<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-Q


(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 OR

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

                        Commission file number 000-27473


                         SPINNAKER EXPLORATION COMPANY
             (Exact name of registrant as specified in its charter)

                DELAWARE                            76-0560101
          (State or other jurisdiction of        (I.R.S. Employer
          incorporation or organization)         Identification No.)


               1200 SMITH STREET, SUITE 800
                     HOUSTON, TEXAS                     77002
        (Address of principal executive offices)      (Zip Code)


                                (713) 759-1770
             (Registrant's telephone number, including area code)


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

As of May 10, 2000, there were 20,500,120 shares of the registrant's common
stock, par value $0.01 per share, outstanding.
<PAGE>

                         SPINNAKER EXPLORATION COMPANY
                                   FORM 10-Q
                   FOR THE THREE MONTHS ENDED MARCH 31, 2000


<TABLE>
<CAPTION>

                                                                        Page
                                                                        ----
PART I -  FINANCIAL INFORMATION

<S>                                                                     <C>
  ITEM 1. FINANCIAL STATEMENTS

   Consolidated Balance Sheets
     December 31, 1999 and March 31, 2000....................................  3

   Consolidated Statements of Operations
     Three Months Ended March 31, 1999 and 2000..............................  4

   Consolidated Statements of Cash Flows
     Three Months Ended March 31, 1999 and 2000..............................  5

   Notes to Interim Consolidated Financial Statements........................  6


  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS................................  8

  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......... 12


PART II - OTHER INFORMATION

  ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.......................... 13

  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................... 13

SIGNATURES................................................................... 14

EXHIBIT INDEX................................................................ 15

</TABLE>

                                       2
<PAGE>

                         SPINNAKER EXPLORATION COMPANY
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,              MARCH 31,
                                                                                                 1999                     2000
                                                                                          ------------------      ------------------
                                      ASSETS                                                                          (UNAUDITED)
<S>                                                                                          <C>                      <C>
CURRENT ASSETS:
 Cash and cash equivalents................................................................          $ 20,452              $  7,633
 Accounts receivable......................................................................            10,795                18,571
 Other....................................................................................               879                 1,555
                                                                                          ------------------      ----------------
     Total current assets.................................................................            32,126                27,759

PROPERTY AND EQUIPMENT:
 Oil and gas, on the basis of full-cost accounting:
  Proved properties.......................................................................           141,455               177,759
  Unproved properties and properties under development, not being amortized...............            40,696                41,885
 Other....................................................................................             3,714                 4,416
                                                                                          ------------------      ----------------
                                                                                                     185,865               224,060
 Less - Accumulated depreciation, depletion and amortization..............................           (28,468)              (36,550)
                                                                                          ------------------     -----------------
     Total property and equipment.........................................................           157,397               187,510

OTHER ASSETS..............................................................................                30                    30
                                                                                          ------------------     -----------------
     Total assets.........................................................................          $189,553              $215,299
                                                                                          ==================      ================

                                   LIABILITIES AND EQUITY
CURRENT LIABILITIES:
 Accounts payable.........................................................................          $  4,509              $ 12,378
 Accrued liabilities......................................................................             7,942                22,389
                                                                                          ------------------     -----------------
     Total current liabilities............................................................            12,451                34,767

COMMITMENTS AND CONTINGENCIES

EQUITY:
 Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued and
   outstanding at December 31, 1999 and March 31, 2000, respectively......................                --                    --
 Common stock, $0.01 par value; 50,000,000 shares authorized; 20,426,192 shares
   issued and 20,404,336 shares outstanding at December 31, 1999 and 20,486,152
   shares issued and 20,464,296 shares outstanding at March 31, 2000......................               204                   205
 Additional paid-in capital...............................................................           203,987               204,330
 Accumulated deficit......................................................................           (27,034)              (23,948)
 Less: Treasury stock, at cost, 21,856 shares at December 31, 1999 and March 31, 2000,
     respectively.........................................................................               (55)                  (55)
                                                                                          ------------------     -----------------
     Total equity.........................................................................           177,102               180,532
                                                                                          ------------------     -----------------
     Total liabilities and equity.........................................................          $189,553              $215,299
                                                                                          ==================      ================
</TABLE>


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

                                       3
<PAGE>

                         SPINNAKER EXPLORATION COMPANY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                      FOR THE THREE MONTHS
                                                                                                          ENDED MARCH 31,
                                                                                              -----------------------------------
                                                                                                   1999                   2000
                                                                                              ------------          -------------
<S>                                                                                           <C>                   <C>
REVENUES..................................................................................         $ 1,839                $13,867
EXPENSES:
 Lease operating expenses.................................................................             240                  1,609
 Depreciation, depletion and amortization - natural gas and oil properties................           1,617                  7,765
 Depreciation and amortization - other....................................................              47                     69
 General and administrative...............................................................           1,128                  1,498
                                                                                              ------------          -------------
     Total expenses.......................................................................           3,032                 10,941
                                                                                              ------------          -------------
INCOME (LOSS) FROM OPERATIONS.............................................................          (1,193)                 2,926
OTHER INCOME (EXPENSE):
 Interest income..........................................................................              46                    244
 Interest expense.........................................................................            (874)                   (84)
 Capitalized interest.....................................................................             407                     --
                                                                                              ------------          -------------
     Total other income (expense).........................................................            (421)                   160
                                                                                              ------------          -------------
INCOME (LOSS) BEFORE INCOME TAXES.........................................................          (1,614)                 3,086
 Income tax provision.....................................................................              --                     --
                                                                                              ------------          -------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE.....................................................................          (1,614)                 3,086
 Cumulative effect of change in accounting principle......................................            (395)                    --
                                                                                              ------------          -------------
NET INCOME (LOSS).........................................................................          (2,009)                 3,086
ACCRUAL OF DIVIDENDS ON PREFERRED STOCK...................................................          (2,493)                    --
                                                                                              ------------          -------------
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS........................................    $     (4,502)         $       3,086
                                                                                              ============          =============

BASIC INCOME (LOSS) PER COMMON SHARE:
 Income (loss) before cumulative effect of change in accounting principle.................    $      (1.00)         $        0.15
 Cumulative effect of change in accounting principle......................................           (0.10)                    --
                                                                                              ------------          -------------
NET INCOME (LOSS) PER COMMON SHARE........................................................    $      (1.10)         $        0.15
                                                                                              ============          =============

DILUTED INCOME (LOSS) PER COMMON SHARE:
 Income (loss) before cumulative effect of change in accounting principle.................    $      (1.00)         $        0.15
 Cumulative effect of change in accounting principle......................................           (0.10)                    --
                                                                                              ------------          -------------
NET INCOME (LOSS) PER COMMON SHARE........................................................    $      (1.10)         $        0.15
                                                                                              ============          =============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
 Basic....................................................................................           4,095                 20,417
                                                                                              ------------          -------------
 Diluted..................................................................................           4,095                 21,259
                                                                                              ============          =============
</TABLE>

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

                                       4
<PAGE>

                         SPINNAKER EXPLORATION COMPANY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                         FOR THE THREE MONTHS
                                                                                                             ENDED MARCH 31,
                                                                                                        ----------------------
                                                                                                          1999          2000
                                                                                                        --------      --------
<S>                                                                                                   <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)........................................................................              $ (2,009)     $  3,086
 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
  activities:
  Depreciation, depletion and amortization................................................                 1,664         7,834
  Cumulative effect of change in accounting principle.....................................                   395            --
 Change in components of working capital:
  Accounts receivable.....................................................................                (4,314)       (7,776)
  Accounts payable and accrued liabilities................................................                 6,202         8,329
  Other current assets and other..........................................................                (1,390)         (648)
                                                                                                        --------      --------
     Net cash provided by operating activities............................................                   548        10,825

CASH FLOWS FROM INVESTING ACTIVITIES:
 Oil and gas properties...................................................................               (16,262)      (37,245)
 Change in property related payables......................................................               (14,000)       13,987
 Purchases of other property and equipment................................................                  (123)         (702)
                                                                                                        --------      --------
     Net cash used in investing activities................................................               (30,385)      (23,960)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from borrowings.................................................................                28,000            --
 Proceeds from exercise of stock options..................................................                    --           316
                                                                                                        --------      --------
     Net cash provided by financing activities............................................                28,000           316
                                                                                                        --------      --------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................................................                (1,837)      (12,819)
CASH AND CASH EQUIVALENTS, beginning of year..............................................                 2,141        20,452
                                                                                                        --------      --------
CASH AND CASH EQUIVALENTS, end of period..................................................              $    304      $  7,633
                                                                                                        ========      ========
</TABLE>

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

                                       5
<PAGE>

                         SPINNAKER EXPLORATION COMPANY
         NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2000



1.  BASIS OF PRESENTATION

    The accompanying unaudited consolidated financial statements of Spinnaker
Exploration Company (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting only of normal and recurring
adjustments) necessary to present a fair statement of the results for the
periods included herein have been made and the disclosures contained herein are
adequate to make the information presented not misleading. Interim period
results are not necessarily indicative of results of operations or cash flows
for a full year. These consolidated financial statements and the notes thereto
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.

2.  INITIAL PUBLIC OFFERING

    On September 28, 1999, the Company priced its initial public offering of
8,000,000 shares of common stock, par value $0.01 per share ("Common Stock").
After payment of underwriting discounts and commissions, the Company received
net proceeds of $108.7 million on October 4, 1999. With a portion of the
proceeds, the Company retired all then outstanding debt of $72.0 million. The
Company is using the remaining net proceeds after offering costs to fund
exploration and development activities. In connection with the initial public
offering, the Company converted all outstanding Series A Convertible Preferred
Stock, par value $0.01 per share ("Preferred Stock"), into shares of Common
Stock, and certain shareholders reinvested preferred dividends payable of $16.3
million into shares of Common Stock.

    The initial public offering closed on October 4, 1999 and is not reflected
in the accompanying consolidated financial statements for the three months ended
March 31, 1999. Pro forma financial information for the three months ended March
31, 1999 assumes the completion of the initial public offering, the conversion
of each share of Preferred Stock into two shares of Common Stock, the
reinvestment of Preferred Stock dividends into shares of Common Stock and the
retirement of all outstanding debt occurred on January 1, 1999 (in thousands,
except per share data).

<TABLE>
<S>                                                                                                                  <C>
  Pro forma net loss...............................................................................                    $(1,711)
                                                                                                               ===============


Pro forma basic and diluted loss per common share:
 Loss before cumulative effect of change in accounting principle...................................                    $ (0.07)
 Cumulative effect of change in accounting principle...............................................                      (0.02)
                                                                                                               ---------------
  Pro forma net loss per common share..............................................................                    $ (0.09)
                                                                                                                ==============


Pro forma weighted average number of common shares outstanding - basic and diluted.................                     18,766
                                                                                                                ==============

</TABLE>

3.  ORGANIZATION COSTS

    As of December 31, 1998, "other assets" included capitalized organization
costs incurred by the Company in its initial formation. The Company was
amortizing the start-up costs over a period of five years. On April 3, 1998, the
American Institute of Certified Public Accountants issued Statement of Position
98-5 ("SOP 98-5"), "Reporting on the Costs of Start-Up Activities," which
requires that costs for start-up activities and organization costs be expensed
as incurred and not capitalized as had previously been allowed. SOP 98-5 is
effective for financial statements for fiscal years beginning after 1998. The
Company adopted this policy in the first quarter of 1999 and recorded a charge
related to this accounting change of $395,000 in conjunction with the write-off
of previously capitalized organization costs.

                                       6
<PAGE>

4. EARNINGS PER SHARE

   Basic and diluted net income (loss) per share is computed based on the
following information (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                                                         FOR THE THREE MONTHS
                                                                                                            ENDED MARCH 31,
                                                                                                        -----------------------
                                                                                                          1999           2000
                                                                                                        -------         -------
<S>                                                                                                    <C>             <C>
Numerator:
 Net income (loss) available to common stockholders.............................................        $(4,502)        $ 3,086
                                                                                                        =======         =======
Denominator:
 Basic earnings per share - weighted average shares.............................................          4,095          20,417
                                                                                                        =======         =======
 Dilutive securities:
  Stock options.................................................................................             --             842
                                                                                                        -------         -------
 Dilutive potential common shares...............................................................             --             842
                                                                                                        -------         -------
 Diluted earnings per share - adjusted weighted average shares and assumed conversions..........          4,095          21,259
                                                                                                        =======         =======

Net income (loss) per common share:
 Basic:
  Income (loss) before cumulative effect of change in accounting principle......................        $ (1.00)        $  0.15
  Cumulative effect of change in accounting principle...........................................          (0.10)             --
                                                                                                        -------         -------
 Net income (loss) per common share.............................................................        $ (1.10)        $  0.15
                                                                                                        =======         =======

 Diluted:
  Income (loss) before cumulative effect of change in accounting principle......................        $ (1.00)        $  0.15
  Cumulative effect of change in accounting principle...........................................          (0.10)             --
                                                                                                        -------         -------
 Net income (loss) per common share.............................................................        $ (1.10)        $  0.15
                                                                                                        =======         =======
</TABLE>

5. SUBSEQUENT EVENT - CREDIT FACILITY

  Subsequent to March 31, 2000, the Company entered into letter agreements with
TD Securities (USA) Inc. ("TDSI") and Credit Suisse First Boston ("CSFB")
whereby TDSI and CSFB will provide to the Company a $75.0 million senior secured
revolving credit facility ("Credit Facility") with an initial borrowing base of
$40.0 million. The Credit Facility, which is subject to the negotiation of
mutually satisfactory definitive agreements, will be used for working capital,
letters of credit and general business purposes and will replace the $25.0
million Amended and Restated 364-Day Credit Agreement ("Amended Credit
Agreement") which is scheduled to mature in October 2000. At March 31, 2000, the
Company had no borrowings outstanding under the Amended Credit Agreement.

                                       7
<PAGE>

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

                   Forward-Looking Statements and Assumptions

  Some of the information in this Quarterly Report on Form 10-Q contains
forward-looking statements. These statements express, or are based on, the
Company's expectations about future events. These include such matters as:

  .  the Company's financial position;
  .  business strategy;
  .  budgets;
  .  amount, nature and timing of capital expenditures;
  .  drilling of wells;
  .  natural gas and oil reserves;
  .  timing and amount of future production of natural gas and oil;
  .  operating costs and other expenses;
  .  cash flow and anticipated liquidity;
  .  prospect development and property acquisitions; and
  .  marketing of natural gas and oil.

  There are many factors that could cause these forward-looking statements to be
incorrect, including, but not limited to, the risks described in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999. These factors
include, among others:

  .  the risks associated with exploration;
  .  the ability to find, acquire, market, develop and produce new properties;
  .  natural gas and oil price volatility;
  .  uncertainties in the estimation of proved reserves and in the projection of
     future rates of production and timing of development expenditures;
  .  operating hazards attendant to the natural gas and oil business;
  .  downhole drilling and completion risks that are generally not recoverable
     from third parties or insurance;
  .  potential mechanical failure or under-performance of significant wells;
  .  climatic conditions;
  .  availability and cost of materials and equipment;
  .  delays in anticipated start-up dates;
  .  actions or inactions of third-party operators of the Company's properties;
  .  the ability to find and retain skilled personnel;
  .  availability of capital;
  .  the strength and financial resources of competitors;
  .  regulatory developments;
  .  environmental risks and;
  .  general economic conditions.

  When you consider these forward-looking statements, you should keep in mind
these risk factors and the other cautionary statements in this Form 10-Q. The
forward-looking statements speak only as of the date made.

GENERAL

  Spinnaker is an independent energy company engaged in the exploration,
development and production of natural gas and oil in the U.S. Gulf of Mexico.
The Company's operating results depend substantially on the success of its
exploratory drilling program and the price of natural gas and oil. Revenues,
profitability and future growth rates also substantially depend on factors
beyond the Company's control, such as economic, political and regulatory
developments and competition from other sources of energy. The energy markets
historically have been very volatile, and natural gas and oil prices may
fluctuate widely in the future. Sustained periods of low prices for natural gas
and oil could materially and adversely affect the Company's financial position,
its results of operations, the quantities of natural gas and oil reserves that
it can economically produce and its access to capital.

                                       8
<PAGE>

RESULTS OF OPERATIONS

  The following table sets forth certain operating information with respect to
the natural gas and oil operations of the Company:

<TABLE>
<CAPTION>
                                                                                                      FOR THE THREE MONTHS
                                                                                                           ENDED MARCH 31,
                                                                                                 -------------------------------
                                                                                                  1999                    2000
                                                                                                 -------               ---------
<S>                                                                                            <C>                    <C>
Production:
 Natural gas (MMcf)........................................................................        1,007                   4,556
 Oil and condensate (MBbls)................................................................           11                      58
  Total (MMcfe)............................................................................        1,071                   4,904

Revenues (in thousands):
 Natural gas...............................................................................      $ 1,715                 $11,739
 Oil and condensate........................................................................          124                   1,620
 Other.....................................................................................           --                     508
                                                                                                 -------               ---------
  Total....................................................................................      $ 1,839                 $13,867

Average sales price per unit:
 Natural gas revenues from production (per Mcf)............................................      $  1.70                 $  2.58
 Effects of hedging activities (per Mcf)...................................................           --                    0.18
                                                                                                 -------               ---------
  Average price............................................................................      $  1.70                 $  2.76

 Oil and condensate revenues from production (per Bbl).....................................      $ 11.64                 $ 27.93
 Effects of hedging activities (per Bbl)...................................................           --                   (5.82)
                                                                                                 -------               ---------
  Average price............................................................................      $ 11.64                 $ 22.11

 Total revenues from production (per Mcfe).................................................      $  1.72                 $  2.72
 Effects of hedging activities (per Mcfe)..................................................           --                    0.11
                                                                                                 -------               ---------
  Total average price (per Mcfe)...........................................................      $  1.72                 $  2.83

Expenses (per Mcfe):
 Lease operating expenses..................................................................      $  0.22                 $  0.33
 Depreciation, depletion and amortization - natural gas and oil properties.................         1.51                    1.58

Income (loss) from operations (in thousands)...............................................      $(1,193)                $ 2,926
</TABLE>

Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
1999

  Production increased approximately 3.8 Bcfe in the first quarter of 2000
compared to the first quarter of 1999. The daily production rate at the end of
March 2000 was approximately 67,000 Mcfe as compared to rates of approximately
14,000 Mcfe at the end of March 1999 and approximately 53,000 Mcfe at the end of
December 1999.

  Natural gas and oil revenues increased $12.0 million and income from
operations increased $4.1 million during the first quarter of 2000 compared to
the first quarter of 1999. Natural gas revenues increased $10.0 million and oil
and condensate revenues increased $1.5 million in the first quarter of 2000
compared to the first quarter of 1999. Net natural gas and oil hedging income,
which is included in revenues, was $508,000 in the first quarter of 2000. The
Company entered into hedging arrangements beginning in the fourth quarter of
1999. Natural gas production volumes increased primarily due to seven wells
which commenced production after the first quarter of 1999, contributing $9.0
million of the increase in natural gas revenues. Average natural gas prices
increased, contributing $1.0 million of the increase in natural gas revenues.
Oil and condensate production volumes increased primarily due to seven wells
which commenced production after the first quarter of 1999, contributing $1.5
million of the increase in oil and condensate revenues.

  Lease operating expenses increased $1.4 million in the first quarter of 2000
compared to the first quarter of 1999. Of the total increase in lease operating
expenses, $1.3 million was attributable to seven wells which commenced

                                       9
<PAGE>

production after the first quarter of 1999. The increase in the lease operating
expense rate per Mcfe was primarily due to higher operating expense requirements
of the new wells and workover activities in the first quarter of 2000.

  General and administrative expenses increased $370,000 in the first quarter of
2000 compared to the first quarter of 1999. The increase in general and
administrative expenses was primarily due to employment-related costs associated
with an increase in personnel after the first quarter of 1999.

  Depreciation, depletion and amortization increased $6.1 million in the first
quarter of 2000 compared to the first quarter of 1999. Of the total increase in
depreciation, depletion and amortization, $5.8 million was attributable to a
substantial increase in production.

  Interest income increased $198,000 in the first quarter of 2000 compared to
the first quarter of 1999 primarily due to investment income associated with the
remaining initial public offering proceeds invested during the first quarter of
2000. Interest expense, net of capitalized interest, decreased $383,000 in the
first quarter of 2000 compared to the first quarter of 1999. The Company had no
borrowings outstanding during the first quarter of 2000.

  No income tax expense was recognized during the first quarter of 2000 due to
the availability of net operating loss carryforwards not previously benefited
that offset taxable income in 2000.

  The Company recognized net income of $3.1 million, or $0.15 per basic and
diluted share, in the first quarter of 2000 compared to a net loss of $2.0
million in the first quarter of 1999. After preferred dividends of $2.5 million,
the Company recognized a net loss available to common stockholders of $4.5
million, or a loss of $1.10 per share, in the first quarter of 1999.

LIQUIDITY AND CAPITAL RESOURCES

  Through September 30, 1999, the Company funded its activities primarily with
the proceeds from private placements of its equity securities and borrowings
under an $85.0 million Credit Agreement with CSFB, New York Branch, Bank of
Montreal and Bank of America, N.A. (formerly NationsBank, N.A.) ("Credit
Agreement"). During the fourth quarter of 1999, the Company amended and restated
the Credit Agreement. The $25.0 million Amended Credit Agreement matures on
October 27, 2000. The Company may borrow only up to the borrowing base, which is
currently $25.0 million. Subsequent to March 31, 2000, the Company entered into
letter agreements whereby TDSI and CSFB will provide to the Company a $75.0
million Credit Facility with an initial borrowing base of $40.0 million. The
Credit Facility will be used for working capital, letters of credit and general
business purposes and will replace the $25.0 million Amended Credit Agreement.
The availability of the Credit Facility is subject to, among other items, the
negotiation and execution of mutually satisfactory definitive agreements.

  The Company has experienced and expects to continue to experience substantial
working capital requirements, primarily due to its active exploration and
development programs. The Company plans to fund remaining 2000 capital
expenditures from working capital, cash flows from operations and borrowings
under current and future financing arrangements. In the event additional capital
resources are unavailable, the Company may curtail its drilling, development and
other activities or be forced to sell some of its assets on an untimely or
unfavorable basis.

  Cash and cash equivalents decreased $12.8 million to $7.6 million at March 31,
2000 from $20.4 million at December 31, 1999. The decrease resulted from $23.9
million used in investing activities, offset in part by $10.8 million provided
by operating activities and $316,000 provided by financing activities.

 Operating Activities

  The Company intends to use cash flows from operations to fund a portion of its
future acquisition, exploration and development activities. Net cash of $10.8
million was provided by operating activities in the first quarter of 2000,
primarily as a result of a substantial increase in natural gas and oil
production and prices.

  Cash flow from operations will depend on the Company's ability to increase
production through its exploration and development drilling program and the
prices of natural gas and oil. The Company has made significant investments to
expand its operations in the Gulf of Mexico. These investments have resulted in
an increase in the Company's daily production to approximately 67,000 Mcfe at
the end of March 2000 from approximately 53,000 Mcfe at the end of December
1999. The Company expects substantially higher production and cash flow during
the

                                       10
<PAGE>

remainder of 2000 as recent discoveries commence production. However, the
Company can provide no assurance that production volumes and pricing in 2000
will achieve expectations.

  The Company currently sells most of its natural gas and oil production under
price sensitive or market price contracts. To reduce exposure to fluctuations in
natural gas and oil prices, the Company enters into hedging arrangements.
However, these contracts also limit the benefits the Company would realize if
prices increase. See "Item 3. Quantitative and Qualitative Disclosures About
Market Risk."

  The increase in "accounts receivable" was primarily due to a $4.2 million
increase in joint interest billings associated with additional wells operated by
the Company and a $2.8 million increase in accrued natural gas and oil revenues
resulting primarily from an increase in production in March 2000 compared to
December 1999. The increases in "accounts payable" and "accrued liabilities"
were primarily due to costs associated with increased leasehold acquisition,
drilling and development activities during the first quarter of 2000.

 Investing Activities

  Net cash of $23.9 million used in investing activities in the first quarter of
2000 included net oil and gas property capital expenditures of $23.2 million and
purchases of other property and equipment of $702,000. During the first quarter
of 2000, the Company completed drilling operations on seven exploratory wells,
two of which were successful. The two successful wells included discoveries at
High Island 202 #2 and North Padre Island 883 #2. At March 31, 2000, the Company
was drilling three exploratory wells. In April 2000, two of the wells were
determined to be successful and one was unsuccessful.

  The 2000 budget includes development costs that are contingent on the success
of future exploratory drilling. The Company does not anticipate that budgeted
leasehold acquisition activities will include the acquisition of producing
properties. The Company does not anticipate any significant abandonment or
dismantlement costs through 2000. The Company has capital expenditure plans for
the last nine months of 2000 totaling approximately $78 million, primarily for
exploratory drilling costs. Actual levels of capital expenditures may vary
significantly due to many factors, including drilling results, natural gas and
oil prices, industry conditions, decisions of operators and other prospect
owners and the prices of oilfield goods and services.

 Financing Activities

  During the first quarter of 2000, the Company received cash of $316,000
related to proceeds from exercises of stock options.

  In September 1998, the Company entered into the $85.0 million Credit
Agreement. The Company received $19.0 million and $53.0 million from borrowings
under the Credit Agreement during 1998 and 1999, respectively. Simultaneously
with the completion of the initial public offering, the Company retired all
outstanding borrowings under the Credit Agreement, which were $72.0 million as
of October 4, 1999.

  On October 29, 1999, the Company amended and restated the Credit Agreement.
The $25.0 million Amended Credit Agreement matures on October 27, 2000. The
Company may borrow only up to the borrowing base, which is currently $25.0
million. On a semi-annual basis, proved reserves are required to be evaluated to
re-determine the borrowing base. At March 31, 2000, the Company had no
borrowings outstanding under the Amended Credit Agreement.

  Subsequent to March 31, 2000, the Company entered into letter agreements
whereby TDSI and CSFB will provide to the Company a $75.0 million Credit
Facility with an initial borrowing base of $40.0 million. The Credit Facility
will be used for working capital, letters of credit and general business
purposes and will replace the $25.0 million Amended Credit Agreement scheduled
to mature in October 2000. The availability of the Credit Facility is subject
to, among other items, the negotiation and execution of mutually satisfactory
definitive agreements.

                                       11
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Interest Rate Risk

  The Company is exposed to changes in interest rates. Changes in interest rates
affect the interest earned on the Company's cash and cash equivalents and the
interest rate paid on borrowings under the credit agreements. Under its current
policies, the Company does not use interest rate derivative instruments to
manage exposure to interest rate changes.

 Commodity Price Risk

  The Company's revenues, profitability and future growth depend substantially
on prevailing prices for natural gas and oil. Prices also affect the amount of
cash flow available for capital expenditures and the Company's ability to borrow
and raise additional capital. The amount the Company can borrow under the
Amended Credit Agreement is subject to periodic re-determination based in part
on changing expectations of future prices. Lower prices may also reduce the
amount of natural gas and oil that the Company can economically produce. The
Company currently sells most of its natural gas and oil production under price
sensitive or market price contracts. To reduce exposure to fluctuations in
natural gas and oil prices, the Company entered into hedging arrangements
beginning in the fourth quarter of 1999. However, these contracts also limit the
benefits the Company would realize if prices increase. The Company has entered
into the following collar arrangements. One MMBtu approximates one Mcf of gas.

<TABLE>
<CAPTION>
                                                     Gas Collars                                     Oil Collars
                             -----------------------------------------------------   ----------------------------------------------

                           Average            Average             Average            Average         Average            Average
                            Daily              NYMEX               NYMEX              Daily           NYMEX              NYMEX
                           Volume              Floor              Ceiling             Volume          Floor             Ceiling
     Time Period           (MMBtu)           Price/MMBtu         Price/MMBtu           (Bbl)         Price/Bbl          Price/Bbl
----------------------     --------------   ------------------  ------------------   -------------   -------------   --------------
<S>                           <C>                 <C>               <C>                 <C>              <C>               <C>
First Quarter 2000           25,000              2.86               3.06                534              19.63              21.81
Second Quarter 2000          41,758              2.57               2.86                600              19.37              21.78
Third Quarter 2000           50,000              2.63               2.96                600              18.61              21.03
Fourth Quarter 2000          50,000              2.95               3.43                600              22.11              25.15
First Quarter 2001           50,000              2.95               3.43                 --                 --                 --
Second Quarter 2001          10,000              2.74               3.23                 --                 --                 --
</TABLE>

  The daily production rates at the end of March 2000 were approximately 62,000
Mcf of natural gas and approximately 800 barrels of oil and condensate. These
transactions are designated as hedges and accounted for on the accrual basis
with realized gains and losses recognized in revenues when the related
production occurs. The Company recognized $508,000 of net hedging income during
the first quarter of 2000. The estimated fair value of the open collar
arrangements is an unrealized loss of approximately $3.2 million using natural
gas and oil prices as of the end of April 2000.

                                       12
<PAGE>

                          PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

  On July 16, 1999, the Company filed a registration statement on Form S-1 (File
No. 333-83093) relating to an initial public offering of 8,000,000 shares of its
Common Stock for an aggregate offering price of $116.0 million. On September 28,
1999, the registration statement on Form S-1 was declared effective. The public
offering price was $14.50 per share of Common Stock, and the underwriting
discounts and commissions were $0.91 per share of Common Stock. The offering
closed on October 4, 1999. The proceeds from the offering, after deducting the
underwriting discounts and commissions, but before deducting expenses associated
with the offering, were $108.7 million. The net offering proceeds to the
Company, after deducting the underwriting discounts, commissions and expenses
associated with the offering, were $107.6 million.

  The Company used $72.0 million of the net offering proceeds to pay all
outstanding debt under its $85.0 million Credit Agreement. Of the remaining
$35.6 million of net offering proceeds, approximately $17.8 million was used to
fund exploration and development activities in each of the fourth quarter of
1999 and the first quarter of 2000.

  The managing underwriters for the offering were Credit Suisse First Boston
Corporation, Donaldson, Lufkin & Jenrette Securities Corporation, Banc of
America Securities LLC, Prudential Securities Incorporated and Nesbitt Burns
Securities Inc.

Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits

         27 Financial Data Schedule.

    (b)  Reports on Form 8-K

         None.

                                       13
<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.

                                              SPINNAKER EXPLORATION COMPANY

Date:         May 10, 2000                    By: /s/  JAMES M. ALEXANDER
        ---------------------------               ------------------------------
                                                       James M. Alexander
                                                 Vice President, Chief Financial
                                                         Officer and Secretary

Date:         May 10, 2000                    By: /s/  JEFFREY C. ZARUBA
        ---------------------------              ------------------------------
                                                       Jeffrey C. Zaruba
                                                         Treasurer

                                       14
<PAGE>

                                 EXHIBIT INDEX



     EXHIBIT
     NUMBER      DESCRIPTION
     ------      -----------


     27        Financial Data Schedule.

                                       15