lives.  Under the new
rules, companies would only adjust the carrying amount of goodwill or indefinite
life  intangible  assets upon an impairment  of the goodwill or indefinite  life
intangible assets. The Company adopted these standards effective January 1, 2002
and as such, has not recorded any  amortization  of goodwill  during the quarter
ended March 31, 2002.

Initial  adoption  of these  standards  will  require  that the first  step of a
goodwill  impairment test be completed by June 30, 2002 and that if the carrying
amount of the net assets of a reporting unit  (including  goodwill)  exceeds the
fair value of that reporting unit, the second step of the transitional  goodwill
impairment  test  must be  completed  as soon as  possible,  but no  later  than
December 31, 2002. The effect,  if any, these  impairment tests will have on the
Company's  financial  position or results of  operations  is not yet known.  The
following  reconciles reported net earnings (loss) and related per share amounts
to amounts  that would have been  presented  exclusive of  amortization  expense
recognized for goodwill that is no longer being amortized:
<TABLE>
<CAPTION>

                                                    For the three months ended
                                                           March 31,
                                                    --------------------------
                                                     2002             2001
                                                    --------------------------
<S>                                                 <C>             <C>
Net earnings (loss)                                 $574,420        $(1,185,559)
Goodwill amortization                                      -             67,389
                                                    --------        -----------
       Adjusted net earnings (loss)                 $574,420        $(1,118,170)
                                                    ========        ===========

Net earnings (loss) per share - basic and diluted
         Reported net loss $                        $    .03        $      (.07)
         Goodwill amortization                             -                .01
                                                    --------        -----------
       Adjusted net earnings (loss)                 $    .03        $      (.06)
                                                    ========        ===========
</TABLE>

In June  2001,  FASB  issued  SFAS No.  143,  Accounting  for  Asset  Retirement
Obligations,  and in  August  2001,  issued  SFAS No.  144,  Accounting  for the
Impairment or Disposal of Long-Lived  Assets.  SFAS No. 143 requires entities to
record the fair value of a liability for an asset  retirement  obligation in the
period in which it is incurred  and a  corresponding  increase  in the  carrying
amount of the related long-lived asset. Subsequently,  the asset retirement cost
should be allocated to expense using a systematic and rational method.  SFAS No.
143 is effective for fiscal years  beginning  after June 15, 2002.  SFAS No. 144
addresses  financial  accounting  and reporting for the impairment of long-lived
assets  and for  long-lived  assets  to be  disposed  of.  It  supersedes,  with
exceptions, SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to Be Disposed  Of, and is  effective  for fiscal  years
beginning after December 15, 2001. The Company is currently assessing the impact
of SFAS Nos. 143 and 144.  However,  at this time,  the Company does not believe
the impact of these  statements will be material to its  consolidated  financial
position or results of operations.

In April 2002,  FASB issued SFAS No. 145,  Rescissions of FASB Statements 4, 44,
and 64,  Amendment of FASB  Statement  13, and Technical  Corrections.  With the
rescission  of SFAS 4, gains and  losses on  extinguishments  of debt  should be
classified  as ordinary  items unless they meet the  criteria for  extraordinary
item  classification in Opinion 30. The Company adopted this standard  effective
January 1, 2002 and as such, has reported the  extinguishments of the contingent
repurchase obligation as an ordinary item for the quarter ended March 31, 2002.


                               Page 9 of 16 pages
<PAGE>
                     WARREN RESOURCES INC. AND SUBSIDIARIES
                      FOR THE QUARTER ENDED MARCH 31, 2002


Item 2.  Management's  discussion  and  analysis  of  financial  conditions  and
         operations

LIQUIDITY AND CAPITAL RESOURCES:

     We have funded our activities  primarily  with the proceeds  raised through
privately  placed drilling  programs and our private sale of our equity and debt
securities.  These private  placements  primarily were made through a network of
independent  broker  dealers.  Since  1992,  we have raised  approximately  $217
million  through the private  placements  of interests in 29 drilling  programs.
Additionally,  we have raised  $58.7  million  through the  issuance of our debt
securities and $52.2 million through the issuance of our equity  securities.  In
our drilling programs, we fund the costs associated with acreage acquisition and
the tangible  portion of drilling  activities,  while  investors in the drilling
programs fund all intangible drilling costs.

     Our cash and cash  equivalents  decreased  $5.8 million  during the current
quarter.  This  resulted  from a $6.7  million  decrease in cash  provided  from
operating  activities,  a $1.5 million  increase in cash provided from investing
activities  and  a  $0.6  million  decrease  in  cash  provided  from  financing
activities.

     Cash  provided  from  operating  activities  decreased  due to decreases in
accounts payable and accrued expenses during the current quarter.  Additionally,
we raise funds from drilling  programs that are primarily raised during the last
quarter of our calendar  year. As a result,  during the first nine months of the
calendar year, we incur turnkey expenses related to drilling programs and do not
raise additional funds through drilling programs.

     Cash  provided  from  investing  activities  increased  due to the  sale of
certain assets of our drilling rig subsidiary,  CJS Pinnacle Petroleum Services,
LLC  (Pinnacle)  on February 14, 2002.  This increase was offset by purchases of
oil  and  gas  properties.  Lastly,  cash  provided  from  financing  activities
decreased due to the payment of debt related to the Pinnacle  assets sold during
the quarter.

     Our most material commitment of funds relates to the drilling programs. Our
deferred  revenue  balance  relating to our drilling  commitments  totaled $29.2
million at March 31, 2002.  This  commitment  varies pro rata with the amount of
funds raised through our drilling funds.

     The Company had a net  earnings of $0.6 million for the quarter as compared
to a loss of $1.2 million for the  corresponding  quarter of the preceding year.
At March 31, 2002, current liabilities  exceeded current assets by approximately
$12.9 million and total liabilities  exceeded total assets by approximately $6.0
million.

     During 2001,  the Company  raised $18.1  million for its drilling  programs
compared to $46.5 million and $40.9 million in 2000 and 1999, respectively. As a
result,  the  Company's  turnkey  revenue and total gross profit in 2002 will be
less  than  in 2001  and  2000  and  the  number  of the  Company's  oil and gas
properties developed through partnership arrangements will be reduced.

     In order to improve  operations and liquidity and meet its cash flow needs,
the company has or intends to do the following:

     o    Sell  interests  in some of our  undeveloped  oil and gas leases.  The
          Company is currently in extended  negotiations  for several sales of a
          portion of its oil and gas interests  which it is anticipated  will be
          closed in 2002.  Although  there  are no  definitive  agreements,  the
          Company has received  offers to buy certain of its undeveloped oil and
          gas leases that have significantly  appreciated when compared to their
          original cost.

     o    Raise  additional  capital  through  the sale of  preferred  stock and
          common stock.

     o    Obtain a credit  facility  based  in part on the  value of its  proven
          reserves.

     o    Continue  privately  placed  drilling  programs,  which based on prior
          experience management anticipates raising approximately $30 million in
          2002.


                                 Page 10 of 16
<PAGE>
     o    Generate  turnkey profit and operating cash flow from turnkey drilling
          contracts  equal to  approximately  25% of the  total  amount of total
          turnkey price.

     o    Reduce fixed  overhead  expenses and primarily  conduct  developmental
          drilling  operations in the  Company's two main target areas,  coalbed
          methane  properties in Wyoming and oil  formations  in the  Wilmington
          field in California.

As a result of these plans, management believes that it will generate sufficient
cash flows to meet its current obligations in 2002.


                     WARREN RESOURCES INC. AND SUBSIDIARIES
                      FOR THE QUARTER ENDED MARCH 31, 2002


FORWARD LOOKING STATEMENTS

     Investors are cautioned that certain statements  contained in this document
are  "forward-looking  statements"  within the meaning of the Private Securities
Litigation  Reform Act of 1995 (the Act).  Statements  which are  predictive  in
nature,  which depend upon or refer to future  events or  conditions  constitute
forward-looking  statements.  In  addition,  any  statements  concerning  future
financial  performance,  ongoing business strategies or prospects,  and possible
future  Company   actions,   which  may  be  provided  by  management  are  also
forward-looking statements as defined by the Act. Forward-looking statements are
based on  current  expectations  and  projections  about  future  events and are
subject to risks, uncertainties, assumptions, and economic and market conditions
in the oil and gas industry, among other things.

     Actual  events and results may differ  materially  from those  expressed or
forecasted  in the  forward-looking  statements  made by the  Company or Company
management due to a number of factors.  Important  factors that could cause such
differences  include but are not limited to,  future cash flows and  borrowings,
anticipated capital  expenditures and budgets,  sources of funding for drilling,
oil and gas prices,  exploratory and development  drilling results and reserves,
engineering and geological  information,  changes in general economic conditions
either  nationally  or in regions in where the Company  operates or may commence
operations,  employment growth or unemployment rates,  availability and costs of
drilling  equipment,   labor  costs,   interest  rates,   industry  competition,
environmental and regulatory developments.


RESULTS OF OPERATIONS:

Three months Ended March 31, 2002 Compared to March 31, 2001

     Turnkey contract revenue and expenses.  Turnkey contract revenue  decreased
$1.3 million in the current quarter to $3.7 million,  a 25% decrease compared to
the corresponding quarter of the preceding year. Additionally,  turnkey contract
expense decreased $1.7 million during the current quarter to $2.7 million, a 39%
decrease  compared to the same period in 2001.  These decreases  resulted from a
lower level of drilling  activity  during the  current  quarter  compared to the
corresponding  quarter of the preceding year. The level of drilling  activity is
affected by the amount of funds raised from our  drilling  programs in the prior
fiscal year. We raised $18.1 million from our drilling programs in 2001 compared
to $46.5 million during 2000.

     Gross profit from turnkey contract revenue and expenses was $1.0 million or
27% for the current  quarter.  This  compares to gross profit of $0.6 million or
11% for the corresponding quarter in 2001. This increase in gross profit results
from  additional  turnkey  revenue  recognized due to lower  estimated  costs to
complete our drilling  programs.  During the  corresponding  quarter of 2001, we
increased the estimated  costs to complete our drilling  obligation  relating to
the 2000 and 1999 drilling  programs by $1.1 million and therefore  reducing the
related gross profit percentage for that quarter.

                               Page 11 of 16 pages
<PAGE>

     Natural oil and gas sales and costs from marketing activities.  Natural oil
and gas sales from marketing activities decreased $1.0 million in the quarter to
$2.9 million,  a 27% decrease compared to the same period last year. Cost of oil
and gas  marketing  activities  decreased  $1.6  million in the  quarter to $2.8
million,  a 36% decrease  compared to the same quarter in 2001.  These decreases
resulted  from a decrease in the  average  prices of natural gas and oil in 2002
compared to 2001. The average price of natural gas and oil marketed and sold for
the first quarter of 2002 was $1.54 and $13.86,  respectively.  This compared to
the  average  price of natural  gas and oil  marketed  and sold  during the same
quarter  in  2001  of  $4.82  and  $19.05,  respectively.  Natural  gas  and oil
production allocated to drilling programs for the first quarter of 2002 and 2001
was 1.0 Bcfe.

     The gross profit from marketing  activities for the current quarter was $46
thousand as compared to a loss of $0.5 million for the corresponding  quarter in
2001. The 2001 loss resulted from a hedging transaction,  which expired on March
31,  2001.  The total  hedging  loss  incurred by Warren was $0.5  million  from
January 2001 to March 2001.

     Well services  activities.  Well services revenue decreased  $0.7million in
the  current  quarter  to  $0.7  million,   a  48%  decrease   compared  to  the
corresponding  quarter of the preceding  year. Well services  expense  decreased
$0.3 million for the current quarter to $0.4 million, a 45% decrease compared to
the same  period in 2001.  This  decrease in well  services  revenue and expense
resulted from the sale of certain assets of Pinnacle,  on February  14th,  2002,
for total consideration of $4.2 million. The operations of Pinnacle ceased since
the sale.


                     WARREN RESOURCES INC. AND SUBSIDIARIES
                      FOR THE QUARTER ENDED MARCH 31, 2002

     Gross profit from well services  activities was $0.3 million or 45% for the
quarter.  This  compared  to  gross  profit  of  $0.7  million  or 47%  for  the
corresponding quarter last year. Additionally,  $48 thousand and $91 thousand of
well services  depreciation  expense is included in depreciation,  depletion and
amortization for the quarter ended March 2002 and 2001, respectively.

     Natural  gas and  oil  sales.  We have  interests  in  natural  gas and oil
production attributable to our drilling programs.  Through and prior to June 30,
2001,  virtually all of our production was  subordinated to our investors in the
drilling  programs.  Revenue for oil and gas sales for the quarter decreased $17
thousand to $68  thousand,  due to lower  average  sales  prices for the quarter
compared to the same quarter in 2001.  The average  price of natural gas and oil
marketed and sold for the first quarter was $1.54 and $13.86, respectively. This
compared to the average  price of natural gas and oil  marketed  and sold during
the same  quarter  in 2001 of  $4.82  and  $19.05,  respectively.  Our  share of
pre-payout  production from programs formed  subsequent to 1998 is generally 25%
of the production allocated to these drilling programs.

     Interest and other income.  Interest  income  decreased $0.1 million in the
quarter  ended March 2002 to $0.5 million,  a 16% decrease  compared to the same
quarter in 2001. Primarily, the decrease is attributable to a lower average cash
balance  during the current  quarter in 2002  compared  to the first  quarter of
2001.

     Net gain (loss) on  investments.  Net gain on investments  was $0.1 million
for the  current  quarter  in 2002 as  compared  to a  negligible  loss in 2001.
Primarily,  investments  represent  zero coupon U.S.  treasury bonds held in our
inventory. Fluctuations in net gain or loss on investments resulted from changes
in long term interest rates.


                               Page 12 of 16 pages
<PAGE>

     General and administrative  expenses.  General and administrative  expenses
increased  $0.8 million in the current  quarter in 2002 to $1.3 million,  a 183%
increase  compared to 2001.  This  increase  resulted  from  allocating a higher
percentage of salary  expense and other  administrative  expenses to general and
administrative  expenses and a lower  percentage to turnkey  expense  during the
first quarter of 2002 compared to the similar period in 2001.

     Depreciation,  Depletion  and  Amortization.  Depreciation,  depletion  and
amortization  expense decreased $0.2 million for the quarter to $0.3 million,  a
42% decrease  compared to the  corresponding  quarter last year due to the lower
balance in the oil and gas properties account in 2002, as compared to 2001.

     Interest expense. Interest expense decreased $0.1 million in the quarter to
$1.4 million,  a 7% decrease compared to the same quarter last year.  Primarily,
the decrease  reflects the elimination of interest  expense related to Pinnacle.
Certain assets of Pinnacle were sold on February 14th, 2002 and the related debt
was simultaneously  repaid.  Capitalized  interest recorded for March 31st, 2002
and 2001 was $0.6 million and $0.5 million, respectively.

     Repurchase  Obligation.  Certain Company sponsored oil and gas partnerships
provide  investor  partners a right to tender their  interest to the Company for
repurchase at specified  future dates.  In the event the Company does repurchase
the investor  interest,  the Company will be entitled to receive any future cash
flows  from the  underlying  oil and gas  properties.  A  repurchase  obligation
expense and a related  liability  of $3.3  million was  recorded at December 31,
2001  based on oil and gas  pricing  at March 15,  2002.  The  determination  of
whether a repurchase liability exists is based upon estimates of future net cash
flows from  reserve  studies  prepared by  petroleum  engineers  compared to the
potential  repurchase  of drilling  program  units.  During the first quarter of
2002, the Company assigned  additional proved  undeveloped leases located in the
Wilmington  Unit  to  various  partnerships.  As  a  result  the  liability  was
extinguished and a gain was recognized in the first quarter of $3.1 million.

     Production & exploration. Production and exploration expense increased $1.4
million  resulting  from  the  recording  of a  dismantlement,  restoration  and
abandonment liability and the related expense of $1.4 million.


                     WARREN RESOURCES INC. AND SUBSIDIARIES
                      FOR THE QUARTER ENDED MARCH 31, 2002

Item 3.  Quantitative and qualitative disclosure about market risk

     Commodity  Risk.  Our major market risk exposure is the  commodity  pricing
applicable  to our natural gas and oil  production.  Realized  commodity  prices
received for our  production are primarily  driven by the  prevailing  worldwide
price for crude oil and spot prices  applicable  to natural  gas. The effects of
price  volatility  is  expected  to  continue.  Below  is a  description  of the
financial  instruments  we have used to reduce our exposure to  commodity  price
risk.  Since  March  31,  2001,  we have  not  employed  any  commodity  hedges,
derivatives or embedded derivatives, although we may do so in the future.

     In May 2000,  we entered into  participating  collars to hedge  natural gas
production through March 31, 2001. Below is a summary of the collar arrangements
from May 1, 2000 to March 31, 2001. The participating collars were designated as
hedges,  and realized  losses were  recognized  in marketing  revenues  when the
associated production occurred.

     We hedged  approximately  180,000  Mcf per month for eleven  months  with a
floor  price of $2.50 per Mcf and a ceiling  price of $3.55 per Mcf. As a result
of this collar for the period  ending March 31, 2001, we recorded a hedging loss
of $0.5 million.



                               Page 13 of 16 pages
<PAGE>

                     WARREN RESOURCES INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

     Except  as  provided  below,  we are  not  engaged  in any  material  legal
proceedings to which we or our  subsidiaries  are a party or to which any of our
property is subject.

     On September 28, 1999, Magness Petroleum Company, our joint venture partner
in the Wilmington Field,  filed a complaint  against Warren,  Pedco, and certain
Warren  subsidiaries in the Superior Court of Los Angeles County,  alleging that
we had breached  our joint  venture  agreement  with Magness and an alleged oral
agreement  regarding  advance  payment of expenses for  drilling and  completion
operations. Magness sought dissolution of the joint venture, an accounting and a
declaratory  judgment  as to the rights of the parties  under the joint  venture
agreement.  We were  successful  in enforcing the  arbitration  provision in the
joint venture agreement and entered into an agreement with Magness to submit the
matter for  arbitration  by the  Judicial  Arbitration  Mediation  Services,  or
"JAMS,"  before the  Honorable  Keith J. Wisot,  a retired Los Angeles  Superior
Court  Judge.  Judge  Wisot,  as the  arbitrator,  ruled that the joint  venture
agreement  is a valid  enforceable  agreement;  declined to  dissolve  the joint
venture;  denied Magness'  claims for breach of contract;  held that there was a
material  breach of the  contract  by  Magness;  declared  Pedco and  Warren are
responsible for  supervision  and control of drilling and completion  operations
and Magness is responsible for production operations; held in favor of Warren on
accounting  disputes;  and held that he and JAMS would  retain  jurisdiction  to
enforce the award.  On August 8, 2001,  Magness filed a demand with the American
Arbitration Association, or "AAA," reasserting its claims for dissolution of the
joint venture and breach of contract. On August 20, 2001, Warren filed a request
to resume  arbitration before Judge Wisot and Magness filed an objection to such
jurisdiction.  On September 19, 2001,  Warren  petitioned  the Superior Court of
California for Los Angeles County to compel Magness to enter binding arbitration
with  Warren  before  Judge  Wisot  and  JAMS.  On  October  5,  2001,   Magness
cross-petitioned  to compel  Warren to enter  binding  arbitration  with Magness
before AAA. On January 3, 2002, the Los Angeles  Superior Court granted Warren's
petition,  denied  Magness'  petition  and ordered  Magness to  discontinue  its
efforts to remove the controversy  from the  jurisdiction of JAMS and to proceed
forthwith to  arbitration  before  Judge Wisot of JAMS.  Magness  appealed  this
ruling by the Superior Court and on February 6, 2002, the Court of Appeal of the
State of  California  stayed the  January 3, 2002 order  compelling  arbitration
before JAMS,  pending a hearing on the lower  court's  ruling.  The date for the
hearing has not yet been set by the Court of Appeal. Accordingly,  pending final
resolution, further development of the Wilmington Field will be curtailed.

     In 1998, Pedco was sued in the 81st Judicial District Court of Frio County,
Texas by Stricker Drilling  Company,  Inc. and Manning Safety Systems to recover
the value of lost equipment based on a well blow out. Warren was later joined in
the suit as a defendant.  As a result of the lawsuit,  Gotham Insurance Company,
Pedco's well blow-out insurer, intervened. The suit was settled in 1999 with all
parties except Gotham.  Gotham paid over $1.7 million under the insurance policy
and now seeks a refund of  approximately  $1.5 million of monies  paid,  denying
coverage, and alleging fraud and misrepresentation and a failure of Pedco to act
with due diligence and pursuant to safety regulations. Pedco countersued for the
remaining  proceeds under the policy  coverage.  In the summer and fall of 2000,
summary  judgments were entered for Pedco on  essentially  all claims except its
bad faith claims against  Gotham.  Gotham's claims against Pedco and Warren were
rejected.  Final  judgment was rendered on May 14, 2001 in Pedco's favor for the
remaining policy proceeds,  interest and attorney fees.  Gotham has appealed the
final judgment.  Pedco is defending the judgment on appeal  although  seeking to
reverse  the ruling  denying  its bad faith claim  against  Gotham.  The case on
appeal  was heard on March  28,  2002 and we are  awaiting  the  appeal  court's
decision on the appeal.


                               Page 14 of 16 pages

<PAGE>

     We are also a party to legal actions  arising in the ordinary course of our
business.  In the opinion of our management,  based in part on consultation with
legal counsel,  the liability,  if any, under these claims is either  adequately
covered by insurance or would not have a material adverse effect on us.

Item 2.  Changes in Securities

         a.    Not applicable

         b.    Not applicable

         c.    Not applicable

Item 3.  Defaults upon Senior Securities

               Not applicable.

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

               Not applicable.

Item 5.  Other Information

               Not applicable

Item 6.  Exhibits and Reports on Form 8-K

         a.    There are no Exhibits filed with this report.

         b.    The Company filed one report on Form 8-K dated February 28, 2002,
               reporting the sale of assets from it's  subsidiary,  CJS Pinnacle
               Petroleum  Services,  LLC, on February 14th, 2002. This event was
               reported under Item 5 "Other Events" and Item 7(c) "Exhibits."


                               Page 15 of 16 pages

<PAGE>

                                   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.

Date: May 15, 2002                            WARREN RESOURCES INC.
                                              ---------------------
                                                  (Registrant)

                                              By: /s/ Norman F. Swanton
                                                  ----------------------------
                                                  Norman F. Swanton,
                                                  Chairman & CEO

                                              By: /s/ Timothy A. Larkin
                                                  ----------------------------
                                                  Timothy A. Larkin,
                                                  Senior Vice President
                                                  and Chief Financial Officer
                                                  (Principal Financial and
                                                  Accounting Officer)




                               Page 16 of 16 pages