<PAGE>

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

                                    FORM 10-Q

    (Mark One)

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

                For the quarterly period ended September 30, 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.
                                                          Outstanding at
                       Class                              October 31, 1999
           ---------------------------------------------------------------------
           Common stock, $.01 par value                   18,448,000 shares

<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 September 30, 1999.......................................            3

                  Consolidated Statements of Operations for the
                  three and nine months ended September 30, 1998 and 1999.......................             5

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

                  Consolidated Statements of Cash Flows for the
                  nine months ended September 30, 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 Risks.............................................................           21

PART II.  OTHER INFORMATION

     Item 1.      Legal Proceedings..............................................................           22

     Item 2.      Changes in Securities and Use of Proceeds......................................           22

     Item 3.      Defaults Upon Senior Securities................................................           22

     Item 4.      Submission of Matters to a Vote of Security Holders............................           22

     Item 5.      Other Information..............................................................           22

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

SIGNATURES        ...............................................................................           25
</TABLE>


<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    BASIN EXPLORATION, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    DECEMBER 31, 1998 AND SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                                     ASSETS
(In thousands)
                                                                            December 31,           September 30,
                                                                               1998                    1999
                                                                        ------------------      -------------------
<S>                                                                    <C>                      <C>
CURRENT ASSETS
         Cash and equivalents                                              $           331         $             534
         Accounts receivable                                                        10,036                    16,056
         Prepaids and other                                                          2,752                     4,324
                                                                        -------------------     --------------------

PROPERTY AND EQUIPMENT, at cost:                                                    13,119                    20,914
                                                                        -------------------     --------------------
         Oil and gas properties, under the full cost
         method of accounting
              Proved                                                               265,826                   315,491
              Unproved                                                              34,039                    30,548
         Less accumulated depreciation,
         depletion and amortization                                               (113,462)                 (142,038)
                                                                        -------------------     --------------------
                                                                                   186,403                   204,001
         Furniture and equipment, net                                                1,408                     1,396
                                                                        -------------------     --------------------
                                                                                   187,811                   205,397
                                                                        -------------------     --------------------

OTHER ASSETS                                                                           233                       537
                                                                        -------------------     --------------------

                                                                           $       201,163         $         226,848
                                                                        ===================     ====================
</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 SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands)
                                                                            December 31,            September 30,
                                                                                1998                    1999
                                                                        -------------------      --------------------
<S>                                                                     <C>                      <C>
CURRENT LIABILITIES
         Accounts payable                                               $        12,465          $            6,768
         Accrued liabilities                                                     13,620                      19,765
         Current portion of long-term debt                                          258                          21
                                                                        -------------------      -------------------

                                                                                 26,343                      26,554
                                                                        -------------------      -------------------

LONG-TERM DEBT, net of current portion                                           80,000                      29,000

OTHER LONG-TERM OBLIGATIONS                                                         601                         233

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,
           14,151,000 and 18,697,000 shares
           issued, respectively                                                     142                         187
         Additional paid-in capital                                             113,136                     183,870
         Accumulated deficit                                                    (16,488)                     (9,022)
         Common stock held in treasury, at cost,
           186,000 and 257,000 shares, respectively                              (2,571)                     (3,974)
                                                                        -------------------      -------------------

         Total stockholders' equity                                              94,219                     171,061
                                                                        -------------------      -------------------

                                                                        $       201,163          $          226,848
                                                                        ===================      ===================
</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 Nine Months Ended
(In thousands, except per share data)                          September 30                              September 30
                                                         1998                 1999                1998                  1999
                                                    ---------------      ---------------      --------------       ---------------
<S>                                                 <C>                  <C>                  <C>                  <C>
REVENUE:

Oil sales                                             $     2,545         $       3,651        $       7,932        $       9,145

Gas sales                                                  11,553                15,776               28,317               43,605

Interest and other, net                                        46                    39                   59                   83
                                                    ---------------      ---------------      --------------       ---------------
                                                           14,144                19,466               36,308               52,833
                                                    ---------------      ---------------      --------------       ---------------

COST AND EXPENSES:

Lease operating expenses                                    1,976                 2,874                6,569                8,352

Production taxes                                              190                   270                  628                  537

Depreciation, depletion and amortization                    8,413                 9,951               21,140               29,130

General and administrative, net                             1,012                 1,296                2,795                3,756

Stock compensation, net                                       143                   558                  462                1,397

Interest expense                                              500                   100                1,288                2,195
                                                    ---------------      ---------------      --------------       ---------------

                                                           12,234                15,049               32,882               45,367
                                                    ---------------      ---------------      --------------       ---------------

INCOME BEFORE INCOME TAXES                                  1,910                 4,417                3,426                7,466

Income tax provision                                          668                     -                1,199                    -
                                                    ---------------      ---------------      --------------       ---------------

NET INCOME                                            $     1,242        $        4,417       $        2,227       $        7,466
                                                    ===============      ===============      ==============       ===============

BASIC:
        Earnings per share                            $      0.09        $         0.24         $      0.16         $        0.48
                                                    ===============      ===============      ==============       ===============
        Weighted average shares outstanding                13,884                18,393              13,838                15,600
                                                    ===============      ===============      ==============       ===============

  DILUTED:
        Earnings per share                            $      0.09         $        0.23         $      0.16         $        0.47
                                                    ===============      ================      =============       ===============
        Weighted average shares outstanding                14,199                19,009              14,320                15,943
                                                    ===============      ================      =============       ===============
</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 SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                                                                                                    RETAINED
                                                            ADDITIONAL                              EARNINGS
                                       COMMON STOCK          PAID-IN         TREASURY STOCK          (ACCUM.
(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
  common stock                         79             1          1,107         (62)       (1,108)             -              -

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            4,416            44         67,822            -            -              -         67,866

Common stock offering costs             -             -           (465)           -            -              -           (465)

Purchase of treasury stock              -             -              -         (20)         (355)             -           (355)

Issuance and vesting of
   restricted stock                    55             -          2,330            -            -              -          2,330

Exercise of warrants for
  common stock                         75             1          1,047         (51)       (1,048)             -              -

Net income                              -             -              -            -            -          7,466          7,466
                                ----------   ----------    -----------   ----------   ----------    -----------   ------------

BALANCES, September 30, 1999       18,697    $      187    $   183,870        (257)   $   (3,974)  $     (9,022)  $    171,061
                                ==========   ==========    ===========   ==========   ==========   ============   ============

</TABLE>

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

                                       6
<PAGE>

                    BASIN EXPLORATION, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMEMTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     For the Nine Months Ended
                                                                          September 30,
(In thousands)                                                      1998               1999
                                                                ------------       ------------
<S>                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                    $      2,227       $      7,466
  Adjustments to reconcile net income
  to net cash provided by operating activities -
     Depreciation, depletion and amortization                         21,140             29,130
     Deferred income tax provision                                     1,117                  -
     Stock compensation expense                                          462              1,397
     Other                                                               (14)                22
                                                                ------------       ------------
                                                                      24,932             38,015

     Changes in operating assets and liabilities -
         Decrease (increase) in -
            Receivables                                                  676             (6,630)
            Prepaids and other                                           927             (1,426)
         (Decrease ) increase in -
            Accounts payable and accrued liabilities                   2,722               (889)
            Ad valorem taxes and other                                   (71)               (50)
            Income taxes payable                                         (19)                 -
                                                                ------------       ------------
         Net cash provided by operating activities                    29,167             29,020
                                                                ------------       ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital additions                                                  (87,585)           (54,728)
  Deposits on offshore leases                                           (239)               (65)
  Proceeds from sale of property and equipment                            52             10,608
                                                                ------------       ------------
  Net cash used in investing activities                              (87,772)           (44,185)
                                                                ------------       ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes payable and long-term debt                      73,000             47,500
  Principle payments on notes payable and long-term debt             (13,614)           (98,738)
  Proceeds from sale of stock, net                                       441             67,149
  Purchase of treasury stock                                             (23)              (103)
  Debt issuance costs and other                                            -               (440)
                                                                ------------       ------------
     Net cash provided by financing activities                        59,804             15,368
                                                                ------------       ------------
INCREASE IN CASH AND EQUIVALENTS                                       1,199                203
CASH AND EQUIVALENTS, beginning of period                                531                331
                                                                ------------       ------------
CASH AND EQUIVALENTS, end of period                             $      1,730       $        534
                                                                ============       ============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest, net of amounts capitalized            $        968       $      2,465
                                                                ============       ============
  Cash paid for income taxes                                    $        119       $          -
                                                                ============       ============

</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 September 30, 1999, and the results of operations and
cash flows for the three and nine 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. Basin is required to adopt
the Statement as of January 1, 2001, but may implement the Statement as of
the beginning of any fiscal quarter prior to that date. Statement 133 cannot
be applied retroactively. Basin 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 comprehensive income.

(3) ACCOUNTING FOR OIL AND GAS PROPERTIES

Basin 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 cash flows 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 gas prices are volatile and reflect seasonal
factors, as well as other supply and demand conditions. A decline in prices
subsequent to September 30, 1999 could result in a requirement that Basin
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 you in understanding our
results of operations and our present financial condition and should be read
in conjunction with the Consolidated Financial Statements and the Notes
thereto. 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."

Basin Exploration, Inc. ("Basin" or the "Company") is a domestic independent
oil and gas company that conducts exploration, acquisition and production
activities in the shallow waters of the Gulf of Mexico and selected areas
onshore.

Basin commenced operations in 1981 and primarily acquired, developed and
exploited properties in the Denver-Julesberg ("D-J") Basin in eastern
Colorado through 1991. In 1992, we began expanding into other areas within
the Rocky Mountain region and initiated exploration activities. In 1996, we
sold our D-J Basin properties, representing approximately two-thirds of our
oil and gas properties at that time, for $123.5 million (the "D-J Sales") and
initiated operations in the Gulf of Mexico.

Since that time, the Company's principal investment activities have related
to property acquisitions, exploratory drilling, and property development in
the shallow waters of the Outer Continental Shelf in the Gulf of Mexico. To a
lesser extent, we have conducted similar activities in the Rocky Mountain
region, primarily in the Green River and Powder River Basins in Wyoming, and,
beginning in 1999, in the onshore Gulf Coast areas of Louisiana and Texas.
During the first nine months of 1999, we participated in drilling 13
exploratory wells and three development wells in the Gulf of Mexico and four
exploratory wells onshore, including wells in progress at period-end. Three
of these wells are still under evaluation. Of the 17 evaluated wells, we have
completed or plan to complete 13 wells, including nine of the exploratory
wells and all three development wells drilled in the Gulf and one exploratory
well drilled in the Green River Basin.

RESULTS OF OPERATIONS

The following operating and financial data, in conjunction with the
discussion below, is provided to assist you in understanding our results of
operations for the periods presented.

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                       Three Months Ended             Nine Months Ended
                                                          September 30                  September 30
                                                 ---------------------------     ---------------------------
                                                     1998            1999            1998            1999
                                                 -----------     -----------     -----------     -----------
<S>                                              <C>             <C>             <C>             <C>
PRODUCTION:
   Oil (MBBL)                                           173              236             545             624
   Gas (MMCF)                                         5,297            7,036          12,633          20,772
   Total gas equivalents (MMCFE)                      6,335            8,452          15,903          24,516
REVENUE (IN THOUSANDS):
   Oil sales                                     $    2,545      $     3,651     $     7,932     $     9,145
   Gas sales                                     $   11,553      $    15,776     $    28,317     $    43,605
   Total oil and gas sales                       $   14,098      $    19,427     $    36,249     $    52,750
AVERAGE SALES PRICE:
   Oil (PER BBL)                                 $    14.74      $     15.52     $     14.55     $     14.67
   Gas (PER MCF)                                 $     2.18      $      2.24     $      2.24     $      2.10
   Total gas equivalents (PER MCFE)              $     2.23      $      2.30     $      2.28     $      2.15
EXPENSES (PER MCFE):
   Lease operating expenses                      $     0.31      $      0.34     $      0.41     $      0.34
   Production taxes                              $     0.03      $      0.03     $      0.04     $      0.02
   Depreciation, depletion and amortization      $     1.33      $      1.18     $      1.33     $      1.19
   General and administrative, net               $     0.16      $      0.15     $      0.18     $      0.15

</TABLE>

REVENUE. Oil and gas sales for the three months ended September 30, 1999
totaled $19.4 million, representing an increase of $5.3 million, or 38%,
compared to the third quarter of 1998. This improvement was attributable to a
33% increase in net oil and gas production and a 3% increase in unit prices,
based on net equivalent unit measures. Oil and gas sales for the nine months
ended September 30, 1999 totaled $52.8 million, representing an increase of
$16.5 million, or 46%, compared to 1998. A 54% increase in net oil and gas
production was partially offset by a 6% decline in unit prices, based on net
equivalent unit measures. The increases in oil and gas production are
attributable to contributions during the nine months of 1999 from 18 Gulf of
Mexico properties compared to twelve in the prior-year period. Due to the
additional Gulf of Mexico production, which is predominantly gas, and lower
oil production from onshore properties, on which investments were deferred in
late 1998 and early 1999 due to low oil prices, gas increased from 79% of net
equivalent units produced in the first nine months of 1998 to 85% of the
Company's total oil and gas production in the first nine months of 1999.
Hedging transactions had the effect of decreasing oil and gas sales by $3.7
million, or $0.44 per Mcfe, in the three months ended September 30, 1999, as
compared to increasing oil and gas sales by $1.7 million, or $0.28 per Mcfe,
in the three months ended September 30, 1998. Hedging transactions had the
effect of decreasing oil and gas sales by $3.2 million, or $0.13 per Mcfe in
the nine months ended September 30, 1999, as compared to increasing oil and
gas sales by $2.7 million, or $0.17 per Mcfe, in the nine months ended
September 30, 1998.

LEASE OPERATING EXPENSES. Due to an increased number of producing properties
and higher production levels, lease operating expenses for the three and nine
months ended September 30, 1999 increased by $0.9 million, or 45%, and $1.8
million, or 27%, respectively, from the amounts reported for the comparable
periods in the prior year. Lease operating costs per Mcfe produced in the
three months ended September 30, 1999 increased by approximately 10% to
$0.34, from $0.31 in the comparable period of 1998. This increase in per-unit
costs was principally due to costs associated with workovers to recommence
production on onshore properties that had been shut in due to low commodity
prices. Lease operating costs per Mcfe produced during the nine months ended
September

                                       10
<PAGE>

30, 1999 declined by approximately 17%, to $0.34, as compared to $0.41 in the
nine months ended September 30, 1998. This decrease in per-unit costs was due
to increased production in 1999 from Gulf of Mexico wells, which typically
have significantly lower average unit operating costs than our Rocky Mountain
properties.

PRODUCTION TAXES. Production taxes for the three and nine months ended
September 30, 1999 were $0.3 million and $0.6 million, representing an
increase of $80,000, or 42%, and a decrease of $91,000, or 14%, respectively,
from amounts reported for the comparable periods in 1998. The increase in the
three months ended September 30, 1999 is attributable to an 85% increase in
onshore oil and gas sales during the 1999 period as compared to 1998. The
decrease in the nine months ended September 30, 1999 was partially due to
reduced tax rates on new production and partially to revisions to previous
estimates. Production taxes as a percentage of oil and gas sales for the
three and nine months ended September 30, 1999 were 1.4 % and 1.0%, compared
to 1.3% and 1.7%, respectively in 1998, due principally 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 expenses for the three and nine months ended September 30, 1999
were $10.0 million and $29.1 million, representing increases of $1.5 million,
or 18%, and $8.0 million, or 38%, respectively, compared to 1998. The
increases were attributable to the 33% and 54% increases in production
volumes for the three and nine month periods ended September 30, 1999,
relative to the comparable periods in 1998. Depletion rates of $1.16 and
$1.17 per Mcfe of production in the three and nine months ended September 30,
1999 represented a 9% decrease from the $1.28 per Mcfe average depletion rate
during the three and nine months of 1998. The lower rate is principally due
to the effects of a property impairment charge recorded in the fourth quarter
of 1998.

GENERAL AND ADMINISTRATIVE, NET. General and administrative expenses for the
three and nine months ended September 30, 1999 were $1.3 million and $3.8
million, reflecting increases of $0.3 million, or 28%, and $1.0 million, or
34%, respectively, as compared to 1998. The increases resulted primarily from
incremental costs incurred to manage our expanded operations in the Gulf of
Mexico. Percentage increases in general and administrative expenses were
smaller than increases in production, resulting in declines in general and
administrative expenses per Mcfe produced, from $0.16 and $0.18 during the
three and nine month periods ended September 30, 1998, to $0.15 in the three
and nine month periods ended September 30, 1999.

STOCK COMPENSATION, NET. Stock compensation expenses for the three and nine
months ended September 30, 1999 were $0.6 million and $1.4 million,
reflecting increases of $0.4 million and $0.9 million, compared to the same
periods of 1998. Grants of performance shares under Basin's equity incentive
plan are required to be "marked-to-market." Accordingly, the increased
expenses reflect, in part, an increase in the price of the Company's common
stock from $12.56 per share at December 31, 1998 to $24.00 per share at
September 30, 1999.

INTEREST EXPENSE. Interest expenses for the three and nine months ended
September 30, 1999 totaled $0.1 million and $2.2 million, representing a
decrease of $0.4 million, or 80%, and an increase of $0.9 million or 70%,
respectively, as compared to 1998. The fluctuations were attributable to
changes in average borrowings, average interest rates and amounts capitalized
to unproved property costs in accordance with Statement of Financial
Accounting Standards No. 34. During the three months ended September 30,
1999, Basin had average outstanding debt of $33.0 million, with an average
effective interest rate of 6.3%, compared to average debt of $65.5 million
and an average interest rate of 6.5% in the comparable 1998 period. During
the nine months ended September 30, 1999, Basin had average

                                       11
<PAGE>

outstanding debt of $71.8 million, with an average effective interest rate of
6.6%, compared to average debt of $45.0 million and an average interest rate
of 6.6% in the comparable 1998 period. Interest costs of $0.4 million and
$1.5 million were capitalized during the three and nine months ended
September 30, 1999, as compared to $0.6 million and $1.0 million for the
three and nine months ended September 30, 1998.

INCOME TAX BENEFIT (PROVISION). The income tax provisions for 1998
approximate the amounts that would be calculated by applying statutory income
tax rates to income before income taxes. No income tax provision has been
recorded in 1999 due to an equivalent decrease in the previously established
deferred tax asset valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES

Historically, Basin's principal sources of capital have been cash flow from
operations, a revolving line of credit established with a group of banks (the
"Credit Facility"), proceeds from asset sales, and proceeds from sales of
common stock. Our principal uses of capital have been for acquisition,
exploration and development of oil and gas properties.

During June 1999, Basin realized net proceeds of approximately $66.6 million
from the sale of 4.313 million shares of its common stock through an
underwritten public offering. Initially, proceeds from this equity sale were
used to repay a portion of debt outstanding under the Credit Facility.
However, with the net proceeds from the stock offering and approximately $9
million realized from asset sales in the first half of 1999, we increased our
1999 budget for exploration and development from $65 million to $95 million.
We estimate that this budget expansion will enable us to increase our
exploratory drilling activities during the year by approximately 50% compared
to planned activities under our initial 1999 budget, and compared to our
drilling activity during 1998. Although we also pursue acquisitions of
properties with proved and probable reserves as an integral part of our
overall business strategy, we do not budget for such transactions. We plan to
continue to monitor and potentially adjust our budget to reflect changes in
the general business environment, variances from assumptions, or specific
business opportunities.

Net cash provided by operations before changes in working capital totaled
$38.0 million during the nine months ended September 30, 1999, including
$14.9 million related to the most recent fiscal quarter. Other sources of
funds during the first nine months of 1999 included $67.1 million of proceeds
from issuances of common stock and $10.6 million of asset sales. Funds were
utilized for accrual-basis capital expenditures of $57.3 million, net
repayment of $51.2 million of debt, and a $7.6 million increase in net
working capital. As of September 30, 1999, the Company had a working capital
deficit of approximately $5.6 million, long-term debt of $29.0 million, and
stockholders' equity of $171.1 million. The borrowing base presently
established under our Credit Facility is $90 million, of which $61 million
was unutilized as of September 30, 1999.

PRODUCTION. Our cash flow from operations is generally determined by our
production level and oil and gas prices. Since 1996, we have made significant
investments to initiate and then expand our operations in the Gulf of Mexico.
These investments have resulted in an increase in our production from an
average of 11.2 MMcfe per day in the second quarter of 1997, prior to
commencement of Gulf of Mexico production, to an average of 101.9 MMcfe per
day in the second quarter of 1999 and 91.8 MMcfe per day in the third quarter
of 1999. The decrease in production from the second quarter of 1999 to the
third quarter of the year was principally attributable to natural decline
rates only partially offset by initial contributions from additional
properties, and unanticipated reductions in production

                                       12
<PAGE>

from three high-rate properties due to mechanical problems. One mechanical
problem, a pipeline leak, was repaired during the third quarter. We expect to
address another, related to a casing cement failure, through drilling a
side-track well late in the current quarter or in early 2000. The third
mechanical issue related to production of reservoir sand along with natural
gas and condensate, and resulted in an elective reduction of the well's
production rate that successfully eliminated the sand production. We expect
our average production rate in the fourth quarter of 1999 to be approximately
at the level we reported for the third quarter of the year, provided no
unanticipated production disruptions or rate reductions occur. We anticipate
achieving higher production rates next year, based primarily on expected
contributions from properties with proved reserves that are currently either
producing or under development, and also on anticipated additions from
continuing exploration activity. See "Forward Looking Statements" for a
description of the kinds of risks that would cause such results not to occur.

As of November 1, 1999, we owned interests in 25 properties in the Gulf of
Mexico with proved reserves, including six that were under development for
first production. One of the properties under development, Vermilion Block
83, is expected to begin producing from three wells later in November 1999.
The remaining five properties presently under development are expected to
have first production established at various times during the year 2000.
Although we believe these 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 our ability to achieve projected results.

MARKETING AND HEDGING TRANSACTIONS. Basin's production is generally sold
under month-to-month contracts at prevailing prices. From time to time,
however, as conditions are deemed to warrant, we have entered into hedging
transactions or fixed price sales contracts for a portion of our oil and gas
production. The purposes of these transactions are to limit Basin's exposure
to future oil and gas price declines and to achieve a more predictable cash
flow. However, such contracts may also limit the benefits we would realize if
prices increase. Hedging transactions had the effect of decreasing oil and
gas sales by $3.7 million, or $0.44 per Mcfe, in the three months ended
September 30, 1999, as compared to increasing oil and gas sales by $1.7
million, or $0.28 per Mcfe, in the three months ended September 30, 1998.
Hedging transactions had the effect of decreasing oil and gas sales by $3.2
million, or $0.13 per Mcfe, in the nine months ended September 30, 1999, as
compared to increasing oil and gas sales by $2.7 million, or $0.17 per Mcfe,
in the nine months ended September 30, 1998.

Through November 5, 1999, Basin had entered into the following fixed price
swap and collar arrangements covering the period beginning October 1, 1999
(one MMBtu approximates one Mcf of gas). The positions shown are the net of
hedging contracts entered into that contractually offset certain previously
established swap arrangements at price levels that we anticipate will reduce
revenue in the fourth quarter of 1999 by approximately $0.3 million.

<TABLE>
<CAPTION>
                                     GAS SWAPS                               OIL COLLARS
                       ------------------------------------       --------------------------------
                         Average Daily        Average NYMEX       Average Daily         NYMEX               NYMEX
    Time Period         Volume (MMBtu)         Price/MMBtu        Volume (Bbl)     Floor Price/Bbl    Ceiling Price/Bbl
------------------     ---------------        -------------       -------------    ---------------    -----------------
<S>                    <C>                    <C>                 <C>              <C>                <C>
  10/1/99-12/31/99           18,300                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, we have periodically entered into spread trades or options
transactions related to oil or 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
us to lock in favorable fixed prices for future hedging positions, but can
also result in unfavorable fixed price

                                       13
<PAGE>

contracts if the reference price declines. As of November 5, 1999, Basin had
an outstanding 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 Basin, at a price equal to the
New York Mercantile Exchange February 2000 contract price less $0.41. As of
November 5, 1999, we had also sold the following call options: 20,000 MMBtu
of gas per day for the period from October 1999 through November 1999, at a
strike price of $1.95 per MMBtu; 10,000 MMBtu of gas per day for the period
from October 1999 through December 2001, at an average strike price of $2.50
per MMBtu; and 1,000 barrels of oil per day for the period from October 1999
through December 1999, at a strike price of $16.75 per barrel.

REVOLVING LINE OF CREDIT. Effective January 1, 1999, and as amended in
October 1999, we entered into a Credit Facility with our bank group that
provides for borrowings of up to $150 million. Interest rates applied to
borrowings under the Credit Facility are determined by reference to the prime
rate or LIBOR, at our election. A varying spread of 0% to 0.25% is added to
the prime rate, or a spread of 0.75% to 1.5% is added to LIBOR, based on our
facility usage ratio. Our Credit Facility contains various covenants,
including limitations on our ability to incur other debt, dispose of assets,
pay dividends, or repurchase stock. Pursuant to our Credit Facility,
substantially all of our producing properties are subject to mortgages in
favor of the banks and our remaining properties are subject to a negative
pledge.

Our Credit Facility 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 Facility is amended.
The borrowing base under the Credit Facility is scheduled to be re-determined
at six-month intervals until the revolving loan is converted into a term
loan. The borrowing base is currently established at $90 million and the next
re-determination of the borrowing base under the Credit Facility is scheduled
to occur as of December 1, 1999. Borrowing base re-determinations conducted
by the bank group reflect a number of estimates and assumptions including,
but not limited to, future production from Basin's proved properties, risk
factors for estimates of proved reserves, future oil and gas prices, future
operating and development costs, and future 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 that cannot be forecast with certitude, we cannot predict what
level of borrowing base will be established at any future determination date.

The weighted average interest rate on borrowings outstanding under the Credit
Facility at September 30, 1999 was 6.1%. Our annual interest costs will
fluctuate based upon changes in short-term interest rates and borrowings
outstanding. Assuming debt outstanding remained unchanged from the amount
outstanding at September 30, 1999, the annual impact on interest expense of a
ten percent change in the average interest rate would be approximately $0.2
million, before amounts capitalized. As the interest rate is variable and is
reflective of current market conditions, the carrying value of Basin's debt
approximates its fair value.

CAPITAL EXPENDITURES. Since the beginning of 1996, our primary exploration
activities have been focused in the shallow waters of the Gulf of Mexico,
predominantly off the coast of Louisiana. During the second half of 1998, we
began to direct a small portion of our exploration budget toward onshore
opportunities. We also pursue acquisition and development opportunities in
the vicinity of our Gulf of Mexico exploration operations, in the Rocky
Mountain region where we have an existing base of proved reserves and
producing wells, and in certain other major domestic producing basins where
we believe significant upside potential exists. Our capital expenditures are
generally discretionary and activity levels are determined by a number of
factors, including oil and gas prices, availability of

                                       14
<PAGE>

funds, quantity and character of identified investment projects, availability
of service providers, and competition.

Basin's initial budget for 1999 provided for capital investments of
approximately $65 million, subject to an increase for proceeds from
anticipated asset sales. With realization of net proceeds from the equity
offering completed in June 1999 and from asset sales, at mid-year we
increased our 1999 exploration and development budget to $95 million. Given
lower costs for oil field services in 1999 compared to 1998, and lower
planned current year investments to acquire prospect leaseholds, we expect
our expanded budget to result in significantly greater drilling activity in
1999 than in 1998, when our capital expenditures totaled $107 million. Our
current 1999 budget primarily provides for:

-    development of seven Gulf of Mexico properties with one or more discovery
     wells that had not yet commenced sustained production at the end of 1998;

-    acquisitions of seismic data and exploratory prospect leaseholds;

-    participation in approximately nine net (18 to 20 gross) exploratory wells
     in the Gulf of Mexico;

-    participation in four to eight onshore exploration opportunities, primarily
     in the Greater Green River Basin in Wyoming and the onshore Gulf Coast
     area;

-    development of projected 1999 exploratory discoveries; and

-    continued exploitation of our other offshore and onshore properties.

We also intend to pursue acquisitions of properties with proved and probable
reserves as an integral part of our overall business strategy, with the
expectation that these efforts will result in significant investment activity
over time. At this time, no portion of our 1999 budget has been specifically
allocated for acquisitions of proved properties. If such a transaction is
executed in the future, it may require a re-allocation of funds from other
planned activities and/or external financing.

During the first nine months of 1999, Basin's accrual-basis capital
expenditures totaled approximately $57.3 million. Such investments were
primarily for development of several Gulf of Mexico properties on which
discovery wells were drilled during the prior year, participation in drilling
16 (7.4 net) Gulf of Mexico wells and four (1.2 net) onshore exploratory
wells (including wells in progress at period-end), related completion costs
on twelve (5.0 net) of the Gulf of Mexico wells and one (0.6 net) onshore
well, and acquisitions of additional Gulf of Mexico 3-D seismic data and
leasehold interests.

Preliminarily, we anticipate establishing a budget for exploration and
development activities in year 2000 at a level comparable to our budget for
1999. We expect to be able to fund our planned exploration and development
activities during the balance of 1999 and in year 2000 primarily utilizing
cash flow, working capital, and additional borrowings under the Credit
Facility. However, the amount and allocation of future capital expenditures
will depend on a number of factors that are not entirely within Basin'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. Basin'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 our Credit Facility. Due to

                                       15
<PAGE>

these uncertainties, our actual capital expenditures may vary significantly
and funding sources may differ from current expectations. See "Forward
Looking Statements."

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 Basin's
disclosures under the heading "Summary--Forward-Looking Statements."

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 systems--computer systems controlling a company's accounting,
land, operations, seismic processing, and other specialized functions--but
also non-information technology 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 us and the parties with whom we do
business.

STATE OF READINESS. We have created an internal committee to assess our Year
2000 readiness and to lead our 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 Basin'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
our information technology and non-information technology systems, and have
communicated with our business partners regarding the status of their
assessment and remediation efforts, with the results summarized below.

We have completed an assessment of our information technology systems to
determine whether they are Year 2000 compliant. The licensors of both our
core financial, land and operations software system and the underlying
operating system have certified that such software is Year 2000 compliant.
Our Gulf of Mexico seismic data interpretation software system has been
upgraded to software that has been represented to be Year 2000 tested. Basin
will be upgrading our reservoir economics software in the first quarter of
2000 with a Year 2000 compliant-system. We do not expect any impact on the
functionality of our existing reservoir economics system from Year
2000-related issues because we will not be using any 2000 production data
before the upgrade is complete and because we understand that industry has
tested the existing system adequately to confirm the absence of Year 2000
issues. Additionally, we have assessed other less critical information
technology systems and we believe them to be compliant.

We also rely on non-information technology systems, such as office
telephones, facsimile machines, HVAC systems and elevators in our 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-information technology systems that may be susceptible to failure or
impairment by reason of Year 2000 problems and that are potentially critical
to our operations and business continuity. Based on that review, Basin has
sent written inquiries to the suppliers of those systems to determine the
status of their Year 2000 compliance. Our communications systems vendors, and
the property managers of our Houston and

                                       16
<PAGE>

Denver office buildings, have reported their systems to be Year 2000
compliant, although the Houston building is still awaiting results of an
outside audit to confirm their internal analysis. We have received responses
from virtually all vendors of non-information technology systems that may
affect our production operations, and on the basis of those responses believe
those systems to be compliant.

We have sent written inquiries to our significant suppliers, customers (i.e.,
production purchasers and transporters), banks, government agencies, benefit
plan providers, and others with whom we have significant business
relationships to determine the extent to which we are vulnerable to those
third parties' failure to correct their own Year 2000 issues. For Gulf of
Mexico and onshore operations these include representative vendors and
suppliers who could supply necessary goods and services to maintain our
production operations and continue any ongoing or planned drilling
activities. As of the date of this report, the following summarizes the
responses we have received:

         (a) We sent inquiries for Gulf of Mexico operations to 115 vendors
and 114 have responded with written or verbal confirmation that they are Year
2000 compliant. Most qualify that statement with the caveat that they cannot
certify the compliance of their material third-party business partners,
although all have confirmed their communication with those partners and their
receipt of some degree of assurance from them. The Minerals Management
Service of the United States Department of the Interior, which is the primary
permitting and supervisory agency over our Gulf of Mexico operations, has
reported that it is Year 2000 compliant.

         (b) For onshore operations we sent inquiries to 22 representative
vendors and suppliers and all have responded with confirmation that they are
Year 2000 compliant. We are continuing to inquire of various government
agencies having jurisdiction over our operations to confirm their compliance.

         (c) We sent 35 inquiries to production purchasers and pipeline
companies with whom we are currently doing business or expect to do business
with respect to the gathering, treatment, processing, and marketing of our
production, and we have received 30 responses confirming either current Year
2000 compliant or anticipated compliance by late 1999. We are continuing to
follow up with those that have not responded. All interstate pipelines have
certified their compliance, subject, as with our vendors, to the assumption
that the third-party systems on which they rely will be compliant. All the
pipelines have extensive contingency plans and back-up systems in place to
attempt to insure that production continues to flow and that communications
continue uninterrupted. We are continuing to discuss Year 2000 readiness with
our remaining customers to assess their compliance but believe that there is
no purchaser of any material portion of our production that will not be Year
2000 compliant (subject always to the compliance of their business partners).

         (d) With respect to our corporate and administrative operations, our
bank group, service providers (such as payroll processing), insurance agents
and underwriters, and benefit plan providers have confirmed their Year 2000
compliance or their expectation that they will be compliant by year end 1999.
We will continue to monitor their compliance efforts.

ESTIMATED COMPLIANCE COSTS. We have relied primarily on our internal staff to
assess our current Year 2000 readiness and do not anticipate extensive use of
external resources to complete our assessment or remediation. We have not
separately quantified our costs of internal resources on this project but do
not expect that we will incur material costs in remediating our information
technology 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. We have not incurred, and do not anticipate that we 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

                                       17
<PAGE>

third-party vendors, customers, or other business partners, which Basin will
not be able to fairly estimate until the extent, if any, of their Year 2000
non-compliance is known.

RISKS OF NON-COMPLIANCE AND CONTINGENCY PLANS. As indicated above, we do not
expect Year 2000 issues to cause our information technology systems to have
any material adverse impact on our business, operations or financial
condition. We believe that the potential impact, if any, of our non-critical
information technology systems not being Year 2000 compliant will at most
require employees to manually complete otherwise automated tasks or
calculations and should not impact our ability to continue exploration,
drilling, production or sales activities. We are not able to predict at this
time what the impact could be of non-information technology system failures
but do not believe that there will be a material disruption of our operations.

In light of the responses we have received to date from our business
partners, we do not believe there is a likelihood of a material impact on our
operations, business, or financial condition from the failure of a business
partner to be Year 2000 compliant. The most reasonably likely "worst case"
impacts could be impairment of our ability to deliver our production to, or
receive payment from, third parties gathering and/or purchasing our
production from individual affected facilities; impairment of the ability of
third-party suppliers or service companies to provide needed materials or
services to our planned or ongoing operations, thereby necessitating deferral
or shut-in of exploration, development or production operations; inability to
execute financial transactions with our banks or other third parties whose
systems fail or malfunction; or inability to process permit applications or
operations plans with government agencies that may delay our ability to
conduct planned activities. We have no reason to believe that any of these
contingencies will occur or that our principal vendors, customers, and
business partners will not be Year 2000 compliant.

Basin's gas production purchase contracts do not contain firm delivery
obligations. Offshore production is generally delivered on an interruptible
basis through monthly spot contracts, which permit deliveries to be
interrupted for any reason. These contracts also permit purchasers to refuse
to take contracted quantities for any reason, so disruption of a purchaser's
system for Year 2000-related reasons could result in a purchaser's failure to
take gas tendered by Basin. Either circumstance (i.e., failure of Basin to
deliver or of a purchaser to take) should not result in contractual liability
to cover the cost of acquiring replacement gas. Pipeline failure to any of
Basin's offshore platforms would cause shut-in of Basin's production, since
there would be no alternative available for transporting the gas.

Basin's material onshore gas contract does not commit specified volumes but
only those that are produced, and it is the gas purchaser that owns the
pipeline system into which most of this gas is delivered. Accordingly,
whether a production failure is well-related or pipeline related should not
in either event result in liability of Basin to the gas purchaser.

If Basin is unable to deliver gas offshore because of a failure of equipment
on a platform, Basin could incur a daily imbalance penalty pursuant to
pipeline tariff. However, electronic measuring equipment is generally owned
and maintained by the pipeline, not by Basin, so a failure in such equipment
should not expose Basin to penalty claims by the pipeline. Further, in most
cases such penalties are calculated on a monthly basis, are not imposed for
imbalances caused by force majeure circumstances, and can be avoided by
prompt nomination revisions when problems become apparent. All of Basin's
platforms are equipped with safety systems which will immediately shut-in
production if any pipeline fails to function. Similarly, all platforms
(except West Cameron Block 45, which is manned 24 hours a day) are equipped
with alarm systems which are Year 2000 compliant and which will result in
notification to Basin of any shut-in. Basin will have its marketing and
operations personnel available and

                                       18
<PAGE>

monitoring its platforms over the holiday weekend, and all pipelines and
purchasers have indicated that they will similarly have personnel and back-up
systems in place to prevent shut-ins, act quickly to alleviate interruptions,
and insure continuity of communications. Accordingly, Basin expects to be
able to respond quickly to any production interruption, which at a minimum
will permit nomination changes if necessary to avoid imbalance penalties and
will facilitate remedial action to restore production. Basin does not,
therefore, expect to incur material imbalance penalties for production
failures.

Basin does not use electronic meters to measure its gas production onshore,
and thus there should be no disruption of gas measurement or any
corresponding billing. Although electronic measuring equipment is used
offshore, Basin's platforms are also equipped with mechanical check meters
which can be used to provide integrated charts as alternative readings for
the duration of electronic malfunction. Basin's contracts also permit billing
based on nominations if actual measurements are not available. Accordingly,
Basin does not expect its gas billings to be materially disrupted by Year
2000-related measurement problems. It is possible that purchaser payments
could be delayed by failures in their internal systems, but Basin's material
gas purchasers have confirmed to us their system readiness.

With respect to oil production, once again Basin does not have firm
contractual delivery obligations and thus would not incur liability for
failure to deliver volumes to a purchaser for Year 2000-related reasons.
Basin's crude oil and condensate barrels are transported from offshore
platforms to onshore delivery points via pipelines, and there is no
alternative delivery system available if a pipeline shuts in. Because of the
automatic shut-in system on Basin's platforms, no such pipeline shut-in
should result in an oil spill, because production would cease. Onshore
production is stored in tanks at the leases or at central field gathering
points, which are emptied periodically by truck or pipeline. Basin plans to
maximize its onshore crude oil deliveries within the last two weeks of the
year to minimize the impact of any year-end disruption.

For crude oil and condensate production, Basin's mechanical platform meters
and run tickets would provide adequate measurements for sales, although it is
possible that payments could be delayed either because of the failure of
purchaser payment systems or of third-party allocation systems.

With respect to the conduct of operations, Basin has received Year 2000
compliance assurances from vendors in all critical field categories and
therefore does not expect to experience material disruptions. Nevertheless,
to the extent feasible, Basin intends to minimize its operations at year-end,
including drilling.

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 Basin or our
vendors, customers, service providers, or other entities with whom we do
business could have a material adverse impact on our business, financial
condition or operating results.

                                       19
<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,
-      our ability to find, acquire, market, develop and produce new properties,
-      the risks associated with acquisitions and 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,
-      the shorter reserve life and steeper decline rate that generally
       characterize our Gulf of Mexico reserves in comparison to those of the
       Rocky Mountain region and other onshore areas,
-      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 wells,
-      the strength and financial resources of our competitors,
-      Basin'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 Basin's properties,
-      regulatory developments, and
-      third-party Year 2000 compliance actions.

                                       20
<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
factors outlined above. 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 "Liquidity and Capital Resources
-Marketing and hedging transactions" and "Liquidity and Capital Resources
-Revolving line of credit". The Company has no exposure to foreign currency
exchange rate risks or to any other market risks.


                                       21
<PAGE>

                    BASIN EXPLORATION, INC. AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
         (a) None

         (b) None

         (c) During the period covered by this report, Basin had no sales of
             securities that were not registered under the Securities Act of
             1933, except the issuance of 21,911 shares of common stock
             pursuant to the cashless exercise of warrants issued by us on
             November 30, 1994 covering a total of 70,589 shares. Warrants
             covering a total of 97,473 shares of Basin common stock remain
             outstanding at September 30, 1999. The warrants expire on December
             31, 1999. The warrants (and the shares issued pursuant to exercise
             of the warrants) were issued in reliance upon the exemption from
             registration under Section 4(2) of the Securities Act of 1933, as
             amended, relative to sales by an issuer not involving a public
             offering.

         (d) None


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
         None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         None

ITEM 5.  OTHER INFORMATION
         None



                                       22
<PAGE>

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 12, 1999.(15)
       10.2   Key Employee Participation Plan.(2)
       10.3   Employment Agreement dated March 31, 1992 by and between Basin and
              Michael S. Smith.(3)
       10.4   Gulf Coast Geoscientist Overriding Royalty Interest Plan as
              amended November 10, 1999.(1)
       10.5   Onshore Geoscientist Overriding Royalty Interest Plan dated August
              24, 1999.(1)
       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   Amendment to Change of Control Employment Agreement dated June 2,
              1999 between Basin Exploration, Inc. and Howard L. Boigon.(15)
       10.10  Employment Agreement dated August 28, 1995 between Basin
              Exploration, Inc. and Samuel D. Winegrad.(9)
       10.11  Change of Control Agreement dated August 28, 1997 between Basin
              Exploration, Inc. and Samuel D. Winegrad.(15)
       10.12  Employment Agreement dated June 28, 1995 between Basin
              Exploration, Inc. and Neil L. Stenbuck.(9)
       10.13  Change of Control Agreement dated August 1, 1997 between Basin
              Exploration, Inc. and Neil L. Stenbuck.(1)
       10.14  Employment Agreement dated November 10, 1995 between Basin
              Exploration, Inc. and David A. Pustka.(9)
       10.15  Employment Agreement dated February 1, 1999, between Basin
              Exploration, Inc. and David A. Pustka.(14)
       10.16  Employment Agreement dated February 23, 1996 between Basin
              Exploration, Inc. and Thomas J. Corley.(10)
       10.17  Employment Agreement dated January 28, 1999, between Basin
              Exploration, Inc. and Patrick A. Jackson.(14)
       10.18  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)
</TABLE>

                                       23

<PAGE>

<TABLE>
<S>           <C>
       10.19  Lease of Office Space dated September 25, 1992, between Brookfield
              Republic Inc. and Basin Operating Company, as amended(4)+
       10.20  First Lease of Additional Office Space dated as of December 1,
              1994, between Brookfield Republic, Inc. and Basin Operating
              Company.(6)+
       10.21  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.(11)
       10.22  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(11)
       10.23  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(12)
       10.24  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(14)
       10.25  Amended and Restated Credit Agreement dated January 1, 1999 among
              the Company and NationsBank, N.A., U.S. Bank National Association
              and Union Bank of California, N.A.(14)
       10.26  First Amendment of Amended and Restated Credit Agreement dated
              July 1, 1999 among the Company, NationsBank, N.A., U.S. Bank
              National Association and Union Bank of California, N.A.(15)
       10.27  Second Amendment of Amended and Restated Credit Agreement dated
              October 15, 1999 among the Company and U.S. Bank National
              Association, Union Bank of California, Toronto Dominion (Texas),
              Inc. and Bank of America National Trust and Savings Association.(1)
       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 8-K filed on December 11, 1997,
                     and incorporated herein by reference.

                                       24
<PAGE>

              12     Filed as an Exhibit to Form 10-Q filed on May 14, 1998, and
                     incorporated herein by reference.
              13     Filed as an Exhibit to Form 10-Q filed on November 13,
                     1998, and incorporated herein by reference.
              14     Filed as an Exhibit to Form 10-K filed on March 30, 1999,
                     and incorporated herein by reference.
              15     Filed as an Exhibit to Form 10-Q filed on August 16, 1999,
                     and incorporated herein by reference.
              +      Confidential treatment has been granted for portions of
                     these Exhibits.

       (b)    Reports on Form 8-K
              None


                                   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: November 12, 1999                By: /s/ Neil L. Stenbuck
                                          ---------------------------
                                          Neil L. Stenbuck
                                          Chief Financial Officer



Date: November 12, 1999                By: /s/ James A. Tuell
                                          ---------------------------
                                          James A. Tuell
                                          Controller and
                                          Chief Accounting Officer


                                       25