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

                                   -----------


                                    FORM 10-Q


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

                  For the Quarterly Period Ended March 31, 1999


                                   -----------

                         Commission File Number 0-20872

                       ST. MARY LAND & EXPLORATION COMPANY
                       -----------------------------------
             (Exact name of Registrant as specified in its charter)


            Delaware                                   41-0518430
     -----------------------                    -----------------------
  (State or other Jurisdiction              (I.R.S. Employer Identification No.)
 of incorporation or organization)           
                                  
                        

             1776 Lincoln Street, Suite 1100, Denver, Colorado 80203
             -------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (303) 861-8140
                                 --------------
              (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 Registrant's classes of
common stock as of the latest practicable date.


As of May 13, 1999 the registrant had  10,827,067  shares of Common Stock,  $.01
par value, outstanding.


                                              


                       ST. MARY LAND & EXPLORATION COMPANY


                                      INDEX


Part I.   FINANCIAL INFORMATION                                             PAGE

          Item 1.   Financial Statements (Unaudited)

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

                    Consolidated Statements of
                    Operations - Three Months Ended
                    March 31, 1999 and 1998................................... 4

                    Consolidated Statements of
                    Cash Flows - Three Months Ended
                    March 31, 1999 and 1998 ....... .......................... 5

                    Notes to Consolidated Financial
                    Statements - March 31, 1999 .............................. 7


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


Part II.  OTHER INFORMATION

          Item 6.   Exhibits and Reports on Form 8-K ........................ 22

                    Exhibits

                    10.1    St. Mary Land & Exploration Company Incentive  Stock
                                Option Plan, As Amended on March 25, 1999
                    10.2    St. Mary Land &  Exploration  Company  Stock  Option
                                Plan, As Amended on March 25, 1999
                    10.3    Net Profits  Interest  Bonus  Plan,  As  Amended  on
                                September   19,  1996  and  July  24,  1997  and
                                January 28, 1999
                    27.1    Financial Data Schedule


                                       -2-



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

              ST. MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                      (In thousands, except share amounts)

                                     ASSETS



 
                                                                                   March 31,          December 31,
                                                                                --------------       --------------
                                                                                     1999                 1998
                                                                                --------------       --------------
                                                                                              
Current assets:
  Cash and cash equivalents                                                      $      5,727         $      7,821
  Accounts receivable                                                                  14,388               17,937
  Prepaid expenses and other                                                              564                  795
  Refundable income taxes                                                                 322                  391
  Deferred income taxes                                                                   125                  125
                                                                                --------------       --------------
           Total current assets                                                        21,126               27,069
                                                                                --------------       --------------

Property and equipment (successful efforts method), at cost:
  Proved oil and gas properties                                                       245,334              241,021
  Unproved oil and gas properties, net of impairment
           allowance of $4,155 in 1999 and $5,987 in 1998                              28,422               25,588
  Other property and equipment                                                          4,081                4,051
                                                                                --------------       --------------
                                                                                      277,837              270,660
  Less accumulated depletion, depreciation, amortization and impairment              (131,546)            (126,835)
                                                                                --------------       --------------
                                                                                      146,291              143,825
                                                                                --------------       --------------
Other assets:
  Khanty Mansiysk Oil Corporation receivable and stock                                  6,839                6,839
  Summo Minerals Corporation  investment and receivable                                 3,012                2,869
  Restricted cash                                                                           -                  720
  Other assets                                                                          3,471                3,175
                                                                                --------------       --------------
                                                                                       13,322               13,603
                                                                                --------------       --------------
                                                                                 $    180,739         $    184,497
                                                                                ==============       ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                               $     15,183         $     16,926
  Current portion of stock appreciation rights                                            358                  358
                                                                                --------------       --------------
           Total current liabilities                                                   15,541               17,284
                                                                                --------------       --------------

Long-term liabilities:
  Long-term debt                                                                       17,898               19,398
  Deferred income taxes                                                                11,153               11,158
  Stock appreciation rights                                                               279                  422
  Other noncurrent liabilities                                                          1,690                1,493
                                                                                --------------       --------------
                                                                                       31,020               32,471
                                                                                --------------       --------------
Commitments and contingencies

Stockholders' equity:
  Common stock, $.01 par value: authorized  - 50,000,000 shares: issued and
         outstanding - 11,009,867 shares in 1999 and 10,992,447 shares in 1998            110                  110
  Additional paid-in capital                                                           67,856               67,761
  Treasury stock - at cost:  182,800 shares in 1999 and 147,800 shares in 1998         (2,995)              (2,470)
  Retained earnings                                                                    69,207               69,341
                                                                                --------------       --------------
           Total stockholders' equity                                                 134,178              134,742
                                                                                --------------       --------------
                                                                                 $    180,739         $    184,497
                                                                                ==============       ==============



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

                                       -3-


              ST. MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                    (In thousands, except per share amounts)



                                                                 For the Three Months Ended
                                                                           March 31,
                                                               ------------------------------
                                                                   1999              1998
                                                               ------------      ------------
                                                                            
Operating revenues:
   Oil and gas production                                       $   13,769        $    19,025
   Gain on sale of proved properties                                   195                  -
   Other revenues                                                      146                114
                                                               ------------      -------------
           Total operating revenues                                 14,110             19,139
                                                               ------------      -------------

Operating expenses:
   Oil and gas production                                            3,994              3,943
   Depletion, depreciation and amortization                          5,402              5,377
   Impairment of proved properties                                       -                368
   Exploration                                                       1,739              3,421
   Abandonment and impairment of unproved properties                   464                303
   General and administrative                                        1,608              2,947
   Loss in equity investees                                             45                 61
   Other                                                               125                 35
                                                               ------------      -------------
           Total operating expenses                                 13,377             16,455
                                                               ------------      -------------
 
Income from operations                                                 733              2,684

Nonoperating income and (expense):
   Interest income                                                       96               155
   Interest expense                                                    (241)             (394)
                                                               -------------     -------------

Income before income taxes                                              588             2,445
Income tax expense                                                      179               775
                                                               -------------     -------------

Net income                                                      $       409       $     1,670
                                                               =============     =============

Basic net income per common share                               $       .04       $       .15
                                                               =============     =============
Diluted net income per common share                             $       .04       $       .15
                                                               =============     =============

Basic weighted average common shares outstanding                     10,846            10,983
                                                               =============     =============
Diluted weighted average common shares outstanding                   10,858            11,125
                                                               =============     =============

Cash dividend declared per share                                $      0.05       $      0.05
                                                               =============     =============




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

                                       -4-

              ST. MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (In thousands)



                                                                                          For the Three Months Ended
                                                                                                  March 31,
                                                                                        ------------------------------
                                                                                       1999                   1998
                                                                                   ------------           ------------
                                                                                                     
Reconciliation of net income to net cash provided by operating activities:
   Net income                                                                       $      409             $    1,670
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Gain on sale of proved properties                                                  (195)                     -
       Depletion, depreciation and amortization                                          5,402                  5,377
       Impairment of proved properties                                                       -                    368
       Exploration                                                                         (95)                   916
       Abandonment and impairment of unproved properties                                   464                    303
       Loss in equity investees                                                             45                     61
       Deferred income taxes                                                                (5)                   285
       Other                                                                               166                     97
                                                                                   ------------           ------------
                                                                                         6,191                  9,077
Changes in current assets and liabilities:
   Accounts receivable                                                                   3,549                  2,300
   Prepaid expenses and other                                                            1,050                     73
   Accounts payable and accrued expenses                                                (2,738)                 6,169
   Stock appreciation rights                                                                 -                   (351)
                                                                                   ------------           ------------
Net cash provided by operating activities                                                8,052                 17,268
                                                                                   ------------           ------------

Cash flows from investing activities:
   Proceeds from sale of oil and gas properties                                            804                     52
   Capital expenditures                                                                 (7,159)               (18,108)
   Acquisition of oil and gas properties                                                (1,475)                (1,189)
   Investment in and loans to Summo Minerals Corporation                                  (188)                  (235)
   Receipts from restricted cash                                                           720                      -
   Other                                                                                  (297)                   618
                                                                                   ------------           ------------
Net cash used in investing activities                                                   (7,595)               (18,862)
                                                                                   ------------           ------------

Cash flows from financing activities:
   Proceeds from long-term debt                                                          4,175                 11,700
   Repayment of long-term debt                                                          (5,675)               (12,917)
   Proceeds from sale of common stock                                                       17                      -
   Repurchase of common stock                                                             (525)                     -
   Dividends paid                                                                         (543)                  (549)
                                                                                   ------------           ------------
Net cash used in financing activities                                                   (2,551)                (1,766)
                                                                                   ------------           ------------

Net decrease in cash and cash equivalents                                               (2,094)                (3,360)
Cash and cash equivalents at beginning of period                                         7,821                  7,112
                                                                                   ------------           ------------
Cash and cash equivalents at end of period                                          $    5,727             $    3,752
                                                                                   ============           ============


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


                                       -5-

              ST. MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                   (Continued)


Supplemental   schedule  of  additional   cash  flow   information  and  noncash
activities:


    
                                                 For the Three Months Ended
                                                         March 31,
                                                 --------------------------
                                                    1999            1998
                                                 ----------      ----------
                                                       (In thousands)
                                               
                                                                 
Cash paid for interest                            $    270        $    326

Cash paid for income taxes                             115              30

Cash paid for exploration expenses                   1,485           3,266



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

                                       -6-


              ST. MARY LAND & EXPLORATION COMPANY AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


                                 March 31, 1999


Note 1 - Basis of Presentation

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim financial information. They do not include all information and notes
required by generally  accepted  accounting  principles  for complete  financial
statements.  However,  except as  disclosed  herein,  there has been no material
change  in the  information  disclosed  in the notes to  consolidated  financial
statements  included  in the  Annual  Report  on Form  10-K of St.  Mary  Land &
Exploration Company and Subsidiaries (the "Company") for the year ended December
31, 1998. In the opinion of Management,  all  adjustments  (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating  results  for the  periods  presented  are not  necessarily
indicative of the results that may be expected for the full year.

         The accounting policies followed by the Company are set forth in Note 1
to the Company's  financial  statements in Form 10-K for the year ended December
31, 1998. It is suggested that these financial statements be read in conjunction
with the financial statements and notes included in the Form 10-K.

Note 2 - Investments

         The Company accounts for its 37% ownership interest  in Summo  Minerals
Corporation  ("Summo")  under the  equity  method of  accounting.  For the three
months  ended  March 31,  1999,  the  Company  recorded a loss of $45,000 as its
equity in the losses of Summo.  The  Company  has  entered  into  agreements  to
provide  interim  financing of up to $3,471,000 for Summo's Lisbon Valley Copper
Project (the "Project") in the form of a loan due in June 1999 bearing  interest
at the prime rate plus 1%. As  security  for this loan,  Summo has  pledged  its
interest in the Project. As of March 31, 1999, $3,057,000 was outstanding  under
this loan. Additional amounts totaling $32,000 have been advanced to Summo under
this loan since March 31, 1999.  The  principal  amount of advances  made by the
Company to Summo are convertible  into shares of Summo common stock at a defined
conversion price.
 
         The Company has analyzed its net  investment in Summo and the effect of
persistent  depressed  copper prices and increased  worldwide  copper  inventory
levels on Summo's stock price.  Management  believes Summo's stock price decline
is not temporary and that its value is impaired. Consequently, the Company wrote
down its net investment in Summo to net  realizable  value in the fourth quarter
of 1998. Management believes the recorded net investment is recoverable.

                                      -7-


Note 3 - Capital Stock

         In August  1998,  the  Company's  Board of  Directors  approved a stock
repurchase  program  whereby the Company may purchase from time to time, in open
market  purchases or negotiated  sales,  up to one million  shares of its common
stock. During the first quarter of 1999 the Company repurchased 35,000 shares of
its common  stock  under the program at a weighted  average  price of $15.00 per
share,  bringing  the total  number of shares  repurchased  under the program to
182,800 at a weighted-average price of $16.38 per share.  Management anticipates
that  additional  purchases  of  shares  by the  Company  may  occur  as  market
conditions  warrant.  Such  purchases will be funded with internal cash flow and
borrowings under the Company's credit facility.

Note 4 - Income Taxes

         Federal  income tax  expense  for 1999 and 1998 differ from the amounts
that would be provided by applying the statutory U.S. Federal income tax rate to
income  before  income  taxes  primarily  due to Section 29 credits,  percentage
depletion, and the effect of state income taxes.

                                      -8-



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

                                    Overview

     St. Mary Land &  Exploration  Company  ("St.  Mary" or the  "Company")  was
founded in 1908 and  incorporated in Delaware in 1915. The Company is engaged in
the  exploration,  development,  acquisition  and  production of natural gas and
crude oil with  operations  focused in five core  operating  areas in the United
States:  the Mid-Continent  region;  the ArkLaTex region;  south Louisiana;  the
Williston Basin; and the Permian Basin.

         The  Company's  objective  is to build value per share by focusing  its
resources within selected basins in the United States where management  believes
established  acreage  positions,   long-standing   industry   relationships  and
specialized   geotechnical  and  engineering  expertise  provide  a  significant
competitive  advantage.   The  Company's  ongoing  development  and  exploration
programs are complemented by less predictable opportunities to acquire producing
properties having significant  exploitation  potential,  to monetize assets at a
premium and to repurchase shares of its common stock at attractive values.

         Internal  exploration,  drilling and production  personnel  conduct the
Company's  activities  in the  Mid-Continent  and ArkLaTex  regions and in south
Louisiana.  Activities in the Williston  Basin are  conducted  through  Panterra
Petroleum  ("Panterra"),  a general  partnership in which the Company owns a 74%
interest.  The Company  proportionally  consolidates  its  interest in Panterra.
Activities in the Permian Basin are primarily  contracted through an oil and gas
property management company with extensive experience in the basin.

         The Company's presence in south Louisiana includes active management of
its fee lands from which  significant  royalty  income is derived.  St. Mary has
encouraged  development drilling by its lessees,  facilitated the origination of
new  prospects  on acreage not held by  production  and  stimulated  exploration
interest in deeper,  untested horizons. The Company's discovery on its fee lands
at South Horseshoe Bayou in early 1997 and the successful  confirmation  well in
early 1998 proved that significant  accumulations of gas are sourced and trapped
at  depths  below  16,000  feet.  In  August  1998 one of the wells in the South
Horseshoe  Bayou  project  experienced  shut-in  production  due  to  mechanical
problems.  These mechanical problems and premature water encroachment caused the
Company to reduce the project's proved reserves by 38.8 BCFE, of which 23.7 BCFE
were  reclassified to the probable  reserve  category and 15.1 BCFE were written
off. An untested fault block to the north of the existing production is expected
to spud at South Horseshoe Bayou in the third quarter of 1999.

                                       -9-





         St.  Mary seeks to make  selective  niche  acquisitions  of oil and gas
properties that complement its existing operations, offer economies of scale and
provide further  development and exploration  opportunities based on proprietary
geologic  concepts.  Management  believes  that the  Company's  focus on smaller
negotiated transactions where it has specialized geologic knowledge or operating
experience  has enabled it to acquire  attractively-priced  and  under-exploited
properties.

         The results of operations include several significant acquisitions made
during recent years and their subsequent further  development by the Company. In
1996, 1997 and 1998 the Company  purchased a series of interests  totaling $15.8
million that formed a new core area of focus in the Permian  Basin of New Mexico
and west Texas. In late 1998 St. Mary, through Panterra,  acquired the interests
of Texaco,  Inc. in several fields in the Williston  Basin for $2.1 million.  In
1997  the  Company  acquired  an  85%  working  interest  in  certain  Louisiana
properties of Henry Production  Company for $3.9 million,  and the remaining 15%
working  interest in these properties was acquired in the first quarter of 1999.
Also in the first quarter of 1999 St. Mary acquired additional  interests in the
West Cameron  Block 39 property located offshore Louisiana and other  properties
in Louisiana totaling $1.2 million.

         The Company  pursues  opportunities  to monetize  selected  assets at a
premium  and as part of its  continuing  strategy to focus and  rationalize  its
operations.  In late 1998 St. Mary sold a package of non-strategic properties in
Oklahoma to ONEOK  Resources  Company  for  $22.2 million and sold its remaining
minor  interests  in  Canada  for  $1.2  million,  realizing  a  pre-tax gain of
$7.7 million.

         St.  Mary  has  one  principal   equity   investment,   Summo  Minerals
Corporation  ("Summo").  The Company accounts for its investments in Summo under
the equity  method and includes its share of the income or loss from this entity
in its consolidated results of operations.

         In June 1998 the  Company's  stockholders  approved  an increase in the
number of  authorized  shares of the Company's  common stock from  15,000,000 to
50,000,000 shares.

         In August 1998 the  Company's  Board of  Directors  authorized  a stock
repurchase  program  whereby St. Mary may purchase  from  time-to-time,  in open
market  transactions  or  negotiated  sales,  up to  1,000,000 of its own common
shares.  The Company has  repurchased a total of 182,800  shares of common stock
under this plan in 1998 and the first quarter of 1999.

                                      -10-




         The  Company  seeks to protect  its rate of return on  acquisitions  of
producing  properties  by hedging up to the first 24 months of an  acquisition's
production  at  prices  approximately  equal  to  those  used  in the  Company's
acquisition  evaluation and pricing model.  The Company also  periodically  uses
hedging  contracts to hedge or otherwise  reduce the impact of oil and gas price
fluctuations on production from each of its core operating  areas. The Company's
strategy is to ensure certain  minimum levels of operating cash flow and to take
advantage of windows of favorable commodity prices. The Company generally limits
its aggregate  hedge position to no more than 50% of its total  production.  The
Company seeks to minimize  basis risk and indexes the majority of its oil hedges
to NYMEX  prices and the  majority of its gas hedges to various  regional  index
prices  associated  with  pipelines in proximity to the  Company's  areas of gas
production.  The Company has hedged approximately 41% of its remaining estimated
1999 gas production at an average fixed price of $2.09 per MMBtu,  approximately
30% of its remaining  estimated 1999 oil production at an average fixed price of
$16.16 per Bbl,  approximately  15% of its estimated  2000 oil  production at an
average fixed price of $15.54 per Bbl and less than 1% of its estimated 2001 oil
production at an average fixed price of $15.76.  The Company has also  purchased
options  resulting  in  price  collars  on  approximately  10% of the  Company's
remaining  estimated 1999 gas production  with price ceilings  between $2.00 and
$3.00 per MMBtu and  price  floors  between  $1.50 and $2.00 per MMBtu and price
collars on approximately 6% of its remaining  estimated 1999 oil production with
a price floor of $15.00 and a price  ceiling of $16.85.  In 2000 the Company has
price collars on  approximately  16% of its estimated gas production  with price
ceilings between $2.50 and $2.65 and a price floor of $2.00 and approximately 6%
of its estimated oil production  with a price floor of $15.00 and price ceilings
between $16.85 and $17.75.

         This Quarterly Report on Form 10-Q includes certain statements that may
be deemed to be  "forward-looking  statements" within the meaning of Section 27A
of the  Securities  Act of 1933, as amended,  and Section 21E of the  Securities
Exchange Act of 1934,  as amended.  All  statements,  other than  statements  of
historical facts, included in this Form 10-Q that address activities,  events or
developments that the Company expects, believes or anticipates will or may occur
in the  future,  including  such  matters  as future  capital,  development  and
exploration expenditures (including the amount and nature thereof),  drilling of
wells,  reserve estimates (including estimates of future net revenues associated
with such  reserves and the present value of such future net  revenues),  future
production of oil and gas, repayment of debt, business strategies, expansion and
growth of the Company's  operations,  Year 2000 readiness and other such matters
are   forward-looking   statements.   These  statements  are  based  on  certain
assumptions  and analyses made by the Company in light of its experience and its
perception  of  historical   trends,   current   conditions,   expected   future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
general economic and business  conditions,  the business  opportunities (or lack
thereof) that may be presented to and pursued by the Company, changes in laws or
regulations  and other  factors,  many of which are  beyond  the  control of the
Company.  Readers are cautioned  that any such  statements are not guarantees of
future performance and that actual results or developments may differ materially
from those projected in the forward-looking statements.


                                      -11-



Results of Operations

         The following table sets forth selected  operating data for the periods
         indicated:



                                              Three Months Ended March 31,
                                         ---------------------------------------
                                             1999                      1998
                                         -------------             -------------
                                             (In thousands, except BOE data)
                                                              
Oil and gas production
 revenues:
    Working interests                     $    13,139               $    17,010
    Louisiana royalties                           630                     2,015
                                         -------------             -------------
        Total                             $    13,769               $    19,025
                                         =============             =============

Net production:
   Oil (MBbls)                                    283                       321
   Gas (MMcf)                                   5,340                     6,359
                                         -------------             -------------
   MBOE                                         1,173                     1,381
                                         =============             =============


Average sales price (1):
   Oil (per Bbl)                          $     11.51               $     14.90
   Gas (per Mcf)                                 1.97                      2.24


Oil and gas production costs:
   Lease operating expense                $     3,096               $     2,841
   Production taxes                               897                     1,102
                                         -------------             -------------
     Total                                $     3,993               $     3,943
                                         =============             =============

Additional per BOE data:
   Sales price                            $     11.74               $     13.78
   Lease operating expense                       2.64                      2.06
   Production taxes                               .77                       .80
                                         -------------             -------------
      Operating margin                    $      8.33               $     10.92
   Depletion, depreciation and
      amortization                        $      4.61               $      3.89
   Impairment of proved
      Properties                                    -                       .27
                                                   
   General and administrative                    1.37                      2.13


- -----------------------------
      (1) Includes the effects of the Company's hedging activities.


         Oil and Gas  Production  Revenues.  Oil  and  gas  production  revenues
decreased  $5.2  million,  or 28% to $13.8 million for the first quarter of 1999
compared to $19.0 million for the first quarter of 1998. Oil production  volumes
decreased 12% and gas production  volumes decreased 16% for the first quarter of
1999  compared to 1998.  Average net daily  production  declined to 13.0 MBOE in
1999  compared  to 15.3 MBOE in the  comparable  quarter  of 1998.  The  decline
resulted from the  significant  loss of production at the South  Horseshoe Bayou
Field  in 1998  and  1999 and the  sale of  certain  Oklahoma  properties  which
occurred in late 1998.

                                      -12-




         The average  realized oil price for the first quarter of 1999 decreased
23% to $11.51 per Bbl, while average  realized gas prices decreased 12% to $1.97
per Mcf, from their respective 1998 levels. The Company hedged  approximately 6%
of its oil  production for the first quarter of 1999 or 18.0 MBbls at an average
NYMEX price of $16.05 and realized a $51,000 increase in oil revenue or $.18 per
Bbl for the first  quarter  of 1999 on these  contracts  compared  to a $200,000
increase or $.62 per Bbl in 1998.  The Company also hedged 51% of its 1999 first
quarter gas  production  or 3.1  million  MMBtu at an average  indexed  price of
$2.096 and realized a $1.4 million  increase in gas revenues or $.25 per Mcf for
the first  quarter  of 1999 from these  hedge  contracts  compared  to a $78,000
increase in gas revenues or $.01 per Mcf in 1998.

         Oil and Gas Production  Costs.  Oil and gas production costs consist of
lease operating expense and production  taxes.  Total production costs increased
$51,000  or 1% for the first  quarter  of 1999 from  comparable  levels in 1998.
Total  oil and gas  production  costs  per BOE  increased  19% to  $3.41 in 1999
compared with $2.86 for the 1998 first quarter due to increased  workover  costs
and the  December  1998 sale of  producing  properties  in  Oklahoma  with lower
production costs per BOE.

         Depreciation,  Depletion,  Amortization  and Impairment.  Depreciation,
depletion and amortization  expense ("DD&A")  increased  $25,000 or less than 1%
for the first quarter of 1999 from  comparable  levels in 1998. DD&A expense per
BOE  increased  18% to $4.61 in the first  quarter of 1999  compared to $3.89 in
1998  due to the  reduction  in  volumes  produced  at  South  Horseshoe  Bayou,
decreased  royalty  production  from the Fee Lands,  the effect of continued low
prices on the  Company's oil and gas reserves at March 31, 1999 and the December
1998 sale of producing  properties  in Oklahoma with lower DD&A expense per BOE.
The Company  recorded no  impairments  of proved oil and gas  properties for the
first quarter of 1999 compared with $368,000 in 1998.

         Abandonment and impairment of unproved properties increased $160,000 or
53% to $463,000 for the first  quarter of 1999  compared to $303,000 in 1998 due
to additional abandonments of expired leases in 1999.

         Exploration.  Exploration expense decreased $1.7 million or 49% to $1.7
million for the first quarter of 1999  compared  with $3.4 million in 1998.  The
decrease  results  from lower delay rental  payments  and  improved  exploratory
drilling results.

         General  and  Administrative.   General  and  administrative   expenses
decreased  $1.3  million or 45% in the first  quarter of 1999  compared  to 1998
primarily  due to a decrease in  compensation  expense  related to  decreases in
bonus and stock  appreciation  rights  expenses.  This decrease in  compensation
expense was  partially  offset by an increase in rent expense and a reduction in
overhead  reimbursements  from outside interest owners in properties operated by
the Company.

         Other  operating  expenses  primarily  consist  of  legal  expenses  in
connection with ongoing oil and gas activities.  This expense  increased $90,000
or 257% for the first  quarter  of 1999  compared  with 1998,  primarily  due to
increased  activity in the pending litigation that seeks to recover damages from
the drilling  contractor for the St. Mary Land & Exploration No. 1 well at South
Horseshoe Bayou.

         Equity in Loss of Summo Minerals Corporation.  The Company accounts for
its  investment  in Summo  under the  equity  method and  includes  its share of
Summo's income or loss in its results of operations.  The equity in the net loss
of Summo was $45,000 for the first quarter of 1999 and $61,000 in 1998.

                                      -13-



         Non-Operating  Income and Expense. Net interest and other non-operating
expense  decreased  $94,000 to $145,000 in the first quarter of 1999 compared to
$239,000 in 1998 due to decreased  borrowings  resulting from cash received from
the sale of Oklahoma properties in late 1998.

         Income  Taxes.  Income tax expense was $179,000 in the first quarter of
1999 and  $775,000 in 1998,  resulting  in  effective  tax rates of 30% and 32%,
respectively.  The reduced  expense  reflects  lower net income from  operations
before income taxes for 1999 due primarily to lower oil and gas  production  and
prices.  The  reduced  rate  reflects a higher  impact on lower net income  from
Section 29 credits and percentage depletion in 1999.

         Net Income.  Net income for the first  quarter of 1999  decreased  $1.3
million or 76% to $409,000 compared to $1.7 million in 1998. The 28% decrease in
oil and gas revenues caused by reductions in both price and produced  volumes in
the first  quarter of 1999 was  partially  offset by  significant  decreases  in
exploration expense, general and administrative expense and income tax expense.

Liquidity and Capital Resources

         The  Company's  primary  sources of liquidity  are the cash provided by
operating  activities,  debt financing,  sales of  non-strategic  properties and
access to the capital markets. The Company's cash needs are for the acquisition,
exploration  and  development  of oil and gas  properties and for the payment of
debt  obligations,   trade  payables  and  stockholder  dividends.  The  Company
generally  finances its  exploration  and  development  programs from internally
generated  cash  flow,  bank  debt and cash and cash  equivalents  on hand.  The
Company  continually  reviews its capital expenditure budget based on changes in
cash flow and other factors.

         Cash Flow.  The  Company's  net cash  provided by operating  activities
decreased $9.2 million or 53% to $8.1 million in the first quarter 1999 compared
to $17.3 million in the first quarter 1998. Revenues decreased significantly due
to decreased  production at South  Horseshoe Bayou and in Oklahoma from the sale
of producing properties and due to lower prices. Additionally,  accounts payable
and accrued expenses decreased  significantly in the first quarter 1999 compared
to a  significant  increase  in the  first  quarter  1998 due to lower  drilling
activity in 1999.  These  factors  were only  partially  offset by  decreases in
general and administrative expenses and exploration expense.

         Net cash used in investing activities decreased $11.3 million or 60% to
$7.6 million in the first  quarter 1999  compared to $18.9  million in the first
quarter  1998.  The decrease is  primarily  due to a $10.9  million  decrease in
capital expenditures in the first quarter 1999. Total first quarter 1999 capital
expenditures,  including acquisitions of oil and gas properties, decreased $10.9
million  or 60% to $7.2  million in the first  quarter  1999  compared  to $18.1
million in the first quarter 1998.

         A portion of the proceeds from sales of oil and gas  properties in 1998
were applied to  acquisitions  of oil and gas  properties in 1999 under tax-free
exchanges.  In a  tax-free  exchange  of  properties  the tax  basis of the sold
property carries over to the acquired property for tax purposes. Gains or losses
for tax purposes are  recognized by  amortization  of the lower tax basis of the
property  throughout its remaining life or when the acquired property is sold or
abandoned.

                                      -14-



         Net cash used in financing activities increased $785,000 or 44% to $2.6
million in the first  quarter 1999 compared to $1.8 million in the first quarter
1998. The increase was primarily due to the  repurchase of the Company's  common
stock for $525,000 in the first quarter of 1999. No such  repurchases  were made
in the first quarter 1998.

         The  Company  had $5.7  million  in cash and cash  equivalents  and had
working capital of $5.6 million as of March 31, 1999 compared to $7.8 million in
cash and cash equivalents and working capital of $9.8 million as of December 31,
1998.  Decreases in accounts  receivable and in cash and cash  equivalents  were
partially offset by a decrease in accounts payable.

         Credit  Facility.  On June 30,  1998,  the Company  entered  into a new
long-term  revolving credit agreement that replaced the agreement dated March 1,
1993 and amended in April  1996.  The new credit  agreement  specifies a maximum
loan amount of $200.0  million.  The lender may  periodically  re-determine  the
aggregate  borrowing  base depending upon the value of the Company's oil and gas
properties  and other assets.  In May 1999 the borrowing  base was reduced $25.0
million by the lender to $80.0  million as a result of reduced  reserve  pricing
and the write down of South  Horseshoe  Bayou.  The accepted  borrowing base was
$40.0 million at December 31, 1998. The credit  agreement has a maturity date of
December 31, 2005, and includes a revolving  period that matures on December 31,
2000.  The Company can elect to allocate up to 50% of available  borrowings to a
short-term  tranche  due in 364 days.  The  Company  must  comply  with  certain
covenants including maintenance of stockholders' equity at a specified level and
limitations on additional  indebtedness.  As of March 31, 1999, and December 31,
1998, $9.0 million and $10.5 million,  respectively,  was outstanding under this
credit agreement. These outstanding balances accrue interest at rates determined
by the Company's debt to total capitalization ratio. During the revolving period
of the loan, loan balances accrue interest at the Company's option of either (a)
the higher of the Federal  Funds Rate plus 1/2% or the prime rate,  or (b) LIBOR
plus 1/2% when the Company's debt to total  capitalization  is less than 30%, up
to a maximum of either (a) the higher of the Federal Funds Rate plus 5/8% or the
prime rate plus 1/8%, or (b) LIBOR plus 1-1/4% when the Company's  debt to total
capitalization is equal to or greater than 50%.

         Panterra,  in which the Company has a 74% general partnership interest,
has a  separate  credit  facility  with a  $21.0  million  borrowing  base as of
December  31,  1998,  and $12.0  million  outstanding  as of March 31,  1999 and
December 31, 1998.  In June 1997,  Panterra  entered into this credit  agreement
replacing a previous  agreement  due March 31,  1999.  The new credit  agreement
includes a revolving  period  converting to a five-year  amortizing loan on June
30, 2000. During the revolving period of the loan, loan balances accrue interest
at Panterra's option of either the bank's prime rate or LIBOR plus 3/4% when the
Partnership's  debt to partners' capital ratio is less than 30%, up to a maximum
of either the bank's prime rate or LIBOR plus 1-1/4% when the Partnership's debt
to partners' capital ratio is greater than 100%.

         Common  Stock.  In June 1998 the  Company's  stockholders  approved  an
increase in the number of authorized  shares of the Company's  common stock from
15,000,000 to 50,000,000 shares.

         In August 1998 the  Company's  Board of  Directors  authorized  a stock
repurchase  program  whereby St. Mary may purchase  from  time-to-time,  in open
market  transactions or negotiated  sales, up to 1,000,000 of its common shares.
During  1998 the  Company  repurchased  a total of 147,800  shares of its common
stock under the program for $2.5 million at a  weighted-average  price of $16.71
per share.  The Company  repurchased an additional  35,000 shares for $15.00 per
share during the first quarter of 1999.  Management  anticipates that additional
purchases of shares by the Company may occur as market conditions warrant.  Such
purchases  will be  funded  with  internal  cash flow and  borrowings  under the
Company's credit facility.

                                      -15-




         Capital  and Exploration  Expenditures.  The Company's expenditures for
exploration and development of oil and gas properties and  acquisitions  are the
primary use of its capital resources.

         Outlook. The Company believes that its existing capital resources, cash
flows from  operations  and  available  borrowings  are  sufficient  to meet its
anticipated capital and operating requirements for 1999.

         The Company generally allocates approximately 85% of its capital budget
to low to moderate-risk exploration,  development and niche acquisition programs
in its core  operating  areas.  The remaining  portion of the Company's  capital
budget  is  directed  to  higher-risk,  large  exploration  ideas  that have the
potential to increase the Company's reserves by 25% or more in any single year.

         The  Company  anticipates  spending  approximately  $71.0  million  for
capital and exploration  expenditures  in 1999 with $37.0 million  allocated for
ongoing  exploration and development in its core operating areas,  $25.0 million
for  niche   acquisitions   of  producing   properties   and  $9.0  million  for
large-target, higher-risk exploration and development.

         Anticipated ongoing  exploration and development  expenditures for each
of the Company's core areas include $22.0 million in the  Mid-Continent  region,
$6.5 million in the ArkLaTex  region,  $2.0 million in the  Williston  Basin and
$6.5 million allocated within the Permian Basin and south Louisiana regions.

         The Company  has  several  prospects  in its  pipeline of  large-target
exploration  ideas.  Tests are currently  being  drilled at the  Stallion,  West
Cameron Block 39 and Edgerly  projects,  and the Company expects to commence the
drilling of four  additional  significant  tests in 1999 at its South  Horseshoe
Bayou,  North Parcperdue and Patterson  projects in south Louisiana,  and at its
Carrier project in east Texas.

         The  amount  and   allocation   of  future   capital  and   exploration
expenditures  will  depend  upon a number of  factors  including  the  number of
available  acquisition  opportunities,  the Company's ability to assimilate such
acquisitions, the impact of oil and gas prices on investment opportunities,  the
availability  of  capital  and  borrowing  capability  and  the  success  of its
development  and exploratory  activity which could lead to funding  requirements
for further development.

         The Company continuously evaluates opportunities in the marketplace for
oil  and  gas  properties  and,  accordingly,  may be a  buyer  or a  seller  of
properties at various times.  St. Mary will continue to emphasize  smaller niche
acquisitions utilizing the Company's technical expertise,  financial flexibility
and structuring  experience.  In addition,  the Company is also actively seeking
larger  acquisitions of assets or companies that would afford  opportunities  to
expand the Company's existing core areas, to acquire additional geoscientists or
to gain a significant  acreage and production foothold in a new basin within the
United States.

         The Company,  through a subsidiary,  owns 9.9 million  shares or 37% of
Summo.  The persistence of depressed  commodity  prices and increased  worldwide
inventory  levels  of  copper  have  caused  Summo's  stock  price  to  decline.
Management  believes that this stock price decline is not temporary and that its
value is impaired.  Consequently,  the Company wrote down its net  investment in
Summo to net realizable value in the fourth quarter of 1998. Management believes
the recorded net investment is recoverable.

                                      -16-




         The Company has agreed to provide Summo with interim financing of up to
$3.5 million for Summo's  Lisbon  Valley Copper  Project (the  "Project") in the
form of a loan bearing  interest at the prime rate plus 1% due in June 1999.  As
security  for this loan,  Summo  pledged  its  interest  in the  Project.  As of
December  31,  1998  and  March  31,  1999,   $2.9  million  and  $3.1  million,
respectively,  were  outstanding  under the loan.  Additional  amounts  totaling
$32,000 have been advanced to Summo under this loan since March 31, 1999. At the
Company's  option,  the principal amounts advanced by the Company under the note
are convertible into shares of Summo common stock at a defined conversion price.

         Future  development  and  financial  success of the Project are largely
dependent on the market price of copper,  which is  determined  in world markets
and is subject to  significant  fluctuations.  Management  believes  that copper
prices will  recover and that the Project will have  considerable  value at that
time. The Company has the ability to fund the carrying costs of the property and
the intent to retain its interest in the Project  until copper  prices  recover.
However, there can be no assurance that the Company will realize a return on its
investment in Summo or the Project.

         In February  1997 the Company  sold its  interest in the Russian  joint
venture to KMOC. The Company received cash  consideration of approximately  $5.6
million before transaction costs, KMOC common stock valued at approximately $1.9
million,  and a receivable in a form equivalent to a retained production payment
of  approximately  $10.1 million plus interest at 10% per annum from the limited
liability  company  formed to hold the  Russian  joint  venture.  The  Company's
receivable is collateralized  by the partnership  interest sold. The Company has
the right,  subject to certain  conditions,  to  require  KMOC to  purchase  the
Company's receivable from the net proceeds of an initial public offering of KMOC
common stock.  Alternatively,  the Company may elect to convert all or a portion
of its receivable into KMOC common stock  immediately prior to an initial public
offering of KMOC common stock or on or after February 11, 2000, whichever occurs
first.  Uncertain  economic  conditions  in Russia  and lower  oil  prices  have
affected the carrying value of the  convertible  receivable.  Consequently,  the
Company reduced the carrying amount of the receivable to its minimum  conversion
value during 1998, incurring a pre-tax charge to operations of $4.6 million.

         Impact of the Year  2000  Issue.  The  following  Year 2000  statements
constitute a Year 2000 Readiness  Disclosure within the meaning of the Year 2000
Information and Readiness Disclosure Act of 1998.

         The Year 2000 Issue is the result of  computer  programs  and  embedded
computer chips being written or manufactured  using two digits rather than four,
or other methods,  to define the applicable year. Computer programs and embedded
chips that are  date-sensitive  may recognize a date using "00" as the year 1900
rather  than  the  year  2000.   This  could  result  in  a  system  failure  or
miscalculations  causing  disruptions  of  operations,  including,  among  other
things,  a temporary  inability to process  transactions,  operate  equipment or
engage in normal  business  activities.  Failure to correct a material Year 2000
compliance  problem could result in an interruption  in, or inability to conduct
normal  business  activities or operations.  Such failures could  materially and
adversely  affect the Company's  results of operations,  cash flow and financial
condition.

                                      -17-





         The Company's  approach to determining and mitigating the impact on the
Company of Year 2000 compliance issues is comprised of five phases:

i)       Review  and  assessment  of  all  internal  information technology (IT)
         systems and significant non-IT systems for Year 2000 compliance;
ii)      Identify and prioritize systems with Year 2000 compliance issues;
iii)     Repair or replace and test non-Year 2000 compliant systems;
iv)      Survey and assess the Year 2000 readiness of the Company's  significant
         vendors, suppliers, purchasers and transporters of oil and natural gas;
         and,
v)       Design and implement  contingency plans for those systems, if any, that
         cannot be made Year 2000 compliant before December 31, 1999.

         The Company completed phases i) and ii) of its plan by August 1998, and
identified the systems  requiring repair or replacement in order to be Year 2000
compliant. This review and assessment was completed using outside consultants as
well as Company personnel. The Company determined that of its major systems, the
software it uses for reservoir engineering,  its telephone system, a significant
number of the  personal  computers  used by Company  personnel  and the computer
system used by Panterra should be updated or replaced.

         Phase iii) of the Company's plan of repair and  replacement of non-Year
2000 compliant systems is approximately  90% complete.  The telephone system and
personal  computers  have been  replaced with Year 2000  compliant  hardware and
software as part of the Company's ongoing upgrade program. The Company purchased
a  Year  2000  compliant  release  of  the  reservoir   engineering  system  and
anticipates conversion to and testing of the new system in the second quarter of
1999.  In the fourth  quarter of 1998  Panterra  licensed a Year 2000  compliant
system and  converted to the new system in January  1999.  The systems that have
been either  upgraded or replaced  will be further  tested to confirm their Year
2000 compliance. This testing is planned for completion in the second quarter of
1999. The Company  presently  believes that other less significant IT and non-IT
systems can be upgraded to mitigate any Year 2000 issues with  modifications  to
existing software or conversions to new systems. Modifications or conversions to
new systems for the less significant  systems,  if not completed  timely,  would
have  neither a material  impact on the  operations  of the  Company  nor on its
results of operations.

         Under   phase  iv)  of  the  plan,   the   Company   initiated   formal
communications  with its  significant  vendors,  suppliers  and  purchasers  and
transporters of oil and natural gas to determine the extent to which the Company
is vulnerable to those third parties'  failures to remediate their own Year 2000
issues.  The  process of  collecting  information  from these  third  parties is
approximately 45% complete.  All of the responses  received to date are positive
in assuring that the respondents  will be Year 2000 compliant on a timely basis.
Completion of phase iv) of the plan is anticipated in the third quarter of 1999.
Until this phase of the plan is complete, management cannot currently predict if
third party compliance issues will materially  affect the Company's  operations.
There can be no  assurance  that the  systems  of these  third  parties  will be
converted  timely, or that a failure to remediate Year 2000 compliance issues by
another company would not have a material adverse effect on the Company.

                                      -18-




         Phase v) of the Company's Year 2000 plan, the design and implementation
of contingency  plans for those  systems,  if any, that cannot be made Year 2000
compliant before December 31, 1999, will be addressed in the last half of 1999.

         Through March 31, 1999, the Company has spent approximately $450,000 on
its Year 2000  efforts.  This includes the costs of  consultants  as well as the
cost of repair or replacement of  non-compliant  hardware and software  systems.
Additional  costs to complete the Company's plan are estimated at  approximately
$50,000.  The  Company  has not  specifically  tracked  its  internal  costs  of
addressing the Year 2000 issue. However, management does not believe these costs
to be material.

         The  Company  has  not  completed  a  comprehensive   analysis  of  the
operational  problems and costs that would be  reasonably  likely to result from
the Company or its significant third parties' failure to timely complete efforts
to remediate Year 2000 issues.  Potential "worst case" impacts could include the
inability of the Company to deliver its production to, or receive  payment from,
third parties purchasing or transporting the Company's production; the inability
of third party  vendors to provide  needed  materials or services to the Company
for ongoing or future exploration,  development or producing operations; and the
inability  of the Company to execute  financial  transactions  with its banks or
third parties whose systems fail or malfunction.

         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.  However,  there can be no assurance
that the Company will be able to identify and correct all Year 2000  problems or
implement a satisfactory contingency plan. Therefore,  there can be no assurance
that the Year 2000 issue will not  materially  impact the  Company's  results of
operations or adversely  affect its  relationships  with vendors,  customers and
other business partners.

Accounting Matters

         In June 1998, the FASB issued SFAS No. 133,  "Accounting for Derivative
Instruments and Hedging Activities," effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The Statement  requires companies to report
all  derivatives  at fair value as either  assets or  liabilities  and bases the
accounting  treatment  of the  derivatives  on the  reasons an entity  holds the
instrument.  The Company is currently  reviewing the effects this Statement will
have  on  the  financial   statements  in  relation  to  the  Company's  hedging
activities.

Effects of Inflation and Changing Prices

         Within  the United  States  inflation  has had a minimal  effect on the
Company. The Company cannot predict the future extent of any such effect.

         The  Company's  results of  operations  and cash flows are  affected by
material changes in oil and gas prices. Oil and gas prices are strongly impacted
by global  influences on the supply and demand for petroleum  products.  Oil and
gas prices are further impacted by the quality of the oil and gas to be sold and
the location of the  Company's  producing  properties in relation to markets for
the  products.  Oil and gas price  increases or decreases  have a  corresponding
effect on the Company's revenues from oil and gas sales. Oil and gas prices also
affect the prices  charged for  drilling  and related  services.  If oil and gas
prices  increase,  there  could be a  corresponding  increase in the cost to the
Company for drilling  and related  services,  although  offset by an increase in
revenues.  Also, as oil and gas prices  increase,  the cost of  acquisitions  of
producing properties  increases,  which could limit the number and accessibility
of quality properties on the market.

                                      -19-




         Material  changes in oil and gas prices  affect the  current and future
value of the Company's estimated proved reserves and the borrowing capability of
the Company,  which is largely based on the value of such proved  reserves.  Oil
and gas price changes have a corresponding  effect on the value of the Company's
estimated  proved  reserves and the  available  borrowings  under the  Company's
credit facility.

         The last  half of 1998  and  most of the  first  quarter  of 1999  were
characterized by historically low oil prices and weakening gas markets.  Capital
has left the oil and gas industry and has caused a  significant  decrease in the
number  of  working  drilling  rigs.  Consequently,  in early  1999  there is an
abundance of available  drilling rigs,  personnel,  supplies and services with a
corresponding reduction of costs. Oil and gas prices have begun to increase from
December  31, 1998  levels.  If prices  continue to  increase,  there could be a
return to shortages  and  corresponding  increases in the cost to the Company of
exploration, drilling and production of oil and gas.

Financial Instrument Market Risk

         Directly, and through its 74% investment in Panterra, the Company holds
derivative  contracts  and  financial  instruments  that  have cash flow and net
income exposure to changes in commodity prices or interest rates.  Financial and
commodity-based  derivative  contracts  are used to limit the risks  inherent in
some crude oil and natural gas price changes that have an effect on the Company.
In prior years the Company has occasionally hedged interest rates, and may do so
in the future should circumstances warrant.

         The Company's Board of Directors has adopted a policy regarding the use
of derivative  instruments.  This policy  requires every  derivative used by the
Company to relate to underlying offsetting positions,  anticipated  transactions
or firm  commitments.  It prohibits the use of  speculative,  highly  complex or
leveraged  derivatives.  Under the policy,  the Chief Executive Officer and Vice
President of Finance must review and approve all risk  management  programs that
use  derivatives.  The Audit  Committee of the Company's Board of Directors also
periodically reviews these programs.

         Commodity Price Risk. The Company uses various hedging  arrangements to
manage the  Company's  exposure to price risk from its natural gas and crude oil
production.  These  hedging  arrangements  have the  effect  of  locking  in for
specified periods,  at predetermined  prices or ranges of prices, the prices the
Company will receive for the volumes to which the hedge  relates.  Consequently,
while these hedging arrangements are structured to reduce the Company's exposure
to decreases in prices associated with the hedged commodity, they also limit the
benefit the Company might otherwise receive from any price increases  associated
with the hedged commodity.  A hypothetical 10% change in the quarter-end  market
prices of  commodity-based  swaps and futures  contracts on a notional amount of
13.0  million  MMBtu would have caused a potential  $1.4  million  change in net
income  before  income taxes for the Company for gas contracts in place on March
31, 1999. A 10% change in the quarter-end market prices of commodity-based swaps
and future  contracts  on a  notional  amount of 505 MBbls  would have  caused a
potential  $615,000 change in net income before income taxes for the Company for
oil contracts in place on March 31, 1999.  Results of operations for Panterra (a
non-taxable  entity) would have changed by $337,000 on a notional  amount of 216
MBbls. These changes were discounted to present value using a 7.5% discount rate
since  the  latest  expected  maturity  date of some of the  swaps  and  futures
contracts is greater than one year from the reporting  date. The derivative gain
or loss  effectively  offsets  the  loss or  gain  on the  underlying  commodity
exposures  that have been  hedged.  The fair  values of the swaps are  estimated
based on quoted market prices of comparable  contracts and  approximate  the net
gains or losses that would have been  realized if the  contracts had been closed
out at quarter  end.  The fair values of the futures are based on quoted  market
prices obtained from the New York Mercantile Exchange.

                                      -20-




         Interest Rate Risk. Market risk is estimated as the potential change in
fair  value  resulting  from an  immediate  hypothetical  one  percentage  point
parallel  shift  in  the  yield  curve.  A  sensitivity  analysis  presents  the
hypothetical  change in fair value of those  financial  instruments  held by the
Company at March 31, 1999, which are sensitive to changes in interest rates. For
fixed-rate  debt,  interest rate changes affect the fair market value but do not
impact  results of operations or cash flows.  Conversely for floating rate debt,
interest  rate  changes  generally  do not affect the fair  market  value but do
impact future results of operations  and cash flows,  assuming other factors are
held  constant.  The  carrying  amount  of  the  Company's  floating  rate  debt
approximates  its fair value.  At March 31, 1999,  the Company had floating rate
debt of $17.9 million and had no fixed rate debt. Assuming constant debt levels,
the results of  operations  and cash flows impact for the  remainder of the year
resulting  from a one  percentage  point  change  in  interest  rates  would  be
approximately $134,000 before taxes.




                                      -21-




PART II.  OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

           (a)   Exhibits

                 Exhibit     Description
                 10.1        St. Mary Land & Exploration Company Incentive Stock
                                 Option Plan, As Amended on March 25, 1999
                 10.2        St. Mary  Land  & Exploration  Company Stock Option
                                 Plan, As Amended on March 25, 1999
                 10.3        Net Profits  Interest  Bonus  Plan,  As  Amended on
                                 September  19,  1996  and  July  24,  1997  and
                                 January 28, 1999
                 27.1        Financial Data Schedule

           (b)   There were no reports on Form 8-K filed during the quarter
                 ended March 31, 1999.



                                      -22-                         



                                   SIGNATURES


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

                                       St. Mary Land & Exploration Company



May 14, 1999                           By  /s/ MARK A. HELLERSTEIN            
                                           -----------------------------------
                                           Mark A. Hellerstein
                                           President and Chief Executive Officer


May 14, 1999                           By  /s/ RICHARD C. NORRIS              
                                           -----------------------------------
                                           Richard C. Norris
                                           Vice President - Finance, Secretary
                                           and Treasurer


May 14, 1999                           By  /s/ GARRY A. WILKENING             
                                           -----------------------------------
                                           Garry A. Wilkening
                                           Vice President - Administration and
                                           Controller