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

                                    FORM 10-Q

(Mark One)

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

                  For the quarterly period ended June 30, 1997

                                       OR

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

               For the transition period         from to
                                        --------         --------

                         Commission File Number 0-20125

                             BASIN EXPLORATION, INC.
             (Exact name of registrant as specified in its charter)

                   DELAWARE                            84-1143307
        (State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization)           Identification No.)

                  370 17TH STREET, SUITE 3400, DENVER, CO 80202
               (Address of principal executive offices) (Zip Code)

                                 (303) 685-8000
              (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
                                  -----    -----

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

                                                         Outstanding at
                      CLASS                              July 31, 1997
     ------------------------------------              -----------------
     Common stock, $.01 par value                      10,779,000 shares



<PAGE>



                             BASIN EXPLORATION, INC.


                                      INDEX


PART I. FINANCIAL INFORMATION                                              PAGE

     Item 1. Consolidated Financial Statements

          Consolidated Balance Sheets as of 
          June 30, 1997 and December 31,1996................................3

          Consolidated Statements of Operations for the 
          three months ended June 30, 1997 and 1996 and
          six months ended June 30, 1997 and 1996...........................5

          Consolidated Statements of Changes in
          Stockholders' Equity for the period from
          January 1, 1996 through June 30, 1997.............................6

          Consolidated Statements of Cash Flows for the
          six months ended June 30, 1997 and 1996...........................7

          Notes to Consolidated Financial Statements........................8

     Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations............................9

PART II. OTHER INFORMATION

     Item 4. Submission of Matters to a Vote of Security Holders...........15

     Item 6. Exhibits and Reports on Form 8-K..............................15

SIGNATURES.................................................................18


EXHIBITS -

     Index to Exhibits.....................................................19





                                        2

<PAGE>



                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1997 AND DECEMBER 31, 1996



                                     ASSETS


(In thousands)                                     June 30,        December 31,
                                                     1997              1996
                                                  ----------       -----------
CURRENT ASSETS:
  Cash and equivalents                            $     625        $  22,023
  Accounts receivable                                 7,250            5,108
  Stockholder note receivable                           559              559
  Prepaids and other                                  3,426            2,203
                                                  ----------        ----------

                                                     11,860           29,893
                                                  ----------        ----------

PROPERTY AND EQUIPMENT, at cost:
  Oil and gas properties, under the full
    cost method of accounting
        Proved                                      108,776           78,641
        Unproved                                     14,747            9,822
  Less accumulated depreciation,
    depletion and amortization                      (38,523)         (36,581)
                                                  ---------         ----------
                                                     85,000           51,882
  Furniture and equipment, net                        2,346            2,918
                                                  ----------        ----------

                                                     87,346            54,800
                                                  ----------        ----------

OTHER ASSETS:                                           175               264
                                                  ----------        ----------

                                                  $  99,381         $  84,957
                                                  ==========        ==========












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


                                        3

<PAGE>



                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1997 AND DECEMBER 31, 1996



                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
(In thousands, except share data)                              June 30,                   December 31,
                                                                 1997                         1996
                                                             -----------                  -----------
<S>                                                           <C>                          <C>     
CURRENT LIABILITIES:
  Accounts payable and accrued expenses                       $   9,146                    $  7,469
  Accrued ad valorem taxes                                        2,753                       2,040
  Income taxes payable                                               42                       1,000
  Current portion of long-term debt                                 147                         206
                                                              ----------                   ---------

                                                                 12,088                      10,715
                                                              ----------                   ---------

LONG-TERM DEBT, net of current portion                           14,131                        218

AD VALOREM TAXES AND OTHER                                          391                        513

DEFERRED INCOME TAXES                                             4,458                      4,760

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
        Preferred stock, par value $.01 per
          share; 10,000,000 shares authorized,
          no shares issued and outstanding                           -                          -
        Common stock, par value $.01 per
          share, 50,000,000 shares authorized,
          10,757,000 shares issued                                  108                         108
        Additional paid-in capital                               59,346                      59,219
        Retained earnings                                         8,995                       9,556
        Common stock held in treasury, at cost,
          56,000 shares                                            (136)                       (132)
                                                              ----------                   ---------

                                                                 68,313                      68,751
                                                              ----------                   ---------

                                                              $  99,381                    $ 84,957
                                                              ==========                   =========
</TABLE>



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


                                        4

<PAGE>



                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                For the Three Months Ended              For the Six Months Ended
                                                          June 30,                               June 30,
(In thousands, except per share data)              1997             1996                 1997              1996
                                                   ----             ----                 ----              ----

<S>                                              <C>              <C>                  <C>                 <C>     
REVENUE:

Oil sales                                        $ 1,828          $ 3,164              $ 3,983             $ 7,039

Gas sales                                            689            1,932                1,771               5,543

Gain on sale of assets                                 -           22,472                    -              22,472

Interest and other                                    49              112                  224                 202
                                                 --------         --------             --------            --------

                                                   2,566           27,680                5,978              35,256
                                                 --------         --------             --------            --------
COSTS AND EXPENSES:

Lease operating expenses                             977            1,328                2,036               3,004

Production taxes                                     271              473                  635               1,199

Depreciation, depletion and amortization           1,236            2,116                2,396               5,470

General and administrative, net                      817            1,023                1,603               2,212

Interest expense                                     142              671                  171               2,218
                                                 --------         --------             --------            --------

                                                   3,443            5,611                6,841              14,103
                                                 --------         --------             --------            --------


INCOME (LOSS) BEFORE INCOME TAXES                   (877)          22,069                 (863)             21,153

Income tax benefit (provision)                       307           (5,694)                 302              (5,694)
                                                 --------         --------             --------            --------

NET INCOME (LOSS)                                $  (570)         $16,375               $ (561)            $15,459
                                                 ========         ========             ========            ========

EARNINGS (LOSS) PER SHARE                        $ (0.05)         $  1.53               $(0.05)            $  1.44
                                                 ========         ========             ========            ========

WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING                             $10,701          $10,711              $10,701             $10,699
                                                 ========         ========             ========            ========


</TABLE>




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


                                        5

<PAGE>






                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
            FOR THE PERIOD FROM JANUARY 1, 1996 THROUGH JUNE 30, 1997



<TABLE>
<CAPTION>

                                                                  ADDITIONAL                              RETAINED       TOTAL
                                            COMMON STOCK           PAID -IN         TREASURY STOCK        EARNINGS    STOCKHOLDERS'
(In Thousands)                          SHARES        AMOUNT        CAPITAL       SHARES      AMOUNT      (DEFICIT)      EQUITY
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>          <C>            <C>         <C>         <C>            <C>    
BALANCES, January 1, 1996               10,724         $107         $59,288        (32)        $(94)       $(6,014)       $53,287

 Issuance and vesting of restricted
   stock and stock options                  33            1             181          -            -              -            182

 Purchase of treasury stock and options      -            -            (250)       (24)         (38)             -           (288)

 Net income                                  -            -               -          -            -         15,570         15,570
                                      ---------------------------------------------------------------------------------------------
BALANCES, December 31, 1996             10,757          108          59,219        (56)        (132)         9,556         68,751

 Issuance and vesting of restricted
   stock                                     -            -             127          -            -              -            127

 Purchase of treasury stock                  -            -               -          -            4              -             (4)

 Net income (loss)                           -            -               -          -            -           (561)          (561)
                                      ---------------------------------------------------------------------------------------------

BALANCES, June  30, 1997               $10,757         $108         $59,346        (56)       $(136)        $8,995        $68,313
                                      =============================================================================================


</TABLE>



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


                                        6

<PAGE>



                     BASIN EXPLORATION, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

(In thousands)                                                            For the Six Months Ended
                                                                                  June 30,
                                                                            1997           1996
                                                                            ----           ----
<S>                                                                    <C>              <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
        Net income (loss)                                              $   (561)        $ 15,459
        Adjustments to reconcile net income (loss) to net cash
                 provided by operating activities -
          Gain on sale of assets                                              -          (22,472)
          Depreciation, depletion and amortization                        2,396            5,470
          Deferred income tax provision (benefit)                          (302)           3,694
          Stock compensation expense                                        127               65
          Other, net                                                         (4)             115
          Changes in operating assets and liabilities -
            Decrease (increase) in -
              Restricted cash                                                 -              (36)
              Receivables                                                (2,142)           2,893
              Inventory and other                                        (1,136)            (593)
            (Decrease) increase in -
              Accounts payable and accrued expenses                         746           (2,708)
              Ad valorem taxes and other                                    591           (2,150)
              Income taxes payable                                         (958)           2,000
                                                                       ---------        ---------

          Net cash provided by (used in) operating activities            (1,243)           1,737
                                                                       ---------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
        Capital additions                                               (34,200)         (10,107)
        Proceeds from sale of property and equipment                        195          120,977
                                                                       ---------        ---------

          Net cash provided by (used in) investing activities           (34,005)         110,870
                                                                       ---------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
        Proceeds from notes payable and long-term debt                   14,500            8,089
        Principal payments on notes payable and long-term debt             (646)         (84,736)
        Purchase of treasury stock and options                               (4)             (34)
        Issuance of common stock                                              -               84
                                                                       ---------        ---------

          Net cash provided by (used in) financing activities            13,850          (76,597)
                                                                       ---------        ---------

INCREASE (DECREASE) IN CASH AND EQUIVALENTS                             (21,398)          36,010
CASH AND EQUIVALENTS, beginning of period                                22,023            1,613
                                                                       ---------        ---------
CASH AND EQUIVALENTS, end of period                                    $    625         $ 37,623
                                                                       =========        =========

SUPPLEMENTAL CASH FLOW INFORMATION:
        Cash paid for interest                                         $     56         $  2,273
                                                                       =========        =========
        Cash paid for income taxes                                     $    958         $      -
                                                                       =========        =========


</TABLE>



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


                                        7

<PAGE>



                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position of Basin Exploration, Inc.
and its wholly-owned subsidiaries (collectively, "Basin" or the "Company") as of
June 30, 1997 and the results of operations and cash flows for the periods
presented. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission's rules and regulations. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year. Management believes the disclosures made are adequate to
ensure that the information is not misleading, and suggests that these financial
statements be read in conjunction with the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.




                                        8

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


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

Basin Exploration, Inc. ("Basin" or the "Company") is an independent energy
company engaged in the acquisition, exploration and development of oil and gas
properties and marketing of the related oil and gas production in the United
States, including the Gulf of Mexico. Basin's revenue and results of operations
are significantly affected by changes in oil and gas prices. Assuming level
production, the Company's total revenue would generally be higher in the first
and fourth quarters due to higher natural gas prices typically resulting from
greater demand during colder months. The following discussion should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto.

RESULTS OF OPERATIONS

REVENUE. Excluding a $22,472,000 gain on sale of assets recognized during 1996,
revenue for the three and six months ended June 30, 1997, was $2,566,000 and
$5,978,000, representing decreases of $2,642,000, or 51%, and $6,806,000, or
53%, respectively, as compared to the same periods in 1996. The following table
reflects the Company's average oil and gas prices and its average daily oil and
gas production for the periods presented:
<TABLE>
<CAPTION>

                                     Three Months Ended                          Six Months Ended
                                           June 30,                                  June 30,
                                 ----------------------------             ----------------------------
                                 1997       1996     % Change             1997       1996     % Change
                                 ----       ----     --------             ----       ----     --------
<S>                              <C>        <C>         <C>               <C>        <C>         <C>
Average price:
     Oil (per Bbl)               $17.73     $20.84      (15)              $19.09     $19.14       -
     Gas (per Mcf)               $ 1.73     $ 1.32       31               $ 2.21     $ 1.41      57
Average daily production:
     Oil (Bbl)                    1,133      1,668      (32)               1,153      2,021     (43)
     Gas (Mcf)                    4,384     16,103      (73)               4,428     21,558     (79)
</TABLE>

The decreases in average daily production were primarily attributable to sales
of producing properties during 1996. The Company consummated two transactions
during 1996 in which all of its assets in the D-J Basin were sold. As of
December 31, 1995, these assets represented approximately two-thirds of the
Company's producing wells and 70% of its proved oil and gas reserves. In
conjunction with the second transaction, which closed in June 1996, a
$22,472,000 gain was recognized. Excluding the production and sales from such
D-J Basin properties, average oil and gas prices and average daily oil and gas
production for the periods presented were:



                                        9

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


<TABLE>
<CAPTION>

                                      Three Months Ended                        Six Months Ended
                                            June 30,                                 June 30,
                                  ---------------------------               -------------------------
                                  1997      1996     % CHANGE               1997      1996   % CHANGE
                                  ----      ----     --------               ----      ----   --------
<S>                               <C>       <C>        <C>                  <C>       <C>        <C>
Average price:
     Oil (per Bbl)                $17.73    $21.07     (16)                 $19.09    $20.01     (5)
     Gas (per Mcf)                $ 1.73    $ 1.06      63                  $ 2.21    $ 1.17     89

Average daily production:
     Oil (Bbl)                     1,133     1,181      (4)                  1,153     1,182     (2)
     Gas (Mcf)                     4,384     5,029     (13)                  4,428     5,003    (11)
</TABLE>


LEASE OPERATING EXPENSES. Lease operating expenses for the three and six months
ended June 30, 1997, were $977,000 and $2,036,000, decreases of $351,000, or
26%, and $968,000, or 32%, respectively, compared to the same periods in 1996.
Production costs per Mcfe produced during the three and six months ended June
30, 1997, were $0.96 and $0.99, compared to $0.56 and $0.49, respectively, in
1996. The higher costs per Mcfe were caused primarily by the increased portion
of the Company's total active wells that are oil wells, with typically higher
unit operating costs, following the sale of the D-J Basin assets.

PRODUCTION TAXES. Production taxes for the three and six months ended June 30,
1997, were $271,000 and $635,000, decreases of $202,000, or 43%, and $564,000,
or 47%, respectively, compared to the same periods in 1996. Production taxes as
a percent of oil and gas sales for the three and six months ended June 30, 1997
were 10.8% and 11.0%, compared to 9.3% and 9.5%, respectively, in 1996. The
increased average tax rates were due to a greater portion of sales occurring in
higher-tax jurisdictions in 1997.

DEPRECIATION, DEPLETION AND AMORTIZATION. Depreciation, depletion and
amortization expense for the three and six months ended June 30, 1997, was
$1,236,000 and $2,396,000, decreases of $880,000, or 42%, and $3,074,000, or
56%, respectively, compared to the same periods in 1996. The decreases are
attributable to lower production volumes in 1997 as compared to the same periods
in 1996. The depletion rate of $0.95 per Mcfe produced in the six months ended
June 30, 1997 compared to an $0.81 per Mcfe average depletion rate during the
same 1996 period. The higher rate in 1997 was largely due to higher-cost Gulf of
Mexico proved reserves acquired in the first quarter of 1997 which, although not
yet producing, were incorporated into the computation of the depletion rate for
the period.

GENERAL AND ADMINISTRATIVE, NET. General and administrative expenses for the
three and six months ended June 30, 1997 were $817,000 and $1,603,000,
reflecting decreases of $206,000, or 20%, and $609,000, or 28%, respectively,
compared to the same periods in 1996. The decreases resulted primarily from
staff reductions made during the first half of 1996 and related reductions in
office rent expense attributable to the Company's relocation to smaller space in
the second half of 1996.

INTEREST EXPENSE. Interest expense for the three and six months ended June 30,
1997 was $142,000 and $171,000, decreases of $529,000, or 79%, and $2,047,000,
or 92%, respectively, compared to the same


                                        10

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


periods in 1996. The decreases were principally attributable to lower average
borrowings as a result of asset sales consummated during 1996, as summarized
below:
<TABLE>
<CAPTION>

                                        Three Months Ended            Six Months Ended
                                              June 30,                    June 30,
                                        -------------------          ------------------
                                         1997         1996            1997        1996
                                         ----         ----            ----        ----
<S>                                      <C>          <C>             <C>         <C> 
Average borrowings (in millions)         $  7         $ 33            $  4        $ 52

Average interest rate on borrowings      6.8%         8.1%            6.8%        8.5%

</TABLE>

INCOME TAX BENEFIT (PROVISION). The income tax benefit for 1997 approximates the
amount that would be calculated by applying statutory income tax rates to the
loss before income taxes. The differences between the income tax provisions for
the three and six months ended June 30, 1996, and the amounts which would be
calculated by applying statutory income tax rates to income before income taxes
are due primarily to reversal of a previously established $2,196,000 deferred 
tax asset valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES

In February 1996, the Company entered into two agreements pursuant to which it
sold all of its assets in the D-J Basin, effective January 1, 1996, for an
aggregate adjusted sales price of $123.5 million. The sale of approximately
one-third of these D-J Basin assets was closed in March 1996 and the sale of the
remainder was closed in June 1996. Combined, these transactions resulted in the
disposition of two-thirds of the Company's total wells and approximately 70% of
its estimated proved oil and gas reserves as of December 31, 1995. A portion of
the sales proceeds was used to repay all outstanding long-term debt and the
remainder, net of transaction costs, was initially invested in short-term,
interest-bearing cash equivalents pending redeployment into new oil and gas
investments. The Company's remaining producing properties after the sale were
primarily mature oil and gas fields in the Powder River Basin, Green River
Basin, and elsewhere in the Rocky Mountain region. Since the beginning of 1996,
the Company has been focusing its exploratory activities in the shallow waters
of the Gulf of Mexico, and its acquisition and exploitation efforts in the Gulf
Coast and Rocky Mountain areas. At the beginning of 1997, the Company had net
working capital of approximately $19.2 million, including $22.0 million of cash
equivalents, and had virtually no long-term debt. After investing approximately
$34.1 million in oil and gas activities during the first six months of 1997, the
Company ended the period with a long-term debt of approximately $14.1 million.

The Company has a line of credit established with its bank group that provides
for the interest rate on borrowings to be determined by reference to either the
prime rate or LIBOR, at the Company's election. A varying spread of 0% to 0.5%
is added to the prime rate, or 0.625% to 1.25% is applied to LIBOR, based upon
the Company's debt-to-capitalization ratio at the time. The credit agreement
provides for borrowings to be revolving loans until August 1, 1999, at which
time the outstanding balance will be converted into a four-year amortizing term
loan. The credit agreement contains various covenants, including ones that could
limit the Company's ability to incur other debt, dispose of assets, pay
dividends, or repurchase stock. The borrowing base under the revolving credit
facility was increased from $25.0 million to $32.5 million in June 1997 and is


                                       11

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


scheduled to be redetermined as of November 1, 1997 and generally at six month
intervals thereafter until converted into a term loan. Because this recent
increase was based, in part, on Gulf of Mexico proved reserves that have not yet
commenced production, the interest rate that will be applied prior to the next
borrowing base redetermination will be 0.5% greater than would otherwise be
applicable whenever borrowings under the line of credit exceed $25 million. As
of June 30, 1997 there were $14.0 million of borrowings outstanding under the
facility.

The Company's capital expenditures are generally discretionary and activity
levels are determined by a number of factors, including oil and gas prices,
interest rates, availability of funds, quantity and character of identified
investment projects, availability of service providers, and competition. The
Company's capital budget for calendar 1997 is presently established at
approximately $55 million, allocated as follows: approximately $15 million is
provided for proved property acquisitions consummated in the first quarter;
approximately $20 million is provided for acquisitions of prospect leaseholds,
seismic data procurement, and exploratory drilling costs; approximately $15
million relates to anticipated development of the Company's existing property
base; and approximately $5 million is provided for other activities, including
current year development of assumed exploratory discoveries. Approximately $34.1
million was invested during the first six months of 1997. The remaining budget
for the year of approximately $20.9 million is partially uncommitted and is
dependent on future developments that are not entirely within the Company's
control, such as drilling rig availability, drilling results, and activities
conducted by other operators. Further, the Company intends to continue to pursue
acquisitions of proved properties, which, while not budgeted, could be very
significant. Therefore, the Company's actual capital expenditures may vary
significantly from these budgeted amounts. The Company had no extraordinary
capital expenditure commitments pending at June 30, 1997.

The Company has been awarded all 11 tracts for which it participated in winning
bids at the central Gulf of Mexico lease sale held on March 5, 1997 by the
federal government's Minerals Management Service (MMS). The Company's net share
of the related leasehold bonuses totaled approximately $5.7 million.

Approximately $31.0 million of investments made during the first six months of
1997 related to operations in the Gulf of Mexico. Such amounts were incurred
primarily for a $14.4 million acquisition of properties with proved and probable
reserves, the continuation drilling and completion of an exploratory well
commenced in 1996, the drilling and completion of a successful field delineation
well, leasehold bonuses, fabrication of an offshore platform, and acquisitions
of 3-D seismic data.

The successful field discovery and delineation wells drilled in the first half
of 1997 were located on Eugene Island (EI) Block 65. A production platform is
scheduled to be installed on the EI 65 property in the third quarter of 1997 to
commence production from two completed productive intervals in each of the two
wells. Through the $14.4 million acquisition consummated in the first quarter of
1997, the Company increased its interest in EI 65 and acquired interests in East
Cameron (EC) Block 378. A well on EC 378 was completed subsea in January 1997
and is waiting on pipeline installation to connect to a nearby third-party
production platform. Production from EC 378 is expected to commence during the
fourth quarter of 1997.

Management believes that the remainder of the current-year budget, as described
above, can be funded without new sources of capital by utilizing projected cash
flow and borrowings under the Company's revolving credit facility. The Company's
ability to fund investment activities in future periods may be significantly
affected by


                                       12

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


the results obtained from investments made in 1997. Cash flow is projected to
increase significantly during the latter part of the year when EI 65 and EC 378
are expected to be on-line. Forecasted combined initial production rates for the
three wells on these two properties would result in more than a 200% increase in
the Company's oil and gas production, in net equivalent units. However, these
properties have not produced before and the projected on-line dates and
production rates may not be achieved. Failure of these properties to perform as
expected could impair the Company's borrowing capacity as well as its cash flow.
If conditions warrant, the Company may consider raising additional capital
through issuance of debt or equity securities. Should the Company undertake a
large acquisition, issuing such securities or monetizing assets would likely be
required to fund the transaction.

Changes In Prices

The Company's revenue, cash flow, and the value of its oil and gas properties
have been, and will continue to be, affected by changes in oil and natural gas
prices. The Company's ability to maintain current borrowing capacity and to
obtain additional capital on attractive terms is also substantially dependent on
oil and natural gas prices. As such, changes in oil and gas prices can
significantly affect the amount of the Company's capital expenditures. Oil and
natural gas prices are subject to significant seasonal and other fluctuations
that are beyond the Company's ability to control or predict. The Company
periodically enters into derivatives transactions in order to hedge against the
volatility of product prices. Although the Company enters into such agreements
to limit exposure to price decreases, the agreements may also limit the
Company's ability to benefit from significant price increases on the contract
volumes. Effective July 1, 1996, the Company entered into a crude oil swap
agreement with a contract volume of 10,000 barrels per month through December
31, 1997. This agreement provides for cash settlement of the differential
between the $18.32 per barrel contract price and the average closing NYMEX crude
oil price during each month. The Company has also entered into a crude oil
collar arrangement effective for calendar 1997 on 10,000 barrels per month. This
agreement provides for the cash settlement of the differential between the
monthly average closing NYMEX price and the contract floor of $19.50 per barrel
or the contract ceiling of $24.35 per barrel, if the average monthly NYMEX price
falls outside of the range defined by such contract floor and contract ceiling.
The Company has also entered into a natural gas collar arrangement for the
seven-month period commencing October 1, 1997, for a contract volume of 450,000
MMBTU per month. Under this arrangement, the applicable NYMEX floor and ceiling
prices on which settlements will be based vary by month, and average $2.094 and
$2.536, respectively, over the contract term. In conjunction with entering into
this collar, the Company acquired call options on an equivalent volume of
natural gas for the contract period at varying strike prices $.29 above the
respective contract ceilings provided for under the collar. Any gain or loss
realized on these agreements is included as a component of sales in the month of
production.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

Statements that are not historical facts contained in this report are
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ from projected results. Such statements address
activities, events or developments that the Company expects, believes, projects,
intends or anticipates will or may occur, including such matters as future
capital, development and exploration expenditures (including the amount and
nature thereof), drilling of wells, future production of oil and gas, business
strategies, cash flow and anticipated liquidity, prospect development and
property acquisition, or marketing of oil and gas. Factors that could cause
actual results to differ materially ("Cautionary Disclosures") are described,
among other


                                       13

<PAGE>
                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


places, in the Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Without limiting the Cautionary Disclosures
so described, Cautionary Disclosures include, among others: general economic
conditions, the market price of oil and natural gas, the risks associated with
exploration, the Company's ability to find, acquire, market, develop and produce
new properties, operating hazards attendant to the oil and natural gas business,
downhole drilling and completion risks that are generally not recoverable from
third parties or insurance, the Company's inexperience in the Gulf of Mexico,
uncertainties in the estimation of proved reserves and in the projection of
future rates of production and timing of development expenditures, potential
mechanical failure of individually significant productive wells, the strength
and financial resources of the Company's competitors, the Company's ability to
find and retain skilled personnel, climatic conditions, labor relations,
availability and cost of material and equipment, delays in anticipated start-up
dates, environmental risks, the results of financing efforts, actions or
inactions of third-party operators of the Company's properties, and regulatory
developments. All written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Disclosures. The Company disclaims any obligation to
update or revise any forward-looking statement to reflect events or
circumstances occurring hereafter or to reflect the occurrence of anticipated or
unanticipated events.



                                       14

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES


                            PART II OTHER INFORMATION

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

Proxies for the Company's annual meeting of shareholders held on April 28, 1997,
were solicited pursuant to Regulation 14A during the quarter ended June 30,
1997. There was no solicitation in opposition to the nominees listed in the
proxy statement and all such nominees were elected. The following is a summary
of the matters voted upon at such meeting and the number of votes cast for,
against and abstentions:

                                                    NUMBER OF VOTES CAST
                                          FOR            AGAINST         ABSTAIN
         Election of Directors
          J. Paul Hellstrom             6,593,946             -           4,575
          Howard L. Boigon              6,593,946             -           4,575

         Ratify selection of Arthur
          Andersen LLP as auditors      6,590,973          4,200          3,348

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

  (a) Exhibits

 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBITS

  2.1 -- Agreement and Plan of Merger between Sterling Energy Corporation, Basin
         Energy, Inc. and Basin Exploration, Inc. dated October 13, 1994/7/
  2.2 -- Plan of Merger between Basin Sterling, Inc. and Basin Exploration, Inc.
         dated November 22, 1994/8/
  2.3 -- Plan of Merger between Basin Operating Company and Basin Exploration,
         Inc. dated December 14, 1994/8/
  3.1 -- Restated Certificate of Incorporation of Basin./2/
  3.2 -- Restated Bylaws of Basin./2/
  4.1 -- Common Stock Certificate of Basin./2/
 10.1 -- Equity Incentive Plan as amended April 28, 1997./13/
 10.3 -- Key Employee Participation Plan./2/
 10.4 -- Employment Agreement dated March 31, 1992 by and between Basin and
         Michael S. Smith./3/
 10.5 -- Gulf Coast Geoscientist Overriding Royalty Interest Plan dated November
         30, 1995./10/
 10.6 -- Form of Rights Agreement dated as of February 24, 1996, between Basin
         Exploration, Inc. and Corporate Stock Transfer, Inc. as Rights 
         Agent./9/
 10.7 -- Performance Shares Plan approved February 4, 1997./12/
 10.8 -- Change of Control Employment Agreement dated October 13, 1995 between
         Basin Exploration, Inc. and Howard L. Boigon./10/
 10.9 -- Employment Agreement dated August 28, 1995 between Basin Exploration,
         Inc. and Samuel D. Winegrad./10/
10.10 -- Employment Agreement dated June 28, 1995 between Basin Exploration,
         Inc. and Neil L. Stenbuck./10/
10.11 -- Employment Agreement dated November 10, 1995 between Basin Exploration,
         Inc. and David A. Pustka./10/
10.12 -- Employment Agreement dated February 23, 1996 between Basin Exploration,
         Inc. and Thomas J. Corley./12/
10.13 -- Assignment and Assumption of Lease dated December 18, 1995 by and
         between Team, Inc., as original Tenant, Basin Exploration, Inc., as New
         Tenant, and FC Tower Property Partners, L.P., as Landlord./9/



                                       15

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES


10.14 -- First Supplement to Amended Mortgage, Security Agreement,
         Assignment, Financing Statement and Fixture Filing dated May 8, 1995 by
         and between Basin Exploration, Inc. and Basin Gas Ltd. to NationsBank
         of Texas, N.A., as successor collateral agent for the benefit of
         Colorado National Bank, Union Bank and NationsBank of Texas, N.A./8/

10.15 -- Second Supplement to Amended Mortgage, Security Agreement,
         Assignment, Financing Statement and Fixture Filing dated May 8, 1995 by
         and between Basin Exploration, Inc., and Basin Gas Ltd. to NationsBank
         of Texas, N.A. in its capacity as the successor collateral agent for
         the benefit of Colorado National Bank, Union Bank and NationsBank of
         Texas, N.A./10/

10.16 -- Agreement for Purchase and Sale of Assets (Monetization) dated
         February 24, 1996 by and between Basin Exploration, Inc., HS Resources,
         Inc. and Orion Acquisition, Inc./7/

10.17 -- Agreement for Purchase and Sale of Assets (Wattenberg), dated
         February 24, 1996 by and between Basin Exploration, Inc., HS Resources,
         Inc. and Orion Acquisition, Inc./7/

10.18 -- Lease of Office Space dated September 25, 1992, between Brookfield
         Republic Inc. and Basin Operating Company, as amended/4/+/

10.19 -- First Lease of Additional Office Space dated as of December 1, 1994,
         between Brookfield Republic, Inc. and Basin Operating Company./6/+/

10.20 -- Amended and Restated Credit Agreement dated August 6, 1996 between
         the Company and Colorado National Bank, Union Bank of California, N.A.
         and NationsBank of Texas, N.A./11/

10.21 -- Purchase and Sale Agreement dated February 13, 1997, between
         Hall-Houston Oil Company et al as Sellers and Basin Exploration, Inc.
         as Buyer./12/+/

10.22 -- First Amendment of Amended and Restated Credit Agreement dated
         August 6, 1996 between the Company and Colorado National Bank, Union
         Bank of California, N.A. and NationsBank of Texas, N.A. dated June 11,
         1997/1/

   21 -- Subsidiaries./12/

   27 -- Financial Data Schedule/1/

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


1    Filed herewith.

2    Filed as an Exhibit to Basin's Registration Statement on Form S-1 as filed
     on March 17, 1992, Registration No. 33-46486, and incorporated herein by
     reference.

3    Filed as an Exhibit to Amendment No. 1 to Basin's Registration Statement on
     Form S-1 as filed on April 21, 1992, Registration No. 33-46486, and
     incorporated herein by reference.

4    Filed as an Exhibit to Basin's Registration Statement on Form S-1 as filed
     on October 25, 1993, Registration No. 33-70802, and incorporated herein by
     reference.

5    Filed as an Exhibit to Form 8-K filed on December 10, 1994, and
     incorporated herein by reference.

6    Filed as an Exhibit to Form 10-K/A-1 filed on June 26, 1995 and
     incorporated herein by reference.

7    Filed as an Exhibit to Form 8-K filed on March 6, 1996, and incorporated
     herein by reference.

8    Filed as an Exhibit to Form 10-K filed on March 28, 1995, and incorporated
     herein by reference.

9    Filed as an Exhibit to Form 8-K filed on February 26, 1996, and
     incorporated herein by reference.

10   Filed as an Exhibit to Form 10-K filed on March 28, 1996, and incorporated
     herein by reference.

11   Filed as an Exhibit to Form 10-Q filed on August 14, 1996, and incorporated
     herein by reference.

12   Filed as an Exhibit to Form 10-K filed on March 31, 1997, and incorporated
     herein by reference.



                                       16

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES


13   Filed as an Exhibit to Form 10-Q filed on May 15, and incorporated herein
     by reference.

+    Confidential treatment has been granted for portions of these Exhibits.





(b) Reports on Form 8-K

None



                                       17

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES


                                   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.


                                         BASIN EXPLORATION, INC.
                                               (Registrant)


      Date: August 12, 1997              By:/S/ NEIL L. STENBUCK
                                            ------------------------------------
                                                Neil L. Stenbuck
                                                Chief Financial Officer



      Date: August 12, 1997              By:/S/ JAMES A. TUELL
                                            ------------------------------------
                                                James A. Tuell
                                                Controller
                                                (Principal Accounting Officer)



                                       18

<PAGE>


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES

                                Index to Exhibits


EXHIBIT NUMBERS                          EXHIBITS                       

10.22    First Amendment of Amended and Restated Credit
         Agreement dated August 6, 1996 between the Company and
         Colorado National Bank, Union Bank of California, N.A.
         and NationsBank of Texas, N.A. dated June 11, 1997             

27       Financial data schedule                                        



                                       19