<PAGE>

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

                                   FORM 10-Q

(Mark One)
    X         Quarterly Report Pursuant to Section 13 or 15(d) of the
---------                 Securities Exchange Act of 1934
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                      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 0-9498



                         MISSION RESOURCES CORPORATION
             (Exact name of registrant as specified in its charter)



Delaware                                                              74-0437769
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)
1331 Lamar, Suite 1455  Houston, Texas                                77010-3039
(Address of principal executive offices)                              (ZIP Code)

      Registrant's telephone number, including area code: (713) 495-3000

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
                                              ---    ---

As of November 8, 2001, 23,802,428 shares of common stock of Mission Resources
Corporation were outstanding.
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------


                                     INDEX
                                     -----

<TABLE>
<CAPTION>

PART I.   FINANCIAL INFORMATION                                                                         Page #
<S>                                                                                                     <C>
  ITEM 1.  Financial Statements

           Condensed Consolidated Balance Sheets:
                September 30, 2001 (Unaudited) and December 31, 2000...................................   3
           Condensed Consolidated Statements of Operations (Unaudited):
                Three months and nine months ended September 30, 2001 and 2000.........................   5
           Condensed Consolidated Statements of Cash Flows (Unaudited):
                Three months and nine months ended September 30, 2001 and 2000.........................   6
           Notes to Condensed Consolidated Financial Statements (Unaudited)............................   8

  ITEM 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations......................................................  19

  ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk..................................  29

PART II.  OTHER INFORMATION............................................................................  31
</TABLE>

                                       2
<PAGE>

                        PART I.  FINANCIAL INFORMATION

ITEM 1.                      FINANCIAL STATEMENTS
-------                      --------------------

                         MISSION RESOURCES CORPORATION
                         -----------------------------

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     -------------------------------------

                             (Amounts in thousands)

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                             September 30,            December 31,
                                                                                 2001                    2000
                                                                             -------------            ------------
                                                                              (Unaudited)
<S>                                                                     <C>                      <C>
CURRENT ASSETS:

Cash and cash equivalents..................................................... $   8,454               $  14,464
Accounts receivable and accrued revenues......................................    30,339                  27,724
Current portion of interest rate swap.........................................       156                     ---
Commodity derivative asset....................................................     2,642                     ---
Prepaid expenses and other....................................................     3,288                   1,189
Notes receivable - affiliate..................................................       ---                   1,281
                                                                               ---------               ---------
      Total current assets....................................................    44,879                  44,658
                                                                               ---------               ---------

PROPERTY AND EQUIPMENT, AT COST:

Oil and gas properties (full cost):
    United States - Unproved properties of  $16,747  and $11,360
     excluded from amortization as of September 30, 2001 and
     December 31, 2000, respectively..........................................   731,467                 421,408
     Ecuador - No unproved properties as of  September 30, 2001 and
     December 31, 2000........................................................       ---                  12,988

Gas plant facilities..........................................................    19,533                  18,452
                                                                               ---------               ---------
                                                                                 751,000                 452,848
Accumulated depreciation, depletion and amortization--oil and gas.............  (341,806)               (296,567)
Accumulated depreciation, depletion, and amortization--gas plant..............    (8,298)                 (7,345)
                                                                               ---------               ---------

Net property, plant and equipment.............................................   400,896                 148,936

Leasehold, furniture and equipment............................................     3,287                   2,782
Accumulated depreciation......................................................      (782)                   (404)
                                                                               ---------               ---------
Net leasehold, furniture and equipment........................................     2,505                   2,378
                                                                               ---------               ---------

LONG TERM RECEIVABLE..........................................................     6,246                   4,554
GOODWILL & OTHER INTANGIBLES..................................................    19,996                     ---
DEFERRED INCOME TAXES.........................................................       ---                  15,141
OTHER ASSETS..................................................................    10,921                   5,878
                                                                               ---------               ---------
                                                                               $ 485,443               $ 221,545
                                                                               =========               =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     -------------------------------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

                (Amounts in thousands, except share information)

<TABLE>
<CAPTION>
                                                                       September 30,       December 31,
                                                                            2001                2000
                                                                       -------------       ------------
                                                                        (Unaudited)
<S>                                                                    <C>                 <C>
CURRENT LIABILITIES:

Accounts payable and accrued liabilities...........................     $ 33,487           $ 29,960
Commodity derivative liabilities...................................          831              7,486
                                                                        --------           --------
   Total current liabilities.......................................       34,318             37,446
                                                                        --------           --------


LONG-TERM DEBT, including $1,757 unamortized premium
   on issuance of $125,000 of senior subordinated notes due 2007...      265,757            125,450


INTEREST RATE SWAP, excluding current portion......................        3,858                ---

DEFERRED INCOME TAXES..............................................       41,954                ---

OTHER LIABILITIES..................................................        1,816              1,689


STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, 5,000,000 shares authorized;
   none issued or outstanding at September 30, 2001 and
   December 31, 2000...............................................          ---                ---
Common stock, $0.01 par value, 60,000,000 shares authorized,
   23,896,959 and 14,259,626 shares issued at September 30,
   2001 and December 31, 2000, respectively........................          239                143
Additional paid-in capital.........................................      163,735             81,892
Retained deficit...................................................      (24,855)           (23,170)
Treasury stock, at cost, 311,000 shares............................       (1,905)            (1,905)
Other comprehensive income, net of taxes...........................          526                ---
                                                                        --------           --------
    Total stockholders' equity.....................................      137,740             56,960
                                                                        --------           --------

                                                                        $485,443           $221,545
                                                                        ========           ========
</TABLE>


     See accompanying notes to condensed consolidated financial statements

                                       4
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                -----------------------------------------------
                                  (UNAUDITED)

              (Amounts in thousands, except per share information)

<TABLE>
<CAPTION>
                                                                         Three Months Ended        Nine Months Ended
                                                                            September 30              September 30
                                                                      -----------------------     --------------------
                                                                          2001        2000          2001        2000
                                                                      ----------   ---------      --------    --------
<S>                                                                   <C>           <C>           <C>         <C>
REVENUES:
   Oil--United States...............................................     $25,128    $12,153       $ 54,912    $ 33,372
   Oil--Ecuador.....................................................         ---      1,542          1,877       2,975
   Gas revenues.....................................................      12,906     16,163         46,963      42,129
   Gas plant revenues...............................................       1,152      1,467          4,275       4,123
   Interest and other income (expense)..............................       1,311        191          1,528         757
                                                                         -------    -------       --------    --------
                                                                          40,497     31,516        109,555      83,356
                                                                         -------    -------       --------    --------
COST AND EXPENSES:
   Production expenses--United States...............................      14,940      7,385         31,519      20,447
   Production expenses--Ecuador.....................................         ---        685          3,071         958
   Transportation costs.............................................          10         53             60         178
   Gas plant expenses...............................................         559        717          1,971       1,982
   Mining venture...................................................          41        ---            907         ---
   Loss on sale of Ecuador interests................................         381        ---         11,602         ---
   Depreciation, depletion and amortization--United States..........      13,458      8,151         32,529      22,111
   Depreciation, depletion and amortization--Ecuador................         ---        240            504         456
   General and administrative expenses--United States...............       3,453      1,888          8,746       6,701
   General and administrative expenses--Ecuador.....................         ---       (235)           722          67
   Interest expense.................................................       6,226      3,993         16,058      11,150
                                                                         -------    -------       --------    --------
                                                                          39,068     22,877        107,689      64,050
                                                                         -------    -------       --------    --------
Income before income taxes and cumulative effect of
   a change in accounting method....................................       1,429      8,639          1,866      19,306
Provision (benefit) for income taxes................................         736      3,282            784     (12,470)
                                                                         -------    -------       --------    --------
Income before cumulative effect of a change in
    Accounting method...............................................     $   693    $ 5,357       $  1,082    $ 31,776
Cumulative effect of a change in accounting method,
    net of deferred tax.............................................         ---        ---          2,767         ---
                                                                         -------    -------       --------    --------
Net income (loss)...................................................     $   693    $ 5,357       $ (1,685)   $ 31,776
                                                                         =======    =======       ========    ========
Income before cumulative effect of a change in accounting
    method per share................................................     $  0.03      $0.38          $0.06       $2.29
                                                                         =======    =======       ========    ========
Income before cumulative effect of a change in accounting
     method per share-diluted.......................................     $  0.03      $0.37          $0.06       $2.24
                                                                         =======    =======       ========    ========
Net income (loss) per share.........................................     $  0.03      $0.38         $(0.09)      $2.29
                                                                         =======    =======       ========    ========
Net income (loss) per share-diluted.................................     $  0.03      $0.37         $(0.09)      $2.24
                                                                         =======    =======       ========    ========
Weighted average common shares outstanding..........................      23,586     13,921         18,860      13,888
                                                                         =======    =======       ========    ========
Weighted average common shares outstanding-diluted..................      23,681     14,288         19,189      14,156
                                                                         =======    =======       ========    ========
</TABLE>
     See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                -----------------------------------------------
                                  (UNAUDITED)

                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                                                                   Nine Months Ended
                                                                                                      September 30
                                                                                         -----------------------------------
                                                                                            2001                      2000
                                                                                         ---------                  --------
<S>                                                                                      <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)......................................................................  $  (1,685)                 $ 31,776
Adjustments to reconcile net income (loss) to net cash
 provided by operating activities:
   Depreciation, depletion and amortization............................................     33,033                    22,567
   (Gain) loss on interest rate swap...................................................       (699)                      ---
   (Gain) loss due to hedge ineffectiveness............................................     (1,524)                      ---
   Mining venture......................................................................        729                       ---
   Cumulative effect of a change in accounting method, net of deferred tax.............      2,767                       ---
   Stock option expense amortization...................................................        799                       715
   Amortization of deferred financing costs and bond premium...........................      1,206                       735
   Loss on sale of Ecuador interests...................................................     11,602                       ---
   Bad debt expense....................................................................        183                       ---
   Deferred income taxes...............................................................       (550)                  (12,805)
                                                                                         ---------                  --------
                                                                                            45,861                    42,988
Change in assets and liabilities:
 Accounts receivable and accrued revenue...............................................      3,308                   (12,055)
 Accounts payable and other liabilities................................................     (8,790)                   34,386
 Other.................................................................................     (3,158)                     (521)
                                                                                         ---------                  --------
 NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES.......................................     37,221                    64,798
                                                                                         ---------                  --------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of oil and gas properties.................................................    (23,566)                   (6,853)
 Acquisition of Bargo oil and gas properties...........................................   (143,886)                      ---
 Additions to properties and facilities................................................    (29,597)                  (71,692)
 Additions to leasehold, furniture and equipment  .....................................       (529)                   (2,716)
 Note receivable.......................................................................        ---                      (581)
 Proceeds on sale of Ecuador interests ................................................      4,760                       ---
 Property sale proceeds and costs......................................................     16,399                     3,870
 Additions to gas plant facilities.....................................................     (1,081)                     (236)
                                                                                         ---------                  --------
 NET CASH FLOWS USED IN INVESTING ACTIVITIES...........................................   (177,500)                  (78,208)
                                                                                         ---------                  --------
</TABLE>
     See accompanying notes to condensed consolidated financial statements

                                       6
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
          -----------------------------------------------------------
                                  (UNAUDITED)

                             (Amounts in thousands)
<TABLE>
<CAPTION>
                                                                                                Nine Months Ended
                                                                                                  September 30
                                                                                      -------------------------------
                                                                                         2001                 2000
                                                                                      ---------             --------
<S>                                                                                   <C>                   <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from borrowings.......................................................       208,754               28,900
 Payments of long term debt  ...................................................      (195,204)             (18,500)
 Net proceeds from issuance of common stock.....................................           899                  377
 Proceeds from issuance of senior subordinated notes due
  2007, including premium.......................................................       126,875                  ---

 Credit facility costs..........................................................        (7,055)                 ---
                                                                                     ---------             --------
 NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES................................       134,269               10,777
                                                                                     ---------             --------

 Net (decrease) increase in cash and cash equivalents...........................        (6,010)              (2,633)
 Cash and cash equivalents at beginning of period...............................        14,464                6,101
                                                                                     ---------             --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......................................     $   8,454             $  3,468
                                                                                     =========             ========
</TABLE>

<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                              September 30
                                                         -----------------------
                                                          2001             2000
                                                         ------           ------
<S>                                                      <C>              <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:
 Interest...............................................  $8,140           $7,570

 Income taxes...........................................  $2,185           $  104
</TABLE>

<TABLE>
<CAPTION>
                                                                          Nine Months
                                                                            Ended
                                                                         September 30,
                                                                             2001
                                                                           --------
<S>                                                                        <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Fair value of assets and liabilities acquired
     Net current assets and other assets.................................  $  2,453
     Property, plant and equipment.......................................   260,893
     Goodwill and intangibles............................................    20,849
     Deferred tax liability..............................................   (59,000)
                                                                           --------
          Total allocated purchase price.................................   225,195

Less non-cash consideration - issuance of stock..........................    80,000
Less cash acquired in transaction........................................     1,309
                                                                           --------
Cash used for business acquisition, net of cash acquired.................  $143,886
                                                                           ========
</TABLE>
     See accompanying notes to condensed consolidated financial statement.

                                       7
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

              Notes to Condensed Consolidated Financial Statements
              ----------------------------------------------------
                                  (Unaudited)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with instructions to Form 10-Q and, therefore,
     do not include all disclosures required by accounting principles generally
     accepted in the United States of America. However, in the opinion of
     management, these statements include all adjustments, which are of a normal
     recurring nature, necessary to present fairly the financial position at
     September 30, 2001, and the results of operations and changes in cash flows
     for the periods ended September 30, 2001 and 2000.  These financial
     statements should be read in conjunction with the consolidated financial
     statements and notes to the consolidated financial statements in the Form
     S-4 related to the merger of Bellwether Exploration Company and Bargo
     Energy Company filed with the Securities and Exchange Commission on April
     24, 2001.

     Merger
     ------
     On May 16, 2001, Bellwether merged with Bargo Energy Company ("Bargo") and
     changed its name to Mission Resources Corporation ("Mission"). The merger
     has been accounted for as a purchase.  Bargo's results of operations have
     been included in Mission's Statement of Operations from May 16, 2001
     through September 30, 2001. Contemporaneously with the merger, Bellwether
     increased its authorized capital stock to 65.0 million shares and amended
     its 1996 Stock Incentive Plan to increase the number of shares reserved for
     issuance under the plan by 2.0 million shares. Under the merger agreement,
     Bargo shareholders and option holders received a combination of cash and
     Mission common stock. In connection with the merger, 9.5 million shares of
     Mission common stock were issued to Bargo shareholders with an increase in
     equity of $80 million. In addition, Bargo's preferred stock was redeemed
     and its revolving credit facility was paid in full. The purchase price
     allocated to the acquired assets was $4.1 million to unproved properties,
     $255.7 million to proved properties, $1.1 million to current drilling
     projects, $20.8 million to goodwill and intangible assets, and $2.5 million
     to current assets, current liabilities and other non-current assets.

     Goodwill
     --------
     Goodwill is currently being amortized over a period of 10 years. An
     impairment of goodwill is measured as the excess in the historical value of
     the Company's net assets over the undiscounted future cash flows of its
     operations.  In evaluating the recovery of goodwill, Mission will compare
     the undiscounted future cash flows of its operations to the historical
     value of its net assets. The Company will adopt the goodwill impairment
     provisions of SFAS No. 142 on January 1, 2001.  SFAS No. 142 requires
     goodwill to be tested for impairment at least annually using a two-step
     process that begins with an estimation of the fair value of a reporting
     unit.  The first test is a screen for potential impairment and the second
     step measures the amount of the impairment, if any.

                                       8
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

              Notes to Condensed Consolidated Financial Statements
              ----------------------------------------------------
                                  (Unaudited)

     Oil and Gas Property Accounting
     -------------------------------
     The Company utilizes the full cost method of accounting for its investment
     in oil and gas properties.  Under this method of accounting, all costs of
     acquisition, exploration and development of oil and gas reserves are
     capitalized as incurred.  To the extent that capitalized costs of oil and
     gas properties, net of accumulated depreciation, depletion and
     amortization, exceed the discounted future net revenues of proved oil and
     gas reserves net of deferred taxes, such excess capitalized costs will be
     charged to operations. Using commodity prices as of September 30, 2001 of
     $23.43 per barrel of oil and $1.89 per mcf of gas, a writedown of oil and
     gas property was indicated.  This potential writedown of $22.6 million,
     $13.2 million net of tax, was not recorded due to price recoveries
     subsequent to September 30, 2001. No such charges to operations were
     required during the three and nine-month periods ending September 30, 2000.

     Reclassifications
     -----------------
     Certain reclassifications of prior period statements have been made to
     conform with current reporting practices.  Prior year financial statements
     have been restated to present gas plant revenues on a gross basis
     in accordance with EITF 99-19 "Reporting Revenue Gross as a Principal
     verses Net as an Agent."  The presentation did not impact previously
     reported net income (loss) or net income (loss) per common share for the
     periods presented.

     Use of Estimates
     ----------------
     In order to prepare these financial statements in conformity with
     accounting principles generally accepted in the United States of America,
     management of Mission has made estimates and assumptions relating to the
     reporting of assets and liabilities, the disclosure of contingent assets
     and liabilities, and reserve information.  Actual results could differ from
     those estimates.

     Impact of Recently Issued Accounting Standards
     ----------------------------------------------
     In July 2001, the FASB issued Statement No. 141. Business Combinations, and
     Statement No.142, Goodwill and Other Intangible Assets.  Statement No. 141
     requires that the purchase method of accounting be used for all business
     combinations initiated after September 30, 2001 as well as all purchase
     method business combinations completed after September 30, 2001.  Statement
     No. 141 also specifies criteria that intangible assets acquired in a
     purchase method business combination must meet to be recognized and
     reported apart from goodwill, noting that any purchase price allocable to
     an assembled workforce may not be accounted for separately.  Statement No.
     142 will require that goodwill and intangible assets with indefinite useful
     lives no longer be amortized, but instead tested for impairment at least
     annually in accordance with the provisions of Statement No. 142.  Statement
     No. 142 will also require that intangible assets with definite useful lives
     be amortized over their respective estimated useful lives to their
     estimated residual values, and reviewed for impairment in accordance with
     SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
     Long-Lived Assets to Be Disposed Of.

     The Company is required to adopt the provisions of Statement No. 141
     immediately and Statement No. 142 effective January 1, 2002.

                                       9
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

              Notes to Condensed Consolidated Financial Statements
              ----------------------------------------------------
                                  (Unaudited)

     As of the date of adoption, the Company expects to have unamortized
     goodwill in the amount of $ 19.0 million and unamortized identifiable
     intangible assets in the amount of $374,300, all of which will be subject
     to the transition provisions of Statements No. 141 and No. 142.
     Amortization expense related to goodwill was $761,000 for the period ended
     September 30, 2001.  Upon adoption of SFAS No. 142, amortization of
     goodwill and intangible assets will cease, thereby reducing expenses by
     approximately $200,000 monthly. Since such amortization is not an allowable
     deduction for calculating taxes, the Company's effective tax rate will
     decrease.  Also, upon adoption of SFAS No. 142, $285,000 of workforce
     intangible currently recorded as unamortized identifiable intangible assets
     will be subsumed into goodwill and will not be amortized as it no longer
     qualifies as a recognizable intangible asset. Because of the extensive
     effort needed to comply with adopting Statements No. 141 and No. 142, it is
     not practicable to reasonably estimate all of the potential impacts of
     adopting these statements on the Company's financial statements at the date
     of this report, including whether any transitional impairment losses will
     be required to be recognized as the cumulative effect of a change in
     accounting principle.

     In July 2001, FASB issued Statement No. 143.  SFAS No. 143, Accounting for
     Asset Retirement Obligations, provides accounting requirements for
     retirement obligations associated with tangible long-lived assets,
     including: 1) the timing of liability recognition; 2) initial measurement
     of the liability; 3) allocation of asset retirement cost to expense; 4)
     subsequent measurement of the liability; and 5) financial statement
     disclosures.  SFAS No. 143 requires that asset retirement cost should be
     capitalized as part of the cost of the related long-lived asset and
     subsequently allocated to expense using a systematic and rational method.
     Mission will adopt the statement effective January 1, 2003.  The transition
     adjustment resulting from the adoption of SFAS No. 143 will be reported as
     a cumulative effect of a change in accounting principle.  At this time,
     Mission cannot reasonably estimate the effect of the adoption of this
     statement on either financial position or results of operations.

     In August 2001, the FASB issued Statement No. 144, Accounting for the
     Impairment or Disposal of Long-Lived Assets, which will be effective as of
     the beginning of 2002.  SFAS No. 144 requires that long-lived assets to be
     disposed of by sale be measured at the lower of the carrying amount or fair
     value less cost to sell, whether reported in continuing operations or in
     discontinued operations.  SFAS No. 144 broadens the reporting of
     discontinued operations to include all components of an entity with
     operations that can be distinguished from the rest of the entity and that
     will be eliminated from the ongoing operations of the entity in a disposal
     transaction.  After its effective date, SFAS No. 144 will be applied to
     those transactions where appropriate.  At this time Mission is unable to
     determine what the future impact of adopting this statement will have on
     its financial position or results of operations.

     Mining Venture
     --------------
     During fiscal year 1992, Mission acquired an average 24.4% interest in
     three mining ventures (the "Mining Venture") from an unaffiliated
     individual for $128,500.  At the time of such acquisition, J. P. Bryan, a
     member of the Mission Board of Directors, his brother, Shelby Bryan and
     Robert L. Gerry III (the "Affiliated Group"), owned an average 21.5%
     interest in the Mining Venture.  Mission's interest in the Mining Venture
     increased as it paid costs of the venture while the interest of the
     Affiliated Group decreased. Through September 30, 2001, Mission spent an
     additional $178,000 primarily for soil core assays.  These exploratory
     costs, plus the $729,000 accumulated on the Balance Sheet in Other Assets
     as of December 31, 2000, were charged to earnings in 2001.

                                       10
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

              Notes to Condensed Consolidated Financial Statements
              ----------------------------------------------------
                                  (Unaudited)

     Comprehensive Income
     ----------------------
     Comprehensive income includes all changes in a company's equity except
     those resulting from investments by owners and distributions to owners. The
     Company's total comprehensive income for the three months and nine months
     ended September 30, 2001 and 2000 was as follows (in thousands):


<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED             NINE MONTHS ENDED
                                                         SEPTEMBER 30,                 SEPTEMBER 30,
                                                   -----------------------------------------------------
                                                    2001           2000          2001              2000
                                                   -----          ------       --------          -------
<S>                                               <C>             <C>          <C>               <C>
Net income (loss)                                 $  693          $5,357       $ (1,685)         $31,776
Cumulative effect attributable to adoption of
     SFAS No. 133, net of tax                        ---             ---        (19,328)             ---
Hedge accounting for derivative instruments        3,032             ---         26,380              ---
                                                   -----          ------       --------          -------
Comprehensive income                              $3,725          $5,357       $  5,367          $31,776
                                                  ======          ======       ========          =======
</TABLE>


     The accumulated balance of other comprehensive income related to cash flow
     hedges, net of taxes, is as follows (in thousands):


     Balance at December 31, 2000                        $    ---
     Cumulative effect of accounting change               (19,328)
     Net gains on cash flow hedges                         11,624
     Reclassification adjustments                          14,756
     Tax effect on hedge activity                          (6,526)
                                                         --------
     Balance at September 30, 2001                       $    526
                                                         ========


     Investment in Carpatsky
     -----------------------
     Throughout 1998 and 1999, the Company acquired an interest in Carpatsky
     Petroleum Incorporated "Carpatsky", a Canadian corporation, consisting of
     common shares, convertible preferred shares and a warrant to acquire
     additional common shares.  The total cost of these investments was $4.6
     million. This investment did not give the Company the ability to
     significantly influence Carpatsky's operations and was accounted for under
     the cost method.  Additionally, Mission made a loan to Carpatsky $1 million
     under a revolving credit facility established in July 1999 and incurred
     costs on behalf of Carpatsky of approximately $0.6 million. Mission
     executed an agreement with Carpatsky effective June 29, 2001 under which it
     exchanged the interests for a production payment in Carpatsky's producing
     properties that is reported on the Balance Sheet as a Long Term Receivable.

                                       11
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

              Notes to Condensed Consolidated Financial Statements
              ----------------------------------------------------
                                  (Unaudited)

     Change in Accounting Method
     ---------------------------

     Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting
     for Derivative Instruments and Hedging Activities."  This statement
     establishes accounting and reporting standards requiring that derivative
     instruments (including certain derivative instruments embedded in other
     contracts) be recorded at fair value and included in the balance sheet as
     assets or liabilities.  The accounting for changes in the fair value of a
     derivative instrument depends on the intended use of the derivative and the
     resulting designation, which is established at the inception of a
     derivative. Accounting for qualified hedges allows a derivative's gains and
     losses to offset related results on the hedged item in the Statement of
     Operations. For derivative instruments designated as cash flow hedges,
     changes in fair value, to the extent the hedge is effective, are recognized
     in Other Comprehensive Income until the hedged item is recognized in
     earnings.  Hedge effectiveness is measured at least quarterly based upon
     the relative change in fair value between the derivative contract and the
     hedged item over time.  Any change in the fair value resulting from
     ineffectiveness, as defined by SFAS 133, is recognized immediately in
     earnings.

     Adoption of SFAS No.133 at January 1, 2001 resulted in the recognition of
     $25.3 million of derivative liabilities included in Current Liabilities on
     the Balance Sheet and $19.3 million, net of taxes, of hedging losses
     included in Accumulated Other Comprehensive Income, a component of
     Stockholders' Equity, as the cumulative effect of a change in accounting
     method.  Amounts were determined as of January 1, 2001 based upon quoted
     commodity prices.  The Company also recognized a $4.4 million liability and
     a $2.8 million loss, net of taxes, as the cumulative effect of a change in
     accounting method related to an interest rate swap that does not qualify
     for hedge accounting treatment.

     Effective September 22, 1998, the Company entered into an eight and one-
     half-year interest rate swap agreement with a notional value of $80
     million.  Under the agreement, the Company receives a fixed interest rate
     and pays a floating interest rate based on the simple average of three
     foreign LIBOR rates.  Floating rates are redetermined for a six-month
     period each April 1 and October 1.  The interest rate swap did not qualify
     for hedge accounting under SFAS No. 133 at January 1, 2001.  The swap's net
     value of $3.7 million is reflected on the balance sheet as a $156,000
     Current Asset and a $3.9 million Long-Term Liability.  The change in the
     swap's fair value of $996,000 during the quarter ended September 30, 2001
     and $699,000 for the nine months ended September 30, 2001 has been
     reflected as a reduction in interest expense.

     Mission entered into a gas swap for $4.60 per mcf on 15,000 mcf per day of
     production from November 2000 through October 2001.  This offsets hedges
     previously existing on forecasted production that was sold in late 2000.  A
     non-cash loss of $8.7 million was recognized in the fourth quarter of 2000
     related to the $4.60 swap, along with a current derivative liability as
     this portion of the swap was considered a speculative derivative.  The
     liability is relieved monthly as the swap is settled.  By September 30,
     2001, the liability had been reduced to $831,000.

     Bargo had entered into one derivative contract, a floor of $21 per barrel
     on oil that extended into the year 2001.  In adopting SFAS No. 133, it was
     determined that the Bargo derivative contract would be marked to market.
     Mission acquired this contract at the time of the merger.  The contract was
     marked to market at September 30, 2001 and resulted in a derivative gain of
     $117,000 being recorded to Other Income for the three month period ended
     September 30, 2001.

                                       12
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

              Notes to Condensed Consolidated Financial Statements
              ----------------------------------------------------
                                  (Unaudited)

2.   STOCKHOLDERS' EQUITY
     ---------------------

     On May 16, 2001, Bellwether merged with Bargo Energy Company ("Bargo").
     The resulting company was renamed Mission Resources Corporation.  As
     partial consideration in the merger, 9.5 million shares of Mission common
     stock were issued to the holders of Bargo common stock and options.  The
     $80 million assigned value of such shares was included in the purchase
     price.

     On May 15, 2000 the Company's President was granted 500,000 options with an
     exercise price set at the average price for the 30 days prior to the grant
     date.  Such average price was less than the closing price on the grant
     date.  The Company was required to recognize compensation expense equal to
     the difference between the exercise price and the closing price of
     Bellwether's stock on the grant date for each option.  A charge of $536,000
     was recorded in May 2000, when one-third of the options vested.  The
     remaining expense was to be charged ratably over the two-year vesting
     period for the remaining options. Due to the vesting of all outstanding
     options in connection with the merger on May 16, 2001, the remaining
     $577,000 expense was recognized as compensation expense in May 2001
     bringing the total expense to $756,000.  No further expense was recognized
     in the quarter ended September 30, 2001.  There was no such compensation
     expense in the three and nine month periods ended September 30, 2000.

     Concurrent with the merger, all Bellwether employees who held stock options
     were immediately vested in those options upon closing of the merger.
     Compensation expense of $43,000 was recognized for an estimate of those
     employee options that would have expired unexercisable pursuant to its
     original terms.   The expense was calculated as the excess of the price on
     the merger date over the exercise price for each option.

     The following represents a reconciliation of the numerator and denominator
     of the basic EPS computation to the numerator and denominator of the
     diluted EPS computation.  Potentially dilutive options and warrants
     totaling 3,402,000 and 2,027,000 in the quarter and year to date periods
     ended September 30, 2001, respectively, and 512,500 and 576,500 in the
     quarter and year to date periods ended September 30, 2000, respectively,
     were not included in the computation of diluted earnings per share because
     to do so would have been antidilutive.

 SFAS NO. 128 RECONCILIATION  (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS):

<TABLE>
<CAPTION>
                                                               For the Three Months Ended
                                                                   September 30, 2001
                                                       ----------------------------------------
                                                         Income         Shares       Per Share
                                                       (Numerator)  (Denominator)     Amount
                                                       -----------  -------------  ------------
<S>                                                        <C>           <C>        <C>
NET INCOME PER COMMON SHARE:
Net income available to common stockholders............    $693         23,586        $0.03
                                                                                      -----
EFFECT OF DILUTIVE SECURITIES:
Options and Warrants...................................    $---             95
                                                           ----         ------
NET INCOME PER COMMON SHARE-DILUTED:
Net income available common stockholders and assumed
 conversions...........................................    $693         23,681        $0.03
                                                           ====         ======        =====

                                                               For the Three Months Ended
                                                                   September 30, 2000
                                                       ----------------------------------------
                                                         Income         Shares       Per Share
                                                       (Numerator)  (Denominator)     Amount
                                                       -----------  -------------  ------------
NET INCOME PER COMMON SHARE:
Net income available to common stockholders............    $5,357        13,921        $0.38
                                                                                       -----
EFFECT OF DILUTIVE SECURITIES:
Options and Warrants...................................    $  ---           367
                                                           ------       -------
NET INCOME PER COMMON SHARE-DILUTED:
Net income available common stockholders and assumed
 conversions...........................................    $5,357       $14,288        $0.37
                                                           ======       =======        =====
</TABLE>

                                       13
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

        Notes to Condensed Consolidated Financial Statements (Continued)
        ----------------------------------------------------------------
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                 For the Nine Months Ended
                                                                                    September 30, 2001
                                                            ------------------------------------------------------------
                                                              Income                     Shares                Per Share
                                                            (Numerator)               (Denominator)             Amount
                                                            -----------               -------------            ---------
<S>                                                         <C>                       <C>                      <C>
NET INCOME (LOSS) PER COMMON SHARE:
Net income (loss) available to common stockholders....
                                                             $(1,685)                    18,860                  $(0.09)
                                                                                                                 ======
EFFECT OF DILUTIVE SECURITIES:
Options and Warrants..................................       $   ---                        ---
                                                             --------                    ------
NET INCOME (LOSS) PER COMMON SHARE-DILUTED:
Net income (loss) available common stockholders and
 assumed conversions..................................       $(1,685)                    18,860                  $(0.09)
                                                             =======                     ======                  ======


                                                                                 For the Nine Months Ended
                                                                                    September 30, 2000
                                                            ------------------------------------------------------------
                                                              Income                     Shares                Per Share
                                                            (Numerator)               (Denominator)             Amount
                                                            -----------               -------------            ---------
NET INCOME (LOSS) PER COMMON SHARE:
Net income (loss) available to common stockholders....
                                                              $31,776                     13,888                 $2.29
                                                                                                                 =====
EFFECT OF DILUTIVE SECURITIES:
Options and Warrants..................................        $   ---                        268
                                                              --------                   -------
NET INCOME (LOSS) PER COMMON SHARE-DILUTED:
Net income (loss) available common stockholders and
 assumed conversions..................................        $31,776                    $14,156                 $2.24
                                                              =======                    =======                 =====
</TABLE>

     In periods of loss, the effect of potentially dilutive options and warrants
     is excluded from the calculation as antidilutive.  For the nine months
     ended September 30, 2001, potential incremental shares of 339,287 were
     excluded.

     In September 1998, the Company's Board of Directors authorized the
     repurchase of up to $5 million of the Company's common stock.  As of
     September 30, 2001, 311,000 shares had been acquired at an aggregate price
     of $1,905,000.  These treasury shares are reported at cost as a reduction
     to Stockholders' Equity.

3.   LONG TERM DEBT
     --------------
     In April 1997, the Company entered into a senior unsecured revolving credit
     facility ("Senior Credit Facility") which  had a borrowing base of $35.0
     million at March 31, 2001 and a maturity date of August 2002.  The Company
     could elect an interest rate based either on a margin plus LIBOR or the
     higher of the prime rate or the sum of 0.5% of 1.5% plus the Federal Funds
     Rate.  For LIBOR borrowings, the interest rate varied from LIBOR plus 1.0%
     to LIBOR plus 3.5% based upon the borrowing base usage.

     On May 16, 2001, concurrent with the merger, the Senior Credit Facility was
     replaced with a $200.0 million credit facility ("New Credit Facility") with
     an initial borrowing base of $185.0 million. The borrowing base is
     determined from time to time by the lenders based on the Company's reserves
     and other factors deemed relevant by the lenders. Such borrowing base was
     adjusted for acquisition and financing activities, primarily the issuance
     of senior subordinate notes, and  at September 30, 2001  was $137.5
     million.  The interest rate on borrowings is determined based upon the
     Company's credit rating and borrowing base utilization.  Interest can be
     either Prime plus a margin of up to 1% or LIBOR plus a margin of 1.5% to
     2.5%. The New Credit Facility contains various covenants including certain
     required financial measurements for current ratio, ratio of total debt to
     EBITDAX and interest coverage ratio.  Restrictions are placed on debt,
     liens, dividends, leases and capital spending on foreign operations.  On
     September 30, 2001, $39.0 million was outstanding under the New Credit
     Facility.  As of September 30, 2001, the Company was in compliance with its
     covenants under the New Credit Facility.

                                       14
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

        Notes to Condensed Consolidated Financial Statements (Continued)
        ----------------------------------------------------------------
                                  (Unaudited)


     In April 1997, the Company issued $100.0 million of 10-7/8% senior
     subordinated notes due 2007.  On May 29, 2001 the company issued an
     additional $125.0 million of senior subordinated notes due 2007 with
     identical terms to the notes issued in April 1997 (collectively "Notes") at
     a premium of $1.9 million. The premium is included in  Long-Term Debt on
     the Balance Sheet.  The premium will be amortized as a reduction of
     interest expense over the life of the notes so that the effective interest
     rate on these additional bonds is 10.5%. Interest on the Notes is payable
     semi-annually on April 1 and October 1. The Notes contain certain
     covenants, including limitations on indebtedness, liens, dividends,
     repurchases of capital stock and other payment restrictions affecting
     restricted subsidiaries, issuance and sales of restricted subsidiary stock,
     dispositions of proceeds of asset sales and restrictions on mergers and
     consolidations or sales of assets.  As of September 30, 2001, the Company
     was in compliance with its covenants under the Notes.

     Effective September 22, 1998, the Company entered into an eight and one
     half year interest rate swap agreement with a notional value of $80
     million. Under the agreement, the Company receives a fixed interest rate
     and pays a floating interest rate based on the simple average of three
     foreign LIBOR rates. Floating rates are redetermined for a six-month period
     each April 1 and October 1. The floating rate for the period from April 1,
     2001 through October 1, 2001 is 10.481%. It is capped at 10.875% through
     April 1, 2002 and at 12.875% thereafter. The interest rate swap does not
     qualify for hedge accounting. The fair value of the interest rate swap at
     September 30, 2001 was recorded as a $156,000 Current Asset and a $3.9
     million Long-Term Liability. Upon adoption of SFAS No. 133, the $4.4
     million fair value as of January 1, 2001 was recorded as a $2.8 million net
     of tax Cumulative Effect of an Accounting Change on the Statement of
     Operations for 2001. The $699,000 increase in the swap's fair value over
     the nine months ended September 30, 2001 is also presented on the Statement
     of Operations, as a reduction to Interest Expense.


4.   NATURAL GAS AND CRUDE OIL HEDGING
     ---------------------------------

     In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
     Instruments and Hedging Activities.  This statement established standards
     of accounting for and disclosures of derivative instruments and hedging
     activities.  As amended, SFAS No. 133 was effective for fiscal quarters
     beginning after January 1, 2001.  As discussed in Note 1, the Company
     adopted SFAS No. 133 on January 1, 2001.

     Oil and gas revenues were reduced $0.6 million and $9.2 million in the
     three months ended September 30, 2001 and 2000, respectively, and $15.6
     million and $14.6 million in the nine months ended September 30, 2001 and
     2000, respectively, as a result of hedging activity.

                                       15
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------


        Notes to Condensed Consolidated Financial Statements (Continued)
        ----------------------------------------------------------------
                                  (Unaudited)

     Those hedges outstanding at September 30, 2001 are as follows:


    OIL HEDGES
    ----------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
               PERIOD                       BBLS         TOTAL BBLS          TYPE              NYMEX            NYMEX
                                          PER DAY                                           PRICE FLOOR     PRICE CEILING
--------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>              <C>               <C>               <C>
Oct. 2001-Dec. 2001                        1,500          138,000            Collar            $24.00           $30.00
--------------------------------------------------------------------------------------------------------------------------
Oct. 2001-Dec. 2001                        2,500          230,000            Collar            $23.00           $31.50
--------------------------------------------------------------------------------------------------------------------------
Jan. 2002-Mar. 2002                        6,000          543,000            Collar            $21.50           $31.25
--------------------------------------------------------------------------------------------------------------------------
Apr. 2002-Jun. 2002                        5,400          489,000            Collar            $21.50           $30.25
--------------------------------------------------------------------------------------------------------------------------
Jul. 2002-Sep. 2002                        4,700          432,000            Collar            $21.50           $28.45
--------------------------------------------------------------------------------------------------------------------------
Oct. 2002-Dec. 2002                        4,000          372,000            Collar            $21.50           $27.15
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

    GAS HEDGES
    ----------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
               PERIOD                       MCF          TOTAL MCF           TYPE              NYMEX            NYMEX
                                          PER DAY                                          PRICE  FLOOR     PRICE CEILING
--------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>              <C>               <C>               <C>
    Oct. 2001                             35,000        1,085,000           Collar            $2.25            $2.92
--------------------------------------------------------------------------------------------------------------------------
Jan. 2002-Mar. 2002                       11,700        1,050,000           Collar            $3.57            $7.00
--------------------------------------------------------------------------------------------------------------------------
Apr. 2002-Jun. 2002                       10,200          930,000           Collar            $3.00            $6.48
--------------------------------------------------------------------------------------------------------------------------
Jul. 2002-Sep. 2002                        9,800          900,000           Collar            $3.00            $6.60
--------------------------------------------------------------------------------------------------------------------------
Oct. 2002-Dec. 2002                        8,500          780,000           Collar            $3.40            $7.00
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


     As discussed in Note 1, in 2001 the Company began accounting for the
     collars designated as cash flow hedges in accordance with SFAS No. 133.  As
     a result, changes in the fair value of the cash flow hedges are recognized
     in Other Comprehensive Income until the hedged item is recognized in
     earnings, and any change in the fair value resulting from ineffectiveness
     is recognized immediately in earnings.  For the quarter and year to date
     periods ended September 30, 2001, a gain of $1.1 million and a net gain of
     $1.3 million, respectively, were recorded in Other Income due to hedge
     ineffectiveness.  The Company expects to transfer the remaining balance of
     Accumulated Other Comprehensive Income to earnings over the next two years.

     Mission entered into a gas swap for $4.60 per Mcf on 15,000 Mcf per day of
     production from November 2000 through October 2001.  This offsets hedges
     previously existing on forecasted production that was sold in late 2000.  A
     related non-cash loss of $8.7 million was recognized in the fourth quarter
     of 2000, along with a current derivative liability, as this portion of the
     swap was considered a speculative derivative.  The liability, relieved
     monthly as the swap is settled, was $831,000 at September 30, 2001.

                                       16
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

        Notes to Condensed Consolidated Financial Statements (Continued)
        ----------------------------------------------------------------
                                  (Unaudited)

     Bargo had entered into one derivative, a floor of $21 per barrel on oil
     that extended into the year 2001.  In adopting SFAS 133, it was determined
     that these derivative contracts would be marked to market. Mission acquired
     these contracts at the time of the merger.  The contract was marked to
     market at September 30, 2001 and resulted in a derivative gain of $117,000
     being recorded to Other Income for the three month period ended September
     30, 2001.

5.   INCOME TAXES
     ------------

     As of March 31, 2000, the Company determined that it was more likely than
     not that the deferred tax assets would be realized based on current
     projections of taxable income and commodity prices. After netting deferred
     tax liabilities generated thereafter, an overall tax benefit of $20.6
     million remained as of March 31, 2001.  The merger of Bellwether and Bargo
     created a deferred tax liability, based upon a step up in tax basis of
     assets, of approximately $59 million.  As of September 30, 2001 Mission's
     deferred tax liability was $42.0 million. The provision for federal and
     state income taxes for the quarter ended September 30, 2001 was based upon
     a 51.5% effective tax rate.  Goodwill amortization expense of $761,000 for
     the nine months ended September 30, 2001 is not deductible for tax purposes
     which causes the effective tax rate to increase.

6.   PRO FORMA
     ---------

     The merger with Bargo completed on May 16, 2001 significantly impacted the
     future operating results of Mission Resources. The merger was accounted for
     as a purchase, and the results of operations are included in the Mission's
     results of operations from May 16, 2001.   The pro forma results are based
     on assumptions and estimates and are not necessarily indicative of the
     Company's results of operations had the transaction occurred as of January
     1, 2000, or of those in the future.

     The following table presents the unaudited pro forma results of operations
     as if the merger had occurred on January 1, 2000 and 2001, respectively.
     (amounts in thousands, except  earnings per share).

<TABLE>
<CAPTION>
                                                  Nine Months Ended                Nine Months Ended
                                                  September 30, 2000               September 30, 2001
                                                  ------------------               ------------------
<S>                                               <C>                              <C>
Revenues..........................................     $165,547                         $149,730

Income before cumulative effective of
     change in accounting method..................     $ 39,861                         $  3,206

Net income........................................     $ 39,861                         $    439
                                                       ========                         ========
Net income per share..............................     $   1.73                         $   0.14
Net income per share-diluted......................     $   1.71                         $   0.13
</TABLE>

                                       17
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

        Notes to Condensed Consolidated Financial Statements (Continued)
        ----------------------------------------------------------------
                                  (Unaudited)

7.   SEGMENT REPORTING
     -----------------

     The Company's operations are concentrated primarily in three segments:
     exploration and production of oil and natural gas in the United States, in
     Ecuador and gas plants.  The Ecuadorian assets were sold with an effective
     date of May 31, 2001.

<TABLE>
<CAPTION>
                                                          Three Months Ended                Nine Months Ended
                                                              September 30,                    September 30,
                                                       --------------------------        ------------------------
                                                          2001            2000              2001            2000
                                                       ---------       ----------        --------         -------
<S>                                                    <C>             <C>                <C>             <C>
Sales to unaffiliated customers:

Oil and gas - US..................................     $38,034         $28,316           $101,875         $75,501
Oil and gas - Ecuador.............................         ---           1,542              1,877           2,975
Gas plants........................................       1,152           1,467              4,275           4,123
                                                       -------         -------           --------         -------
   Total sales....................................      39,186          31,325            108,027          82,599
   Interest and other income......................       1,311             191              1,528             757
                                                       -------         -------           --------         -------
    Total revenues................................     $40,497         $31,516           $109,555         $83,356
                                                       =======         =======           ========         =======
Operating profit (loss) before income taxes and
cumulative effect of change in accounting method:
   Oil and gas - US...............................     $ 9,585         $12,727           $ 36,860         $32,765
   Oil and gas - Ecuador..........................         ---             617             (1,698)          1,561
   Gas plants.....................................         593             750              2,304           2,141
                                                       -------         -------           --------         -------
                                                        10,178          14,094             37,466          36,467

   Loss on sale of Ecuador interests..............         381             ---             11,602             ---
   Unallocated corporate expenses.................       2,142           1,462              7,940           6,011
    Interest expense..............................       6,226           3,993             16,058          11,150
                                                       -------         -------           --------         -------
   Operating profit (loss) before income taxes....     $ 1,429         $ 8,639           $  1,866         $19,306
                                                       =======         =======           ========         =======

</TABLE>

                                       18
<PAGE>

                           MISSION RESOURCES CORPORATION
                           -----------------------------

        Notes to Condensed Consolidated Financial Statements (Continued)
        ----------------------------------------------------------------
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                 Three Months Ended              Nine Months Ended
                                                                    September 30,                  September 30,
                                                            ----------------------------       -----------------------
                                                              2001                2000           2001           2000
                                                            --------            --------       --------       --------
<S>                                                         <C>                 <C>            <C>             <C>
Identifiable assets:
   Oil and gas - US...............................          $389,661            $169,443       $389,661       $169,443
   Oil and gas - Ecuador..........................               ---               9,897            ---          9,897
   Gas plants.....................................            11,235              10,955         11,235         10,955
                                                            --------            --------       --------       --------
                                                             400,896             190,295        400,896        190,295
   Corporate assets and investments...............            84,547              60,837         84,547         60,837
                                                            --------            --------       --------       --------
         Total....................................          $485,443            $251,132       $485,443       $251,132
                                                            ========            ========       ========       ========

Capital expenditures:
   Oil and gas - US...............................          $ 10,840            $ 23,122       $ 49,012       $ 69,365
   Oil and gas - Ecuador..........................               ---               4,905          4,151          8,762
   Gas plants.....................................               464                  27          1,081            236
                                                            --------            --------       --------       --------
                                                            $ 11,304            $ 28,054       $ 54,244       $ 78,363
                                                            ========            ========       ========       ========
Depreciation, depletion, amortization and
 impairments:
   Oil and gas - US...............................          $ 12,410            $  7,745       $ 30,345       $ 20,963
   Oil and gas - Ecuador..........................               ---                 239            504            456
   Gas plants.....................................               328                 291            953            921
                                                            --------            --------       --------       --------
                                                            $ 12,738            $  8,275       $ 31,802       $ 22,340
                                                            ========            ========       ========       ========
</TABLE>


                         MISSION RESOURCES CORPORATION
                         -----------------------------

ITEM 2.       Management's Discussion and Analysis of Financial
-------       -------------------------------------------------
                      Condition and Results of Operations
                      -----------------------------------

GENERAL

Merger
------

On May 16, 2001, Bellwether merged with Bargo and changed its name to Mission
Resources Corporation, ("Mission"). Contemporaneously with the merger,
Bellwether increased its authorized capital stock to 65.0 million shares and
amended its 1996 Stock Incentive Plan to increase the number of shares reserved
for issuance under the plan by 2.0 million shares. Under the merger agreement,
holders of Bargo's stock and options received a combination of cash and
Bellwether common stock.  The merger was accounted for using the purchase method
of accounting.  Mission's management believes the merger was, among other
things, in accordance with Mission's long-term strategy of growth through
acquisitions, will create a larger company with more liquidity in its common
stock and more financial flexibility, will strengthen Mission's management team,
and will add significantly to Mission's production.  The Company anticipated the
merger would result in a cost savings of

                                       19
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

approximately $4.0 million per year.  Mission expects that key service
providers, such as reserve engineers, information system and financial
outsourcers, external auditors and tax providers, attorneys and insurers, will
be able to serve the larger combined company at lower cost than the two smaller
companies.

The merger was financed through the issuance of $80.0 million in Mission common
stock to Bargo option holders and shareholders, and an initial draw down under
the New Credit Facility of $166.0 million used to refinance Bargo's and
Bellwether's then-existing credit facilities and to pay the cash portion of the
purchase price of the Bargo common stock and options, and the amount incurred by
Bargo to redeem its preferred stock immediately prior to the merger. Mission
issued $125.0 million of additional senior subordinated notes on May 29, 2001
and used most of the proceeds to reduce borrowings under the New Credit
Facility.

Ecuador
-------

In June 2001, with an effective date of May 31, 2001, Mission entered into an
agreement to sell its wholly owned subsidiaries, Bellwether International and
Petrobell, to Rio Alto Exploration, a Canadian company.  These subsidiaries are
parties to the concessions of the Charapa and Tiguino fields in Ecuador.  The
transaction divests Mission of all interest in Ecuador and relieves it of
approximately $35 million in capital spending commitments.  The result of the
transaction was a $11.6 million loss that was recognized in the year-to-date
September 30, 2001 income.  Mission retains two current receivables: 1) a  $1
million escrow receivable from Rio Alto to be settled before year end upon
resolution of negotiations with the Ecuador government concerning production
levels, and 2) a receivable of approximately $900,000 to be collected out of
this year's oil sales from the partner in the Tiguino field.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's primary uses of capital are the acquisition, exploration and
development of oil and gas properties. The Company's primary sources of capital
are operating cash flows, borrowings from banks, sales of equity and debt
securities and sales of assets.

Through September 30, 2001, the Company spent $20.3 million on exploration and
development activities compared with $78.4 million during the same period in
2000.  Capital expenditures were reduced during the merger process to allow the
Mission technical staff to prioritize and reallocate capital spending.

On May 16, 2001, the Company acquired Bargo.  The Bargo acquisition was financed
through the issuance of $80 million in Mission common stock to Bargo common
stockholders and option holders, and $166.0 million in borrowings under the
Company's New Credit Facility.  Borrowings under the Credit Facility were used
to pay the cash portion of the purchase price paid to holders of Bargo common
stock and options and  to pay the amount incurred by Bargo in redeeming its
preferred stock immediately prior to the merger, to refinance Bargo's and the
Company's then-existing credit facilities, and to pay transaction costs.

                                       20
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

In another transaction, the Company acquired producing properties for $23.6
million during 2001, primarily using borrowings under its New Credit Facility.

The Company is party to a $200 million New Credit Facility with a syndicate of
lenders.  The New Credit Facility is a revolving facility, which allows the
Company to borrow, repay and re-borrow under the facility from time to time.
The total amount which may be borrowed under the facility is limited by the
borrowing base periodically set by the lenders based on the Company's reserves
and other factors deemed relevant. At September 30, 2001, the Company's
borrowing base was $137.5 million.  Borrowings under the New Credit Facility are
charged a percentage in excess of LIBOR, which percentage is based on the
Company's credit rating, the amount outstanding under the facility and other
indebtedness.  On September 30, 2001, the Company had outstanding borrowings of
$39.0 million.  The New Credit Facility contains customary covenants, including
those restricting the Company's ability to make investments in other entities,
pay dividends, repurchase its capital stock and incur additional indebtedness.

In May 2001, the Company issued $125 million of its 10 7/8% senior subordinated
notes due 2007 in a private offering.  These notes have terms substantially
identical to the Company's senior subordinated notes due 2007 issued in April
1997.  On July 27, 2001 the Company filed a registration statement on form S-4
to exchange $225 million of the Company's senior subordinated notes due 2001
issued in 1997 and 2001 for registered senior subordinated notes.  These notes
have substantially identical terms to the senior subordinated notes due 2007
issued in April 1997 and May 2001.

During 2001, Mission sold several non-core properties for proceeds of $28.5
million.  As discussed previously, the Ecuador interests were sold for $8.5
million in June.  Two additional packages of Mid-Continent and East Texas
properties were sold in third quarter for $20.0 million.  On October 1, 2001
Mission entered into a Purchase and Sale Agreement under which its interest in
the Snyder Gas Plant and Diamond M gas plant will be sold for $11.5 million.
This transaction is to close over the next two months.  The primary uses of all
sales proceeds mentioned above were repayment of credit facility borrowings.

2001 CAPITAL EXPENDITURES
-------------------------

Taking into account the merger with Bargo, a budget of $60.0 million for the
combined companies was adopted for the year 2001, with $41.0 million for
domestic and Ecuador development, $11.0 million for exploration and $8.0 million
for seismic data, land and related items.  With the sale of Ecuador in June
2001, development costs previously committed to Ecuador operations were
reallocated to higher return domestic projects. Capital spending during the
first and second quarters of 2001 was limited due to the Bargo merger. The
Company believes that cash flow provided by operating activities, borrowings
under its credit facilities, issuance of subordinated notes and proceeds from
property sales will be sufficient to meet all obligations resulting from the
capital investment program discussed above.  (See Note 3 of the Notes to
Condensed Consolidated Financial Statements.) The Company continues to review
acquisition opportunities and the consummation of such a transaction will
directly impact anticipated capital expenditures.

                                       21
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

RESULTS OF OPERATIONS
---------------------

The following table sets forth certain operating information for the Company for
the periods presented:

<TABLE>
<CAPTION>
                                                                  Three Months Ended                 Nine Months Ended
                                                                    September 30,                      September 30,
                                                        ---------------------------------------------------------------------
<S>                                                        <C>              <C>               <C>               <C>
                                                                 2001 (1)             2000           2001 (1)            2000
                                                        ---------------------------------------------------------------------
Production:
  Oil and condensate (MBbls)--US........................           1,073               583             2,366            1,658
  Oil and condensate (MBbls)--Ecuador...................             ---                56                95              117
  Natural gas (Mmcf)....................................           4,863             5,547            13,542           15,241
       Equivalent barrels (MBOE)........................           1,884             1,564             4,718            4,315

Average sales price including the effect of hedges:
  Oil and condensate (per Bbl)--US......................           23.42             20.85             23.21            20.13
  Oil and condensate (per Bbl)--Ecuador.................             ---             27.54             19.76            25.43
  Natural gas  (per Mcf)................................            2.65              2.91              3.47             2.76

Average sales price excluding the effect of hedges:
  Oil and condensate (per Bbl) --US.....................           23.42             25.14             23.21            23.76
  Oil and condensate per (Bbl) -Ecuador.................             ---             27.54             19.76            25.43
  Natural gas (per Mcf).................................            2.79              4.12              4.62             3.33

Average costs:
  Production expenses (per Boe)--US.....................        $   7.93            $ 4.90          $   6.82          $  4.87
  Production expenses (per Boe)--Ecuador................        $   ---             $12.23          $  32.33          $  8.19
  General and administrative expense (per Boe)--US......        $   1.83            $ 1.25          $   1.89          $  1.60
  General and administrative expense(per Boe)--Ecuador..        $   ---             $(4.20)         $   7.60          $  0.57
  Depreciation, depletion and amortization
       (per Boe) (2) --US...............................        $   6.59            $ 5.14          $   6.56          $  4.99
  Depreciation, depletion and amortization
       (per Boe) (2) --Ecuador..........................        $   ---             $ 4.29          $   5.31          $  3.90

</TABLE>
(1)  Beginning with May 16, 2001, the operations of the former Bargo properties
     are included.
(2)  Excludes depreciation, depletion and amortization on gas plants, furniture
     and fixtures and other assets.

                                       22
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                 Condition and Results of Operations (Continued)
                 -----------------------------------------------


THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
----------------------------------------------

Net Income
----------
For the three months ended September 30, 2001, the Company reported income of
$693,000, or $0.03 per share, and for the same period in 2000 reported income of
$5.4 million, or $0.37 per share.  The decrease in income is due to the decline
in gas prices and volumes and the increase in production expenses due to the May
16, 2001 merger with Bargo whose properties are predominately higher cost oil
producers.  Additionally, interest expense and general and administrative
expenses increased due to the merger.

Oil and Gas Revenues
--------------------
Oil and gas revenues increased 27% to $38.0 million for the three months ended
September 30, 2001, from $29.9 million for the same period in the year 2000.
Oil revenues, excluding Ecuador, more than doubled for the quarter from  $12.0
million for the same quarter of the previous year.  Increased production as a
result of the Bargo merger and the acquisition of properties in south Louisiana
is the most significant reason for the revenue increase, but the successful
drilling program in the Raccoon Bend field has recently begun to contribute to
production.  Domestic oil production increased to 1.1 MBbls in the current
quarter from 0.6 MBbls in the same quarter of 2000.  Domestic average realized
oil prices, including the effect of hedges, increased from $20.85 per Bbl in the
quarter ended September 30, 2000 to $23.42 per Bbl in the current quarter of
2001.

There was no oil revenue or production recorded for Ecuador during the third
quarter of 2001 because Mission sold its interests in June 2001.

Gas revenues decreased 20% from 16.2 million reported for the quarter ended
September 30, 2000 to $12.9 million for the quarter ended September 30, 2001.
Gas prices averaged $2.65 per Mcf, or 9% lower, in the three month period ended
September 30, 2001 as compared to $2.91 per Mcf in the comparable period of
2000.  Gas production declined 12% to 4,863 MMcf in the quarter ended September
30, 2001 from 5,547 MMcf in the same quarter of 2000.  The added production from
the acquired Bargo and new south Louisiana properties initially offset the
approximately 33% annual production decline in the offshore properties.  Now the
decline in production from the offshore properties is evident because the
Mission has shifted its focus toward developing the more profitable oil
properties and redirecting capital from offshore development to acquisitions
that are more economically viable.

The realized prices discussed above include the impact of oil and gas hedges. A
decrease of $642,000 related to hedging activity was reflected in oil and gas
revenues for the three months ended September 30, 2001, while a decrease in oil
and gas revenues of $9.2 million was reflected for the same period of 2000.
Ecuador oil production was not hedged.

Gas Plant Revenues
------------------
Gas plant revenues were $1.1 million for the quarter ended September 30, 2001,
as compared to $1.5 million for the quarter ended September 30, 2000.  The
revenue decline resulted from 19% decline in realized liquids prices from $19.25
to $15.67.

                                       23
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

Interest and Other Income
-------------------------
Interest and other income increased to $1.3 million for the quarter ended
September 30, 2001 versus $191,000 for the same quarter of 2000.  The primarily
reason for this increase is the inclusion of hedge ineffectiveness totaling $1.3
million, as computed under the requirements of SFAS No. 133, in this line item.
A $183,000 write off of an uncollectible receivable partially offset the hedge
ineffectiveness gain.  Previously, this line item included miscellaneous revenue
items of minor amount, as is reflected by the $191,000 from the quarter ended
September 30, 2000, with the occasional writedown or legal settlement recorded
in the quarter in which they occurred.

Production Expenses--US
-----------------------
Domestic production expenses, including production taxes, increased 101% to
$14.9 million in the three months ended September 30, 2001, from $7.4 million in
the three months ended September 30, 2000.  On a barrel equivalent basis (BOE),
domestic production expenses, including production taxes, increased 62% per BOE
for the quarter ended September 30, 2001, from $4.90 per BOE for the three
months ended September 30, 2000.  The increase in production expenses is
primarily attributable to the higher number of wells and the larger oil
component of Mission's production mix as a result of the May 16, 2001 merger.
Additionally, third-party oilfield service costs have increased significantly.
Production taxes are included in the above production expense numbers.
Production taxes increased 51% to $1.4 million in the quarter ended September
30, 2001 from $930,000 for the same period of the previous year due to higher
volumes and revenues resulting from the merger.  Future expenses are expected to
decline as oilfield service costs adjust to the current commodity price market,
properties are continually reviewed for possible cost saving measures and
exceptionally high costs properties are divested.   In August 2001, Mission
closed the sale of several properties with above-average production costs, which
should favorably impact production costs in the future periods.

Production Expenses--Ecuador
----------------------------
There were no Ecuador production expenses during the third quarter of 2001
because Mission sold its interests in the Ecuador properties in June 2001.

Transportation Costs
--------------------
Transportation costs were not significant in either period presented.

Gas Plant Expenses
------------------
Gas plant expenses decreased 22% to $559,000 in the three months ended September
30, 2001, from $717,000 for the same period in 2000.  Significant declines in
gas purchase costs account for the decrease.

Depreciation, Depletion and Amortization
----------------------------------------
Domestically, depreciation, depletion and amortization was $13.5 million for the
three months ended September 30, 2001 and $8.2 million for the three month
period ended June 30, 2000.  Depreciation, depletion and amortization per BOE
has increased 28% to $6.59 per BOE in the quarter ended September 30, 2001, from
$5.14 per BOE in the same period of 2000.  Increased capital spending in late
2000 resulted in the higher per BOE rate.  There was no depreciation, depletion
and amortization on Ecuadorian properties during the third quarter of 2001
because Mission sold its interests in the Ecuador properties in June 2001.

                                       24
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

General and Administrative Expenses
-----------------------------------
General and administrative expenses from domestic operations totaled $3.5
million in the three months ended September 30, 2001 as compared to $1.9 million
for the same period of fiscal 2000.  The expansion of the Company in the Bargo
merger, increased salaries  by $793,000 and management fees by $806,000 in third
quarter 2001 over the same quarter of 2000.  The largest portion of management
fees are based upon the increased property count.

There were no general and administrative expenses related to Ecuador properties
during the third quarter of 2001 because Mission sold its interests in the
Ecuador properties in June 2001.

Interest Expense
----------------
Interest expense increased 55% to $6.2 million for the three months ended
September 30, 2001 from $4.0 million for the three months ended September 30,
2000. The additional $125 million of 10 7/8% senior subordinated notes accounts
for an interest expense increase of almost $4.5 million.  The actual increase is
not so significant because a $996,000 reduction to interest expense was recorded
in third quarter 2001 as a result of the mark-to-market of the interest rate
swap.  Credit facility borrowings were similar for both the quarters ended
September 30, 2001 and 2000 however, interest rates were declining in 2001.

Income Taxes
------------
The provisions for federal and state income taxes for the three months ended
September 30, 2001 is based upon a 51.5% effective tax rate. Goodwill
amortization of $492,000 is not deductible for tax purposes which caused the
effective tax rate to increase in the period.


NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
----------------------------------------------

Net Income (Loss)
-----------------
For the nine months ended September 30, 2001, the Company reported a loss of
$1.7 million or ($0.06) per share, while the same period in 2000 had income of
$31.8 million, or $2.29 per share.  First quarter 2000 income included $17.7
million related to an adjustment to the valuation allowance on the deferred tax
asset. The $11.6 million dollar loss on the sale of the Company's Ecuador
interests had the most significant impact on net income in the 2001 period.
Mission's subsidiaries, Bellwether International, Inc. and Petrobell, that were
party to the Ecuador contracts were sold in June 2001.

                                       25
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

Oil and Gas Revenues
--------------------
Oil and gas revenues increased 32% to $103.8 million for the nine months ended
September 30, 2001, from $78.5 million for the same period in the year 2000.
Domestic oil revenues increased 64% to $54.9 million for the nine-month period
ended September 30, 2001 from  $33.4 million for the same period of 2000.
Increased production as a result of the Bargo merger and the acquisition of
properties in south Louisiana is the most significant reason for the revenue
increase. Development drilling successes in the Raccoon Bend field contributed
to the increase in recent months.  Domestic oil production was 2.4 million
barrels during the nine months ended September 30, 2001 compared to 1.7 million
barrels for the same period of 2000.   Domestic average realized oil prices,
including the effect of hedges, increased 15% from $20.13 per Bbl in the nine
months ended September 30, 2000 to $23.21 per Bbl in the current year.

Ecuador oil revenues and production are down when comparing the year to date
periods ended September 30, 2001 and 2000.  Mission sold its interests in the
Ecuador properties in June 2001, therefore a little less than one-half a year's
production is reported in 2001.

Gas revenues increased 12% to  $47.0 million reported for the period ended
September 30,  2001, from $42.1 million for same period of 2000.   Gas prices
averaged $3.47 per Mcf, or 26% higher, in the nine month period ended September
30, 2001 than the $2.76 per Mcf averaged in the comparable period of 2000.  Gas
production decreased 11% to 13,542 MMcf in the nine months ended September 2001,
from 15,241 MMcf in the same period of 2000.  A decrease was expected in the
first quarter of 2001 as a result of the approximately 33% annual production
decline in the offshore properties and the property sales made in late 2000.
Those production declines were partially offset in second quarter by inclusion
of the Bargo properties' gas production after May 16, 2001.  However, in the
third quarter Mission shifted its development focus to more profitable oil
properties and acquisitions, so that the impact of the decline curve has become
more evident.

The realized prices discussed above include the impact of oil and gas hedges. A
decrease of $15.6 million related to hedging activity was reflected in oil and
gas revenues for the nine months ended September 30, 2001, while a decrease in
oil and gas revenues of $14.6 million was reflected for the same period of 2000.
Ecuadorian oil production was not hedged.

Gas Plant Revenues
------------------
Gas plant revenues were $4.3 million in the nine months ended September 30, 2001
and $4.1 million in the same period of 2000.

                                       26
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                 Condition and Results of Operations (Continued)
                 -----------------------------------------------

Interest and Other Income
-------------------------
Interest and other income increased significantly to $1.5 million in the nine
months ended September 30, 2001 from $757,000 for the nine months ended
September 30, 2000. The primarily reason for this increase is the inclusion of
hedge ineffectiveness, as computed under the requirements of SFAS No. 133, in
this line item.  For the current period, hedge ineffectiveness was a gain of
$1.5 million.  The interest income component more than doubled, with $365,000
reported in 2001 and $163,000 in 2000, while the minor revenue items
historically reported on this line item remained at about one-half million for
each period.  The interest income increase was a direct result of improved cash
flow, and to a lesser extent higher interest rates in early 2001. Offsetting the
regular components were a loss of about $325,000 related to Carpatsky and the
write off of about $444,000 of uncollectible accounts.

Production Expenses--US
-----------------------
Domestic production expenses, including production taxes,  increased 54% to
$31.5 million in the nine months ended September 30, 2001, from $20.4 million in
the nine months ended September 30, 2000.  On a barrel equivalent basis,
domestic production expenses increased 40% per BOE for the nine months ended
September 30, 2001 to $6.82 per BOE, from $4.87 for the nine months ended
September 30, 2000.  The increase in production expenses is primarily
attributable to the higher number of wells and the larger oil component of
Mission's post merger production.  Additionally, third-party oil field service
costs have increased significantly in 2001. Production taxes are included in the
production expense numbers.  Production tax for the nine months ended September
30, 2001 increased 46% over the $2.2 million level reported for the same period
of 2000, primarily due to the increase in properties resulting from the Bargo
merger. Future expenses are expected to decline as oilfield service costs adjust
to the current commodity price market, properties are continually reviewed for
possible cost savings measures, and exceptionally high cost properties are
divested.  In August 2001, Mission closed the sale of several properties with
above-average production costs, which should favorably impact production costs
in the future periods.

Production Expenses--Ecuador
----------------------------
Production expenses for Ecuador increased to $3.1 million for the period ended
September 30, 2001, from $958,000 for the same period in 2000.  In the year
2000, Ecuadorian operations were just getting started. Expenses increased as the
number of wells on production increased.  Costs for the Tiguino field were not
recorded until the partnership interests were finalized in late July 2000. From
that start, Tiguino field expenses increased as each well was put on production
until they averaged about $300,000 per month for six wells near the end of 2000.
Mission sold its interests in the Ecuadorian properties in June 2001, therefore
a little less than one-half a year's costs is reported in 2001.

Transportation Costs
--------------------
Transportation costs were slightly higher in the period ended September 30,
2000.  The Cove field that was sold in the last quarter of 2000, had significant
transportation costs.

Gas Plant Expenses
------------------
Gas plant expenses were approximately $2.0 million for both the periods ended
September 30, 2000 and 2001.

                                       27
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------


Depreciation, Depletion and Amortization
----------------------------------------
Domestically, depreciation, depletion and amortization is $32.5 million for the
nine months ended September 30, 2001 and $22.1 million for the nine month period
ended September 30, 2000. Included in the total for 2001 are $761,000 of
Goodwill amortization and $92,000 for amortization of intangible assets.
Depreciation, depletion and amortization of oil and gas properties per BOE has
increased from $4.99 per BOE in 2000 to $6.56 per BOE in 2001.

Depreciation, depletion and amortization for the Ecuadorian properties totaled
$504,000 for the nine months ended September 30, 2001 and $456,000 for same
period of 2000.  Mission sold its interests in the Ecuadorian properties in June
2001, therefore no depreciation, depletion and amortization was recorded for the
third quarter of 2001.

General and Administrative Expenses
-----------------------------------
General and administrative expenses from domestic operations totaled $8.7
million in the nine months ended September 30, 2001 as compared to $6.7 million
for the comparable period of fiscal 2000 for an increase of about 30%.
Contributing to the increase in 2001 were increased salaries and management fees
due to the Company's increase in size after the May 16, 2001 merger, $351,000 in
separation expenses incurred early in the year, and $798,000 in non-cash charges
related to options.  On May 15, 2000 the Company's president was granted 500,000
options with an exercise price set at the average price for the 30 days prior to
the grant date.  Such average price was less than the closing price of the
Company's common stock on the grant date. The Company is required to recognize
compensation expense equal to the difference between the exercise price and the
close price of the Company's stock on the grant date for every option. Due to
the immediate vesting of outstanding options as a result of the merger, an
additional compensation expense charge was required for the difference between
the stock price on the merger date in excess of the exercise price.   A similar
non-cash charge of about $580,000 was recorded in the second quarter of 2000.

Comparing the first halves of 2001 and 2000, general and administrative expenses
related to Ecuadorian operations increased substantially. These increases in
costs were related to the commencement of operation in the Tiguino field and the
increase operations in the Charapa field. Mission sold its interests in the
Ecuadorian properties in June 2001, therefore no general and administrative
expenses were recorded for the third quarter of 2001.

Interest Expense
----------------
Interest expense increased 44% to $16.1 million for the nine months ended
September 30, 2001 from $11.2 million in the same period of 2000. The increase
is due to some one-time fees related to credit facility amendments, a larger
level of borrowing utilized in the Bargo merger, and the additional $125 million
of 10 7/8% senior subordinated notes issued May 29, 2001.  A net gain of
$699,000 on the mark to market of the interest rate swap, recorded as a
reduction to interest expense, reduced the impact of these other items.

                                       28
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

               Management's Discussion and Analysis of Financial
               -------------------------------------------------
                Condition and Results of Operations (Continued)
                -----------------------------------------------

Income Taxes
------------
The provisions for federal and state income taxes for the nine months ended
September 30, 2001 are based upon a 33.5% effective tax rate, adjusted for the
impact of foreign operations. Goodwill amortization of $761,000 is not
deductible for tax purposes which caused the effective tax rate to increase in
the period.


FORWARD LOOKING STATEMENTS
--------------------------
This Form 10-Q contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended.  All statements other than
statements of historical facts included herein, including without limitation,
statements under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and in the notes to the financial statements
regarding the Company's financial position, capital budget, intent to acquire
oil and gas properties, estimated quantities and net present values of reserves,
business strategy, plans and objectives of management of the Company for future
operations, and the effect of gas balancing, are forward-looking statements.
There can be no assurances that such forward-looking statements will prove to
have been correct.  Important factors that could cause actual results to differ
materially from the Company's expectations ("Cautionary Statements") include the
volatility of oil and gas prices, operating hazards, government regulations,
exploration risks and other factors described in the Company's Form 10-K filed
with the Securities and Exchange Commission.  All subsequent written and oral
forward-looking statements attributable to the Company, or persons acting on its
behalf, are expressly qualified by the Cautionary Statements.


                         MISSION RESOURCES CORPORATION
                         -----------------------------

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------      ----------------------------------------------------------


The Company is exposed to market risk, including adverse changes in commodity
prices and interest rates.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This statement establishes standards of
accounting for and disclosures of derivative instruments and hedging activities.
As amended, the statement is effective for fiscal quarters beginning after
January 1, 2001.  As discussed in Note 1, the Company adopted SFAS 133 on
January 1, 2001.

                                       29
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

           Quantitative and Qualitative Disclosures About Market Risk
           ----------------------------------------------------------


Those hedges outstanding at September 30, 2001 are as follows:

    OIL HEDGES
    ----------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
               PERIOD                       BBLS         TOTAL BBLS          TYPE              NYMEX            NYMEX
                                          PER DAY                                           PRICE FLOOR     PRICE CEILING
--------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>              <C>               <C>               <C>
Oct. 2001-Dec. 2001                        1,500          138,000           Collar            $24.00           $30.00
--------------------------------------------------------------------------------------------------------------------------
Oct. 2001-Dec. 2001                        2,500          230,000           Collar            $23.00           $31.50
--------------------------------------------------------------------------------------------------------------------------
Jan. 2002-Mar. 2002                        6,000          543,000           Collar            $21.50           $31.25
--------------------------------------------------------------------------------------------------------------------------
Apr. 2002-Jun. 2002                        5,400          489,000           Collar            $21.50           $30.25
--------------------------------------------------------------------------------------------------------------------------
Jul. 2002-Sep. 2002                        4,700          432,000           Collar            $21.50           $28.45
--------------------------------------------------------------------------------------------------------------------------
Oct. 2002-Dec. 2002                        4,000          372,000           Collar            $21.50           $27.15
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

    GAS HEDGES
    ----------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
               PERIOD                       MCF          TOTAL MCF           TYPE              NYMEX            NYMEX
                                          PER DAY                                          PRICE  FLOOR     PRICE CEILING
--------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>                  <C>               <C>               <C>
     Oct. 2001                            35,000        1,085,000           Collar            $2.25            $2.92
--------------------------------------------------------------------------------------------------------------------------
Jan. 2002-Mar. 2002                       11,700        1,050,000           Collar            $3.57            $7.00
--------------------------------------------------------------------------------------------------------------------------
Apr. 2002-Jun. 2002                       10,200          930,000           Collar            $3.00            $6.48
--------------------------------------------------------------------------------------------------------------------------
Jul. 2002-Sep. 2002                        9,800          900,000           Collar            $3.00            $6.60
--------------------------------------------------------------------------------------------------------------------------
Oct. 2002-Dec. 2002                        8,500          780,000           Collar            $3.40            $7.00
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


As discussed in Note 1, the Company began accounting for the collars designated
as cash flow hedges in accordance with SFAS 133.  As a result, changes in the
fair value of the cash flow hedges are recognized in Other Comprehensive Income
until the hedged item is recognized in earnings, and any change in the fair
value resulting from ineffectiveness is recognized immediately in earnings.  For
the quarter and year to date periods ended September 30, 2001, a gain of $1.1
million and a net gain of $1.3 million, respectively, were recorded in Other
Income due to ineffectiveness of the collars.  The Company expects to transfer
the remaining balance of Accumulated Other Comprehensive Income to earnings over
the next two years.

Mission entered into a gas swap for $4.60 per mcf on 15,000 Mcf per day of
production from November 2000 through October 2001.  This offsets hedges
previously existing on forecasted production that were sold in late 2000.  A
non-cash loss of $8.7 million was recognized in the fourth quarter of 2000
related to the $4.60 swap, along with a current derivative liability, as this
portion of the swap was considered a speculative derivative.  The liability is
relieved monthly as the swap is settled.  By September 30, 2001, the liability
had been reduced to $831,000.

Bargo had entered into one derivative, a floor of $21 per barrel on oil that
extended into the year 2001.  In adopting SFAS No. 133, it was determined that
the Bargo derivative contract would be marked to market. Mission acquired this
contract at the time of the merger.  The contract was marked to market at
September 30, 2001 and resulted in a derivative gain of $117,000 being recorded
to Other Income for the three month period ended September 30, 2001.

                                       30
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

                          PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
-------   -----------------

               None

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS
-------   -----------------------------------------

               None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
-------   -------------------------------

              None.

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

              None.

ITEM 5.   OTHER INFORMATION
-------   -----------------

              None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
-------   --------------------------------

          a.  Exhibits.
                  The following exhibits are filed with this Form 10-Q and they
                  are identified by the number indicated.

               2.1  Agreement and Plan of Merger, dated January 24, 2001,
                    between Bellwether Exploration Company and Bargo Energy
                    Company (incorporated by reference to Bellwether's Exhibit
                    2.1 to the current report on Form 8-K, filed January 25,
                    2001).

               3.1  Certificate of Incorporation of Bellwether Exploration
                    Company (incorporated by reference to Exhibit 3.1 to the
                    Company's Registration Statement No. 33-76570)

               3.2  Certificate of Amendment to Certificate of Incorporation
                    (incorporated by reference to Exhibit 3.2 to the Company's
                    Annual Report on Form 10-K for the fiscal year ended June
                    30, 1997)

               3.3  Certificate of Designation, Preferences and Rights of Series
                    A Preferred Stock (incorporated by reference to Exhibit 1 to
                    the Company's Registration Statement on Form 8-A dated
                    September 19, 1997.)

               3.4  By-laws of Bellwether Exploration Company (incorporated by
                    reference to Exhibit 3.2 to the Company's Registration
                    Statement No. 33-76570)

                                       31
<PAGE>

                         MISSION RESOURCES CORPORATION
                         -----------------------------

                          PART II.  OTHER INFORMATION

               3.5  Amendment to Article II, Section 2.2 of Bellwether
                    Exploration Company's Bylaws (incorporated by reference to
                    Exhibit 3.5 to the Company's Annual Report on Form 10-K for
                    the transition period ended December 31, 1997).

               3.6  Amendment to Bellwether Exploration Company's bylaws adopted
                    on March 27, 1998 (incorporated by reference to Exhibit 3.6
                    to the Company's Annual Report on Form 10-K for the
                    transition period ended December 31, 1997).

          b.  Reports on Form 8-K

                  Current Report on Form 8-K filed July 13, 2001 reported Item 2
                  Acquisition or Disposition of Assets and Item 7 Proforma
                  Financial Information.

                  Current Report on Form 8-K filed August 29, 2001 reported Item
                  5 Financial Statements, Proforma Financial Information and
                  Exhibits.

                  Current Report on Form 8-K September 28, 2001 reported Item 5
                  Other Event, which extended Mission Resources' bond exchange
                  offer to October 17, 2001.

                  Current Report on Form 8-K filed October 17, 2001 reported
                  Item 5 Other Events, which extended Mission Resources' bond
                  exchange offer to October 22, 2001.

                  Current Report on Form 8-K filed October 22, 2001 reported
                  Item 5 Other Events, announcing the completion of the bond
                  exchange.


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.

                             MISSION RESOURCES CORPORATION
                             -----------------------------
                                             (Registrant)


Date:  November 13, 2001     By:    /s/ Douglas G. Manner
       -----------------            ---------------------
                                    Douglas G. Manner
                                    Chairman and Chief Executive Officer


Date:  November 13, 2001     By:    /s/ Ann Kaesermann
       -----------------            -------------------
                                    Ann Kaesermann
                                    Vice-President, Chief Accounting Officer

                                       32