<PAGE>   1


                                 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         SEPTEMBER 30, 1998
                                        ------------------------------------
                                       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 number 1-10053
                                                -------

                              ORYX ENERGY COMPANY
         -------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                    DELAWARE                          23-1743284
         --------------------------------------------------------------
         (State or other jurisdiction of           (I.R.S. Employer
          incorporation or organization)         Identification Number)

           13155 NOEL ROAD, DALLAS, TEXAS                 75240-5067
         --------------------------------------------------------------
         (Address of principal executive offices)         (Zip code)

                                 (972) 715-4000
         --------------------------------------------------------------
              (Registrant's telephone number, including area code)

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

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No
                                             ---    ---

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

         The number of shares of common stock, $1 par value, outstanding on
October 14, 1998 was 106,233,579.


<PAGE>   2



                              ORYX ENERGY COMPANY



                           FORWARD-LOOKING STATEMENTS


In the following report, the Company has included certain statements (other
than statements of historical fact) that constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When used herein, the words "budget",
"budgeted", "anticipate", "expects", "believes", "seeks", "goals", "intends" or
"projects" and similar expressions are intended to identify forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those projected by such forward-looking statements.
Although the Company believes the expectations reflected in such
forward-looking statements are reasonable and such forward-looking statements
are based upon the best data available at the time this report is filed with
the Securities and Exchange Commission, no assurance can be given that such
expectations will prove correct. Factors that could cause the Company's results
to differ materially from the results discussed in such forward-looking
statements include, but are not limited to, the following: production variances
from expectations, volatility of oil and gas prices, the need to develop and
replace its reserves, the substantial capital expenditures required to fund its
operations, exploration uses, environmental risks, uncertainties about
estimates of reserves, competition, government regulation and political actions
and the ability of the Company to implement its business strategy. All such
forward-looking statements in this document are expressly qualified in their
entirety by the cautionary statements in this paragraph.


                                       2
<PAGE>   3



                              ORYX ENERGY COMPANY

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

                                     INDEX


<TABLE>
<CAPTION>

                                                                                                           Page

<S>      <C>               <C>                                                                             <C>
PART I.  FINANCIAL INFORMATION
         Item 1.           Financial Statements

                           Condensed Consolidated Statements of Income for the Three and Nine Months Ended
                           September 30, 1998 and 1997.....................................................  4

                           Condensed Consolidated Balance Sheets at September 30, 1998 and December 31,
                           1997............................................................................  5

                           Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
                           September 30, 1998 and 1997.....................................................  6

                           Notes to Condensed Consolidated Financial Statements............................  7

                           Report of Independent Accountants............................................... 11

         Item 2.           Management's Discussion and Analysis of Financial Condition and Results of
                           Operations...................................................................... 12


PART II. OTHER INFORMATION

         Item 6.           Exhibits and Reports on Form 8-K................................................ 18


SIGNATURE                  ................................................................................ 19
</TABLE>



                                       3
<PAGE>   4



                                     PART I
                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
ORYX ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                         For the Three Months       For the Nine Months
(Millions of Dollars,                    Ended September 30         Ended September 30
                                      ------------------------    ------------------------
Except per Share Amounts)                1998           1997        1998          1997
-------------------------------------------------------------------------------------------------------------------
                                                           (Unaudited)
<S>                                   <C>           <C>           <C>           <C>       
REVENUES
  Oil and gas                         $      195    $      294    $      614    $      912
  Other                                       (1)           (7)           16           (16)
                                      ----------    ----------    ----------    ----------
                                             194           287           630           896
                                      ----------    ----------    ----------    ----------
COSTS AND EXPENSES
  Operating costs                             58            60           167           196
  Production taxes                            19            41            42           121
  Exploration costs                           26            18            95            49
  Depreciation, depletion
    and amortization                          83            78           225           231
  General and administrative
    expense                                   13            14            40            44
  Interest and debt
    expense                                   30            28            86            83
  Interest capitalized                        (4)           (4)          (15)          (12)
  Provision for restructuring
    (Note 2)                                  25            --            25            --
                                      ----------    ----------    ----------    ----------
                                             250           235           665           712
                                      ----------    ----------    ----------    ----------
Income (Loss) Before Provision
  (Benefit) for Income Taxes                 (56)           52           (35)          184
Provision (Benefit) for Income
  Taxes (Note 3)                             (15)           12           (13)           57
Remeasurement of Foreign
  Deferred Tax (Note 3)                        2            (2)            2            (4)
                                      ----------    ----------    ----------    ----------
NET INCOME (LOSS)                     $      (43)   $       42    $      (24)   $      131
                                      ==========    ==========    ==========    ==========

Basic and Diluted Net
  Income (Loss) Per Share
  of Common Stock (Note 4)            $     (.40)   $      .40    $     (.23)   $     1.24
                                      ==========    ==========    ==========    ==========

Weighted Average Number
  of Common Shares
  Outstanding
  (in millions)                            106.2         105.5         106.2         105.5
                                      ==========    ==========    ==========    ==========
</TABLE>

                            (See Accompanying Notes)


                                       4
<PAGE>   5



ORYX ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                                    September 30                December 31
(Millions of Dollars)                                                   1998                       1997
-------------------------------------------------------------------------------------------------------------------
                                                                   (Unaudited)
<S>                                                                <C>                         <C>       
ASSETS
Current Assets
  Cash and cash equivalents                                        $        7                  $       10
  Accounts receivable and other current assets                            170                         228
                                                                   ----------                  ----------
Total Current Assets                                                      177                         238
Properties, Plants and Equipment (net) (Note 5)                         1,975                       1,811
Deferred Charges and Other Assets                                          58                          59
                                                                   ----------                  ----------

Total Assets                                                       $    2,210                  $    2,108
                                                                   ==========                  ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Accounts payable                                                 $      117                  $      121
  Accrued liabilities                                                     210                         257
  Current portion of long-term debt                                       119                           4
                                                                   ----------                  ----------
Total Current Liabilities                                                 446                         382
Long-Term Debt                                                          1,259                       1,184
Deferred Income Taxes                                                     231                         235
Deferred Credits and Other Liabilities                                    132                         150
Shareholders' Equity (Note 6)
  Common stock, par value $1 per share                                    124                         124
  Additional paid-in capital                                            1,821                       1,821
  Accumulated deficit                                                    (772)                       (740)
                                                                   ----------                  ----------
                                                                        1,173                       1,205

  Less: Common stock in treasury, at cost                                (939)                       (952)
        Loan to ESOP                                                      (92)                        (96)
                                                                   ----------                  ----------
Shareholders' Equity                                                      142                         157
                                                                   ----------                  ----------

Total Liabilities and Shareholders' Equity                         $    2,210                  $    2,108
                                                                   ==========                  ==========
</TABLE>

-----------------
The successful efforts method of accounting is followed.

                            (See Accompanying Notes)


                                       5
<PAGE>   6



ORYX ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                          For the Nine Months
                                                          Ended September 30
                                                          ------------------
(Millions of Dollars)                                      1998        1997
-------------------------------------------------------------------------------------------------------------------
                                                             (Unaudited)
<S>                                                     <C>         <C>     
CASH AND CASH EQUIVALENTS FROM OPERATING
  ACTIVITIES
Net income (loss)                                       $    (24)   $    131
  Adjustments to reconcile net income (loss)
    to net cash from operating activities:
      Depreciation, depletion and amortization               225         231
      Dry hole costs and leasehold impairment                 50          18
      Loss (gain) on sale of assets, net of taxes            (13)          3
      Deferred income taxes                                  (11)         21
      Provision for restructuring, net of taxes               16           -
      Remeasurement of foreign deferred tax                    2          (4)
      Other                                                    7           6
                                                        --------    --------
                                                             252         406
  Changes in working capital:
    Accounts receivable and other current assets              58          (2)
    Accounts payable and accrued liabilities                 (73)         55
                                                        --------    --------
Net Cash Flow Provided From Operating Activities             237         459
                                                        --------    --------

INVESTING ACTIVITIES
  Capital expenditures                                      (436)       (410)
  Proceeds from divestments, net of current
    taxes                                                     15           1
  Other                                                      (12)        (52)
                                                        --------    --------
Net Cash Flow Used For Investing Activities                 (433)       (461)
                                                        --------    --------

FINANCING ACTIVITIES
  Proceeds from borrowings                                   233          75
  Repayments of long-term debt                               (43)        (78)
  Proceeds from sale of treasury stock                         3           9
                                                        --------    --------
Net Cash Flow Provided From
  Financing Activities                                       193           6
                                                        --------    --------

CHANGES IN CASH AND CASH EQUIVALENTS                          (3)          4
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                                   10           9
                                                        --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD              $      7    $     13
                                                        ========    ========
</TABLE>

                            (See Accompanying Notes)


                                       6
<PAGE>   7



                              ORYX ENERGY COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       Basis of Presentation

         The accompanying condensed consolidated financial statements and
         related notes of Oryx Energy Company and its subsidiaries
         (hereinafter, unless the context otherwise requires, being referred to
         as the Company) are presented in accordance with the requirements of
         Form 10-Q and do not include all disclosures normally required by
         generally accepted accounting principles or those normally made in
         annual reports on Form 10-K. In management's opinion, all adjustments
         necessary for a fair presentation of the results of operations for the
         periods shown have been made and are of a normal recurring nature. The
         results of operations of the Company for the nine months ended
         September 30, 1998 are not necessarily indicative of the results for
         the full year 1998. Certain items in the period ended September 30,
         1997 have been reclassified to conform to the 1998 presentation.

         In December 1997, the Company adopted Statement of Financial
         Accounting Standards (SFAS) No. 128, "Earnings per Share," effective
         January 1, 1997. As a result, earnings per share for the three and
         nine months ended September 30, 1997 have been restated to conform to
         the provisions of this statement. In addition, the Company adopted
         SFAS No. 130, "Reporting Comprehensive Income," effective January 1,
         1998. Total comprehensive income and net income are identical for the
         three and nine months ended September 30, 1998.

         In June 1998, the Financial Accounting Standards Board (FASB) issued
         SFAS No. 133, "Accounting for Derivative Instruments and Hedging
         Activities," effective for fiscal years beginning after June 15, 1999.
         SFAS 133 requires that all derivative instruments be recorded on the
         balance sheet at their fair value and net gains and losses on
         derivative instruments be recognized initially in comprehensive
         income. The Company has not yet determined the impact that the
         adoption of SFAS 133 will have on its earnings or statement of
         financial position.

         Statements of Cash Flows

         Amounts paid for interest and income taxes were as follows:

<TABLE>
<CAPTION>

                                                  Nine Months Ended September 30
                                                      1998              1997
                                                    ---------         --------
                                                      (Millions of Dollars)
                  <S>                               <C>               <C>
                  Interest paid (net of 
                    capitalized amounts)            $   57            $   77
                  Income taxes paid                 $    2            $   42

</TABLE>


                                       7
<PAGE>   8



                              ORYX ENERGY COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

2.       Provision for Restructuring

         On July 28, 1998, in response to the current low oil price
         environment, the Company announced its intention to reduce payroll
         related expenses primarily in the U.S. onshore and staff groups. In
         the third quarter of 1998, the Company recognized a $25 million ($16
         million after-tax) restructuring charge for employee terminations.
         During the third quarter of 1998, $16 million of actuarial related
         costs were incurred. Accordingly, at September 30, 1998, $9 million of
         this provision remains and is comprised of severance pay and
         associated employee benefit costs. Management expects to complete such
         payments in 1999.

         In the fourth quarter of 1995, the Company recognized a net $25
         million ($16 million after-tax) charge for restructuring comprised of
         a $4 million adjustment to the 1994 restructuring provision and a $29
         million restructuring provision for a plan to achieve further cost
         reductions. The costs of the 1995 restructuring were complete at
         December 31, 1996 except for costs associated with an office lease
         obligation, which expires in 2001 and existed prior to the commitment
         date, that has no economic benefit to the Company. During the nine
         months ended September 30, 1998, $2 million of costs associated with
         this lease were incurred, and at September 30, 1998, $8 million of
         this provision remains.

3.       Income Taxes

         The Company's provisions for income taxes for the three and nine
         months ended September 30, 1998 reflect benefits of $15 million and
         $13 million. The Company's provisions for income taxes for the three
         and nine months ended September 30, 1997 reflect provisions of $12
         million and $57 million. Foreign income tax provisions included within
         the Company's consolidated provisions are determined based upon the
         appropriate foreign statutory rates which differ from the U.S.
         statutory rate.

         Deferred income taxes are provided to reflect the tax consequences in
         future periods of differences between financial statements and tax
         basis of assets and liabilities at period end in accordance with
         Statement of Financial Accounting Standards No. 109, "Accounting for
         Income Taxes" (SFAS No. 109). The remeasurement provisions of SFAS No.
         109 have affected the reported earnings of the Company. Earnings for
         the three and nine months ended September 30, 1998 decreased $2
         million while reported earnings for the three and nine months ended
         September 30, 1997 increased $2 million and $4 million. Management
         believes that such non-cash remeasurements distort current period
         economic results and should be disregarded in analyzing the Company's
         current business. Future economic results may also be distorted
         because payment of the deferred tax liability is not expected to occur
         in the near-term and it is likely that exchange rates will fluctuate
         prior to the eventual settlement of the liability.


                                       8
<PAGE>   9



                              ORYX ENERGY COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

4.       Net Income (Loss) Per Share

         Following is a reconciliation of the numerators and denominators of
         the basic and diluted earnings per share (EPS) computations for the
         three and nine months ended September 30, 1998 and 1997 (in millions
         of dollars and shares, except per share amounts). 

<TABLE>
<CAPTION>

                                                  Three                    Nine 
                                               Months Ended            Months Ended 
                                               September 30            September 30 
                                            1998         1997        1998         1997
                                         ---------    ---------   ---------    ---------
<S>                                      <C>          <C>         <C>          <C>      
Basic EPS:
     Numerator, Net Income (Loss)        $     (43)   $      42   $     (24)   $     131
     Denominator, Common Shares
      Outstanding                            106.2        105.5       106.2        105.5
                                         ---------    ---------   ---------    ---------

     Basic EPS                           $    (.40)   $     .40   $    (.23)   $    1.24
                                         =========    =========   =========    =========

Diluted EPS:
     Numerator, Net Income (Loss)        $     (43)   $      42   $     (24)   $     131
     Potential Common Shares:
         Debentures*                             -            -           -            -
                                         ---------    ---------   ---------    ---------
     Total Net Income (Loss)             $     (43)   $      42   $     (24)   $     131
                                         ---------    ---------   ---------    ---------
     Denominator, Common Shares
       Outstanding                           106.2        105.5       106.2        105.5
     Potential Common Shares:
       Common Stock Options**                    -           .5           -           .4
       Debentures*                               -            -           -            -
                                         ---------    ---------   ---------    ---------
       Total                                 106.2        106.0       106.2        105.9
                                         ---------    ---------   ---------    ---------

     Diluted EPS                         $    (.40)   $     .40   $    (.23)   $    1.24
                                         =========    =========   =========    =========
</TABLE>

*                 The Company has reserved 5,111,438 shares of Common Stock for
                  issuance to the owners of its 7 1/2% Convertible Subordinated
                  Debentures due 2014 (Debentures). The Debentures were not
                  included in the computation of diluted shares since they have
                  an anti-dilutive effect for all periods presented. 

**                Common Stock options to purchase 2.6 million and 2.1 million
                  shares of Common Stock were outstanding but not included in
                  the computation of diluted EPS for the three months ended
                  September 30, 1998 and 1997 and Common Stock options to
                  purchase 2.3 million and 2.2 million shares of Common Stock
                  were outstanding but not included in the computation of
                  diluted EPS for the nine months ended September 30, 1998 and
                  1997 because the various exercise prices of the options were
                  greater than the average market price of the common shares.
                  In addition, Common Stock options to purchase 0.1 million and
                  0.3 million shares of common Stock were outstanding but not
                  included in the computation of diluted EPS for the three and
                  nine months ended September 30, 1998 since they have an
                  anti-dilutive effect for both periods.


                                       9
<PAGE>   10



                              ORYX ENERGY COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)


5.       Properties, Plants and Equipment

         At September 30, 1998 and December 31, 1997, the Company's properties,
         plants and equipment; and related accumulated depreciation, depletion
         and amortization were as follows:
         
<TABLE>
<CAPTION>
                                        September 30,  December 31,
                                            1998           1997
                                        ------------   -----------
                                           (Millions of Dollars)
<S>                                        <C>           <C>    
Gross investment                           $ 5,991       $ 5,626
Less accumulated depreciation,
   depletion and amortization                4,016         3,815
                                           -------       -------
Net investment                             $ 1,975       $ 1,811
                                           =======       =======
</TABLE>


6.       Shareholders' Equity

         Shares of the Company's preferred and common stocks authorized,
         issued, outstanding and in treasury at September 30, 1998 and December
         31, 1997 were as follows:

<TABLE>
<CAPTION>

                             Authorized     Issued      Outstanding   In Treasury
                             ----------     ------      -----------   -----------
                                         (Thousands of Shares)
<S>                          <C>            <C>         <C>           <C>
September 30, 1998
  Preferred stock              15,000             -             -             -
  Preference stock              7,741             -             -             -
  Common stock                250,000       126,704       106,234       (17,468)

December 31, 1997
  Preferred stock              15,000             -             -             -
  Preference stock              7,741             -             -             -
  Common stock                250,000       126,704       105,982       (17,720)
</TABLE>


7.       Subsequent Events

         On October 14, 1998, the Company announced a merger with Kerr-McGee
         Corporation, with Kerr-McGee to be the surviving corporation. The
         board of each company has unanimously approved the transaction and
         recommends the merger. Prior to the merger, each share of Oryx common
         stock will be converted into .369 shares of Oryx common stock in a
         reverse stock split. If approved by shareholders of both companies, at
         the effective time of the merger, each Oryx shareholder will receive
         one newly issued share of Kerr-McGee common stock for each Oryx common
         share, resulting in an equity split of Kerr-McGee of approximately 55%
         Kerr-McGee and 45% Oryx. The transaction is intended to be accounted
         for as a pooling of interests, to be tax-free to Oryx's shareholders
         and to be completed in the first quarter of 1999.


                                      10
<PAGE>   11



                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Shareholders and Board of Directors, Oryx Energy Company:


We have reviewed the accompanying condensed consolidated balance sheet of Oryx
Energy Company and its Subsidiaries as of September 30, 1998, the related
condensed consolidated statements of income for the three and nine months ended
September 30, 1998 and 1997, and the related condensed consolidated statements
of cash flows for the nine months ended September 30, 1998 and 1997. These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for
them to be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1997, and the
related consolidated statements of income and cash flows for the year then
ended (not presented herein); and in our report dated February 17, 1998, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1997 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.

                                           /s/ PricewaterhouseCoopers LLP

Dallas, Texas
November 2, 1998


                                      11
<PAGE>   12



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

FINANCIAL CONDITION

The Company's cash and cash equivalents decreased by $3 million over the nine
months ended September 30, 1998. The decrease was comprised of $237 million of
net cash flow provided from operating activities, $433 million of net cash flow
used for investing activities and $193 million of net cash flow provided from
financing activities. The $237 million in net cash flow provided from operating
activities consisted of $252 million in net cash flow provided from operating
activities before changes in current assets and liabilities and $15 million
used for changes in current assets and liabilities. The $252 million in net
cash flow provided from operating activities before changes in current assets
and liabilities was primarily impacted by lower revenues, particularly from
lower crude oil prices. The $15 million of net cash flow used for changes in
current assets and liabilities consisted of a $58 million decrease in accounts
receivable and other current assets and a $73 million decrease in accounts
payable and accrued liabilities.

The $433 million in net cash flow used for investing activities and the $193
million in net cash flow provided from financing activities are primarily due
to cash uses of $436 million for capital expenditures and $190 million from net
increases in debt. The increase in debt is primarily due to lower crude oil
prices in the first nine months of 1998.

As of October 26 1998, the Company has entered into collar agreements to hedge
approximately 31 percent of its remaining projected 1998 crude production at an
average floor price of $17.71 West Texas Intermediate (WTI) per barrel and an
average ceiling price of $18.77 WTI per barrel. Approximately 51 percent of its
remaining estimated 1998 U.S. gas production is hedged using collars at an
average floor price of $2.37 Henry Hub (HH) per mmbtu and an average ceiling
price of $2.54 HH per mmbtu. The Company has also entered into collar
arrangements to hedge approximately 7 percent of its projected 1999 crude
production at an average floor price of $15.85 WTI per barrel and an average
ceiling price of $17.35 WTI per barrel. Approximately 31 percent of its
estimated 1999 U.S. gas production is hedged using collars at an average floor
price of $2.29 HH per mmbtu and an average ceiling price of $2.47 HH per mmbtu.

On July 28, 1998, in response to the current low oil price environment, the
Company announced its intention to reduce payroll related expenses, primarily
in the U.S. onshore and staff groups. In the third quarter of 1998, the Company
recognized a $25 million ($16 million after-tax) restructuring charge for
employee terminations. For an analysis of the restructuring provision, see Note
2 to the Condensed Consolidated Financial Statements. The Company previously
announced its intention to reduce its 1998 exploration and development
investment plans by approximately 17 percent.


                                      12
<PAGE>   13



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

FINANCIAL CONDITION (CONTINUED)

In the fourth quarter of 1995, the Company incurred a net $25 million ($16
million after-tax) provision for restructuring comprised of a $4 million
adjustment to the 1994 restructuring provision and a $29 million restructuring
provision for a plan to achieve further cost reductions. For an analysis of the
restructuring provision, see Note 2 to the Condensed Consolidated Financial
Statements.

On October 14, 1998, the Company announced a merger with Kerr-McGee
Corporation, with Kerr-McGee to be the surviving corporation. The board of each
company has unanimously approved the transaction and recommends the merger.
Prior to the merger, each share of Oryx common stock will be converted into
 .369 shares of Oryx common stock in a reverse stock split. If approved by
shareholders of both companies, at the effective time of the merger, each Oryx
shareholder will receive one newly issued share of Kerr-McGee common stock for
each Oryx common share, resulting in an equity split of Kerr-McGee of
approximately 55% Kerr-McGee and 45% Oryx. The transaction is intended to be
accounted for as a pooling of interests, to be tax-free to Oryx's shareholders
and to be completed in the first quarter of 1999.


FINANCIAL CONDITION - YEAR 2000 PROJECT

GENERAL

The Project addresses the ability of computer programs and embedded computer
chips to distinguish between the year 1900 and the year 2000. An
enterprise-wide program was launched in 1996 to take steps to mitigate this
problem. The Company additionally chose to replace its financial applications
and human resources/payroll systems with systems that were already Year 2000
compliant. Implementation of these systems is on schedule and expected to be
completed by January 31, 1999. Remaining business software programs are
expected to be made Year 2000 compliant through the Year 2000 Project. None of
the Company's other information technology projects have been delayed due to
the implementation of the Year 2000 Project.

PROJECT

The Year 2000 Project is divided into three major sections - Information
Technology (IT Systems), Asset Integrity and Commercial Integrity. The general
phases common to all sections are: (1) inventorying Year 2000 items; (2)
assigning priorities to those items; (3) assessing the Year 2000 compliance of
items determined to be material to the Company; (4) repairing or replacing
material items that are determined not to be Year 2000 compliant; (5) testing
material items and (6) designing and implementing contingency and business
continuation plans. 


                                      13
<PAGE>   14

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


FINANCIAL CONDITION - YEAR 2000 PROJECT (CONTINUED)

PROJECT (CONTINUED)

At September 30, 1998, the inventory and priority assessment phases of the
Information Technology and the Asset Integrity sections of the Project had been
completed. The remediation phase of the Project is currently being performed by
the Company. The testing phase is ongoing as hardware or system software is
remediated, upgraded or replaced.

The Information Technology section includes software applications,
telecommunications, networks and other hardware. The Company estimates that all
repair or replacement will be completed by the second quarter of 1999. The
testing phase is conducted as the software is replaced and is also scheduled to
be completed by mid-1999.

The Asset Integrity area covers process control, automation and instrumentation
systems which can include date-sensitive hardware or software, and associated
embedded computer chips that are used in the operation of the assets and
facilities of the Company. Testing and remediation is currently being conducted
on all critical systems and will continue through the third quarter of 1999.

The Commercial Integrity area addresses the external parties who are involved
in the Company's business chains and processes. These include suppliers,
customers, joint venture partners, transporters, regulatory and government
agencies, financial institutions and third party service providers. The Company
is currently in the process of identifying those parties who may have a
material adverse effect on the Company's business performance. We plan to
communicate with them about their plans and progress in addressing the Year
2000 problem commencing in late 1998 with expected completion in mid-1999.

COSTS

The total cost associated with required modifications to become Year 2000
compliant is not expected to be material to the Company's financial position.
The estimated total cost of the Year 2000 Project is approximately $6 million.
This estimate does not include Oryx's potential share of Year 2000 costs that
may be incurred by partnerships or joint ventures in which the Company
participates but is not the operator. The total amount expended on the Project
through September 30, 1998 was $1 million, all of which related to the repair,
replacement or upgrade of software and hardware and the cost of testing and
replacing non-compliant process control and instrumentation systems. The
estimated future cost of completing the Year 2000 Project is estimated to be
approximately $5 million; $3 million to repair or replace software and related
hardware, $2 million to repair or replace process control and instrumentation
systems and an immaterial amount to identify and communicate with external
parties.


                                      14
<PAGE>   15



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


FINANCIAL CONDITION - YEAR 2000 PROJECT (CONTINUED)


COSTS (CONTINUED)

Funds for the Project are provided from operating cash flows and are included
in existing operating budgets. The costs of implementing the financial
applications and human resources/payroll systems are not included in these cost
estimates.

CONTINGENCY PLANS

The Company has begun, but not yet completed, a comprehensive analysis of the
operational problems and costs (including loss of revenues) that would be
reasonably likely to result from the failure by the Company and certain third
parties to complete efforts necessary to achieve Year 2000 compliance timely. A
contingency plan has not been developed for dealing with the most reasonably
likely worst case scenario, and such scenario has not yet been clearly
identified. The Company currently plans to complete such analysis and
contingency planning by the latter part of 1999.

RISKS

The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of
Year 2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Year 2000 Project is expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem. The Company believes that, with the implementation of new business
systems and completion of the Project as scheduled, the possibility of
interruptions to normal operations should be significantly reduced.


                                      15
<PAGE>   16



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


RESULTS OF OPERATIONS - NINE MONTHS

The Company's net loss for the nine months ended September 30, 1998 was $24
million, or $.23 per share, as compared to net income of $131 million, or $1.24
per share for the first nine months of 1997. Revenues for the nine months were
$630 million in 1998 versus $896 million in 1997. Year-to-date results for 1998
include a $16 million net charge for employee terminations associated with the
Company's cost-reduction initiatives, an $11 million net gain on the sale of
assets and a $2 million provision for remeasurement of foreign deferred taxes.
By comparison, year-to-date results for 1997 include a $2 million benefit
associated with a change in the U.K. income tax rate and a $4 million benefit
from remeasurement of foreign deferred taxes.

Average worldwide net production of crude oil and condensate for the nine
months ended September 30, 1998 was 106 thousand barrels daily compared to
average net production for the nine months ended September 30, 1997 of 116
thousand barrels daily. Average net production of crude oil and condensate was
44 thousand barrels daily in the United States and 62 thousand barrels daily
from foreign locations during the nine months ended September 30, 1998,
compared to 46 thousand barrels daily in the United States and 70 thousand
barrels daily from foreign locations during the nine months ended September 30,
1997. The worldwide crude oil and condensate price for the first nine months of
1998 was $13.44 per barrel compared to $18.58 per barrel for the first nine
months of 1997.

Average worldwide net production of natural gas was 390 million cubic feet
daily for the nine months ended September 30, 1998, compared to 508 million
cubic feet in the nine months ended September 30, 1997. The reduction in U.S.
natural gas production resulted primarily from field declines, lower than
expected drilling results, performance issues at certain fields and
weather-related interruptions in the Gulf of Mexico. Average net production of
natural gas was 379 million cubic feet daily in the United States and 11
million cubic feet daily from the United Kingdom in the first nine months of
1998, compared to 497 million cubic feet daily in the United States and 11
million cubic feet daily in the United Kingdom in the first nine months of
1997. The worldwide price of natural gas for the first nine months of 1998 was
$2.10 per thousand cubit feet compared to $2.35 per thousand cubic feet for the
first nine months of 1997.


                                      16
<PAGE>   17



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


RESULTS OF OPERATIONS - THREE MONTHS

The Company reported a net loss of $43 million, or $.40 per share, for the
quarter ended September 30, 1998, compared to net income of $42 million, or
$.40 per share, for the same quarter last year. Revenues for the 1998 third
quarter were $194 million versus $287 million for the 1997 third quarter.

The 1998 third quarter includes a $16 million net charge for employee
terminations associated with the Company's cost-reduction initiatives and a $2
million provision for the remeasurement of foreign deferred taxes. By
comparison, the 1997 third quarter included a $2 million benefit for the
remeasurement of foreign deferred taxes and a $2 million benefit primarily from
a change in the U.K. income tax rate.

Compared to the same quarter last year, worldwide oil prices decreased by $5.15
per barrel, or 29 percent and U.S. natural gas prices decreased by $.22 per
mcf, or 10 percent. Crude oil volumes decreased by 11,000 barrels per day and
natural gas volumes decreased 111 million cubic feet per day. The reduction in
U.S. natural gas production resulted primarily from field declines, lower than
expected drilling results, performance issues at certain fields and
weather-related interruptions in the Gulf of Mexico.

Average worldwide net production of crude oil and condensate for the three
months ended September 30, 1998 was 106 thousand barrels daily compared to
average net production for the three months ended September 30, 1997 of 117
thousand barrels daily. Average net production of crude oil and condensate was
41 thousand barrels daily in the United States and 65 thousand barrels daily
from foreign locations during the three months ended September 30, 1998,
compared to 49 thousand barrels daily in the United States and 68 thousand
barrels daily from foreign locations in the third quarter of 1997. The
worldwide crude oil and condensate price in the third quarter of 1998 was
$12.86 per barrel compared to $18.01 per barrel in the third quarter of 1997.

Average worldwide net production of natural gas was 377 million cubic feet
daily for the three months ended September 30, 1998, compared to 488 million
cubic feet daily in the three months ended September 30, 1997. Average net
production of natural gas was 370 million cubic feet daily in the United States
and 7 million cubic feet daily from the United Kingdom in the third quarter of
1998, compared to 475 million cubic feet daily in the United States and 13
million cubic feet daily from the United Kingdom in the third quarter of 1997.
The worldwide price of natural gas for the third quarter of 1998 was $2.00 per
thousand cubic feet compared to $2.22 per thousand cubic feet in the third
quarter of 1997.


                                      17
<PAGE>   18



                                    PART II

                               OTHER INFORMATION



Item 6.           Exhibits and Reports on Form 8-K

                  (a)       Exhibits:

                            12      Computation of Consolidated Ratio of
                                    Earnings to Fixed Charges and Earnings to
                                    Fixed Charges and Preferred Stock Dividend
                                    Requirements.

                            15      Accountant's letter regarding unaudited
                                    interim financial information.

                            27      Financial Data Schedule for the year ended
                                    September 30, 1998.

                            27.1    Restated Financial Data Schedule for the
                                    year ended September 30, 1997.


                  (b)       Reports on Form 8-K:

                            The Company filed a Form 8-K (File  No. 1-10053)
                            dated October 22, 1998, which included Item 5, 
                            Other Events.


                                      18
<PAGE>   19



                                    SIGNATURE



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.


         ORYX ENERGY COMPANY





BY       /s/ E. W. Moneypenny
         -------------------- 
         E. W. Moneypenny
         (Executive Vice President, Finance and
          Chief Financial Officer)



DATE:   November 2, 1998


                                      19
<PAGE>   20




                               INDEX TO EXHIBITS
<TABLE>
<CAPTION>
                         Exhibit
                         Number                   Description 
                         -------                  -----------                  
<S>                                 <C>
                            12      Computation of Consolidated Ratio of
                                    Earnings to Fixed Charges and Earnings to
                                    Fixed Charges and Preferred Stock Dividend
                                    Requirements.

                            15      Accountant's letter regarding unaudited
                                    interim financial information.

                            27      Financial Data Schedule for the year ended
                                    September 30, 1998.

                            27.1    Restated Financial Data Schedule for the
                                    year ended September 30, 1997.

</TABLE>