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

                                    FORM 10-Q

                  (Mark One)

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

                  For the quarterly period ended March 31, 1999

                                       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.

<TABLE>
<CAPTION>
                                              Outstanding at
                      Class                   April 30, 1999   
          ----------------------------        -----------------
<S>                                           <C>
          Common stock, $.01 par value        14,045,000 shares
</TABLE>


<PAGE>

                             BASIN EXPLORATION, INC.

                                     INDEX

<TABLE>
<CAPTION>
PART I.    FINANCIAL INFORMATION                                                    Page
                                                                                    ----
<S>                                                                                 <C>
     Item 1.  Consolidated Financial Statements

              Consolidated Balance Sheets as of
              December 31, 1998 and March 31, 1999..................................   3

              Consolidated Statements of Operations for the
              three months ended March 31, 1998 and 1999............................   5

              Consolidated Statements of Changes in
              Stockholders' Equity..................................................   6

              Consolidated Statements of Cash Flows for the
              three months ended March 31, 1998 and 1999............................   7

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

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

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk............  22

PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K......................................  23

SIGNATURES..........................................................................  25

</TABLE>

                                       2
<PAGE>
                           PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      DECEMBER 31, 1998 AND MARCH 31, 1999

<TABLE>
<CAPTION>
                                                       ASSETS
(In thousands)
                                                     December 31,        March 31,
                                                        1998               1999
                                                     ------------        ---------
<S>                                                  <C>                 <C>
CURRENT ASSETS
     Cash and equivalents                            $     331           $      20
     Accounts receivable                                10,036               9,227
     Prepaids and other                                  2,752               3,791
                                                     ---------           ---------
                                                        13,119              13,038
                                                     ---------           ---------

PROPERTY AND EQUIPMENT, at cost:
     Oil and gas properties, under the full
       cost method of accounting
         Proved                                        265,826             287,299
         Unproved                                       34,039              33,902
     Less accumulated depreciation,
       depletion and amortization                     (113,462)           (121,819)
                                                     ---------           ---------
                                                       186,403             199,382
     Furniture and equipment, net                        1,408               1,306
                                                     ---------           ---------
                                                       187,811             200,688
                                                     ---------           ---------
OTHER ASSETS                                               233               1,117
                                                     ---------           ---------
                                                     $ 201,163           $ 214,843
                                                     ---------           ---------
                                                     ---------           ---------

</TABLE>

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

                                       3
<PAGE>

                    BASIN EXPLORATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      DECEMBER 31, 1998 AND MARCH 31, 1999

<TABLE>
<CAPTION>
                                        LIABILITIES AND STOCKHOLDERS' EQUITY

(In thousands, except share data)                    December 31,        March 31,
                                                        1998                1999
                                                     ------------        ---------
<S>                                                  <C>                 <C>
CURRENT LIABILITIES:
     Accounts payable                                   $  12,465        $  14,409
     Accrued liabilities                                   13,620           14,930
     Current portion of long-term debt                        258              156
                                                        ---------        ---------
                                                           26,343           29,495
                                                        ---------        ---------

LONG-TERM DEBT, net of current portion                     80,000           91,000

OTHER LONG-TERM OBLIGATIONS                                   601               45

STOCKHOLDERS' EQUITY:
     Preferred stock, par value $.01 per
      share; 10,000,000 shares authorized,
      shares issued and outstanding                             -                -
       no shares issued and outstanding
     Common stock, par value $.01 per
       share, 50,000,000 shares authorized,
       14,151,000 and 14,213,000 shares
       issued, respectively                                   142              142
     Additional paid-in capital                           113,136          113,618
     Accumulated deficit                                  (16,488)         (16,886)
     Common stock held in treasury, at cost,
         186,000 shares                                    (2,571)          (2,571)
                                                        ---------        ---------
                                                           94,219           94,303
                                                        ---------        ---------
                                                        $ 201,163        $ 214,843
                                                        ---------        ---------
                                                        ---------        ---------

</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
                                                                March 31,
(In thousands, except per share data)                   1998                 1999
                                                     ------------        ------------
<S>                                                  <C>                 <C>
REVENUE:

Oil sales                                            $    2,690          $    2,246

Gas sales                                                 7,545              10,796

Interest and other                                           21                  13
                                                     ----------          ----------
                                                         10,256              13,055
                                                     ----------          ----------

COSTS AND EXPENSES:

Lease operating expenses                                  2,143               2,455

Production taxes                                            234                  76

Depreciation, depletion and amortization                  5,986               8,546

General and administrative, net                           1,112               1,427

Interest expense                                            413                 949
                                                     ----------          ----------
                                                          9,888              13,453
                                                     ----------          ----------

INCOME (LOSS) BEFORE INCOME TAXES                           368                (398)

Income tax provision                                        129                   -
                                                     ----------          ----------
NET INCOME (LOSS)                                    $      239          $     (398)
                                                     ----------          ----------
                                                     ----------          ----------
EARNINGS (LOSS) PER SHARE:                                             
   Basic                                             $     0.02          $    (0.03)
                                                     ----------          ----------
                                                     ----------          ----------
   Diluted                                           $     0.02          $    (0.03)
                                                     ----------          ----------
                                                     ----------          ----------

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
   Basic                                                 13,784              13,973
   Diluted                                               14,237              13,973

</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, 1998 THROUGH MARCH 31, 1999

<TABLE>
<CAPTION>
                                                                                                     RETAINED
                                                           ADDITIONAL                               EARNINGS              TOTAL
                                       COMMON STOCK          PAID-IN        TREASURY STOCK        (ACCUMULATED        STOCKHOLDERS
(In thousands)                       SHARES      AMOUNT      CAPITAL      SHARES      AMOUNT        DEFICIT)             EQUITY
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>          <C>       <C>            <C>        <C>         <C>                <C>
BALANCES, January 1, 1998            13,833    $   138    $  110,627        (120)   $(1,412)    $     12,012           $121,365

Issuance of common stock                130          2           627           -          -                -                629

Exercise of warrants for                 79          1         1,107         (62)    (1,108)               -                  -
common stock

Purchase of treasury stock                -          -             -          (4)       (51)               -                (51)

Issuance and vesting of 
restricted stock                        109          1           775           -          -                -                776

Net income (loss)                         -          -             -           -          -          (28,500)           (28,500)
                                   ------------------------------------------------------------------------------------------------

BALANCES, December 31,  1998         14,151        142       113,136        (186)    (2,571)         (16,488)            94,219

Issuance of common stock                 12          -            62           -          -                -                 62

Issuance and vesting of
 restricted stock                        50          -           420           -          -                -                420

Net income (loss)                         -          -             -           -          -             (398)              (398)
                                   ------------------------------------------------------------------------------------------------

BALANCES, March 31, 1999             14,213    $   142    $  113,618        (186)   $(2,571)    $    (16,886)           $94,303
                                   ------------------------------------------------------------------------------------------------
                                   ------------------------------------------------------------------------------------------------
</TABLE>






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

                                       6
<PAGE>

                     BASIN EXPLORATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                             For the Three Months Ended
                                                                                                     March 31,
(In thousands)                                                                             1998                       1999
                                                                                       ------------               ------------
<S>                                                                                    <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income (loss)                                                               $        239               $       (398)
       Adjustments to reconcile net income (loss) to
       net cash provided by operating activities -
         Depreciation, depletion and amortization                                             5,986                      8,546
         Deferred income tax expense                                                            129                          -
         Stock compensation expense                                                             202                        254
         Other                                                                                    -                         16
                                                                                       ------------               ------------
                                                                                              6,556                      8,418
         Changes in operating assets and liabilities -
           Decrease (increase) in
              Receivables                                                                    (6,104)                       809
              Prepaids and other                                                                174                       (939)
           (Decrease) increase in -
              Accounts payable and accrued expenses                                             657                      2,982
              Ad valorem taxes and other                                                       (273)                         4
                                                                                       ------------               ------------
         Net cash provided by operating activities                                            1,010                     11,274
                                                                                       ------------               ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Capital additions                                                                    (23,281)                   (23,977)
       Deposits on offshore leases                                                           (3,989)                      (566)
       Proceeds from sale of property and equipment                                              20                      2,438
                                                                                       ------------               ------------
         Net cash used in investing activities                                              (27,250)                   (22,105)
                                                                                       ------------               ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from notes payable and long-term debt                                        31,500                     23,500
       Principle payments on notes payable and long-term debt                                (5,538)                   (12,602)
       Proceeds from sale of stock                                                                -                         62
       Debt issuance costs and other                                                             (5)                      (440)
                                                                                       ------------               ------------
         Net cash provided by (used in) financing activities                                 25,957                     10,520
                                                                                       ------------               ------------

DECREASE IN CASH AND EQUIVALENTS                                                               (283)                      (311)
CASH AND EQUIVALENTS, beginning of period                                                       531                        331
                                                                                       ------------               ------------
CASH AND EQUIVALENTS, end of period                                                   $         248              $          20
                                                                                       ------------               ------------
                                                                                       ------------               ------------

SUPPLEMENTAL CASH FLOW INFORMATION:
       Cash paid for interest                                                         $         283              $       1,369
                                                                                       ------------               ------------
                                                                                       ------------               ------------
       Cash paid for income taxes                                                     $           -              $           -
                                                                                       ------------               ------------
                                                                                       ------------               ------------
</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 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 March 31, 1999, and the results of operations and cash 
flows for the three-month 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, 1998.

(2) ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 133, Accounting for Derivative Instruments 
and Hedging Activities. The Statement establishes accounting and reporting 
standards requiring that every derivative instrument including certain 
derivative instruments embedded in other contracts be recorded on the balance 
sheet as either an asset or liability measured at its fair value and that 
changes in the derivative's fair value be recognized currently in earnings 
unless specific hedge accounting criteria are met. The Company is required to 
adopt the Statement as of January 1, 2000, but may implement the Statement as 
of the beginning of any fiscal quarter prior to that date. Statement 133 
cannot be applied retroactively. The Company has not yet quantified the 
impacts of adopting Statement 133 or determined the timing or method of 
adoption. However, Statement 133 could increase the volatility of the 
Company's earnings and other comprehensive income.

(3) ACCOUNTING FOR OIL AND GAS PROPERTIES

The Company follows the full cost method of accounting for oil and gas 
properties. Under this method, all costs associated with the acquisition, 
exploration and development of oil and gas properties are capitalized. If 
capitalized costs, net of amortization and related deferred taxes, exceed the 
full cost ceiling, the excess would be expensed in the period such excess 
occurs. Calculation of the full cost ceiling includes an estimate of the 
discounted value of future net revenue attributable to proved reserves using 
various assumptions and parameters consistent with promulgations of the 
Securities and Exchange Commission, and such calculation is sensitive to 
changes in prevailing oil and gas sales prices. Oil and natural gas prices 
are volatile and reflect seasonal factors, as well as other supply and demand 
conditions. A decline in prices subsequent to April 1, 1999 could result in a 
requirement that the Company recognize an impairment expense in a future 
period.

                                       8

<PAGE>

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

The following discussion is intended to assist in an understanding of the 
Company's results of operations and its present financial condition. The 
Company's consolidated financial statements and notes thereto contain 
additional detailed information that should be referred to in conjunction 
with a review of this material.

Certain statements in this discussion may be forward looking.  Such forward 
looking statements involve risks and uncertainties, including those discussed 
below, that could cause actual results to differ significantly from those 
expressed.  See "Forward Looking Statements."

HISTORY AND OVERVIEW

Basin is a domestic independent oil and gas company that conducts 
exploration, acquisition, exploitation and production activities in the 
shallow waters of the Gulf of Mexico and selected areas onshore.

The Company commenced operations in 1981 and completed an initial public 
offering of its common stock in 1992. From its inception through 1991, Basin 
primarily acquired, developed and exploited properties in the 
Denver-Julesburg ("D-J") Basin in eastern Colorado. The Company subsequently 
expanded into other areas within the Rocky Mountain region and initiated 
exploration activities.

During 1995, the Company's capital expenditures on oil and gas properties 
declined to $16 million, from $67 million the year before, due primarily to 
fewer quality investment opportunities identified in the Company's core 
operating areas and limited borrowing capacity under the Company's revolving 
line of credit with its bank group (the "Credit Facility"). Each of these 
factors was exacerbated by depressed regional gas prices.

In response to these developments and management's assessment of alternative 
investment opportunities, the Company implemented a significant redirection 
of its business strategy and operations between late-1995 and mid-1996, which 
included: (i) the addition of new financial, technical and business 
development members to its senior management; (ii) the sale of its D-J Basin 
properties for $123.5 million (the "D-J Sales"); (iii) establishment of a 
Houston-based Gulf of Mexico exploration team through hiring geoscientists 
and petroleum engineers with substantial experience operating in the shallow 
waters of the Gulf of Mexico; and (iv) a substantial reduction in corporate 
general and administrative overhead. 

The D-J Sales, which occurred in two transactions closed in March and June 
1996, enabled the Company to eliminate its long-term debt and establish cash 
reserves, thus providing considerable liquidity for investments in new 
capital projects. However, the divestitures reduced the Company's estimated 
proved oil and gas reserves and production rates at the time by approximately 
70%, resulting in a significant initial decline in revenue and cash flow. 

The Company began Gulf of Mexico activities in 1996 with no initial property 
base in the region and early investments related primarily to acquisitions of 
three-dimensional seismic data and exploratory leasehold interests and 
overhead. The Company's first significant discovery in the Gulf of Mexico was 
the Eugene Island Block 65 #1 well, which was drilling at the end of 1996 and 
completed in 1997. The Company realized first production from Gulf of Mexico 
assets in August 1997 when it brought two wells 

                                      9
<PAGE>

drilled on Eugene Island Block 65 on-line, providing the first significant 
addition to the Company's producing property base following the D-J Sales. 
The Company added other proved properties in the Gulf of Mexico in 1997 and 
1998 through both exploratory drilling and acquisitions and as of December 
31, 1998 owned interests in 18 proved properties in the area, of which 14 
were producing and four were under development for first production.  First  
production was established on two of these properties early in the second 
quarter of 1999. The Company's estimated proved oil and gas reserves 
increased from 62.6 Bcfe as of December 31, 1995, pro forma the D-J Sales, to 
179.5 Bcfe at the end of 1998.  As further described below, Basin's net 
production has increased significantly since mid-1997, as Gulf of Mexico 
properties have been brought on-line.  

During 1996, 1997, 1998, and the first three months of 1999, the Company's 
capital expenditures on oil and gas activities totaled approximately $22.8 
million, $105.6 million, $106.7 million and $22.5 million, respectively.  
Over 90% of these investments related to operations in the Gulf of Mexico, 
including costs incurred for exploratory leaseholds, geological and 
geophysical data, exploratory drilling, completion and development 
activities, and acquisitions of proved properties.   These activities 
included drilling a total of 36 wells in the Gulf of Mexico through March 31, 
1999, of which 22, or 61%, have been successful.  Two of five wells that the 
Company participated in drilling in the first quarter of 1999 were successful.

The Company closed the first quarter of 1999 with a working capital deficit 
of approximately $16.5 million, long-term debt of $91.0 million, and 
stockholders' equity of $94.3 million.  Stockholders' equity at the end of 
the period reflected the impact of a $38.5 million pre-tax non-cash 
impairment charge in the fourth quarter of 1998 to reduce the carrying value 
of the Company's oil and gas properties.  This charge, which had no impact on 
the Company's cash flow or its borrowing capacity under the Credit Facility, 
was precipitated by low oil and gas prices in effect at the end of 1998.

The Company's preliminary budget for 1999 provides for capital investments of 
approximately $65 million, subject to increase for proceeds from asset sales. 
This budget provides for exploratory drilling activities comparable to the 
level of such activities in 1998, and for continued expeditious development 
of drilling successes.  Compared to 1998, the 1999 budget provides for a 
smaller investment in prospect leaseholds, and anticipates cost savings 
realizable from lower rates for drilling rigs and other oilfield goods and 
services.  This budget may be revised up or down due to a number of factors, 
including future developments that impact availability of capital.

OPERATING ENVIRONMENT

Basin's results of operations are significantly impacted by oil and gas price 
levels, which are volatile and largely beyond the Company's control. Changes 
in oil and gas prices can also impact the amount and terms of external 
capital resources available to the Company.

Gas prices generally respond to North American supply and demand conditions, 
including the effects of weather, whereas oil prices reflect global supply 
and demand conditions to a greater degree, including the impact on supply of 
decisions by petroleum exporting countries.  Despite temporary periods of 
interrupted growth, oil and gas demand has generally increased over time.  
Short-term fluctuations in demand can significantly impact prices, however.  
During most of 1998 and the first quarter of 1999, the markets for both oil 
and gas generally reflected ample supply and price weakness due to a number 
of factors, including a second consecutive unusually warm winter in North 
America.  Since mid-March 1999, oil and gas prices have increased, apparently 
in response to announced production cut-backs by 

                                      10
<PAGE>

petroleum exporting countries and expectations of reduced productive capacity 
caused by declines in drilling activity.  There are well-developed futures 
markets for oil and gas that provide indications of expected future prices 
for each product. These prices are often substantially different than current 
prices reflected on spot markets.  Presently, these futures markets reflect 
expectations of oil and gas prices sustained at levels above the levels that 
prevailed during most of 1998 and early 1999, particularly for gas, which 
accounted for 85% of the Company's total production in the first quarter of 
1999.   Expectations will change in response to future developments and 
indicated future prices may not actually materialize.  

Hedging transactions can be entered into based on prices reflected in 
commodity futures markets. The Company periodically enters into fixed price 
sales agreements or other hedging transactions to take advantage of prices 
that it believes to be attractive and to reduce risks related to potential 
price declines, including the risk of being unable to make capital 
investments at targeted levels.  The Company has executed various hedging 
transactions to mitigate its exposure to declines in oil and gas prices, as 
described herein under Liquidity and Capital Resources.  However, since its 
hedges cover only a portion of its anticipated future production, the Company 
remains vulnerable to the potential effects of a decline in prices.  Such 
hedges also can reduce the benefits realized by the Company from increases in 
oil and gas prices.

For much of the past year, the decline in oil and gas prices negatively 
impacted availability of capital resources for most energy companies, 
including Basin.  Besides unfavorably affecting cash flow, this weakness in 
oil and gas prices increased the cost of, and reduced opportunities for, 
issuance of long-term debt or equity securities.  Increases in oil and gas 
prices, as noted above, have resulted in some recent improvement in these 
conditions.

For oil and gas producers, the impairment of capital resources during much of 
the past year has been partially mitigated by certain improvements in the 
operating environment.  In the opinion of management, diminished capital 
resources for energy companies, in the aggregate,  has resulted in 
significant overall improvement in the quality and terms of investment 
opportunities available, compared to the period preceding the decline in oil 
and gas prices that occurred in 1998 and early 1999.  In addition to a more 
favorable market for acquirers of exploratory prospects or producing 
properties, there have been substantial reductions in the costs of oilfield 
goods and services. At various times in the recent past, demand for oil and 
gas drilling rigs and other oilfield products and services has strained 
available capacity, leading to high cost levels, delays in obtaining 
materials and services, and decreased dependability in the quality of goods 
and services.  Such conditions do not generally apply presently, and 
availability of and costs for such goods and services have improved markedly 
since mid-1998.  As an example, the day rate for a typical shallow-water 
jack-up drilling rig used by the Company in the Gulf of Mexico has declined 
from approximately $40,000 to $15,000.  Other costs have declined by smaller 
amounts, but still significantly.  As noted, these conditions reflect reduced 
demand for such goods and services in an environment of relatively low oil 
and gas prices and, therefore, some reversal would be expected with stronger 
oil and gas prices.

The Company's Gulf of Mexico exploration activities are dependent on the 
Company's ability to continue to identify prospects and obtain interests in 
prospect leaseholds. The Company generally utilizes speculative 
three-dimensional seismic data as a tool in its prospect generation.  This 
data is not proprietary and is available to competitors, which tends to 
increase competition for, and cost of, available prospects.  From the 
beginning of 1998 through the end of the first quarter of 1999, the Company 
was successful in expanding its inventory of potential exploratory drilling 
locations from approximately 30 to 40, while drilling 20 test wells. The 
Company also submitted high bids for five leases with identified 

                                      11
<PAGE>

exploratory prospects at a Central Gulf of Mexico lease sale held in March 
1999, of which one lease has been awarded by the Minerals Management Service 
and four remain under review.  This inventory of prospects, the majority of 
which are 100%-owned by the Company, represents more than a two-year set of 
drilling opportunities for Basin, based on the Company's historical and 
anticipated drilling activity levels. However, the Company faces competition 
for prospects from many better-capitalized oil and gas companies and there is 
no assurance that over the longer term, the Company will be able to continue 
to acquire interests in prospects at acceptable costs to replenish its 
inventory of prospects as these are drilled. The Company seeks to mitigate 
this risk by pursuing prospect ownership through a number of avenues, 
including lease sales, farm-ins, exchanges, and acquisitions.  The Company 
also plans to selectively evaluate and pursue other investment opportunities, 
including onshore exploration and acquisitions of properties with proved oil 
and gas reserves, to complement its core exploration activities in the Gulf 
of Mexico.

RESULTS OF OPERATIONS

The following operating and financial data is provided to assist in 
understanding results of operations for the periods presented.

<TABLE>
<CAPTION>

Quarter Ended                                 March 31,       March 31,
-----------------------------------------------------------------------
                                                1998            1999
-----------------------------------------------------------------------
<S>                                          <C>             <C>
PRODUCTION:
   Oil (MBbl)                                    183             165
   Gas (MMcf)                                  3,400           5,803
   Total gas equivalents (MMcfe)               4,498           6,793
REVENUE (IN THOUSANDS):
   Oil sales                                 $ 2,690         $ 2,246
   Gas sales                                 $ 7,545         $10,796
   Total oil and gas sales                   $10,235         $13,042
AVERAGE SALES PRICE:
   Oil (per Bbl)                             $ 14.69         $ 13.58
   Gas (per Mcf)                             $  2.22         $  1.86
   Total gas equivalents (per Mcfe)          $  2.27         $  1.92
EXPENSES (per Mcfe):
   Lease operating expenses                  $  0.48         $  0.36
   Production taxes                          $  0.05         $  0.01
   Depreciation, depletion and amortization  $  1.33         $  1.26
   General and administrative, net           $  0.25         $  0.21

</TABLE>

REVENUE.  Oil and gas sales revenue for the three months ended March 31, 1999 
totaled $13.0 million, representing an increase of $2.8 million, or 27%, 
compared to the first quarter of 1998.  A 51% increase in net oil and gas 
production was partially offset by a 15% decline in unit prices, based on net 
equivalent unit measures.  The increase in oil and gas production is 
attributable to contributions in the current period from thirteen GOM 
properties, compared to seven in the prior-year period.  Due to the 
additional GOM production, which is predominantly natural gas, and lower oil 
production from onshore properties on which investments were deferred due to 
low oil prices, gas increased from 76% of net equivalent units produced in 
the first quarter of 1998 to 85% of total oil and gas production in the first 
quarter of 1999.  See "Liquidity and Capital Resources" for additional 
discussion of the Company's oil and gas production. Hedging transactions had 
the effect of increasing oil and gas sales by $0.3 million, or $0.08 per 
Mcfe, and by $1.4 million, or $0.20 per Mcfe, in the three-month periods 
ended March 31, 1998 and 1999, respectively.

LEASE OPERATING EXPENSES.  Due to an increased number of producing properties 
and higher production levels, lease operating expenses for the three months 
ended March 31, 1999 increased by $0.3 million, 

                                      12
<PAGE>

or 15%, from the amount reported for the comparable period in the prior year. 
However, lease operating expenses per Mcfe produced declined by 25%, from 
$0.48 in the quarter ended March 31, 1998 to $0.36 during the three months 
ended March 31, 1999, due to increased production in the current period from 
GOM wells, which typically have significantly lower average unit operating 
costs than the Company's Rocky Mountain properties.

PRODUCTION TAXES.  Production taxes for the three months ended March 31, 1999 
were $0.1 million, representing a decrease of $0.2 million, or 68%, compared 
to 1998, due to reduced revenues from onshore properties caused by lower oil 
and gas prices and a decline in production from such properties.  Production 
taxes as a percentage of oil and gas sales for the three months ended March 
31, 1999 were 0.6%, compared to 2.3% in 1998, due to  a greater portion of 
sales in 1999 attributable to properties in federal waters offshore, which 
are generally not subject to production taxes.

DEPRECIATION, DEPLETION AND AMORTIZATION.  Depreciation, depletion and 
amortization expense for the three months ended March 31, 1999 was $8.5 
million, representing an increase of $2.6 million, or 43%, compared to 1998.  
The increase was attributable to the 51% increase in production volumes in 
1999 as compared to 1998, offset by a decrease in the per-unit depletion 
rate.  The depletion rate of $1.23 per Mcfe produced in the three months 
ended March 31, 1999 represented a 4% decrease from the $1.28 per Mcfe 
average depletion rate during 1998.  The lower rate is principally due to the 
effects of a property impairment charge recorded by the Company in the fourth 
quarter of 1998.

GENERAL AND ADMINISTRATIVE, NET.  General and administrative expenses for the 
three months ended March 31, 1999 were $1.4 million, representing an increase 
of $0.3 million, or 28%, as compared to 1998. The increase resulted from 
incremental costs incurred to manage expanded operations in the GOM and 
greater stock-based incentive compensation accruals.  Stock compensation 
expense relates to annual grants to employees of restricted stock, including 
shares awarded to management that will be earned only if certain performance 
measures are achieved by the Company.  Expense is recognized based on vesting 
schedules and changes in the price of the Company's stock during applicable 
vesting periods.

INTEREST EXPENSE.  Interest expense for the three months ended March 31, 1999 
totaled $0.9 million, representing an increase of $0.5 million, or 130%, 
compared to the first quarter of 1998.  The variance was attributable to an 
increase in average borrowings offset by a slight decrease in average 
effective interest rates.  Interest expense in 1999 excludes $0.6 million of 
interest capitalized to unproved property costs in accordance with Statement 
of Financial Accounting Standards No. 34.  During the quarter ended March 31, 
1999, the Company had average outstanding debt of $88.5 million, with an 
average effective interest rate of 6.8%, compared to average debt of $22.6 
million and an average interest rate of 6.9% in the comparable 1998 period.

INCOME TAX BENEFIT (PROVISION).  The income tax provision for 1998 
approximates the amount that would be calculated by applying statutory income 
tax rates to income before income taxes.  No net income tax benefit has been 
recognized in 1999 due to an equivalent increase in the deferred tax asset 
valuation allowance.

                                      13
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's principal sources of capital have been cash flow 
from operations, the Credit Facility, proceeds from asset sales, and proceeds 
from sales of common stock. The Company's principal uses of capital have been 
for the exploration, acquisition, development and exploitation of oil and gas 
properties.

For 1999, the Company has established an initial budget for exploration and 
development activities of approximately $65 million, subject to potential 
increase for proceeds from asset sales. The Company anticipates being able to 
fund such investments with cash flow from operations and additional 
borrowings under the Credit Facility.  This budget is subject to revision to 
reflect future developments.  It may be impacted by oil and gas price levels, 
future re-determinations of the borrowing base under the Credit Facility, and 
other factors.  The budget is not predicated on a future sale of securities, 
but the Company may choose to issue securities in certain circumstances, in 
which case the level of the Company's capital expenditures would likely 
increase. Compared to actual capital expenditures in 1998 of $106.7 million, 
the lower budget presently established for 1999 reflects a number of 
considerations including, but not limited to, lower assumed oil and gas 
prices and higher initial debt levels.  The impact on drilling activity in 
the current year, compared to 1998, is expected to be modest, as most of the 
decline in expenditures is expected to be offset by lower service sector 
costs or reflected in reduced investments in prospect leaseholds.  The 
Company's investments in leaseholds in 1998 significantly increased its 
inventory of exploratory prospects in the Gulf of Mexico.  The Company's 
initial budget for 1999 anticipates investments at a level aiming to 
approximately maintain, rather than expand, its inventory of Gulf of Mexico 
prospects.

The Company's accrual-basis capital expenditures during the first quarter of 
1999, plus deposits for five leases for which the Company submitted apparent 
winning bids at the Central GOM leasesale held March 17, 1999, totaled 
approximately $23.1 million.  Net cash provided by operations before changes 
in working capital totaled $8.4 million during the recent three-month period. 
Other sources of funds for investments during the quarter included $11.0 
million of net borrowings under the Credit Facility, a $3.2 million reduction 
in net working capital, and $2.4 million of proceeds from asset sales.   The 
Company closed the first quarter of 1999 with a working capital deficit of 
approximately $16.5 million and long-term debt of $91.0 million, all of which 
was outstanding under the Credit Facility.  The borrowing base established 
under the Credit Facility is currently $110 million.

PRODUCTION AND CASH FLOW

The Company's cash flow from operations is generally determined largely by 
its production level and oil and gas prices. Since 1996, the Company has made 
significant investments to initiate and then expand its operations in the 
Gulf of Mexico. These investments have resulted in a production ramp-up that 
increased the Company's production from an average rate of 11.2 MMcfe per day 
in the second quarter of 1997, prior to commencement of Gulf of Mexico 
production, to an average of 75.5 MMcfe per day in the first quarter of 1999. 
Production added late in the first quarter and early in the second quarter 
of 1999 increased the Company's net production rate to a recent level above 
100 MMcfe per day.

Based primarily on estimates reflected in the Company's year-end 1998 reserve 
reports and production levels achieved to-date, the Company anticipates that 
its net production in 1999 will be at least 50% 

                                      14
<PAGE>

greater than during 1998, when production totaled 21,966 MMcfe, or an average 
of 60.2 MMcfe per day. The expected increase is attributable primarily to 
projected production from Gulf of Mexico properties with proved reserves at 
the end of 1998 that were either on-line for only a portion of 1998 or had 
not yet commenced producing. Partially offsetting these additions will be 
natural depletion-related declines in production from existing producing 
wells. Actual realization of the production increases projected for 1999 will 
be dependent upon meeting scheduled dates for commencement of production from 
wells not yet on-line at the end of 1998, and upon achieving projected 
performance from major wells, including certain wells with little or no 
production history. Although management and the Company's independent 
petroleum engineering consultants believe the projections are reasonable, 
there is no assurance that they will be met.  See "Forward Looking 
Statements" for a description of certain risks that may impact the Company's 
ability to achieve projected production levels.

MARKETING AND HEDGING TRANSACTIONS

The Company's production is generally sold under month-to-month contracts at 
prevailing prices. From time-to-time, however, as conditions are deemed to 
warrant, Basin has entered into hedging transactions or fixed price sales 
contracts for a portion of its oil and gas production.  The purposes of these 
transactions are to limit the Company's exposure to future oil and gas price 
declines and achieve a more predictable cash flow. However, such contracts 
also limit the benefits the Company would realize if prices increase.  
Hedging contracts increased the Company's revenue by $0.3 million and $1.4 
million in the three-month periods ended March 31, 1998 and 1999, 
respectively.

Through May 7, 1999, the Company had entered into the following fixed price 
swap and collar arrangements covering the period beginning April 1, 1999 (one 
MMBtu approximates one Mcf of natural gas):

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------------
                           GAS SWAPS                    OIL SWAPS                             OIL COLLARS
-------------------------------------------------------------------------------------------------------------------------------
                  Average Daily      NYMEX      Average Daily     NYMEX     Average Daily        NYMEX              NYMEX
Time Period       Volume (MMBtu)  Price/MMBtu   Volume (Bbl)    Price/Bbl   Volume (Bbl)    Floor Price/Bbl   Ceiling Price/Bbl
-------------------------------------------------------------------------------------------------------------------------------
<S>               <C>             <C>           <C>             <C>         <C>             <C>               <C>
 4/1/99-6/30/99      53,300          2.09          1,500          16.67       1,000              14.00              16.00
-------------------------------------------------------------------------------------------------------------------------------
 7/1/99-9/30/99      50,000          2.10                                     1,000              14.00              16.00
-------------------------------------------------------------------------------------------------------------------------------
10/1/99-12/31/99     38,300          2.09                                     1,000              14.00              16.00
-------------------------------------------------------------------------------------------------------------------------------
 1/1/00-12/31/00      3,300          2.15
-------------------------------------------------------------------------------------------------------------------------------
 1/1/01-12/31/03     10,000          2.15
-------------------------------------------------------------------------------------------------------------------------------

</TABLE>

In addition, the Company has periodically entered into spread trades or 
options transactions related to oil or natural gas futures markets. Under a 
spread trade, fixed prices under a hedging contract are determined in the 
future by reference to the price of an underlying contract. Such positions 
may enable the Company to lock in favorable fixed prices for future hedging 
positions, but can also result in unfavorable fixed price contracts if the 
related reference price declines. As of May 7, 1999, the Company had an 
outstanding natural gas spread trade that provides for a fixed price for 
10,000 MMBtu per day for the period of March 2000 through October 2000 to be 
established in the future, when so elected by the Company, at a price equal 
to the NYMEX February 2000 contract price less $0.41. As of May 7, 1999, the 
Company had also sold the following call options: 20,000 MMBtu of natural gas 
per day for the period from April 1999 through November 1999, at a strike 
price of $1.95 per MMbtu; 10,000 MMBtu of natural gas per day for the period 
from April 1999 through December 2001, at a strike price of $2.50 per MMBtu; 
500 barrels of oil per day for the period from April 1999 through June 1999, 
at a strike price of $16.00 per barrel; and 1,000 barrels of oil per day for 
the period from July 1999 through December 1999, at a strike price of $16.75 
per barrel. 

                                      15

<PAGE>

CREDIT FACILITY

Effective January 1, 1999, the Company entered into an Amended and Restated 
Credit Agreement (the "Credit Agreement") with its existing bank group that 
provides for borrowings of up to $110 million under two combined facilities. 
Facility A, currently established at $90 million, represents the borrowing 
base that is considered to be "conforming" based upon the banks' customary 
practices and standards in making conventional borrowing base determinations 
for oil and gas producers. Facility B, which is currently established at $20 
million, is a shorter-term supplemental line of credit.   Interest rates 
applied to borrowings under the Credit Agreement are determined by reference 
to the prime rate or LIBOR, at the Company's election. Facility A provides 
for a varying spread of 0% to 0.25% to be added to the prime rate, or 0.75% 
to 1.5% to be applied to LIBOR, based upon the Company's facility usage 
ratio. Facility B provides for a spread of 3.5% to be added to the prime 
rate, or 4.75% to be applied to LIBOR, subject to a 0.25% increase in such 
spreads effective June 1, 1999. 

The Credit Agreement provides for borrowings to be revolving loans until 
November 30, 2001, at which time the outstanding balance will be converted 
into a four-year amortizing term loan unless the Credit Agreement is amended, 
and subject to the scheduled termination of Facility B effective May 31, 
2000. The borrowing base under the Credit Agreement is scheduled to be 
re-determined at three-month intervals until Facility B is retired, and then 
at six-month intervals until the revolving loan is converted into a term 
loan. The next re-determination is scheduled to occur as of June 1, 1999.  
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. Pursuant to the Credit Agreement, 
substantially all of the Company's producing properties are subject to 
mortgages in favor of the banks and the Company's remaining properties are 
subject to a negative pledge.

The weighted average interest rate on borrowings outstanding under the Credit 
Agreement at March 31, 1999 was 6.5%. The Company's annual interest costs 
will fluctuate based upon fluctuations in short-term interest rates. Assuming 
debt outstanding during 1999 remained unchanged from the amount outstanding 
at March 31, 1999, the annual impact on interest expense of a ten percent 
change in the average interest rate would be approximately $0.5 million, 
before amounts capitalized. As the interest rate is variable and is 
reflective of current market conditions, the carrying value of the Company's 
debt approximates its fair value.

Borrowing base re-determinations conducted by the bank group reflect a number 
of estimates and assumptions including, but not limited to, future production 
from the Company's proved properties, risk factors for proved reserves, 
projected oil and gas prices, future operating and development costs, and 
interest rates. Changes in such estimates and assumptions can significantly 
impact the size of the borrowing base established by the banks. Because these 
factors will be influenced by future events, which cannot be forecast with 
certitude, the Company cannot predict what level of borrowing base will be 
established at any future determination date. The provision for Facility B 
was intended, in part, to provide short-term funds to develop the Company's 
proved undeveloped and proved developed nonproducing reserves in the Gulf of 
Mexico. It is anticipated that funds drawn under Facility B will be retired 
through expansion of Facility A, if the Company's reserve values are 
sufficiently increased, or that Facility B will be repaid from cash flows or 
proceeds from the sale of assets or securities. At May 7, 1999, $90 million 
was outstanding under Facility A and $8 million was outstanding under 
Facility B.

Positive or negative changes in the borrowing base during 1999 could impact 
the level of the Company's capital expenditures during the year. Increases, 
supported by performance of the Company's properties, 

                                      16
<PAGE>

drilling results, and/or higher oil and gas prices, could improve the 
Company's ability to grow. Decreases would adversely affect the Company's 
liquidity and capital resources, potentially resulting in a reduction of 
planned capital expenditures or the sale of assets or securities.

CAPITAL EXPENDITURES

Since the beginning of 1996, Basin has focused its exploration activities in 
the shallow waters of the Gulf of Mexico, primarily off the coast of 
Louisiana. Recently, the Company began to direct a small portion of its 
exploration budget toward onshore opportunities, and it pursues acquisition, 
development, and exploitation opportunities in the vicinity of the Company's 
Gulf of Mexico exploration operations, in the Rocky Mountain region where 
Basin has an existing base of proved reserves and producing wells, and in 
certain other major domestic producing basins where the Company believes 
significant upside potential exists. The Company's capital expenditures are 
generally discretionary and activity levels are determined by a number of 
factors, including oil and gas prices, availability of funds, quantity and 
character of identified investment projects, availability of service 
providers, and competition.

The Company currently estimates that its capital expenditures for exploration 
and development in 1999 will be approximately $65 million, subject to 
potential increase for proceeds from asset sales. This budget primarily 
provides for: development of seven Gulf of Mexico properties with one or more 
discovery wells yet to commence sustained production as of the end of 1998; 
investments in seismic data and prospect leaseholds; participation in 
approximately six net (13 to 15 gross) exploratory wells in the Gulf of 
Mexico; participation in a small number of onshore exploration opportunities; 
development of projected 1999 prospect discoveries; and continued 
exploitation of the Company's other offshore and onshore properties. Although 
several locations for planned 1999 exploratory drilling have been identified, 
a significant portion of the 1999 exploration budget is currently 
unallocated, pending acquisition of drilling partners and formation of joint 
ventures to conduct exploratory operations. The smaller budget in 1999, 
compared to actual expenditures in 1998, is not expected to require a 
significant reduction in drilling activity because of a planned substantial 
reduction in acquisitions of exploratory leaseholds in 1999 and benefits 
expected to be realized from the substantial decline in service sector costs 
during the past year. The reduced budget for exploratory leaseholds reflects 
the unusually large investment made by the Company in 1998 to initially 
establish a multi-year inventory of drilling prospects. New investments 
planned for 1999 will seek to approximately maintain this inventory level 
rather than significantly expand it.  The Company also intends to pursue 
acquisitions of properties with proved and probable reserves as an integral 
part of its overall business strategy, with the expectation that these 
efforts will result in significant investment activity over time. At this 
time, no portion of the Company's 1999 budget has been specifically allocated 
for acquisitions of proved properties. If such a transaction is executed, it 
will likely require a re-allocation of budget from other planned activities 
and/or external financing.

During the first quarter of 1999, the Company's accrual-basis capital 
expenditures totaled approximately $22.5 million.  Such investments were 
primarily for development of several GOM properties on which discovery wells 
were drilled during the prior year, participation in drilling five (2.5 net) 
GOM wells, related completion costs on two (0.8 net) of these wells, and 
acquisitions of additional GOM three-dimensional seismic data and leasehold 
interests.  The Company also submitted deposits totaling $0.6 million related 
to five apparent winning bids aggregating $3.0 million made at the March 1999 
Central Gulf of Mexico lease sale.  Should the Minerals Management Service 
approve all five of these high bids, the Company will owe the remaining 80% 
of the respective bid amounts, or an additional total of $2.4 million. Such 
amounts are provided for within the Company's budget for exploration and 
development activities in the current year.

                                      17
<PAGE>

The amount and allocation of future capital expenditures will depend on a 
number of factors that are not entirely within the Company's control or 
ability to forecast, including drilling results, scheduling of activities by 
other operators, availability of service providers, success in acquiring 
prospect leaseholds, and success in consummating acquisitions of proved 
properties. The Company's planned capital expenditures are also based on 
estimates regarding availability of capital that depend on assumptions and 
estimates regarding production, oil and gas prices, and borrowing base 
re-determinations under the Company's Credit Agreement. Due to these 
uncertainties, and other matters described under "Forward Looking 
Statements", actual capital expenditures may vary significantly from current 
expectations.

Should the Company seek to increase its capital expenditure budget for 1999 
to respond to drilling opportunities that it deems exceptional, to fund 
development of a greater number or larger-sized exploratory successes than 
assumed, or for acquisitions of proved and probable reserves or prospect 
leaseholds, the Company may consider raising additional capital through 
issuance of debt and/or equity securities. The Company may also seek 
additional debt or equity financing in the absence of a specific planned 
increase in capital expenditures, in order to increase financial flexibility 
to capitalize on future opportunities.

YEAR 2000 READINESS DISCLOSURE AND STATEMENT 

Readers are cautioned that the forward-looking statements contained in the 
following Year 2000 discussion should be read in conjunction with the 
Company's disclosures under the heading "Forward Looking Statements" in this 
report. 

Year 2000 issues result from the inability of many computer programs to 
accurately calculate, store or use a date subsequent to December 31, 1999. 
The date can be erroneously interpreted in a number of different ways; 
typically the year 2000 is interpreted as the year 1900.This could result in 
a system failure or miscalculations causing disruptions of or errors in 
operations.  Systems potentially affected include not only information 
technology ("IT") systems -- computer systems controlling a company's 
accounting, land, operations, seismic processing, and other specialized 
functions -- but also non-IT systems controlled by embedded chips, which 
include many common and specialized machines and support systems.  The 
effects of the Year 2000 problem can be exacerbated by the interdependence of 
computer and telecommunications systems in the United States and throughout 
the world.  This interdependence can affect the Company and the parties with 
whom it does business.

STATE OF READINESS.  The Company has created an internal committee to assess 
the Company's Year 2000 readiness and to lead its remediation efforts.  The 
committee is composed of the general counsel, chief financial officer, 
controller, and manager of information systems.  The committee's objective is 
to prevent loss or impairment of those functions material to the Company's 
operations and business continuity or to avoid potential liability to third 
parties.  At the direction of the committee, department heads and managers 
have assessed and remediated the Company's IT and non-IT systems, and have 
communicated with the Company's business partners regarding the status of 
their assessment and remediation efforts, with the results summarized below.

The Company has completed an assessment of its IT systems to determine 
whether they are Year 2000 compliant.  The licensors of both the Company's 
core financial, land and operations software system and its underlying 
operating system have certified that such software is Year 2000 compliant. 
The Company's Gulf of Mexico seismic data interpretation software system is 
not currently Year 2000 compliant, but the 

                                      18
<PAGE>

Company has begun an upgrade of that system with software which the licensor 
has represented will be compliant.  The Company is also upgrading its 
reservoir economics software to make it Year 2000 compliant.  The Company 
expects the upgrade and testing of these software systems to be completed by 
July 1999.  Additionally, the Company has assessed other less critical IT 
systems and believes them to be compliant.

The Company also relies on non-IT systems, such as office telephones, 
facsimile machines, HVAC systems and elevators in its leased offices, 
security systems, and automated measuring equipment on platforms and other 
production facilities, which may have embedded technology such as 
micro-controllers.  Department heads and managers have identified those 
non-IT systems which may be susceptible to failure or impairment by reason of 
Year 2000 problems and which are potentially critical to the Company's 
operations and business continuity.  Based on that review, the Company has 
sent written inquiries to the suppliers of those systems to determine their 
Year 2000 compliance.  The vendors of the Company's communications systems 
and the property managers of the buildings in which the Company's Houston and 
Denver offices are situated have certified their systems to be Year 2000 
compliant.  The Company is still receiving and analyzing responses from 
vendors of those non-IT systems that may affect the Company's production 
operations.  The operations department will follow up those inquiries with 
telephone interviews to assess the status of such systems.  Assessment and 
remediation of non-IT systems should be completed by September 1999.

The Company has sent written inquiries to its significant suppliers, 
customers, banks, government agencies, benefit plan providers, and others 
with whom the Company has significant business relationships to determine the 
extent to which the Company is vulnerable to those third parties' failure to 
correct their own Year 2000 issues.  To date, the Company has not received 
definitive responses from many of these entities and therefore cannot assess 
whether they are Year 2000 compliant or how their failure to be compliant 
would affect the Company.  Those third parties who have responded have 
generally indicated that they are either Year 2000 compliant or expect to be 
compliant.  Department heads and managers have compiled a list of critical 
third parties to whom telephone follow-up will be made.  For Gulf of Mexico 
operations, these include representative vendors and suppliers who could 
supply necessary goods and services to maintain the Company's production 
operations and continue any ongoing or planned drilling activities.  The 
Company expects to have this follow-up inquiry completed by July 1999 and 
will utilize those vendors and suppliers providing adequate assurances 
regarding their compliance.  

ESTIMATED COMPLIANCE COSTS.  The Company has relied primarily on its internal 
staff to assess its current Year 2000 readiness and does not anticipate 
extensive use of external resources to complete its assessment or 
remediation.  The Company has not separately quantified its costs of internal 
resources on this project but does not expect that it will incur material 
costs in remediating its IT systems to be Year 2000 compliant. Costs incurred 
for the purchase of new software and hardware are capitalized and all other 
costs are expensed as incurred.  The Company has not incurred, and does not 
anticipate that it will incur, costs for external resources in excess of 
$100,000 relating to the assessment and remediation of Year 2000 issues. That 
estimate does not include the cost of remediating problems caused by 
third-party vendors, customers, or other business partners, which the Company 
will not be able to estimate until the extent, if any, of their Year 2000 
non-compliance is known.

RISKS OF NON-COMPLIANCE AND CONTINGENCY PLANS.  As indicated above, the only 
critical IT systems which the Company believes are not yet Year 2000 
compliant are its seismic data interpretation and reservoir economics 
systems, which should be compliant by July 1999. Accordingly, the Company 
does 

                                      19
<PAGE>

not expect Year 2000 issues to cause its IT systems to have any material 
adverse impact on its business, operations or financial condition.  The 
Company believes that the potential impact, if any, of its non-critical IT 
systems not being Year 2000 compliant will at most require employees to 
manually complete otherwise automated tasks or calculations and should not 
impact the Company's ability to continue exploration, drilling, production or 
sales activities.  The Company is not able to predict at this time what the 
impact could be of non-IT system failures but does not believe that there 
will be a material disruption of the Company's operations.

Until the Company has completed its inquiries to third parties, it will not 
be able to assess the potential impact of their failure to be Year 2000 
compliant on the Company's operations, business, or financial condition.  The 
most reasonably likely "worst case" impacts could be impairment of the 
Company's ability to deliver its production to, or receive payment from, 
third parties gathering and/or purchasing the Company's production from 
affected facilities, impairment of the ability of third-party suppliers or 
service companies to provide needed materials or services to the Company's 
planned or ongoing operations, thereby necessitating deferral or shut-in of 
exploration, development or production operations, and the inability of the 
Company to execute financial transactions with its banks or other third 
parties whose systems fail or misfunction.  The Company currently has no 
reason to believe that any of these contingencies will occur or that its 
principal vendors, customers, and business partners will not be Year 2000 
compliant.

The Company does not currently have a contingency plan under development or 
in place to address these potential problems.  The Company does intend to 
develop contingency plans in response to testing its IT and non-IT systems 
and in response to the results of its third-party inquiries.  These 
contingency plans may include installing back-up computer systems or 
equipment, temporarily replacing systems or equipment with manual processes, 
and identifying alternate suppliers, service companies and purchasers.  The 
Company expects these plans to be complete by October 1999.

Basin's Year 2000 program is a continuing process that may result in changes 
to cost estimates and schedules as testing and business partner assessment 
progresses.  Unexpected Year 2000 compliance problems of either the Company 
or its vendors, customers, service providers, or other entities with whom it 
does business could have a material adverse impact on the Company's business, 
financial condition or operating results.

                                      20
<PAGE>

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are not 
historical facts but 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, estimates, plans or anticipates 
will, should, could or may occur, including such matters as:

-    amount and nature of capital expenditures,
-    drilling of wells, 
-    estimated reserves,
-    timing and amount of future production of oil and gas, 
-    business strategies, 
-    operating costs and other expenses, 
-    cash flow and anticipated liquidity, 
-    prospect development and property acquisitions, 
-    marketing of oil and gas, and
-    Year 2000 compliance activities. 

Although the Company believes that the expectations reflected in the 
forward-looking statements are reasonable, we cannot assure you that any of 
these expectations will prove correct or that we will take any actions that 
may have been planned.  Factors that could cause actual results to differ 
materially are described in the "Management's Discussion and Analysis of 
Financial Condition and Results of Operations" section of this report and 
also include, among others:

-    general economic conditions, 
-    oil and gas price volatility, 
-    the Company's ability to find, acquire, market, develop and produce new 
     properties, 
-    the risks associated with acquisitions,
-    the risks associated with exploration,
-    operating hazards attendant to the oil and gas business,
-    downhole drilling and completion risks that are generally not 
     recoverable from third parties or insurance
-    uncertainties in the estimation of proved reserves and in the 
     projection of future rates of production and timing of development 
     expenditures, 
-    potential mechanical failure or underperformance 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, 
-    availability of capital,
-    availability and cost of material and equipment, 
-    delays in anticipated start-up dates, 
-    environmental risks,
-    actions or inactions of third-party operators of the Company's 
     properties, regulatory developments, and
-    third-party Year 2000 compliance actions. 

                                      21
<PAGE>

All written and oral forward-looking statements attributable to the Company 
or persons acting on its behalf are qualified in their entirety by the 
Cautionary Disclosures. The Company disclaims any obligation to update or 
revise any forward-looking statement in light of actual results or future 
events.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company's exposure to interest rate risk and commodity price risk is 
discussed in Management's Discussion and Analysis of  Financial Condition and 
Results of  Operations under the headings  "Operating Environment", 
"Liquidity and Capital Resources - Marketing and Hedging Transactions" and 
"Liquidity and Capital Resources - Credit Facility".  The Company has no 
exposure to foreign currency exchange rate risks or to any other market risks.

                                      22
<PAGE>

                    BASIN EXPLORATION, INC. AND SUBSIDIARIES

                            PART II OTHER INFORMATION


ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

  (a) Exhibits

<TABLE>
<CAPTION>
        EXHIBIT
        NUMBER                      DESCRIPTION OF EXHIBITS
        ------                      -----------------------
<S>               <C>

         2.1      Agreement and Plan of Merger between Sterling Energy
                  Corporation, Basin Energy, Inc. and Basin Exploration, Inc.
                  dated October 13, 1994(5)

         2.2      Plan of Merger between Basin Sterling, Inc. and Basin
                  Exploration, Inc. dated November 22, 1994(5)

         2.3      Plan of Merger between Basin Operating Company and Basin
                  Exploration, Inc. dated December 14, 1994.(7)

         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 May 5, 1998.14 10.3 Key
                  Employee Participation Plan.(14)

         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.(9)

         10.6     Form of Rights Agreement dated as of February 24, 1996,
                  between Basin Exploration, Inc. and Corporate Stock Transfer,
                  Inc. as Rights Agent.(8)

         10.7     Performance Shares Plan approved February 4, 1997.(10)
 
         10.8     Change of Control Employment Agreement dated October 13, 1995
                  between Basin Exploration, Inc. and Howard L. Boigon.(9)
  
         10.9     Employment Agreement dated August 28, 1995 between Basin
                  Exploration, Inc. and Samuel D. Winegrad.(9)

         10.10    Employment Agreement dated June 28, 1995 between Basin
                  Exploration, Inc. and Neil L. Stenbuck.(9)
 
         10.11    Employment Agreement dated November 10, 1995 between Basin
                  Exploration, Inc. and David A. Pustka.(9)
  
         10.12    Employment Agreement dated February 23, 1996 between Basin
                  Exploration, Inc. and Thomas J. Corley.(10)
     
         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, LP, as
                  Landlord.(8)
    
         10.16    Lease of Office Space dated September 25, 1992, between
                  Brookfield Republic Inc. and Basin Operating Company, as
                  amended(4)+
     
         10.17    First Lease of Additional Office Space dated as of December 1,
                  1994, between Brookfield Republic, Inc. and Basin Operating
                  Company.(6)+
       
         10.18    Purchase and Sale Agreement dated February 13, 1997, between
                  Hall-Houston Oil Company et al as Sellers and Basin
                  Exploration, Inc. as Buyer.(10)+
     
         10.19    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(11)
       
         10.20    Order of the United States Bankruptcy Court for the Southern
                  District of Texas Corpus Christi Division, dated November 18,
                  1997, with exhibits, including the Agreement of Purchase and
                  Sale.(12)
       
         10.21    Second 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 November 1, 1997(13)
       
         10.22    Third Amendment of Amended and Restated Credit Agreement dated
                  August 6, 1996 between the Company and U.S. Bank National
                  Association, Union Bank of California, N.A. and NationsBank of
                  Texas, N.A. dated April 30, 1998(14)

                                      23
<PAGE>

         10.23    Fourth Amendment of Amended and Restated Credit Agreement
                  dated August 6, 1996 between the Company and U.S. Bank
                  National Association, Union Bank of California, N.A. and
                  Nationsbank, N.A., dated August 20, 1998(15)
        
         10.24    Amended and Restated Credit Agreement dated January 1, 1999
                  among the Company and Nationsbank, N.A., U.S. National
                  Association and Union Bank of California, N.A.(16)
        
         10.25    Employment Agreement dated January 28, 1999, between Basin
                  Exploration, Inc. and Patrick A. Jackson.(16)
        
         10.26    Employment Agreement dated February 1, 1999, between Basin
                  Exploration, Inc. and David A. Pustka.(16)

         27       Financial Data Schedule(1)
</TABLE>

            (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 10-K filed on March 28, 1995, and
                incorporated herein by reference.

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

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

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

           (11) Filed as an Exhibit to Form 10-Q filed on August 12, 1997, and
                incorporated herein by reference.

           (12) Filed as an Exhibit to Form 8-K filed on December 11, 1997, and
                incorporated herein by reference.

           (13) Filed as an Exhibit to Form 10-K filed on March 31, 1998, and
                incorporated herein by reference.

           (14) Filed as an Exhibit to Form 10-Q filed on May 14, 1998, and
                incorporated herein by reference.

           (15) Filed as an Exhibit to Form 10-Q filed on November 13, 1998, and
                incorporated herein by reference.

           (16) Filed as an Exhibit to Form 10-K filed on March 30, 1999, and
                incorporated herein by reference.

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

(b) Reports on Form 8-K 

        None.

                                       24
<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.


                                       BASIN EXPLORATION, INC. 
                                       -----------------------
                                           (Registrant)


      Date: May 17, 1999                     By:/s/ Neil L. Stenbuck
                                                --------------------
                                                    Neil L. Stenbuck
                                                    Chief Financial Officer



      Date: May 17, 1999                     By:/s/ James A Tuell
                                                -----------------
                                                    James A. Tuell
                                                    Controller
                                                    Chief Accounting Officer



                                       25