<PAGE>   1


                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

For the quarterly period ended June 30, 1997

                                       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 0-18691

                            NORTH COAST ENERGY, INC.
             (Exact name of Registrant as specified in its charter)

           DELAWARE                                           34-1594000
    (State of Incorporation)                                I.R.S. (Employer
                                                            Identification No.)

         1993 CASE PARKWAY
          TWINSBURG, OHIO                                        44087-2343
(Address of principal executive offices)                         (Zip Code)

Registrants' telephone number, including area code:  (216) 425-2330

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
                                     -----   ------


APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date. Indicate the number of shares
outstanding of each of the issuer's classes of Common Stock as the latest
practical date.

                 Class                         Outstanding at August 11, 1997
     ----------------------------              ------------------------------
     Common Stock, $.01 par value                      10,795,455


<PAGE>   2



  

                            NORTH COAST ENERGY, INC.
<TABLE>
<CAPTION>
                                                                                                    Page No.
                                                                                                    --------
<S>                                                                                                    <C>
PART I  - FINANCIAL INFORMATION

Consolidated Balance Sheets -
     March 31, 1997 (Audited) and June 30, 1997 (Unaudited)                                              2

Unaudited Consolidated Statements of Operations -
     For the Three Months Ended June 30, 1996 and 1997                                                   4

Unaudited Consolidated Statements of Cash Flows -
     For the Three Months Ended June 30, 1996 and 1997                                                   5

Unaudited Notes to Consolidated Financial Statements                                                     7

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


PART II - OTHER INFORMATION                                                                             18
</TABLE>








<PAGE>   3


                  NORTH COAST ENERGY, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                       MARCH 31, 1997 and JUNE 30, 1997

                                 (Unaudited)

                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
                                                              March 31,        June 30,
                                                             ------------    ------------
                                                                 1997            1997
<S>                                                          <C>             <C>         
CURRENT ASSETS:
   Cash and equivalents                                      $  1,503,278    $    922,126
   Accounts receivable-
     Trade, net                                                 1,306,577       1,144,013
     Affiliates                                                    81,456          66,616
   Inventories                                                    200,971         160,455
   Deferred income taxes                                           26,000          26,000
   Refundable income taxes                                         50,000          50,000
   Other, net                                                       8,488             991
                                                             ------------    ------------
         Total current assets                                   3,176,770       2,370,201
                                                             ------------    ------------
PROPERTY AND EQUIPMENT, at cost:
   Land                                                            93,437          93,437
   Oil and gas properties (successful efforts)                 24,290,505      24,433,264
   Pipelines                                                    4,158,204       4,186,648
   Vehicles                                                       348,825         354,995
   Furniture and fixtures                                         501,049         502,921
   Buildings and improvements                                     788,419         785,531
                                                             ------------    ------------
                                                               30,180,439      30,356,796
   Less- Accumulated depreciation, depletion, amortization
     and impairment                                           (12,279,402)    (12,499,927)
                                                             ------------    ------------
                                                               17,901,037      17,856,869
OTHER ASSETS, net                                                 150,893         135,150
                                                             ------------    ------------
                                                             $ 21,228,700    $ 20,362,220
                                                             ============    ============
</TABLE>




   The accompanying notes are an integral part of these consolidated balance
                                    sheets.


                                       2

<PAGE>   4


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        MARCH 31, 1997 and JUNE 30, 1997

                                   (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
<TABLE>
<CAPTION>
                                                                            March 31,       June 30,
                                                                              1997             1997
                                                                          ------------      ----------
<S>                                                                       <C>             <C>         
CURRENT LIABILITIES:
   Current portion of long-term debt                                      $    108,900    $    196,300
   Accounts payable                                                          1,952,863       1,334,006
   Accrued expenses                                                            320,255         294,714
   Billings in excess of costs on uncompleted contracts                        469,361         153,149
                                                                          ------------      ----------
         Total current liabilities                                           2,851,379       1,978,169
                                                                          ------------      ----------
LONG-TERM DEBT, net of current portion                                      10,720,510      10,624,397

DEFERRED INCOME TAXES, net                                                     347,200         348,200

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Series A, 6% Noncumulative Convertible Preferred stock, par value
     $.01 per share; 563,270 shares authorized; 76,951 and 76,106
     issued and outstanding (aggregate liquidation value of $769,510
     and $761,060, respectively)                                                   770             761
   Series B, Cumulative Convertible Preferred stock, par value $.01 per
     share; 625,000 shares authorized, 269,464 and 268,264 issued and
     outstanding (aggregate liquidation value $2,694,640 and 2,682,640,
     respectively)                                                               2,695           2,683
   Undesignated Serial Preferred stock, par value $.01 per share;
     811,730 shares authorized; none issued and outstanding                       --              --
   Common stock, par value $.01 per share; 40,000,000 shares
     authorized; 10,753,895 and 10,792,711 issued and outstanding              107,539         107,927
   Additional paid-in capital                                               12,083,196      12,108,681
   Retained deficit                                                         (4,884,589)     (4,808,598)
                                                                          ------------      ----------
         Total stockholders' equity                                          7,309,611       7,411,454
                                                                          ------------      ----------
                                                                          $ 21,228,700      20,362,220
                                                                          ============      ==========

</TABLE>






   The accompanying notes are an integral part of these consolidated balance
                                    sheets.


                                       3

<PAGE>   5


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                FOR THE THREE MONTHS ENDED JUNE 30, 1996 and 1997

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                           --------------------------
                                                              1996           1997
                                                           -----------    -----------
<S>                                                        <C>            <C>        
REVENUE:
   Oil and gas production                                  $   862,934    $   744,050
   Drilling revenues                                         1,169,196        463,554
   Well operating, transportation and other                    471,807        428,628
   Administrative and agency fees                              203,478        213,263
                                                           -----------    -----------
                                                             2,707,415      1,849,495

COSTS AND EXPENSES:
   Oil and gas production expenses                             225,810        230,241
   Drilling costs                                              921,583        373,865
   Oil and gas operations                                      249,439        142,494
   General and administrative expenses                         561,099        478,660
   Depreciation, depletion, amortization and other             300,690        293,542
   Abandonment of oil and gas properties                        48,535          3,039
                                                           -----------    -----------
                                                             2,307,156      1,521,841
                                                           -----------    -----------
INCOME FROM OPERATIONS                                         400,259        327,654
                                                           -----------    -----------
OTHER INCOME:
   Interest                                                     13,961         12,916
   Other                                                        16,000             62
   (Loss) gain on sale of property and equipment                (1,780)         1,897
                                                           -----------    -----------
                                                                28,181         14,875
                                                           -----------    -----------
OTHER EXPENSE:
   Interest                                                    239,289        265,538
                                                           -----------    -----------
INCOME BEFORE INCOME TAXES                                     189,151         76,991

PROVISION FOR INCOME TAXES:
   Current                                                        --            1,000
   Deferred                                                     37,000           --
                                                           -----------    -----------
                                                                37,000          1,000
                                                           -----------    -----------
NET INCOME                                                 $   152,151         75,991
                                                           ===========    ===========
NET (LOSS) INCOME PER SHARE (primary and fully diluted)    $      (.01)   $       .00
                                                           ===========    ===========
</TABLE>




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

                                       4

<PAGE>   6


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1997

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                         1996            1997
                                                                      -----------     -----------
<S>                                                                <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                        $   152,151    $    75,991
     Adjustments to reconcile net income to net cash provided by
       operating activities-
         Depreciation, depletion, amortization and other                   300,690        293,542
         Abandonment of oil and gas properties                              48,535          3,039
         Loss (gain) on sale of property and equipment                       1,780         (1,897)
         Deferred income taxes                                              37,000          1,000
         Change in-
           Accounts receivable                                            (102,210)       177,404
           Inventories and other current assets                             11,876         48,013
           Other assets, net                                                15,575           --
           Accounts payable                                               (443,070)      (519,191)
           Accrued expenses                                                (57,983)       (25,541)
           Billings in excess of costs on uncompleted contracts           (516,184)      (316,212)
                                                                       -----------    -----------
                    Total adjustments                                     (703,991)      (339,843)
                                                                       -----------    -----------
                    Net cash used by operating activities                 (551,840)      (263,852)
                                                                       -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                  (971,899)      (223,425)
     Proceeds on sale of property and equipment                            104,262          2,000
                                                                       -----------    -----------
                    Net cash used for investing activities                (867,637)      (221,425)
                                                                       -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Payments of accounts payable used to finance property
         and equipment additions                                           (70,962)       (87,161)
      Borrowings under revolving credit facility                         1,150,000           --
      Borrowings under note payable to stockholder                          20,262         21,863
      Payments on long-term debt                                           (41,520)       (30,577)
      Distributions and dividends                                         (207,708)          --
                                                                       -----------    -----------
                    Net cash provided (used) by financing activities   $   850,072    $   (95,875)
                                                                       -----------    -----------
</TABLE>







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



                                       5

<PAGE>   7


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1997

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                   1996            1997
                                                                -----------    -----------
<S>                                                             <C>            <C>         
DECREASE IN CASH AND EQUIVALENTS                                $  (569,405)   $  (581,152)

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD                       1,551,748      1,503,278 
                                                                -----------    ----------- 

CASH AND EQUIVALENTS AT END OF PERIOD                           $   982,343    $   922,126
                                                                ===========    ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for-
       Interest                                                 $   131,449    $   235,943
       Income taxes                                                    --           11,049

SUPPLEMENTAL DISCLOSURES ON NONCASH INVESTING AND FINANCING
   ACTIVITIES:
     Long-term debt incurred for the purchase of property and
       equipment                                                $   579,510           --
     Accounts payable incurred for the purchase of property
       and equipment                                            $    97,515    $    13,347
     Common stock issued for director fees                             --      $    25,852
</TABLE>





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


                                       6

<PAGE>   8


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

Note 1.  Summary of Accounting Policies

         A.     General

         The consolidated financial statements included herein, have been
         prepared by North Coast Energy, Inc. without audit. In the opinion of
         management, all adjustments (which include only normal recurring
         adjustments) necessary to present fairly the financial position have
         been made.

         Information and footnote disclosures normally included in financial
         statements prepared in accordance with generally accepted accounting
         principles have been condensed or omitted. It is suggested that these
         financial statements be read in conjunction with the financial
         statements and notes thereto which are incorporated in the Company's
         Annual Report on Form 10-K for the fiscal year ended March 31, 1997.

         The results of the operations for the interim periods may not
         necessarily be indicative of the results to be expected for the full
         year. In addition, the preparation of these financial statements in
         conformity with generally accepted accounting principles requires
         management to make estimates and assumptions that effect the reported
         amounts of assets and liabilities at the date of the consolidated
         financial statements and reported amounts of revenues and expenses
         during the reporting period. Actual results could differ from those
         estimates.

         B.     Principles of Consolidation

         The consolidated financial statements include the accounts of North
         Coast Energy, Inc. and its wholly owned subsidiaries (the Company),
         North Coast Operating Company (NCOC), and NCE Securities, Inc. (NCE
         Securities). In addition, the Company's investments in oil and gas
         drilling partnerships, which are accounted for under the proportional
         consolidation method, are reflected in the accompanying financial
         statements. The Company's ownership of revenues in these drilling
         partnerships are as follows:
<TABLE>

<S>                                                                                            <C>  
         Capital Drilling Fund 1986-1 Limited Partnership                                              13.2%

         North Coast Energy/Capital 1987-1 Appalachian Drilling Program Limited Partnership            33.7%

         North Coast Energy/Capital 1987-2 Appalachian Drilling Program Limited Partnership            27.0%

         North Coast Energy/Capital 1988-1 Appalachian Drilling Program Limited Partnership            25.5%

         North Coast Energy/Capital 1988-2 Appalachian Drilling Program Limited Partnership            34.8%

         North Coast Energy 1989 Appalachian Drilling Program Limited Partnership                      30.0%

         North Coast Energy 1990-1 Appalachian Drilling Program Limited Partnership                    26.0%

         North Coast Energy 1990-2 Appalachian Drilling Program Limited Partnership                    25.7%

         North Coast Energy 1990-3 Appalachian Drilling Program Limited Partnership                    25.0%

         North Coast Energy 1991-1 Appalachian Drilling Program Limited Partnership                    26.5%

         North Coast Energy 1991-2 Appalachian Drilling Program Limited Partnership                    25.0%

         North Coast Energy 1991-3 Appalachian Drilling Program Limited Partnership                    25.3%
</TABLE>



                                       7

<PAGE>   9


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (Unaudited)
<TABLE>
<S>                                                                                            <C>  
Note 1.  Summary of Accounting Policies (Continued)

         North Coast Energy 1992-1 Appalachian Drilling Program Limited Partnership                    25.0%

         North Coast Energy 1992-2 Appalachian Drilling Program Limited Partnership                    25.0%

         North Coast Energy 1992-3 Appalachian Drilling Program Limited Partnership                    39.5%

         North Coast Energy 1993-1 Appalachian Drilling Program Limited Partnership                    30.3%

         North Coast Energy 1993-2 Appalachian Drilling Program Limited Partnership                    31.0%

         North Coast Energy 1993-3 Appalachian Drilling Program Limited Partnership                    30.0%

         North Coast Energy 1994-1 Appalachian Drilling Program Limited Partnership                    30.0%

         North Coast Energy 1994-2 Appalachian Drilling Program Limited Partnership                    25.0%

         North Coast Energy 1994-3 Appalachian Drilling Program Limited Partnership                    25.0%

         North Coast Energy 1995-1 Appalachian Drilling Program Limited Partnership                    20.0%

         North Coast Energy 1995-2 Appalachian Drilling Program Limited Partnership                    20.0%

         North Coast Energy 1996-1 Appalachian Drilling Program Limited Partnership                    20.0%

         North Coast Energy 1996-2 Appalachian Drilling Program Limited Partnership                    20.0%

         All significant intercompany accounts and transactions have been eliminated.
</TABLE>

Note 2.  Long-Term Debt
<TABLE>
<CAPTION>
          Long-term debt consists of the following:

                                                                            March 31, 1997        June 30, 1997
                                                                            --------------        -------------
<S>                                                                           <C>                  <C>        
             Revolving credit notes payable - bank                            $8,640,000           $ 8,640,000

             Notes payable to stockholder with interest at prime
             plus 1% and 8%.                                                   1,453,674             1,475,537

             Mortgage note payable to a bank, secured by land and a
             building, requiring monthly payments of approximately
             $1,019 (including interest at 8%) through July 2003.                 60,216                58,357

             Mortgage note payable to a bank, secured by land and a
             building, requiring monthly payments of approximately
             $5,248 (including interest at 8.58%).                               524,033               519,621

             Various installment notes payable, in aggregate monthly
             installments (including interest of $9,042 at March 31,
             1997 and $8,598 at June 30, 1997).                                  151,487               127,182
                                                                            ------------            ----------
                                                                              10,829,410            10,820,697
             Less current portion                                                108,900               196,300
                                                                            ------------           -----------
                                                                            $ 10,720,510           $10,624,397
                                                                             ===========           ===========
</TABLE>



                                       8
<PAGE>   10


                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (Unaudited)

Note 2.  Long-Term Debt (Continued)

        The Company has a $20,000,000 revolving credit agreement with its
        lender. The Agreement provides for a borrowing base which is determined
        semiannually by the lender based upon the Company's financial position,
        oil and gas reserves, as well as outstanding letters of credit ($140,000
        at June 30, 1997), as defined. At June 30, 1997, the Company's borrowing
        base was $10,200,000 subject to monthly reductions of $110,000 beginning
        in May 1997 and increasing to $200,000 beginning June 1, 1997. Available
        borrowings under the facility at June 30, 1997 were $1,110,000 and may
        subsequently change based upon the semiannual reserve study and
        borrowing base determination.

        The revolving line of credit can be renewed annually or converted to a
        term loan at the Company's option prior to its expiration in fiscal
        1999.

        Amounts outstanding under the reducing revolving line of credit which
        were $8,640,000 at June 30, 1997, bear interest at the lending bank's
        prime rate plus 1 1/2%. The agreement requires the Company to pay a
        commitment fee of 1/2% on the unused amount of the available borrowings
        and closing costs of 1% on any increase in borrowing availability. The
        agreement contains certain restrictive covenants, including minimum
        working capital, minimum stockholders' equity, restrictions on the
        payment of dividends, as defined, and a minimum debt coverage ratio, as
        defined. The Company was in compliance with or had received waivers with
        respect to all covenants and restrictions at June 30, 1997.

        The revolving credit facility and the notes are collateralized by
        substantially all of the Company's assets including receivables,
        inventory, equipment and a first mortgage on certain of the Company's
        interests in oil and gas wells and reserves.

        The Company has two notes payable to a stockholder. One note is payable
        out of future operating revenues, as defined. The note is subordinated
        to the borrowings under the revolving credit notes payable - bank. The
        Company also entered into an second note payable with the same
        stockholder for $1,000,000. This note can be repaid in either shares of
        common stock or proceeds of a public offering, as defined. This note is
        also subordinated to the borrowings under the revolving credit notes
        payable - bank.

Note 3.  Billings in Excess of Costs on Uncompleted Contracts

         Billings in excess of costs on uncompleted contracts consist of:
<TABLE>
<CAPTION>
                                                            March 31,                        June 30,
                                                              1997                             1997
                                                              ----                             ----
<S>                                                         <C>                             <C>      
               Billings on uncompleted contracts            $ 738,554                       $ 275,000
               Costs incurred on uncompleted contracts        269,193                         121,851
                                                              -------                         -------
                                                            $ 469,361                       $ 153,149
                                                              =======                         =======
</TABLE>

Note 4.  Commitment and Contingencies

         The Company and a commercial bank have issued standby letters of credit
         which provide a guaranteed total amount of $140,000 in lieu of coverage
         provided by insurance for road bond deposits against damage.




                                       9
<PAGE>   11

                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                   (Unaudited)

Note 4. Commitment and Contingencies (Continued)

         At June 30, 1997, the Company has committed to fund certain costs of
         the North Coast Energy Appalachian Drilling Programs estimated to be
         approximately $334,449 for tangible well equipment and pipeline
         construction.

Note 5.  Preferred Dividends

         The agreement with the Company's Credit Facility provides that the
         payment of dividends with respect to the capital stock of the Company
         is prohibited. For purposes of computing earning per share for the
         three months ending June 30, 1997, dividends in arrears on the
         cumulative convertible Series B preferred stock were $67,066.
         Cumulative dividends in arrears on the cumulative convertible Series B
         preferred stock are $201,198.

Note 6.  Pro Forma

         In fiscal 1997, the Company commenced a conversion offer to its
         preferred shareholders (Series A and B) to convert their shares into
         common stock with additional shares offered as an incentive. Following
         the termination of the conversion offer in fiscal 1997, 223,159 shares
         of preferred Series A were tendered and exchanged for 1,115,795 shares
         of common stock and 195,201 shares of preferred Series B were tendered
         and exchanged for 1,561,608 shares of common stock.

         The following table presents unaudited, pro forma operating results as
         if the stock conversion had occurred at the beginning of each period
         presented.
<TABLE>
<CAPTION>
                                             June 30, 1996                    
                                               Pro Forma       June 30, 1997
                                           ------------------ ----------------
<S>                                          <C>               <C>            
         REVENUES                            $2,707,415        $   1,849,495  
                                                                              
         NET INCOME                              57,151               75,991  
                                                                              
         NET INCOME APPLICABLE TO                                             
             COMMON STOCK                       $60,987       $        8,925  
                                                                              
         WEIGHTED AVERAGE SHARES                                              
             OUTSTANDING                     10,730,782           10,949,781  
                                                                              
         EARNINGS PER SHARE                 $      0.01       $         0.00  
</TABLE>
         
         The pro forma operating results have been prepared for comparative
         purposes only. They do not purport to present actual operating results
         that would have been achieved had the conversions been made at the
         beginning of each period presented or to necessarily be indicative of
         future results of operations.

Note 7.  Subsequent Events

         On August 1, 1997 North Coast Energy, Inc., a Delaware corporation (the
         "Company"), entered into a stock purchase agreement (the "Agreement")
         with NUON International bv, a limited liability company organized under
         the laws of the Netherlands ("NUON"), wherein NUON



                                       10
<PAGE>   12

Note 7.  Subsequent Events (Continued)

         agreed to purchase an aggregate of 17,226,387 shares of stock of North
         coast for $15 million, subject to the satisfaction of certain
         conditions.

         Pursuant to the terms of the Agreement NUON will purchase 5,747,127
         shares of Common Stock, $0.01 par value per share (the "Common Stock"),
         for $5 million at a closing currently scheduled for September 4, 1997.
         The price per share is $0.87 per share. Subject to the satisfaction of
         certain conditions, including the development of a plan of
         complementary business, NUON may purchase an additional 5,747,127
         shares of Common Stock by each of September 30, 1998 and September 30,
         1999 at a price of $0.87 per share.

         Upon the closing and the payment of the initial $5 million installment,
         NUON will appoint three individuals to the Company's Board of
         Directors.

         A portion of the proceeds from the initial installment will be used to
         pay existing subordinated indebtedness. At June 30, 1997 this amount
         was $1,475,537.

         The transaction is subject to customary conditions and governmental
         approvals, including the approval of NUON's Supervisory Board.



                                       11
<PAGE>   13

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

         North Coast Energy, Inc., (the "Company") a Delaware corporation, is an
independent natural gas and oil company engaged in exploration, development and
production activities primarily in the Appalachian Basin. The Company's strategy
focuses primarily on the acquisition of proved undeveloped natural gas and oil
properties and on the development of such properties by the Company in
conjunction with drilling partnerships which the Company sponsors and manages
(the "Drilling Programs"). The Drilling Programs are funded through the sale of
partnership interests to non-industry investors and by contributions from the
Company.

         Several factors may affect the amount and timing of the Company's
revenues with respect to the activities of the Drilling Programs. The amount of
funds raised for each Drilling Program determines the number of wells for which
the Company receives drilling revenues and the date at which the wells reach a
certain point in the completion process determines the timing of revenue
recognition. The turnkey drilling contract price between the Drilling Programs
and the Company may vary from Drilling Program to Drilling Program depending on
competition, type of well drilled and other cost factors and the returns sought
by investors in the Drilling Programs. A change in the turnkey price and the
Company's percentage interest in future Drilling Programs may affect the
Company's capital availability, as well as revenues and profits.

         The Company typically forms the Drilling Programs between August and
December of each year and conducts its drilling operations between September and
March. It generally requires nine months between the drilling of a well and the
generation of production revenue from that well. Drilling revenues are
predominantly recognized during the second half of the Company's fiscal year.

         The following table is a review of the results of operations of the
Company for the three months ended June 30, 1996 and 1997. All items in the
table are calculated as a percentage of total revenues.

<TABLE>
<CAPTION>

                                                                   Three Months
                                                                      Ended

                                                                     June 30,
                                                                  1996      1997

                                                                  --------------
<S>                                                                <C>       <C>
Revenues:

   Oil and gas production                                          32%       40%
   Drilling revenues                                               43        25
   Well operating, transportation and other                        17        23
   Administrative and agency fees                                   7        11
   Other                                                            1         1
                                                                  ---       ---
           Total Revenues                                         100%      100%
                                                                  ---       ---
Expenses:

   Oil and gas production expenses                                  8%       12%
   Drilling costs                                                  34        20
   Oil and gas operations                                           9         8
   General and administrative expenses                             20        26
   Depreciation, depletion, amortization and other                 11        16
   Abandonment of oil and gas properties                            2         0
   Provision for taxes on income                                    1         0
   Other                                                            9        14
                                                                  ---       ---
         Total Expenses                                            94%       96%
                                                                  ---       ---
Net Income                                                          6%        4%
                                                                  ===       ===
</TABLE>

                                       12

<PAGE>   14

         The following discussion and analysis reviews the results of operations
and the financial condition for the Company for the three months ended June 30,
1996 and 1997. The review should be read in conjunction with the financial
information presented elsewhere herein.

COMPARISON OF THREE MONTHS ENDED JUNE 30, 1996 TO THREE MONTHS ENDED JUNE 30,
1997.

REVENUES

         Oil and gas production revenues decreased $118,884 (14%) to $744,050
for the three months ended June 30, 1997 compared to $862,934 for the prior
corresponding period. The primary reason for the decrease in oil and gas
production revenues was due to a 8% decrease in gas production from the
Appalachian area between comparable periods. Oil and gas production revenues
were also effected by a decrease in oil production coupled with a decrease in
oil prices in the Appalachian area for the three months ended June 30, 1997
compared to the three months ended June 30, 1996. The Company received an
average price of $16.86 and $19.59 per barrel of oil for the three months ended
June 30, 1997 and 1996, respectively, and $2.28 and $2.39 per Mcf for natural
gas for the three months ended June 30, 1997 and 1996, respectively.

            Drilling revenues for the period decreased by $705,642 to $463,554
for the three months ended June 30, 1997 from $1,169,196 for the three months
ended June 30, 1996 due to the decrease in the number of wells recognized in
revenue for the period. Drilling revenues were recognized on 3 wells for the
three months ended June 30, 1997 compared to 11 wells for the three months ended
June 30, 1996. The decrease in wells recognized in drilling revenues was due to
a larger number of wells in progress at the Company's fiscal year end of March
31, 1996 compared to March 31, 1997. The reduction in the number of wells in
progress was a result of the decrease of $3,444,500 in the amount of funds
raised in the fiscal 1997 Drilling Programs of $3,015,500 as compared to
$6,460,000 for the fiscal 1996 Drilling Programs. Management of the Company
believes that this reduction was caused by the uncertainties arising from the
purchase of North Coast common stock by Lomak Petroleum, Inc. ("Lomak"), now a
principal stockholder of the Company. At June 30, 1997, the Company had 2 wells
in progress and not yet recognized in drilling revenues as compared to 3 wells
at June 30, 1996.

            For the three months ended June 30, 1997, well operating,
transportation and other revenues decreased $43,179 (9%) compared to the three
months ended June 30, 1996. A decrease of $72,673 in third party gas sales
coupled with a decrease in transportation revenue was offset somewhat by an
increase in well operating revenue and compressor revenue.

EXPENSES

         Oil and gas production expenses increased $4,431 for the three months
ended June 30, 1997 compared to June 30, 1996 due to $35,000 of costs incurred
with relocation of certain production facilities in the Gulf Coast area.

         Drilling costs for the three months ended June 30, 1997 compared to the
three months ended June 30, 1996 decreased $547,718 primarily due to the
decreased number of wells completed between comparable periods. The profit
margin on drilling revenue decreased to 19% for the three months ended June 30,
1997 compared to 21% for the three months ended June 30, 1996. The decrease in
the drilling profit margin between comparable periods was due to the fewer
number of wells drilled with a higher per well overhead allocation for the three
months ended June 30, 1997 compared to the three months ended June 30, 1996.

         General and administrative expenses decreased $82,439 (15%) for the
three months ended June 30, 1997 compared with the three months ended June 30,
1996. This decrease in general and administrative expenses was primarily due to
reductions in salary and employee benefits costs relating to a decrease in the
size of the Company's staff. Also, the staff reductions resulted in certain
changes in job responsibility resulting in additional general and administrative
costs being allocated to production expense and oil and gas operations.

         Abandonment of oil and gas properties decreased $45,496 for the three
months ended June 30, 1997 compared to the three months ended June 30, 1996. The
Company incurred costs abandoning one well during the


                                       13
<PAGE>   15

three months ended June 30, 1996 in its Gulf Coast area of interest while during
the three months ended June 30, 1997 the Company incurred abandonment costs on
two wells in the Appalachian area.

         Interest expense increased to $265,538 for the three months ended June
30, 1997 from $239,289 for the three months ended June 30, 1996. This increase
was associated with an increase in the average outstanding borrowings for the
comparable periods.

         Income from operations for the three months ended June 30, 1997
decreased $72,605 to $327,654 for the three months ended June 30, 1997 compared
to $400,259 for the three months ended June 30, 1996. The Company's net income
decreased $76,160 to $75,991 for the three months ended June 30, 1997 compared
to $152,151 for the three months ended June 30, 1996. The above mentioned
decrease in income was primarily a result of decreases in production revenues
and drilling income which was offset by reduced general and administrative
expenses.

INFLATION AND CHANGES IN PRICES

         While the costs of operations have been and will continue to be
affected by inflation, oil and gas prices have fluctuated during recent years
and generally have not followed the same pattern as inflation. With today's
global economy, especially in the area of oil and natural gas, Management
believes that other forces of the economy and world events, such as OPEC, the
weather, economic factors, and the effects of supply of natural gas in the
United States and regionally have a more immediate effect on current pricing
than inflation. The Company received an average price of $16.86 and $19.59 per
barrel of oil for the three months ended June 30, 1997 and 1996, respectively,
and $2.28 and $2.39 per Mcf for natural gas for the three months ended June 30,
1997 and 1996, respectively. Despite fluctuating gas prices due to weather and
other events beyond the Company's control, several Appalachian based gas market
indexes indicate that the general market for natural gas in the Appalachian
Basin has been, on average, $.60 per Mcf higher during the two year period ended
June 30, 1997 compared to the two year period ended June 30, 1995. Although it
is anticipated that there will be a decline in gas prices during the summer
months compared to the winter of 1996/1997 the demand for gas by storage
facilities may continue to keep gas prices above last year's low prices. Other
variables potentially effecting gas prices are increased competition from
Canadian gas, effects of gas storage and possible changes in federal and state
regulations. With continued unbundling of pipeline service, better educated
consumers and open access to a variety of geographical markets, management
cannot predict what long-term effects this will have on either spot market
prices or longer term gas contracts.

         Currently, the Company sells natural gas under both fixed price
contracts and on the spot market. The spot market price the Company receives for
gas production is related to several variables, including weather and the
effects of gas storage. The Company anticipates that spot market prices will
continue to fluctuate in response to various factors, primarily weather and
market conditions.

         In an effort to position itself to take advantage of future increases
in demand for natural gas, the Company continues to construct new pipeline
systems in the Appalachian Basin and to contract with other pipeline systems in
the region to transport natural gas production from Company wells.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's working capital was $392,000 at June 30, 1997 compared to
$325,000 at March 31, 1997. The increase of $67,000 in working capital from
March 31, 1997 reflects the Company's increase in cash flow from operating
activities and the reduced cash outflow for the purchase of tangible equipment.
The Company was able to utilize equipment on previously uneconomic wells by
abandoning those wells and installing the equipment on new productive wells to
meet its obligations to the partnerships formed in fiscal 1997. As of June 30,
1997, the Company had $8,640,000 outstanding under its Credit Facility. North
Coast's current ratio was 1.2 to 1.0 at June 30, 1997 and 1.1 to 1.0 at March
31, 1997.



                                       14

<PAGE>   16

         The following table summarizes the Company's financial position at
March 31, 1997 and June 30, 1997:
<TABLE>
<CAPTION>
(Amounts in Thousands)          March 31, 1997        June 30, 1997
                               -----------------    ------------------
                               Amount       %       Amount       %
<S>                            <C>             <C>  <C>    
Working capital                $   325         2%   $   392
                                                                    2%
Property and equipment (net)    17,901        97%    17,857        97%
Other                              151         1%       135         1%
                               -------   -------    -------   -------
   Total                       $18,377       100%   $18,384       100%
                               =======   =======    =======   =======

Long-term debt                 $10,720        58%   $10,624        58%
Deferred income taxes              347         2%       348         2%
Stockholders' equity             7,310        40%     7,412        40%
                               -------   -------    -------   -------
   Total                       $18,377       100%   $18,384       100%
                               =======   =======    =======   =======
</TABLE>

CAPITAL RESOURCES AND REQUIREMENTS

         The oil and gas exploration and development activities of North Coast
historically have been financed through the Drilling Programs, through
internally generated funds, and from bank financing.

         The following table summarizes the Company's Statements of Cash Flows
for the three months ended June 30, 1996 and 1997:
<TABLE>
<CAPTION>
                                                       Three Months Ended June 30,
                                                       ---------------------------
(Amounts in Thousands)                                    1996              1997
                                                          ----              ----
                                                   Amount      %      Amount      %
<S>                                                <C>        <C>     <C>        <C>  
Net cash used by operating activities              $(552)     (28)%   $(264)     (28)%
Net cash used for investing activities              (867)     (44)%    (221)     (23)%
Net cash provided (used) by financing activities     850       43 %     (96)     (10)%
                                                   -----    -----     -----    -----
Increase in cash and equivalents                   $(569)     (29)%   $(581)     (61)%
                                                   =====      ===     =====      ===  
</TABLE>

      Note:  All items in the previous table are calculated as a percentage of
             total cash sources. Total cash sources include the following items
             if positive: cash flow from operations before working capital
             changes, changes in working capital, net cash provided by investing
             activities and net cash provided by financing activities, plus any
             decrease in cash and cash equivalents.

         As the above table indicates, the Company's cash flow from operating
activities increased approximately $288,000 for the three months ended June 30,
1997 compared to the period ended June 30, 1996. This increase reflects the
reduction of general and administrative expenses for the three months ended June
30, 1997 compared to the three months ended June 30, 1996.

         Net cash used for investing activities decreased to approximately
$221,000 for the three months ended June 30, 1997 from approximately $867,000
for the three months ended June 30, 1996. The decrease of $646,000 was due to
the amount of funds raised in Drilling Programs and the subsequent number of
wells drilled, coupled with the Company's ability to utilize equipment on
previously uneconomic wells by abandoning those wells and installing the
equipment on new productive wells to meet its obligations to the fiscal 1997
Drilling Programs.

         Net cash from financing activities decreased approximately $946,000 for
the three months ended June 30, 1997 compared to the three months ended June 30,
1996. This decrease reflects the Company's reduced need for borrowing due to
reduced general and administrative expenses and the elimination of its Preferred
Stock dividends between the comparable periods.



                                       15
<PAGE>   17

         The Company has a $20,000,000 revolving credit agreement with its
lender. The Agreement provides for a borrowing base which is determined
semiannually by the lender based upon the Company's financial position, oil and
gas reserves, as well as outstanding letters of credit ($140,000 at June 30,
1997), as defined. At June 30, 1997, the Company's borrowing base was
$10,200,000 subject to monthly reductions of $110,000 beginning in May 1997 and
increasing to $200,000 beginning June 1, 1997. Available borrowings under the
facility at June 30, 1997 were $1,110,000 and may subsequently change based upon
the semiannual reserve study and borrowing base determination (see Note 4 to the
Company's March 31, 1997 financial statements). Also, the amendment of December
2, 1996 provides that the payment of dividends with respect to the capital stock
of the Company is prohibited. As of June 30, 1997, the Company had $8,640,000
outstanding under the Credit Facility. At June 30, 1997 the Company was in
violation of its debt coverage ratio, although this violation was waived by the
lender. Amounts borrowed under the Credit Facility bear interest at the lending
bank's prime rate plus 1 1/2%. The revolving line of credit can be renewed
annually or converted to a term loan at the Company's option prior to its
expiration in fiscal 1999. Also, at June 30, 1997, the Company had approximately
$58,357 outstanding under a mortgage note payable. The mortgage note bears
interest at the rate of 8% and requires the Company to make monthly payments of
approximately $1,019 through July 2003. The Company purchased a building for its
headquarters and entered into a mortgage note on May 13, 1996 for $540,000 over
15 year term with an interest rate of 8.58% to be renegotiated every five years.
The amount outstanding under the mortgage note at June 30, 1997 was $519,621.

         The amounts borrowed under its reducing revolving line of credit are
secured by the Company's receivables, inventory, equipment and a first mortgage
on certain of the Company's interests in oil and gas wells and reserves. The
mortgage notes are secured by certain land and buildings.

         In addition to bank financing, the Company has two loans with Lomak.
The first loan of $335,000 ($304,791 outstanding on June 30, 1997) bears an
interest rate at the prime rate designated by the Chemical Bank, N.A., plus 1%
(9.25% at June 30, 1997). The amounts outstanding under the terms of the
Company's financing arrangement are subordinated to the prior payment and
amounts outstanding under the Company's Credit Facility. Repayment of the loan
is in cash, based upon a percentage of the net monthly revenues received from
certain previously acquired properties.

         The second loan in the amount of $1,000,000 is unsecured and may be
repaid in cash plus accrued interest (with approval of the Company's senior
lender) with the proceeds of a sale of equity or may be converted into shares of
Common Stock at the rate of $1.00 per share. The loan is subordinate to the
Company's Credit Facility with its senior lender and bears interest at the rate
of 8% per annum. As of June 30, 1997, the balance of the loan and accrued
interest was $1,170,746. In connection with entering into the Loan Agreement,
the Company issued a warrant to purchase 200,000 shares of Common Stock at $1.20
per share and a warrant to purchase 300,000 shares of Common Stock at $1.00 per
share. The warrants may be redeemed by the Company for $.10 per share at its
option upon 30 days written notice.

         On or about September 4, 1996 Lomak, a publicly traded oil and gas
company, purchased approximately 47% of the voting stock of the Company (as of
June 30, 1997 Lomak owns approximately 37% of the voting stock of the Company)
from two of the Company's largest former stockholders, NAGIT, USA (NAGIT) and
Bruce E. Brocker. At the Company's annual meeting of stockholders, Lomak
presented proxies representing the shares acquired from these shareholders and
indicated its intention to nominate and elect two directors in the class whose
terms were scheduled to expire at that meeting. Litigation among the Company,
Lomak and Mr. Brocker concerning such proxies then ensued until November 1996
when the parties reached a settlement with respect to that litigation.

         Revenues derived from the Company's Drilling Programs provide an
important source of the Company's cash flow. Due to uncertainties among
potential Drilling Program investors arising out of Lomak's acquisition of a
substantial ownership interest in the Company and the other matters described
above, the Company's ability to market its Drilling Programs was adversely
affected. With the reduction of the Drilling Program activity and the need to
conserve cash, the Company's ability to utilize equipment it owns on
non-productive wells and increase profitably through the Drilling Programs was
adversely affected. Demands on the Company's capital resources 



                                       16
<PAGE>   18


increased due to reduced cash flow associated with lower levels of investor
interest in its Drilling Programs and increased costs associated with litigation
and evaluating the Company's strategic alternatives. This necessitated actions
by the Company to alter its growth oriented business plan in order to conserve
cash. On October 21, 1996, the Company initiated layoffs of 21% of its staff
coupled with a temporary reduction or deferment in wages to many of its
remaining employees. Also, the Company suspended its dividends on its Series A
Non-cumulative and Series B Cumulative Preferred Stock and adopted a plan to pay
director fees in Common Stock in an effort to conserve cash resources. The
Company subsequently made an offer to all holders of the Company's Preferred
Stock offering additional shares of the Company's Common Stock as an enticement
for conversion of the Preferred Stock to Common Stock. At June 30, 1997, the
Company had cumulative dividends in arrears of $201,198.

         Management of the Company believes that the funds anticipated to be
raised in the Drilling Programs together with anticipated general economic
conditions and various sources of available capital, including current available
borrowings under the Credit Facility, will be sufficient to fund the Company's
operations and meet debt service requirements through fiscal 1998.

         In the event that available borrowings under the Credit Facility are
not sufficient or additional financing cannot be obtained, the Company would be
required to continue its current efforts to conserve cash resources. In order to
accomplish this objective, the Company believes that it would be necessary to
take various actions, including reducing the amount of capital raised in future
Drilling Programs, the introduction of additional cost cutting measures and the
possible sale of certain assets. Management of the Company believes that
measures of this type would have a material adverse effect on the Company.

         On August 1, 1997 the Company entered into a stock purchase agreement
(the "Agreement") with NUON International by, a limited liability company
organized under the laws of the Netherlands ("NUON"), wherein NUON agreed to
purchase an aggregate of 17,226,387 shares of stock of North Coast for $15
million, subject to the satisfaction of certain conditions. Pursuant to the
terms of the Agreement, NUON will purchase 5,747,127 shares of Common Stock,
$0.01 par value per share (the "Common Stock"), for $5 million at a closing
currently scheduled for September 4, 1997. Subject to the satisfaction of
certain conditions, including the development of a plan of complementary
business, NUON may purchase an additional 5,747,127 shares of Common Stock by
each of September 30, 1998 and September 30, 1999. A portion of the proceeds
from the initial installment will be used to pay existing subordinated
indebtedness ($1,475,537 outstanding at June 30, 1997) owed to Lomak, a
stockholder of the Company. The transaction is subject to customary conditions
and governmental approvals, including the approval of NUON's Supervisory Board.

ACCOUNTING STANDARDS

         In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share" which will revise the calculation methods and
disclosures regarding earnings per share. SFAS No. 128 is required to be adopted
for financial statements with fiscal years ending after December 31, 1997. The
Company has not determined the impact, if any, of this standard.

 FORWARD-LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q contains forward-looking statements
which involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that may cause such a difference include, but are not limited to, the
competition within the oil and gas industry, the price of oil and gas in the
Appalachian Basin area, the weather in the Company's geographic region, the cost
of the locating and drilling oil and gas wells in the Appalachian Basin area,
the amount of funds raised in the fiscal 1998 Drilling Programs, and the ability
to locate productive oil and gas prospects for development by the Company.






                                       17
<PAGE>   19

                    NORTH COAST ENERGY, INC. AND SUBSIDIARIES
                                     PART II
                                OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

         Not applicable

Item 2.  CHANGES IN SECURITIES

         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).  Exhibits

         11.1     Computation of Earnings per Common Share.

         27.1     Financial Data Schedule*

         b). No reports on Form 8-K have been filed during the quarter for which
this report was filed.

*Exhibit 27.1 furnished for Security and Exchange purposes only.



                                       18
<PAGE>   20

                                   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.

                            NORTH COAST ENERGY, INC.

August 14, 1997             /s/ Charles M. Lombardy, Jr.
                            -------------------------------------
                            Charles M. Lombardy, Jr.
                            Chief Executive Officer and Director

August 14, 1997             /s/ Tim Wagers
                            -------------------------------------
                            Tim Wagers
                            Principal Accounting and Financial Officer







                                       19