<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 QUARTER ENDED MARCH 31, 2000

                                       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



                        BELLWETHER EXPLORATION COMPANY
            (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) 650-1025

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 May 4, 2000, 13,864,398 shares of common stock of Bellwether Exploration
Company were outstanding.
<PAGE>

                         BELLWETHER EXPLORATION COMPANY


                                     INDEX




<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                                 Page #

<S>      <C>                                                                    <C>
ITEM 1.  Financial Statements
         Condensed Consolidated Balance Sheets:
              March 31, 2000 (Unaudited) and December 31,1999................       3
         Condensed Consolidated Statements of Operations (Unaudited):
              Three months ended March 31, 2000 and 1999.....................       5
         Condensed Consolidated Statements of Cash Flows (Unaudited):
              Three months ended March 31, 2000 and 1999.....................       6
         Notes to Condensed Consolidated Financial Statements (Unaudited)....       8

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

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk..........      16

PART II.  OTHER INFORMATION..................................................      17
</TABLE>

                                       2
<PAGE>

                         PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                         BELLWETHER EXPLORATION COMPANY

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                             (Amounts in thousands)

                                     ASSETS
<TABLE>

                                                                 March 31,       December 31,
                                                                   2000              1999
                                                              -------------      -------------
                                                                (Unaudited)
<S>                                                           <C>                <C>
CURRENT ASSETS:

Cash and cash equivalents..................................      $     112         $   6,101
Accounts receivable and accrued revenues...................         16,954            14,354
Prepaid expenses and other.................................          2,368             1,562
                                                                  --------         ---------
   Total current assets....................................         19,434            22,017
                                                                  --------         ---------

PROPERTY AND EQUIPMENT, AT COST:

Oil and gas properties (full cost)
    United States - Unproved properties of  $17,776 and
     $16,325 excluded from amortization as of March 31,
     2000 and December 31, 1999, respectively..............        365,483           344,778
    Latin America - Unproved properties of $728 and $404
     excluded from amortization as of March 31, 2000 and
     December 31, 1999, respectively.......................          2,029             1,246

Gas plant facilities.......................................         17,808            17,775
                                                                 ---------         ---------
                                                                   385,320           363,799
Accumulated depreciation, depletion, amortization and
   impairments.............................................       (234,404)         (227,226)
                                                                 ---------         ---------
                                                                   150,916           136,573
                                                                 ---------         ---------

Leasehold, furniture and equipment.........................          1,041               438
Accumulated depreciation...................................           (116)              (74)
                                                                 ---------         ---------
                                                                       925               364
                                                                 ---------         ---------

INVESTMENTS IN OUTSIDE COMPANIES...........................          4,554             4,554

NOTES RECEIVABLE...........................................            663               ---

DEFERRED INCOME TAXES......................................         20,545             2,739

OTHER ASSETS...............................................          5,425             5,514
                                                                 ---------         ---------
                                                                 $ 202,462         $ 171,761
                                                                 =========         =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements

                                       3
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                (Amounts in thousands, except share information)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>

                                                                        March 31,          December 31,
                                                                          2000                 1999
                                                                    ---------------      ---------------
                                                                       (Unaudited)
<S>                                                                 <C>                  <C>
CURRENT LIABILITIES:

Accounts payable and accrued liabilities.......................          $ 20,623             $ 18,247
                                                                       ----------           ----------
 Total current liabilities.....................................            20,623               18,247
                                                                       ----------           ----------
LONG-TERM DEBT.................................................           134,900              130,000

OTHER LIABILITIES..............................................               200                  200

STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, 1,000,000 shares authorized;
 none issued...................................................               ---                  ---
Common stock, $0.01 par value, 30,000,000 shares authorized,
 13,864,291 and 13,857,791 shares issued and outstanding at
 March 31, 2000 and December 31, 1999, respectively............               142                  142
Additional paid-in capital.....................................            80,490               80,455
Retained earnings (deficit)....................................           (31,988)             (55,378)
Treasury stock, at cost, 311,000 shares........................            (1,905)              (1,905)
                                                                       ----------           ----------
  Total stockholders' equity...................................            46,739               23,314
                                                                       ----------           ----------
                                                                         $202,462             $171,761
                                                                       ==========           ==========
</TABLE>
     See accompanying notes to condensed consolidated financial statements

                                       4
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

              (Amounts in thousands, except per share information)

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                     March 31,
                                                        ---------------------------------------
                                                            2000                  1999
                                                          --------              ---------
<S>                                                     <C>                     <C>
REVENUES:
 Oil and gas revenues..............................       $ 23,667               $12,727
 Gas plant operations, net.........................            654                   221
 Interest and other income.........................            224                   283
                                                          --------               -------
                                                            24,545                13,231
                                                          --------               -------

COST AND EXPENSES:
 Production expenses...............................          6,314                 5,612
 Depreciation, depletion and amortization..........          7,290                 4,680
 General and administrative expenses...............          1,876                 1,394
 Interest expense..................................          3,409                 2,829
                                                          --------               -------
                                                            18,889                14,515
                                                          --------               -------

Income (loss) before income taxes..................          5,656                (1,284)

Income tax expense (benefit).......................        (17,734)                  ---
                                                          --------               -------

NET INCOME (LOSS)..................................       $ 23,390               $(1,284)
                                                          ========               =======

Net income (loss) per share........................       $   1.69               $  (.09)
                                                          ========               =======

Net income (loss) per share-diluted................       $   1.67               $  (.09)
                                                          ========               =======
Weighted average common shares
 outstanding.......................................         13,859                13,854
                                                          ========               =======
Weighted average common shares outstanding-
 diluted...........................................        14,031                 13,854
                                                          =======                =======
</TABLE>


     See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                      March 31,
                                                                          ---------------------------------
                                                                                2000                1999
                                                                          ---------------------------------
<S>                                                                       <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)....................................................          $ 23,390           $(1,284)
Adjustments to reconcile net income (loss) to net cash
 provided by operating activities:
     Depreciation, depletion and amortization........................             7,517             4,886
     Deferred income taxes...........................................           (17,806)              ---
                                                                           ------------       -----------
                                                                                 13,101             3,602
Change in assets and liabilities:
 Accounts receivable and accrued revenue.............................            (2,600)              913
 Accounts payable and other liabilities..............................             2,376              (301)
 Due from (to) related parties.......................................               ---              (973)
 Other...............................................................            (1,057)              890
                                                                           ------------       -----------
 NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES.....................            11,820             4,131
                                                                           ------------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

 Additions to properties and facilities..............................           (21,543)           (7,796)
 Additions to leasehold, furniture and equipment.....................              (603)              (12)
 Notes receivable....................................................              (663)              ---
 Proceeds from sales of properties...................................                65               (80)
                                                                           ------------       -----------
 NET CASH FLOWS USED IN INVESTING ACTIVITIES.........................           (22,744)           (7,888)
                                                                           ------------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from borrowings............................................            16,900             4,500
 Payments of long-term debt..........................................           (12,000)              ---
 Exercise of stock options...........................................                35               ---
 Purchase of treasury shares.........................................               ---                (1)
                                                                           ------------       -----------
 NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES.....................             4,935             4,499
                                                                           ------------       -----------

 Net (decrease) increase in cash and cash equivalents................            (5,989)              742
 Cash and cash equivalents at beginning of period....................             6,101                10
                                                                           ------------       -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...........................          $    112           $   752
                                                                           ============       ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements

                                       6
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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

                             (Amounts in thousands)

                                                         Three Months Ended
                                                              March 31,
                                                      -----------------------
                                                       2000            1999
                                                      ---------     ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:
 Interest..........................................     $ 633         $  87

 Income taxes......................................     $  41         $  ---



     See accompanying notes to condensed consolidated financial statements

                                       7
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

              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 generally accepted accounting
     principles.  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 March 31, 2000 and December 31,
     1999, and the results of operations and changes in cash flows for the
     periods ended March 31, 2000 and 1999.  These financial statements should
     be read in conjunction with the consolidated financial statements and notes
     to the consolidated financial statements in the December 31, 1999 Form 10-K
     of Bellwether Exploration Company ("the Company") that was filed with the
     Securities and Exchange Commission on March 24, 2000.

     Certain reclassifications of prior period statements have been made to
     conform with current reporting practices.

     In order to prepare these financial statements in conformity with generally
     accepted accounting principles, management of the Company has made a number
     of 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.

                                       8
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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


2.  STOCKHOLDERS' EQUITY

     SFAS No. 128 requires a reconciliation of the numerator and denominator of
     the basic EPS computation to the numerator and denominator of the diluted
     EPS computation.  For the three months ended March 31, 1999, diluted
     earnings per common share were not calculated  since the issuance or
     conversion of additional securities would have an antidilutive effect.

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

<TABLE>
<CAPTION>
                                            For the Three Months Ended              For the Three Months Ended
                                                  March 31, 2000                            March 31, 1999
                                   ---------------------------------------    -----------------------------------------
                                      Income        Shares       Per Share    Income (Loss)     Shares       Per Share
                                   (Numerator)   (Denominator)     Amount      (Numerator)    (Denominator)    Amount
                                   ------------  -------------   ---------    -------------   -------------  ----------

INCOME (LOSS) PER COMMON SHARE:
<S>                                <C>           <C>             <C>          <C>             <C>             <C>
Income (loss) available to common
 stockholders...................   $23,390        13,859           $1.69      $(1,284)        13,854         $(.09)
                                                                   =====                                     ======

EFFECT OF DILUTIVE SECURITIES:
Options and Warrants............   $   ---           172                      $   ---            ---
                                   -------        ------                      -------         ------

INCOME (LOSS) PER COMMON
 SHARE-DILUTED:
Income (loss) available to common
 stockholders and assumed
 conversions....................   $23,390        14,031           $1.67      $(1,284)        13,854         $(.09)
                                   =======        ======           =====      =======         ======         =====
</TABLE>

     Options and warrants on 1,000 shares of common stock were not included in
     computing diluted loss per share for March 31, 1999, because their effects
     were antidilutive.

     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 March
     31, 2000, 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.

                                       9
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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

3.   LONG TERM DEBT

     In April 1997, the Company entered into a senior unsecured revolving
     credit facility ("Senior Credit Facility") which currently has a borrowing
     base of $55.0 million and a maturity date of November 5, 2003.  The Company
     may elect an interest rate based either on a margin plus LIBOR or the
     higher of the prime rate or the sum of  1/2 of 1% plus the Federal Funds
     Rate.  For LIBOR borrowings, the interest rate will vary from LIBOR plus
     0.875% to LIBOR plus 1.25% based upon the borrowing base usage. As of March
     31, 2000 there were $34.9 million borrowings outstanding under the Senior
     Credit Facility and available borrowing capacity of $12.8 million, net of
     outstanding lines of credit of $7.3 million.

     The Senior Credit Facility contains various covenants including certain
     required financial measurements for current ratio, consolidated tangible
     net worth and interest coverage ratio.  In addition, the Senior Credit
     Facility includes certain limitations on restricted payments, dividends,
     incurrence of additional funded indebtedness and asset sales.

     In April 1997, the Company issued $100.0 million of 10-7/8% senior
     subordinated notes ("Notes") that mature April 1, 2007.  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
     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.

     Effective September 22, 1998, the Company entered into an eight and a 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, 2000 to
     October 1, 2000 is 10.33%.  Through  April 1, 2002 the  floating rate is
     capped at 10.875% and capped at 12.875% thereafter.

4.   NEW ACCOUNTING PRONOUNCEMENTS

     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, this statement is effective for fiscal quarters
     beginning after January 1, 2001.  The Company has not yet determined the
     impact of this statement on the Company's financial condition or results of
     operations.

                                       10
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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


5.   NATURAL GAS AND CRUDE OIL HEDGING

     Oil and gas revenues decreased $1.2 million and $13,000 in the three months
     ended March 31, 2000 and 1999, respectively, as a result of hedging
     activity.

     Since year end 1999, the Company has entered into additional swap contracts
     as follows:


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

<TABLE>
<CAPTION>
                                                                     NYMEX     NYMEX
             PERIOD                 BBLS     TOTAL BBLS     TYPE     PRICE     PRICE
                                   PER DAY                           FLOOR    CEILING
-------------------------------------------------------------------------------------
<S>                                <C>       <C>          <C>        <C>      <C>
July 2000-Sept. 2000                 4,000      368,000   Collar*    $22.25    $24.75
-------------------------------------------------------------------------------------
Oct. 2000-Dec. 2000                  4,000      368,000   Collar**   $23.00    $25.00
-------------------------------------------------------------------------------------
</TABLE>


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

<TABLE>
<CAPTION>
                                                                     NYMEX     NYMEX
             PERIOD                 MCF      TOTAL MCF      TYPE     PRICE     PRICE
                                   PER DAY                           FLOOR    CEILING
-----------------------------------------------------------------------------------------
<S>                                <C>       <C>          <C>        <C>      <C>
April 2000-Oct. 2000                35,000    7,490,000   Collar     $2.30     $2.84
-----------------------------------------------------------------------------------------
Nov. 2000- March 2001               20,000    3,020,000   Collar     $2.30     $3.35
-----------------------------------------------------------------------------------------
April 2001-Oct. 2001                30,000    6,420,000   Collar     $2.30     $2.88
-----------------------------------------------------------------------------------------
</TABLE>

*  This agreement includes a put at $17.25 per barrel with a $0.50 cost per
   barrel
** This agreement includes a put at $18.00 per barrel

     The fair value at March 31, 2000 of all swap agreements was an unrealized
     loss of $1.2 million.

6.   INCOME TAXES

     At December 31, 1999 the Company had a tax valuation allowance of $19.8
     million against its deferred tax assets.  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 due to
     higher commodity prices, and the valuation allowance was removed.  The
     $19.8 million benefit recorded for the removal of the valuation allowance
     was offset by a $2.1 million deferred tax liability that was generated
     during the three months ended March 31, 2000, resulting in an overall tax
     benefit of $17.7 million for the quarter.

                                       11
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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

Liquidity and Capital Resources

The Company strives to maximize long-term shareholder value through aggressive
growth in reserves and cash flow using advanced technologies, implementation of
a low cost structure and maintenance of a capital structure supportive of
growth.  The Company employs an integrated interdisciplinary team approach to a
balanced program of strategic acquisitions of producing oil and gas properties
and technology driven development and exploration activities.  The funding of
these activities has historically been provided by operating cash flows, bank
financing, equity placements and sale of non-core assets. The Company invested
$21.5 million in oil and gas properties for the three months ended March 31,
2000 versus $7.8 million for the same period in 1999. Cash flows from operations
before changes in assets and liabilities were $13.1 million for the three months
ended March 31, 2000 compared to $3.6 million provided by operating activities
in the same period of 1999. In the latter half of 1999, the Company began an
aggressive drilling program in order to reduce the declining reserve base.  This
strategy is reflected in the increased capital spending and corresponding
increased cash flows as compared to the same period last year.  At March 31,
2000, the Company had $12.8 million of available debt capacity under the Senior
Credit Facility, net of  $7.3 million in outstanding lines of credit.

2000 Capital Expenditures

During 2000, the Company anticipates investing approximately $55 million,
primarily for development and exploratory drilling activities and leasehold and
seismic acquisitions.  The Company believes its cash flow provided by operating
activities and borrowings under its  credit facilities will be sufficient to
meet these projected capital investments (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.

Gas Balancing

It is customary in the industry for working interest partners to sell more or
less than their entitled share of natural gas.  The settlement or disposition of
existing gas balancing positions is not anticipated to materially impact the
financial condition of the Company.

                                       12
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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

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 would be charged to operations. No such
charges to operations were required during the three month periods ending March
31, 2000 or 1999.

Results of Operations

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

                                                        Three Months Ended
                                                             March 31,
                                                    ---------------------------
                                                         2000        1999
                                                    ---------------------------
Production:
  Oil and condensate (MBBLs)......................       562            520
  Natural gas (MMCF)..............................     5,008          4,785

Average sales price: (1)
  Oil and condensate (per BBL)....................    $19.32         $ 9.35
  Natural gas  (per MCF)..........................    $ 2.56         $ 1.64

Average costs:
  Production expenses (per BOE)...................    $ 4.52         $ 4.26
  General and administrative expense
     (per BOE)....................................    $ 1.34         $ 1.06
  Depreciation, depletion and amortization
     (per BOE)(2).................................    $ 4.95         $ 3.32

(1)  Average sales prices include the effect of hedges, which decreased revenues
     by $1.2 million and $13,000 in the three month period s ended March 31,
     2000 and 1999, respectively.
(2)  Excludes depreciation, depletion and amortization on gas plants and other
     assets of $378,000 in the three month period in 2000, and of $306,000 in
     the three month period ended in 1999.

                                       13
<PAGE>

                        BELLWETHER EXPLORATION COMPANY

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

Three Months Ended March 31, 2000 and 1999

Net income for the quarter ended March 31, 2000 was $23.4 million or $1.67 per
share versus a net loss of $1.3 million or $.09 per share. A major contributor
to the increase was a tax benefit in deferred taxes of $17.8 million resulting
from the reversal of the Company's tax valuation allowance. Also contributing to
the increase were higher oil and gas prices and increased oil and gas production
as compared to the quarter ended March 31, 1999.

Oil and gas revenues for the three months ended March 31, 2000 were $23.7
million as compared to $12.7 million for the respective period in 1999.  The 87%
increase in oil and gas revenues is primarily due to increased oil and gas
prices.  Oil prices averaged $19.32 per barrel in the three month period ended
March 31, 2000 as compared to $9.35 per barrel in the comparable period of 1999.
This 107% increase in oil prices translates into a $5.2 million increase in oil
revenues.  Gas prices averaged $2.56 per mcf in the three month period ended
March 31, 2000 as compared to $1.64 per mcf in the comparable period of 1999.
This 56% increase in gas prices translates into a $4.4 million increase in gas
revenues. Partially offsetting these pricing gains is a $1.2 million decrease in
oil and gas revenues due to oil and gas hedges in place in the quarter ended
March 31, 2000.  Hedging activity resulted in a decrease in revenues of $13,000
for the same period of 1999.

Production volumes reflect an increase over normal declines as a result of the
Gulf of Mexico and New Mexico properties purchased in the last half of 1999.  In
addition, we started production in our Ecuador Charapa field in February of
2000.  Oil production increased 8% compared to the same quarter of 1999.  The
Company produced 562,000 and 520,000 barrels for the three month periods ended
March 31, 2000 and 1999, respectively.  Gas production increased 5% compared to
the same quarter of 1999 with production of 5,008 and 4,785 million cubic feet
(MMcf) for the three month periods ended March 31, 2000 and 1999, respectively.

Net gas plant operating profit was $654,000 in the three months ended March 31,
2000 and $221,000 in the same period of 1999.  While volumes were comparable to
last year, the increased operating profit is primarily due to a 111% increase in
prices.  Liquid prices increased from $9.17 per barrel in the quarter ended
March 31, 1999 to $19.33 per barrel in the quarter ended March 31, 2000.

Interest and Other Income decreased 21% from $283,000 at March 31, 1999 to
$224,000 at March 31, 2000 primarily as a result of  the write off of certain
bad debts on receivables.

Production expenses for the three months ended March 31, 2000 totaled $6.3
million, or 13% above the $5.6 million for the three months ended March 31,
1999.  On a per barrel equivalency  basis (BOE), production expenses for the
quarter ended March 31, 2000 increased to $4.52 per BOE as compared to $4.26 per
BOE in the period ended March 31, 1999.   Material expense workovers and
expenses associated with the new acquisitions in the Gulf of Mexico and New
Mexico mentioned above resulted in increased production expenses in the current
quarter.

                                       14
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

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


Depreciation, depletion and amortization was $7.3 million for the three months
ended March 31, 2000 and $4.7 million for the three month period ended March 31,
1999.   A portion of the increase is due to increased production rates while the
remaining increase is due to the increased depreciation, depletion and
amortization rate per BOE.  Increased capital expenditures and future
development costs resulted in the increased depreciation, depletion and
amortization rate per BOE. Depreciation, depletion and amortization per BOE was
$3.32 per BOE in 1999 and $4.95 per BOE in 2000.

General and administrative expenses totaled $1.9 million in the three months
ended March 31, 2000 as compared to $1.4 million for the comparable period of
1999.   An increase in outsourcing costs from $.5 million to $1.0 million was
the major contribution to the increase.   In 1999, the Company was charged a
management fee under its then current outsourcing contract which was based upon
a specified percentage of the average book value of the Company's total assets,
excluding cash, plus a percentage of operating cash flows. Due to the $73.9
million impairment charge in December 1998, the Company's total assets and
resulting percentage of such assets were reduced.  In addition, with the
depressed oil and gas prices in the first quarter of 1999,  management fees were
further reduced in such period.   In October 1999, the Company became party to a
new Master Services Agreement ("MSA") and six specific contracts which covered
comparable outsourcing services as the 1999 contract.  The new contracts have
varying terms and fees, but overall management fees have increased to levels
similar to 1998 management fee levels, a level management feels is appropriate.
On a BOE basis, general and administrative expenses were $1.34 per BOE in the
period ended March 31, 2000 and $1.06 per BOE in the period ended March 31,
1999.

Interest expense increased 21% to $3.4 million for the three months ended March
31, 2000 compared to $2.8 million in the same period of 1999.  Increased
interest rates and higher borrowings outstanding resulted in the increase.

At December 31, 1999 the Company had a tax valuation allowance of $19.8 million
against its deferred tax assets.  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 due to higher commodity prices,
and the valuation allowance was removed.  The $19.8 million benefit recorded for
the removal of the valuation allowance was offset by a $2.1 million deferred tax
liability that was generated during the three months ended March 31, 2000,
resulting in an overall tax benefit of $17.7 million for the quarter.


New Accounting Pronouncements

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, this statement is effective for fiscal quarters beginning after
January 1, 2001.  The Company has not yet determined the impact of this
statement on the Company's financial condition or results of operations

                                       15
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Forward Look 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.


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. Since year end 1999, the Company has entered into
additional swap contracts as follows:

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

<TABLE>
<CAPTION>
                                                                     NYMEX     NYMEX
             PERIOD                 BBLS     TOTAL BBLS     TYPE     PRICE     PRICE
                                   PER DAY                           FLOOR    CEILING
-------------------------------------------------------------------------------------
<S>                                <C>       <C>          <C>        <C>      <C>
July 2000-Sept. 2000                 4,000      368,000   Collar*    $22.25    $24.75
-------------------------------------------------------------------------------------
Oct. 2000-Dec. 2000                  4,000      368,000   Collar**   $23.00    $25.00
-------------------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
                                                                     NYMEX     NYMEX
             PERIOD                 MCF      TOTAL MCF      TYPE     PRICE     PRICE
                                   PER DAY                           FLOOR    CEILING
-----------------------------------------------------------------------------------------
<S>                                <C>       <C>          <C>        <C>      <C>
April 2000-Oct. 2000               35,000   7,490,000     Collar     $2.30     $2.84
-----------------------------------------------------------------------------------------
Nov. 2000- March 2001              20,000   3,020,000     Collar     $2.30     $3.35
-----------------------------------------------------------------------------------------
April 2001-Oct. 2001               30,000   6,420,000     Collar     $2.30     $2.88
-----------------------------------------------------------------------------------------
</TABLE>

*  This agreement includes a put at $17.25 per barrel with a $0.50 cost per
   barrel
** This agreement includes a put at $18.00 per barrel

The fair value at March 31, 2000 of all swap agreements was an unrealized loss
of  $1.2 million.  A 10% increase in prices would increase the loss by $4.3
million while a 10% decrease in prices would decrease the loss by $1.2 million.

                                       16
<PAGE>

                         BELLWETHER EXPLORATION COMPANY

                          PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

              None.

ITEM 2.   CHANGES IN SECURITIES

              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.

                     10.18  Employment Contract dated April 1, 2000 between the
                            Company and Cliff M. West, Jr. - included herewith.
                     10.19  Employment Contract dated April 1, 2000 between the
                            Company and Robert J. Bensh - included herewith.
                     27     Financial Data Schedule

          b.  Reports on Form 8-K.
              None.

                                       17
<PAGE>

                                   SIGNATURES

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

                                       BELLWETHER EXPLORATION COMPANY
                                       ------------------------------
                                             (Registrant)


Date:  May 15, 2000      By: /s/ J.P. Bryan
      -------------          ------------------------------------------------
                             J. P. Bryan
                             Chairman and Chief Executive Officer


Date:    May 15, 2000    By: /s/ Robert J.Bensh
      ---------------        -------------------------------------------------
                             Robert J. Bensh
                             Senior Vice President and Chief Financial Officer

                                       18