DELTA PETROLEUM CORP/CO, 10KSB, 1996-09-30

DELTA PETROLEUM CORP/CO
10KSB, 1996-09-30
CRUDE PETROLEUM & NATURAL GAS

Previous: BLYTH HOLDINGS INC, PRE 14A, 1996-09-30

Next: PHONETEL TECHNOLOGIES INC, 8-K/A, 1996-09-30

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 1996.

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

For the transition period from .

Commission File No. 0-16203

DELTA PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)

Colorado 84-1060803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Suite 3310, 555 Seventeenth Street
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:
(303) 293-9133

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under to Section 12(g) of the Exchange
Act:
Common Stock, $.01 par value

Check whether issuer (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

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

The aggregate market value as of September 13, 1996 of voting
stock held by non-affiliates of the registrant was $19,701,221.

As of September 13, 1996, 5,002,384 shares of registrant's Common
Stock $.01 par value were issued and outstanding.
The Index to Exhibits appears at Page 40.

TABLE OF CONTENTS

PART I

PAGE

ITEM 1. DESCRIPTION OF BUSINESS 1
ITEM 2. DESCRIPTION OF PROPERTY 7
ITEM 3. LEGAL PROCEEDINGS 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 16

PART II

ITEM 5. MARKET FOR DELTA'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 16
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS 17
ITEM 7. FINANCIAL STATEMENTS 25
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 25

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE
EXCHANGE ACT 26
ITEM 10. EXECUTIVE COMPENSATION 29
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 31
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 34
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 38

i
PART I

ITEM 1. DESCRIPTION OF BUSINESS

(a) Business Development.

Delta Petroleum Corporation ("Delta", "Registrant" or
"Company") is a Colorado corporation organized December 21, 1984.
Delta maintains its principal executive offices at
Suite 3310, 555 Seventeenth Street, Denver, Colorado, 80202, and
its telephone number is (303) 293-9133. The company's common
stock is listed on NASDAQ under the symbol DPTR.

The Company is engaged in the acquisition, exploration,
development and production of oil and gas properties. As of June
30, 1996, the Company had varying interests in 90 gross (14.88
net) productive wells located in four states. The Company has
undeveloped properties in five states, including interests in
four federal units and one lease offshore California
near Santa Barbara. The Company operates 21 of the wells and
the remaining wells are operated by independent operators. All
wells are operated under contracts that are standard in
the industry. At June 30, 1996, the Company estimated its proved
reserves attributable to its onshore properties to be
approximately 144,000 Bbls of oil and 5.3 Bcf of gas of which
approximately 47,000 Bbls of oil and 3.1 Bcf of gas were proved
developed reserves. At June 30, 1996, the Company estimated its
proved undeveloped reserves attributable to its offshore
California properties to be 57,989,000 Bbls of oil and 62.4 Bcf
of gas. There are significant uncertainties as to the timing of
the development of the offshore properties. (See "Description
of Property"; Item 2 herein.)

At June 30, 1996, Delta has an authorized capital of
3,000,000 shares of $.10 par value preferred stock of which 160
shares of preferred stock were issued and outstanding and
300,000,000 shares of $.01 par value common stock of which
4,488,283 shares of common stock were issued and outstanding.
Delta has outstanding warrants and options to purchase
887,000 shares at prices ranging from $1.25 per share to $8.50
per share at June 30, 1996. Additionally, Delta has outstanding
options which were granted to officers, employees and
consultants under the Company's 1993 Incentive Plan to purchase
up to 922,350 shares of common stock at prices from $1.25 to
$9.75 per share at June 30, 1996.

At September 13, 1996, the Company owned 4,277,977
shares of common stock of Amber Resources Company ("Amber"),
representing 91.68% of the outstanding common
stock of Amber. Amber is a public company (registered under the
Securities Exchange Act of 1934) whose activities include oil and
gas exploration, development, and production operations.
Amber owns interests in producing oil and gas properties in
Oklahoma and non-producing oil and gas properties offshore
California near Santa Barbara. The Company and Amber entered into
an agreement effective March 31, 1993 which provides, in part,
for the sharing of the management between the two companies and
allocation of expenses related thereto.

Reorganization. In October 1992, Delta concluded a
series of agreements with Underwriters Financial Group, Inc.
("UFG", formerly Chippewa Resources Corporation)
(collectively, the "UFG Agreement") to participate in a plan to
reorganize and recapitalize Delta (the "Plan of Reorganization").
Prior to the reorganization, UFG owned approximately 89%
of the outstanding shares of Delta's common stock. Under the
terms of the UFG Agreement, UFG transferred its oil and gas
properties and certain other related assets to Delta as a
contribution to the capital of Delta. The assets transferred
included producing and non-producing oil and gas properties,
accounts receivable, oil field equipment, and office furniture
and equipment. UFG also transferred 4,110,660 shares of common
stock of Amber to Delta. The shares transferred represented an
88.09% interest in Amber.

Also in connection with the Plan of Reorganization,
Delta issued 1,030,000 shares of common stock to Messrs. Burdette
A. Ogle and Ronald Heck (collectively, "Ogle") in
exchange for their working interests in two federal offshore
California oil and gas units and 167,317 shares of common stock
of Amber.

The oil and gas properties and shares of common stock
of Amber received from Ogle were recorded at Ogle's predecessor
cost of approximately $45,000. The assets transferred
to Delta by UFG were recorded at the predecessor cost of the
assets to UFG, as adjusted. UFG followed the full cost method of
accounting for its oil and gas properties. The predecessor cost
of the producing properties transferred was adjusted to conform
to the Company's policy of accounting for oil and gas properties
under the successful efforts method of accounting. The
predecessor cost of each oil and gas property was further
adjusted, if necessary, to reduce the amount recorded to the
estimated fair value of the oil and gas reserves attributable to
the property, if less than the adjusted predecessor cost of the
property.

On February 23, 1995, the Company and UFG executed and
entered into a letter agreement dated February 22, 1995, in which
Delta agreed to convert $736,932 of principal and
interest due from UFG under its promissory note dated March 31,
1993 into 491,300 shares of UFG common stock. In addition, UFG
and Delta agreed that the remaining $736,932 owed by
UFG to Delta would be satisfied by the transfer of 92,117 shares
of Delta common stock from UFG to Delta. Delta agreed to file a
registration statement covering the registration of the
remaining 888,063 shares of Delta common stock owned by UFG and
UFG agreed that the shares would be held by Delta as collateral
pending the discharge of UFG's obligations to
Snyder Oil Corporation. Upon the effectiveness of the
registration statement, UFG will have the right to sell all or
some of the Delta shares covered by the registration statement at
a price of not less than $6.875 or the bid price on the effective
date, whichever is higher. On December 11, 1995, UFG filed
Chapter 11 bankruptcy protection with the United States
Bankruptcy Court for the Southern District of New York. As of
September 13, 1996, the registration statement had not been
declared effective. The agreement calls for an escrow to be
established for the 888,063 shares pending sale to assure that
the shares are sold pursuant to the terms of the agreement and to
assure that the first proceeds are used to discharge UFG's
promissory note to Snyder Oil Corporation ("SOCO") thereby
releasing to Delta the Amber common stock held by SOCO as
collateral for the promissory note.

Certain of the oil and gas properties transferred had
been pledged to secure existing indebtedness of UFG, which
indebtedness remained an obligation of UFG under the
terms of the UFG Agreement. To the extent the existing secured
indebtedness on a particular property exceeded its adjusted
predecessor cost, the transfer of the property was recorded in
the accompanying financial statements at its adjusted predecessor
cost and a liability was recorded in an amount equal to the asset
recorded. To the extent the existing secured indebtedness on a
particular property was less than the adjusted predecessor cost,
the property was recorded at its adjusted predecessor cost, the
related liability was recorded and the net amount was reflected
as a capital contribution by UFG. Subsequent payments of the
secured indebtedness by UFG are recorded as a reduction of the
liability and a capital contribution.

3,357,003 shares of common stock of Amber transferred
to the Company by UFG are pledged to secure a note payable to
Snyder Oil Corporation (the "Snyder Note"). The
balance due on the note payable at the time of the transfer of
the Amber shares to Delta was recorded as a liability of Delta,
because of the uncertainty of the ability of UFG to fulfill its
obligations under the note.

The Company believes there is substantial risk that UFG
will be unable to repay the Snyder Note, which is currently in
default, and that the encumbered portion (3,357,003
shares) of the Amber shares owned by Delta (4,277,977 shares)
could be lost. The loss of the encumbered Amber shares would
reduce Delta's ownership interest in Amber to 19.74%.
Amber's oil and gas revenue during the year ended June 30, 1996
amounted to approximately $555,000 which constituted
approximately 53% of the Company's consolidated oil and gas
revenues (see Note 4 to the "Consolidated Financial Statements").
Amber's proved oil and gas reserves attributable to its onshore
properties are estimated to be 5,300 Bbls of oil and 1.85 Bcf
of gas. Amber's proved undeveloped oil and gas reserves
attributable to its offshore California
properties are estimated to be 10,582,000 Bbls of oil and 12.96
Bcf of gas. A loss of the encumbered Amber shares would
significantly reduce the Company's oil and gas revenue and
reserves and have a material effect on the operations of the
Company. (See "Financial Statements"; Item 7 herein and
"Management's Discussion and Analysis or Plan of Operation";
Item 6.)

The UFG Agreement also contained provisions regarding
employment agreements, voting agreements and consulting
agreements for the Company's executive officers, Aleron H.
Larson, Jr. and Roger A. Parker, and provided for the transfer to
each of Messrs. Parker and Larson 162,330 shares of the Company's
outstanding common stock owned by UFG in exchange
for certain securities of UFG. As of September 13, 1996, UFG
owns 888,063 shares or approximately 17.75% of Delta's
outstanding common stock, all of which is voted by Messrs.
Parker and Larson, under a voting agreement. (See "Certain
Relationships and Related Transactions"; Item 12 herein.)

Acquisition. Effective February 25, 1994, Burdette A.
Ogle ("Ogle"), a then 21.44% and currently 15.26% beneficial
interest owner of Delta, granted Delta an option
("Option") to acquire working interests in three proved
undeveloped offshore Santa Barbara California, federal oil and
gas units ("Interests"). On August 31, 1994, in an addendum to
the February 25, 1994 Agreement granting the Option, Ogle agreed
to extend the period during which the Option could be exercised
until January 3, 1995 in consideration of the issuance by
Delta to Ogle of warrants to purchase 100,000 shares of common
stock at a price of $8.00 per share until August 31, 1999 with a
call provision whereby Delta may repurchase any unexercised
warrants for an aggregate sum of $1,000 after the stock has
traded at $10.00 per share or greater for thirty consecutive
trading days. On January 3, 1995, the Company exercised its
option to acquire these properties from Ogle. Under the Purchase
and Sale Agreement and related assignment and conveyance of the
interests, Ogle immediately assigned and conveyed the
Interests to Delta. The purchase price of $8,000,000 is
represented by a production payment reserved in the documents of
assignment and conveyance and is payable out of three percent
(3%) of the oil and gas production from the Interests. Delta
paid Ogle $250,000 in 1996 and $250,000 in 1995, and is to pay a
minimum of $350,000 annually thereafter until: 1) the
$8,000,000 purchase price is paid; 2) 80% of the ultimate
reserves of any lease were produced; or 3) 30 years from the date
of the conveyance. Delta already owned other interests in these
same federal units.

(b) Business of Issuer.

During the year ended June 30, 1996, Delta was engaged
in only one industry, namely the acquisition, exploration,
development, and production of oil and gas properties and
related business activities. The Company's oil and gas
operations have been comprised primarily of production of oil and
gas, drilling exploratory and development wells and related
operations and acquiring and selling oil and gas properties. The
Company, directly and through Amber, currently has producing oil
and gas interests, undeveloped leasehold interests and related
assets in south Texas; interests in proven but undeveloped
offshore Federal leases and units near Santa Barbara, California;
producing and non-producing interests in the Denver-Julesburg,
Piceance and North Park Basins of Colorado; and producing
interests in the Anadarko Basin in Oklahoma and in the Arkoma
Basin in western Arkansas. As of June 30, 1996, the Company
had interests in 90 wells. The Company operates 21 of the wells
and the remaining wells are operated by independent operators
under contracts that are standard within the industry. The
Company intends to continue its emphasis on the drilling of
exploratory and development wells primarily in Colorado, Wyoming
and Oklahoma and elsewhere in the Rocky Mountain and Mid-
Continent regions.

The Company intends to drill on some of its leases
(presently owned or subsequently acquired); may farm out or sell
all or part of some of the leases to others; and/or
may participate in joint venture arrangements to develop certain
other leases. Such transactions may be structured in any number
of different manners which are in use in the oil and gas
industry. Each such transaction is likely to be individually
negotiated and no standard terms may be predicted.

(1) Principal Products or Services and Their Markets.
The principal products produced by the Company are crude oil and
natural gas. The products are generally sold at the
wellhead to purchasers in the immediate area where the product is
produced. The principal markets for oil and gas are refineries
and transmission companies which have facilities near the
Company's producing properties.

(2) Distribution Methods of the Products or Services.
Oil and natural gas produced from the Company's wells are
normally sold to the purchasers referenced in (6) below.
Oil is picked up and transported by the purchaser from the
wellhead. In some instances the Company will be charged a fee
for the cost of transporting the oil which fee is deducted from
or included in the price paid for the oil. Natural gas wells are
connected to pipelines owned by the natural gas purchasers. A
variety of pipeline transportation charges are usually included
in the calculation of the price paid for the natural gas.

(3) Status of Any Publicly Announced New Product or
Service. The Company has not made a public announcement of, and
no information has otherwise become public about,
a new product or industry segment requiring the investment of a
material amount of the Company's total assets.

(4) Competitive Business Conditions. Oil and gas
exploration and acquisition of undeveloped properties is a highly
competitive and speculative business. The Company
competes with a number of other companies, including major oil
companies and other independent operators which are more
experienced and which have greater financial resources.
The Company does not hold a significant competitive position in
the oil and gas industry.

(5) Sources and Availability of Raw Materials and
Names of Principal Suppliers. Oil and gas may be considered raw
materials essential to Delta's business. The
acquisition, exploration, development, production, and sale of
oil and gas are subject to many factors which are outside of
Delta's control. These factors include national and
international economic conditions, availability of drilling rigs,
casing, pipe, and other equipment and supplies,
proximity to pipelines, the supply and price of other fuels, and
the regulation of prices, production, transportation, and
marketing by the Department of Energy and other federal and
state governmental authorities.

(6) Dependence on One or a Few Major Customers. Delta
has three major customers for the sale of oil and gas as of the
date of this report, namely, Natural Gas Clearinghouse, Tristar
Gas Marketing and KN Energy. The loss of any one or all of
these customers would not have a material adverse effect on
Delta's business.

(7) Patents, Trademarks, Licenses, Franchises,
Concessions, Royalty Agreements and Labor Contracts. Delta does
not own any patents, trademarks, licenses, franchises,
concessions, or royalty agreements except oil and gas interests
acquired from industry participants, private landowners and state
and federal governments. Delta is not a party to any labor
contracts.

(8) Need for Any Governmental Approval of Principal
Products or Services. Except that the Company must obtain
certain permits and other approvals from various
governmental agencies prior to drilling wells and producing oil
and/or natural gas, the Company does not need to obtain
governmental approval of its principal products or services.

(9) Effect of Existing or Probable Governmental
Regulations on the Business. The oil and gas industry is
extensively regulated by federal, state and local authorities.
Legislation affecting the oil and gas industry is under constant
view for amendment or expansion. Numerous departments and
agencies, both federal and state, have issued rules and
regulations binding on the oil and gas industry and its
individual members, some of which carry substantial penalties for
the failure to comply. The regulatory burden on the oil and gas
industry increases its cost of doing business and consequently
affects its profitability. Inasmuch as such
laws and regulations are frequently amended or reinterpreted, the
Company is unable to predict the future cost or impact of
complying with such regulations.

(10) Research and Development. Delta does not engage
in any research and development activities. Since its inception,
Delta has not had any customer or government-sponsored material
research activities relating to the development of any new
products, services or techniques, or the improvement of existing
products.

(11) Environmental Protection. Because Delta is
engaged in acquiring, operating, exploring for and developing
natural resources, it is subject to various state and local
provisions regarding environmental and ecological matters.
Therefore, compliance with environmental laws may necessitate
significant capital outlays, may materially affect Delta's
earnings potential, and could cause material change in Delta's
proposed business. At the present time, however, the existence
of environmental law does not materially hinder nor adversely
affect Delta's business. Capital expenditures relating to
environmental control facilities have not been material to the
operation of Delta since its inception. In addition, Delta does
not anticipate that such expenditures will be material during the
fiscal year ending June 30, 1997.

(12) Employees. The Company has six full time
employees.

ITEM 2. DESCRIPTION OF PROPERTY

(a) Office Facilities.

Delta's offices are located at 555 Seventeenth Street,
Suite 3310, Denver, Colorado 80202. Delta leases approximately
4,837 square feet of office space for $5,744 per month and the
lease will expire in March of 1998. Currently, Delta subleases
approximately 500 square feet to Bion Environmental Technologies,
Inc. for $940 per month.

(b) Oil and Gas Properties.

The Company owns interests in oil and gas properties
located in California, Colorado, Oklahoma, Texas, Wyoming and
elsewhere. Wells from which the Company receives revenues are
owned only partially by the Company. For information concerning
the Company's oil and gas production, average prices and costs,
estimated oil and gas reserves and estimated future cash flows,
see the tables set forth below in this section and "Note 12 of
Notes to Financial Statements" included in this report. The
Company did not file oil and gas reserve estimates with any
federal authority or agency other than the Securities and
Exchange Commission during the years ended June 30, 1996 and 1995
and the six months ended June 30, 1994.

(1) Principal Properties.

The following is a brief description of Delta's
principal properties:

California.

The Company's Offshore California proved
undeveloped reserves are attributable to its interests in four
federal units (plus one additional lease) located offshore
California near Santa Barbara. While these interests represent
ownership of substantial oil and gas reserves classified as
proved undeveloped, the cost to develop the reserves will be very
substantial. The Company may be required to farm out all or a
portion of its interests in these properties if it cannot fund
its share of the development costs. There can be no assurance
that the Company can farm out its interests on acceptable terms.
If the Company were to farm out its interests in these
properties, its share of the proved reserves attributable to the
properties would be decreased substantially. The Company may
also incur substantial dilution of its interests in the
properties if it elects to use other methods of financing the
development costs.

These units have been formally approved and are
regulated by the Minerals Management Service of the Federal
Government. However, due to a history of opposition to
offshore drilling and production in California by some
individuals and groups, the process of obtaining all of the
necessary permits and authorizations to develop the properties
will be lengthy and even after all required approvals are
obtained, lawsuits may possibly be filed to attempt to
further delay the development of the properties. While the
Federal Government has recently attempted to expedite this
process, there can be no assurance that it will be successful in
doing so. The Company does not have a controlling interest in
and does not act as the operator of any of the offshore
California properties and consequently will not control the
timing of either the development of the properties or the
expenditures for development. Management and its
independent engineering consultant have considered the these
factors relating to timing of the development of the reserves in
the preparation of the reserve information relating to these
properties. As additional information becomes available in the
future, the Company's estimates of the proved undeveloped
reserves attributable to these properties could change, and such
changes could be substantial.

Gato Canyon Unit. The company holds a 15.60% working
interest (directly 8.63% and through Amber 6.97%) in the Gato
Canyon Unit. This 10,100 acre unit is operated by
Samedan Oil Corporation. Four of the five wells drilled on the
unit to date have indicated the presence of oil and gas
reserves. In April 1989, Samedan announced the completion and
test of the Samedan P-0460 #2 which yielded a test flow rate of
5,500 Bbls of oil per day from the Monterey Formation between
5,000 and 6,800 feet of drill depth. The Monterey Formation is
a highly fractured shale formation. The Monterey (which ranges
from 1,500' to 2,900' in thickness) is the main productive and
target zone in many offshore California oil fields
(including the Company's federal leases and/or units). As of
July 1, 1996, Mannon Associates, Inc. ("Mannon"), an independent
petroleum engineering firm based in Santa Barbara, California,
issued a report stating that Gato Canyon contains recoverable
reserves estimated to be 89.4 million Bbls of oil and 128.1 Bcf
of natural gas, representing 11.63 million Bbls of oil and
16.66 Bcf of natural gas net to the Company's 15.60% working
interest at July 1, 1996. The oil has an estimated average
gravity of 16 degrees API. Based on prices of $12 per Bbl and $1.68 per
Mcf and SEC parameters, the Company's 15.60% working interest in
the Gato Canyon Unit had a pretax discounted (10%) present value
of approximately $20,915,000 as of July 1, 1996. (See
"--Oil and Gas Reserves".) No production in the Gato Canyon Unit
is presently anticipated before 2001.

Point Sal Unit. The Company holds a 6.83% working
interest in the Point Sal Unit. This 22,772 acre unit is
operated by Shell Oil Company. All four wells drilled on this
unit have indicated the presence of producible oil and gas
reserves in the Monterey Formation. The largest of these, the
Sun P-0422 #1 yielded a combined test flow rate of 3,750 Bbls of
oil per day from the Monterey. The oil in the upper block has an
average estimated gravity of 10 degrees API and the oil in the subthrust
block has an average estimated gravity of 15 degrees API. Based on
a report prepared by Mannon effective July 1, 1996, Point Sal
Unit contains proved undeveloped recoverable reserves of 267.7
million Bbls of oil and 299.9 Bcf of natural gas, equivalent to
15.23 million Bbls of oil and 17.06 Bcf of natural gas net to the
Company's interest at July 1, 1996. Based on prices of $12 per
barrel and $1.68 per Mcf and SEC parameters, the
Company's 6.83% working interest in the Point Sal Unit had a
pre-tax present value (discounted at 10%) of approximately
$21,509,000 as of July 1, 1996. (See "--- Oil and Gas
Reserves".) No production in the Point Sal Unit is presently
anticipated before 2003.

Lion Rock Unit and Federal OCS Tract P-0409. The
Company holds a 1% net profits interest (through Amber) in the
Lion Rock Unit and a 17.67% working interest (directly)
in 5,693 acres in Federal OCS Tract P-0409 which is immediately
adjacent to the Lion Rock Unit and contains a portion of the San
Miguel Field reservoir. Lion Rock is operated by Shell
Oil Company. An aggregate of seven wells have been drilled on
this unit of which four have been completed and tested which
indicate producible oil and gas reserves in the Monterey
Formation. Additionally, the unit is immediately contiguous with
the San Miguel Field which is in the same reservoir as defined by
drilling and testing of six wells, seismic data and
geological analysis to date. Based on a report prepared by
Mannon on July 1, 1996, the Lion Rock Unit contains proved
undeveloped recoverable reserves of 543.3 million Bbls of oil and
490.7 Bcf of natural gas, equivalent to 29.18 million Bbls of oil
and 26.34 Bcf of natural gas net to the Company's interest at
July 1, 1996. The oil has an average estimated gravity of 10.7
degrees API. Based on prices of $12 per barrel and $1.68 per Mcf and SEC
parameters, the Company's aggregate interest in the Lion Rock
Unit had a pre-tax present value (discounted at 10%) of
approximately $42,906,000 as of July 1, 1996. (See "--Oil and
Gas Reserves".) The Mannon evaluation includes the Lion Rock
Unit and Federal OCS Tract P-0409 which are both included
in the San Miguel Field. This tract is not currently part of the
Lion Rock Unit, but prior to development the Lion Rock Unit is
expected to be expanded to include P-0409. No production
in the Lion Rock Unit is presently anticipated before 2001.

Sword Unit. The Company (through Amber) holds a .8731%
working interest in the Sword Unit. This 12,240 acre unit is
operated by Conoco, Inc. In aggregate, three wells
have been drilled on this unit of which two wells have been
completed and tested to date with calculated flow rates of from
4,000 to 5,000 Bbls per day, which indicate producible oil and
gas reserves in the Monterey Formation. Based on a July 1, 1996
report prepared by Mannon, the Sword Unit contains proved
undeveloped recoverable reserves of 266.5 million Bbls of oil and
323.7 Bcf of natural gas representing reserves of 1.93 million
Bbls of oil (having an estimated average gravity of 10.6 API) and
2.35 Bcf of natural gas to the Company's interest at July 1,
1996. Based on prices of $12 per barrel and $1.68 per Mcf and
SEC parameters, the Company's interest in the Sword Unit had a
pre-tax present value (discounted at 10%) of approximately
$2,182,000 as of July 1, 1996. (See "--Oil and Gas Reserves".)
No production in the Sword Unit is presently anticipated before
2004.

Colorado.

Denver-Julesburg Basin. The Company owns leasehold
interests in approximately 560 gross (50 net) acres in the
Denver-Julesburg Basin of Colorado and has interests in nine
gross (.81 net) wells in the Denver-Julesburg Basin producing
primarily from the D-Sand and J-Sand formations.

Piceance Basin. During the fiscal year ended December
31, 1993, Delta acquired the entire working interests in five gas
wells (4 net), oil and gas leases covering 15,772 gross
and 12,643 net acres in the Piceance Basin in Mesa and Rio Blanco
counties, Colorado. The acreage is located in and around the
Plateau Field. During the fiscal year 1996, the Company
recompleted two of the wells in uphole zones thereby increasing
production from the wells. The Company is currently evaluating
other potential zones for recompletion, although, there are no
current plans to drill new wells because of low gas prices.

On August 15, 1996, the Company completed the purchase
of six additional wells and approximately 3,000 additional acres
in the same area. The Company is also evaluating recompletion
possibilities in these wells.

North Park Basin. The Company owns leasehold interests
in approximately 15,401 gross and net acres in the North Park
Basin of Colorado. This acreage is prospective for drilling
to the fractured Niobrara Shale formation. In acquiring its
North Park properties, the Company has selected areas known to be
in close proximity to wells drilled into the Niobrara Formation
that were either producers or exhibited oil and gas shows.
During the fiscal year 1996, the Company acquired the interest of
its former joint venture partners which amounted to 5,806 net
acres. The acreage surrounds the Coalmont Field area where
North Park Basin's most productive Niobrara production has been
found to date. In addition to the Niobrara formation,
the Company's leasehold is prospective for conventional drilling
to the Pierre, Frontier, Muddy, Dakota, Lakota and Entrada
formations, all of which produce in the North Park Basin.

Oklahoma.

The Company directly (23 wells) and through Amber (41
wells) owns non-operating working interests in 64 natural gas
wells in Oklahoma. The wells range in depth from 4,500 to 20,000
feet and produce from the Red Fork, Atoka, Morrow and Springer
formations. Most of the Company's reserves are in the Atoka
formation. Apache Corporation operates 20 of the wells in which
the Company owns an interest. Other major operators include
Samson Resources Corporation, Meridian Oil Company and Ricks
Exploration. The working interests range from less than 1% to 40%
and average about 6% per well. Many of the wells have remaining
productive lives of 20 to 30 years.

Approximately half of the Oklahoma wells were acquired
by Amber subject to a recoupment agreement with a gas purchaser.
Under the terms of the recoupment agreement, the gas purchaser
was entitled to receive up to 75% of future production to recoup
gas purchased in connection with the settlement of a previous
take or pay contract covering the properties. The
Company was responsible for royalties and for production costs
associated with the properties subject to the recoupment
agreement.

On November 18, 1994, the Company entered into an
agreement with El Paso Natural Gas Company ("El Paso") under
which Amber agreed to transfer to El Paso, Amber's
interest in four wells and the associated acreage in complete
satisfaction of Amber's recoupment gas obligation. As a result
of this agreement, the Company is no longer obligated to El Paso
for recoupment gas from the remaining wells originally subject to
the recoupment agreement.

The obligation under the recoupment agreement was
accounted for in a manner similar to a production payment. The
estimated present value of the obligation at the date of
the acquisition of the properties was recorded as a liability.
The liability was calculated based on remaining volumes of gas
due, using the price of gas at the date of the acquisition of the
properties, discounted at 15% over the period the gas was
expected to be recouped. The liability was periodically
increased by the accretion of the discount and was reduced as the
gas was delivered to the gas purchaser. The gas produced and
delivered to the gas purchaser (recoupment gas) was recorded as
revenue at the then current price of natural gas. Any
difference between the revenue recorded for the recoupment gas
and the reduction in the recoupment obligation was accounted for
as an increase or decrease in interest expense.

Recoupment royalties, included in royalties payable,
represent amounts that may be due on recoupment gas produced and
delivered to the gas purchasers pursuant to the terms
of the recoupment agreement described above. The Company has
estimated an amount that may be due to the royalty owners based
on the market price of the gas during the period the gas was
produced and delivered to the gas purchaser. The Company's
method of estimating the liability to royalty owners is based
upon its interpretation of existing law in the jurisdiction as
applied to the circumstances relating to its properties. There
is no assurance that the Company's method of calculating its
liability to the royalty owners would prevail in court if
challenged and if challenged that another method of calculation
would not be imposed on the Company. The Company believes that
the operators of the affected wells have paid some or all of the
royalties on behalf of the Company and have withheld such amounts
from revenues attributable to the Company's interest in the
wells. The Company has contacted the operators of the wells in
an attempt to determine what amounts the operators have paid on
behalf of the Company over the past five years, which amounts
would reduce the amounts owed by the Company. To date the
Company has not received information adequate to allow it to
determine the amounts paid by the operators. The Company has
been informed by its legal counsel that the applicable statute
of limitations period for actions on written contracts arising in
the state of Oklahoma is five years. The statute of limitation
has expired for royalty owners to make a claim for a portion
of the estimated royalties that had previously been accrued.
Accordingly, this amount has been written off and recorded as
other income in 1996.

Wyoming.

Moneta Hills. The Company, recently acquired
approximately 30,000 acres of oil and gas leasehold, six wells
and a 13 mile gas gathering pipeline from two other oil and gas
companies.

Subsequent to the acquisition, the Company has drilled
one new well (which was plugged and abandoned) recompleted two
existing wells and re-equipped three shut-in wells.
The Company has returned a total of four wells to production and
is continuing to evaluate one of the recompletions. Additional
development is also being considered.

Texas.

Austin Chalk Trend. The Company owns leasehold
interests in approximately 1,558 gross acres (393 net acres) in
the area encompassing the Austin Chalk Trend in Gonzales
and Zavala Counties, Texas and owns interests in four gross (1.28
net) horizontal wells in the Austin Chalk Trend. This does not
include the interest of the Company in an additional well,
the ownership of which is subject to pending litigation.

(2) Other Properties.

San Juan Basin - New Mexico. The Company owns
leasehold interests in approximately 2,230 gross (1,115 net)
acres in the San Juan Basin in New Mexico. This
leasehold is prospective for drilling to the fractured Mancos
Shale Formation. The Company's leasehold is situated between and
on trend with existing fractured Mancos production. The
Company formed a joint venture with two industry partners to
explore the Mancos Shale on this leasehold, which directly
offsets the LaPlata Mancos Unit, which has produced over 622,000
Bbls of oil (six wells) at an average depth of less than 5,900
feet. Other objectives are the Mesa Verde and Dakota Formations
which produce natural gas throughout the immediate area. To
date the parties have not developed plans for commencing
exploration activities.

In February 1994, Delta conveyed an interest in these
leases in San Juan County, New Mexico to an unaffiliated party
reserving an overriding royalty interest of approximately
1.25% net to Delta. Delta retained the rights to its interest in
these leases below the Fruitland Coal formation. The conveyance
related to leases covering 1,400 gross acres. During fiscal
1995, Delta conveyed additional interests on the same terms and
conditions on approximately 600 gross acres nearby.

Southwest Sulu Sea - Philippines. The Company has
participated with Crestone Energy Corporation ("Crestone") and
others in submitting an application for a "Geophysical
Survey and Exploration Contract ("GSEC") covering a portion of
the Southwest Sulu Sea, offshore in the Philippine Islands.
There are approximately 3,800,000 acres in the proposed
contract area. Delta would have an interest of 6.75%in the GSEC.
The focus of the GSEC will be to develop drillable prospects
through the acquisition and evaluation of geophysical/geological
data within the contract area. Portions of three geologic
sub-basins exist within the contract area and the presence of
hydrocarbons has been identified from some of the exploratory
wells drilled to date in nearby areas outside the contract area.
The Company has reported no reserves related to the proposed
GSEC.

Subsequent to June 30, 1996, the government of the
Philippines has requested that Crestone resubmit the application
for the GSEC. As a result, the Company has provided a
valuation allowance for the cost of its investment to date.
Management believes the potential value of the proposed
application for the GSEC is entirely speculative as of this date.

The Company is not obligated to provide a fixed and
determined quantity of oil and gas in the future under existing
contracts or agreements. During the years ended June 30,
1996 and 1995 and the six months ended June 30, 1994, the Company
has not had, nor does it now have, any long-term supply or
similar agreements with governments or authorities pursuant
to which the Company acted as producer. The following table sets
forth the Company's average sales prices and average production
costs (excluding amounts attributable to recoupment gas
produced) during the periods indicated:

Year Ended Year Ended Six Months Ended
June 30, June 30, June 30,
1996 1995 1994

Average sales price:
Oil (per barrel) $17.74 $13.64 $13.61

Natural Gas (per Mcf) $ 1.71 $ 1.55 $ 1.94

Production costs
(per Mcf equivalent) $ .63 $ .48 $.66

The profitability of the Company's oil and gas production
activities is affected by the fluctuations in the sale prices of
its oil and gas production. (See "Management's Discussion
and Analysis or Plan of Operations.")

(d) Productive Wells and Acreage.

The table below shows, as of June 30, 1996, the
approximate number of gross and net producing oil and gas wells
by state and their related developed acres owned by the Company.
Calculations include 100% of wells and acreage owned by Delta and
by Amber. Productive wells are producing wells capable of
production, including shut-in wells. Developed acreage consists
of acres spaced or assignable to productive wells.

Oil (1) Gas Developed Acres
Gross (2) Net (3) Gross (2) Net (3) Gross (2) Net (3)

Texas 5 1.28 0 0 1,558 393
Colorado 9 .81 5 4 1,240 744
Oklahoma 1 .056 63 3.89 24,793 1,857
Wyoming 0 .0 6 4.8 960 768
Nebraska 1 .05 0 0 120 39
16 2.19 74 12.69 28,671 3,801

(1) All of the wells classified as "oil" wells are also
productive of various amounts of natural gas.

(2) A "gross well" or "gross acre" is a well or acre in which a
working interest is held. The number of gross wells or acres is
the total number of wells or acres in which a working interest is
owned.

(3) A "net well" or "net acre" is deemed to exist when the sum
of fractional ownership interests in gross wells or acres equals
one. The number of net wells or net acres is the sum of the
fractional working interests owned in gross wells or gross acres
expressed as whole numbers and fractions thereof.

(e) Undeveloped Acreage.

At June 30, 1996, the Company held undeveloped acreage
by state as set forth below:

Undeveloped Acres (1) (2)

Location Gross Net

Wyoming 27,723 22,179
California (3) 50,805 4,244
Colorado 31,733 25,604
Oklahoma 3,360 271
New Mexico 2,230 1,115
TOTAL 115,851 53,413

(1) Undeveloped acreage is considered to be those lease acres on
which wells have not been drilled or completed to a point that
would permit the production of commercial quantities of oil and
gas, regardless of whether such acreage contains proved reserves.

(2) Includes acreage owned by Amber.

(3) Consists of Federal leases offshore California near Santa
Barbara.

(f) Drilling Activity

During the periods indicated, the Company drilled or
participated in the drilling of the following productive and
nonproductive Exploratory and Development Wells:

Year Year Six Months
Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1994
Gross Net Gross Net Gross Net

Exploratory Wells(1):
Productive:
Oil. . . . . . . . . 0 .000 0 .000 0 .000
Gas. . . . . . . . . 0 .000 1 .056 1 .056
Nonproductive. . . . . 0 .000 1 .125 0 .000
Total. . . . . . . . . 0 .000 2 .181 1 .056

Development Wells(1):.
Productive:
Oil. . . . . . . . . 0 .000 2 .112 0 .000
Gas. . . . . . . . . 2 .076 4 .186 1 .025
Nonproductive. . . . . 0 .000 2 .112 0 .000
Total. . . . . . . . . 2 .076 8 .410 1 .025

Total Wells(1):
Productive:
Oil. . . . . . . . . 0 .000 2 .112 0 .000
Gas. . . . . . . . . 2 .076 5 .242 2 .081
Nonproductive. . . . . 0 .000 3 .237 0 .000
Total Wells. . . . . . 2 .076 10 .591 2 .081

(1) Does not include wells in which the Company had only a
royalty interest.

In addition, the Company, acting as the operator,
recompleted three wells on its acreage, two in western Colorado
and one in central Wyoming, and participated in the recompletion
by another operator of one other well in Oklahoma during the
fiscal year.

ITEM 3. LEGAL PROCEEDINGS

The Company is not engaged in any material pending legal
proceedings to which the Company or its subsidiaries are a party
or to which any of its property is subject.

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

Not applicable.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

(a) Market Information.

Delta stock is not traded in certain states and
will not be until and unless Delta is able to qualify, exempt or
register its stock. Delta's common stock currently trades
under the symbol "DPTR" on NASDAQ. The following quotations
reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.

Quarter Ended High Bid Low Bid

March 31, 1994 5.75 3.62
June 30, 1994 5.25 4.37
September 30, 1994 6.00 4.75
December 31, 1994 6.87 5.75
March 31, 1995 6.87 6.75
June 30, 1995 6.75 6.00
September 30, 1995 7.50 7.25
December 31, 1995 7.63 6.75
March 31, 1996 6.63 6.38
June 30, 1996 6.87 6.50

On September 23, 1996 the closing price of the
Common Stock was $6.188 bid and $6.438 asked.

(b) Approximate Number of Holders of Common Stock.

The number of holders of record of the Company's
Common Stock at September 13, 1996 was approximately 1,400 which
does not include an unknown number of additional holders whose
stock is held in "street name".

The Company has not paid dividends on its stock and
does not expect to do so in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS

Background

In October 1992, Delta concluded a series of agreements
with Underwriters Financial Group, Inc. ("UFG") (collectively,
the "UFG Agreement") to participate in a plan to
reorganize and recapitalize Delta (the "Plan of Reorganization").
Prior to the reorganization, UFG owned approximately 89% of the
outstanding shares of Delta's common stock. Under the
terms of the UFG Agreement, UFG transferred its oil and gas
properties and certain other related assets to Delta as a
contribution to the capital of Delta. The assets transferred
included producing and non-producing oil and gas properties,
accounts receivable, oil field equipment, and office furniture
and equipment. UFG also transferred 4,110,660 shares of common
stock of Amber to Delta. The shares transferred represented an
88.09% interest in Amber.

Also in connection with the Plan of Reorganization,
Delta issued 1,030,000 shares of common stock to Messrs. Burdette
A. Ogle and Ronald Heck (collectively, "Ogle") in exchange for
their working interests in two federal offshore California oil
and gas units and 167,317 shares of common stock of Amber.

The oil and gas properties and shares of common stock of
Amber received from Ogle were recorded at Ogle's predecessor cost
of approximately $45,000. The assets transferred to Delta by UFG
were recorded at the predecessor cost of the assets to UFG, as
adjusted. UFG followed the full cost method of accounting for
its oil and gas properties. The predecessor cost of the
producing properties transferred was adjusted to conform to the
Company's policy of accounting for oil and gas properties under
the successful efforts method of accounting. The
predecessor cost of each oil and gas property was further
adjusted, if necessary, to reduce the amount recorded to the
estimated fair value of the oil and gas reserves attributable to
the property, if less than the adjusted predecessor cost of the
property.

Under the terms of the UFG Agreement, UFG agreed to
assume certain existing liabilities of Delta and Amber totaling
$1,325,175. On April 14, 1993, the Company entered
into an agreement with UFG (the "Clarification Agreement") which
provided for the issuance by UFG of a non-interest bearing
promissory note payable to the Company in the amount of
$1,325,175 to evidence UFG's obligation to repay the Company for
the obligations UFG has assumed under the UFG Agreement. The
Clarification Agreement also provided for the pledge
of 556,289 shares of common stock of the Company held by UFG as
collateral for performance under the promissory note and
clarification and revision of certain other provisions of the UFG
Agreement. In February 1995, UFG transferred 92,117 shares of
the Company's common stock, and 491,300 shares of UFG common
stock to the Company in satisfaction of the note
receivable from UFG. The market value of the Company's common
stock received from UFG was accounted for as a capital
contributions and an increase in treasury stock. The treasury
stock was subsequently retired. Trading on UFG's common stock
has been suspended by the American Stock Exchange and on December
11, 1995 UFG filed Chapter 11 bankruptcy protection with the
United States Bankruptcy Court for the Southern District of New
York. As a result, the value of the 491,300 shares of UFG's
common stock owned by the Company is uncertain and the Company
has not placed any value on the shares received.

Certain of the oil and gas properties transferred had
been pledged by UFG to secure existing indebtedness, which
indebtedness remained an obligation of UFG under the terms
of the UFG Agreement. To the extent the existing secured
indebtedness on a particular property exceeded its adjusted
predecessor cost, the transfer of the property was recorded in
the accompanying financial statements at its adjusted predecessor
cost and a liability was recorded in an amount equal to the asset
recorded. To the extent the existing secured indebtedness on a
particular property was less than the adjusted predecessor cost,
the property was recorded at its adjusted predecessor cost, the
related liability was recorded and the net amount was reflected
as a capital contribution by UFG. Subsequent payments by UFG
which reduce the liabilities recorded by the Company are recorded
as a reduction of the liability and a capital contribution.

3,357,003 shares of common stock of Amber transferred to
the Company by UFG are pledged to secure a note payable to Snyder
Oil Corporation (the "Snyder Note"). The balance due on the note
payable at the time of the transfer of the Amber shares to Delta
of $2,091,761 was recorded as a liability of Delta because of the
uncertainty of the ability of UFG to fulfill its obligations
under the note.

Liquidity and Capital Resources.

At June 30, 1996, the Company had a working capital
deficit of $1,444,584 compared to a working capital deficit of
$3,815,047 at June 30, 1995. The Company's working capital
deficit is in part a result of the note payable to Snyder Oil
Corporation ("Snyder") of $2,669,642 which is non recourse to
Delta and payable by its former parent, UFG. Although
there is no assurance that it will do so, the Company expects the
note will be discharged during the next twelve months through the
sale by UFG of its 888,063 Delta shares, at which time the
Company's working capital deficit will be correspondingly
reduced. If UFG were unable to pay the promissory note payable
to Snyder, Delta's ownership interest in Amber could be reduced
to 19.74%. Although there is no assurance that it would succeed
in doing so, Delta would attempt to make other arrangements to
discharge the promissory note and thereby retain the
Amber shares securing the promissory note (see "Future
Operations" below). Nevertheless, although the loss of these
Amber shares would significantly reduce the Company's oil and gas
revenues and reserves attributable to its ownership of Amber (see
"Future Operations" below), the properties owned directly by
Delta and the revenues therefrom would not be affected.

The Company's current liabilities include royalties
payable of $649,835 at June 30, 1996 which represent the
Company's estimate of royalties payable on production
attributable to Amber's interest in certain wells in Oklahoma,
including production prior to the acquisition of Amber. The
Company is attempting to identify the royalty owners and
calculate the amounts owed to each owner, which it expects will
require some time. To date, no significant claims
have been asserted against Amber by royalty owners for amounts
due for prior production. The Company is awaiting the outcome of
litigation in various courts which may impact the method
of calculating the Company's obligation for royalties payable on
recoupment gas. To date no claims have been asserted against
Amber by royalty owners for royalties due on recoupment gas
produced. The Company believes that the operators of the
affected wells have paid some of the royalties on behalf of the
Company and have withheld such amounts from revenues attributable
to the Company's interest in the wells. The Company has
contacted the operators of the wells in an attempt to determine
what amounts the operators have paid on behalf of the Company
over the past five years, which amounts would reduce the amounts
owed by the Company. To date the Company has not received
information adequate to allow it to determine the amounts paid
by the operators. The Company has been informed by its legal
counsel that the applicable statue of limitations period for
actions on written contracts arising in the state of Oklahoma is
five years. The statute of limitation has expired for royalty
owners to make a claim for a portion of the estimated royalties
that had previously been accrued. Accordingly, this amount has
been written off and recorded as other income in 1996.

The Company believes that it is unlikely that all claims
that might be made for payment of royalties payable in suspense
or for recoupment royalties payable would be made at one time.
Further, Amber, rather than Delta, would be directly liable for
payment of any such claims. The Company believes, although there
can be no assurance, that it may ultimately be able to settle
with potential claimants for less than the amounts
recorded for royalties payable.

On November 18, 1994, the Company entered into an
agreement with El Paso Natural Gas Company ("El Paso") under
which Amber agreed to transfer to El Paso Amber's interest in
four wells and the associated acreage in complete satisfaction of
Amber's recoupment gas obligation. As a result of this
agreement, the Company is no longer obligated to El Paso
for recoupment gas from the remaining wells subject to the
recoupment agreement. As a result of this transaction, the
Company recorded an extraordinary gain of $493,850.

In May 1995, a portion of a convertible note payable
was transferred from a third party to Bion Technologies, Inc.
During June 1995, the Company issued 461,002 restricted
shares of the Company's common stock in satisfaction of the note
payable and related accrued interest. In connection with the
conversion, Aleron H. Larson and Roger A. Parker, officers
of the Company, entered into voting agreements granting them the
right to vote the 461,002 shares of common stock until 2004 or
until it is sold.

The Company estimates its capital expenditures for
onshore proved undeveloped properties to be approximately
$1,250,000 for the year ended June 30, 1997. However, the
Company is not obligated to participate in future drilling
programs and will not enter into future commitments to do so
unless management believes the Company has ability to fund such
projects.

The Company's working interest share of the future
estimated development costs relating to its offshore California
proved undeveloped properties approximates $163 million.
No significant amounts are expected to be incurred during fiscal
1997 and $2.85 and $3.62 million are expected to be incurred
during fiscal 1998 and 1999, respectively. Based on current
engineering estimates the Company's share of future development
costs are expected to be $64 million through fiscal year 2002,
after which the production revenue is expected to exceed both
the operating and annual development costs. The amounts required
for development of these proved undeveloped reserves are so
substantial relative to the Company's present financial
resources, the Company may ultimately determine to farmout all or
a portion of its interest. If it were to farmout its interests,
the Company's share of proved reserves would be decreased
substantially. Alternatively, the Company may pursue other
methods of financing, including selling equity or debt
securities. There can be no assurance that the Company can obtain
any such financing. If the Company were to sell additional
equity securities to finance the development of the properties,
the existing common shareholders'interest would be diluted
significantly.

The Company received the proceeds from the exercise of
options to purchase shares of its common stock of $1,664,350
during the year ended June 30, 1996, $284,073 during
the year ended June 30, 1995 and $252,700 during the six months
ended June 30, 1994. On August 18, 1995, the Company completed
a sale of 231,000 shares of the Company's common
stock to third parties for $750,000 with net of proceeds to the
Company of $675,000 after payment of certain fees. Under the
purchase agreement the Company committed to register the
shares within 30 days or increase the number of shares by 25,000
with an increase of an additional 5,000 shares each 30 days
thereafter until the expiration of six months after which the
Company had agreed to repurchase all shares issued for $750,000
and to deliver a promissory note therefore, with interest payable
at 15% per annum from the date funds were received.
During fiscal 1996, in a series of transaction, the redeemable
shares were sold privately thereby waiving all rights of
redemption. The Company delivered a total of 276,000 shares
before the redeemable shares were sold privately. As a result of
the sale, $750,000 ($675,000 net of commissions) was credited to
equity.

During the year ended June 30, 1996, the Company raised
an additional $639,115 through the issuance of 140,478 shares of
the Company's common stock in private transactions.

The Company expects to raise additional capital by
selling its common stock in order to fund its capital
requirements for its portion of the costs of the drilling and
completion of development wells on its proved undeveloped
properties during the next twelve months. There is no assurance
that it will be able to do so or that it will be able to do so
upon terms that are acceptable. The Company does not currently
have a credit facility with any bank and it has not determined
the amount, if any, that it could borrow againstits existing
properties. The Company will continue to explore additional
sources of both short-term and long-term liquidity to fund its
working capital deficit and its capital requirements for
development of its properties including establishing a credit
facility, sale of equity or debt securities and sale of
non-strategic properties. Many of the factors
which may affect the Company's future operating performance
and liquidity are beyond the Company's control, including oil and
natural gas prices and the availability of financing.

After evaluation of the considerations described above,
the Company believes that its existing cash balances, cash flow
from its existing producing properties, proceeds from the
sale of producing properties, and other sources of funds will be
adequate to fund its operating expenses and satisfy its other
current liabilities over the next year or longer.

Results of Operations

Net Earnings (Loss). The Company's net loss for the
year ended June 30, 1996 was $3,009,390 compared to the net loss
of $3,573,317, net of a $493,850 extraordinary gain
on the settlement of the Company's recoupment gas obligation, for
the year ended June 30, 1995. The loss for the years ended
June 30, 1996 and 1995 included stock option expense of
$293,125 and $1,508,750, respectively, for options granted to
certain officers, directors, employees and consultants.
In addition, the loss for the year ended June 30, 1996 and 1995
also included a $250,000 minimum royalty to a related party as part of
the acquisition of three proved undeveloped offshore California
federal oil and gas units. The loss for the year ended
June 30, 1996 and 1995 also included $375,301 and $559,445,
respectively, for abandoned and impaired properties.
Of these amounts, $56,461 in 1996 and the $411,791 in 1995 are
write downs of its oil and gas properties to comply with SFAS 121
"Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of". The write down of the
Company's producing oil and gas properties in 1995 was primarily due to
the depressed natural gas price.

Revenue. Total revenue for the year ended June 30, 1996
was $1,385,317 compared to $1,428,907 for the year ended June 30,
1995. Oil and gas sales for the year ended June 30, 1996 was
$1,044,873 compared to $1,272,989 for the year ended June 30,
1995. The decrease in oil and gas sales during the year ended
June 30, 1996 resulted from the sale of certain properties during
1995. Revenue from oil and gas sales includes amortization of
the Company's recoupment gas obligation of $167,009 for the year
ended June 30, 1995. Revenue was recorded as the recoupment
gas was produced and delivered to the gas purchaser. The
amount of revenue recorded varied with the amount of gas recouped
by the purchaser and the current price of gas. On November 18,
1994, the Company entered into an agreement with El
Paso Natural Gas Company under which Amber agreed to transfer to
El Paso Amber's interest in four wells and the associated acreage
in complete satisfaction of the obligation. As a result
of this agreement, the Company is no longer obligated to El Paso
for recoupment gas from the remaining wells originally subject to
the recoupment agreement.

Production volumes and average prices received
(excluding amounts attributable to recoupment gas produced) for
the years ended June 30, 1996 and 1995 are as follows:

1996 1995

Production:

Oil (barrels) 10,713 12,261
Gas (Mcf) 499,294 582,844

Average Price:

Oil (per barrel) $17.74 16.34
Gas (per Mcf) $ 1.71 1.55

Lease Operating Expenses. Lease operating expenses for
the year ended June 30, 1996 were $439,805 compared to $369,683
for the year ended June 30, 1995. On a MCF
equivalent basis, production expenses and taxes were $.78 per Mcf
equivalent during the year ended June 30, 1996 compared to $.48
per Mcf equivalent for the year ended June 30, 1995.
The increase in lease operating costs on an equivalent basis
compared to 1995 resulted from the costs of a number of workovers
on the Company's properties.

Depreciation and Depletion Expense. Depreciation and
depletion expense for the year ended June 30, 1996 was $341,813
compared to $542,979 for the year ended June 30,
1995. On a MCF equivalent basis, the depletion rate was $.61 per
Mcf equivalent during the year ended June 30, 1996 compared to
$.71 per MCF equivalent for the year ended June 30,
1995. The decrease in depletion rate compared to 1995 is
primarily the result of the impairment of properties recorded
in 1995 which reduced the depletable basis in the properties.

Exploration Expenses. Exploration expenses consist of
geological and geophysical costs and lease rentals. Exploration
expenses were $116,681 for the year ended June 30, 1996
compared to $23,811 for the year ended June 30, 1995. The
increase in exploration expenses compared to 1995 is primarily
the result the increase in delay rentals attributable to an
acquisition of undeveloped properties in Wyoming during 1996.

Abandonment and Impairment of Oil and Gas Properties.
The Company recorded an expense for the abandonment and
impairment of oil and gas properties for the year ended
June 30, 1996 of $375,301 compared to $559,445 in 1995, including
$411,791 recorded upon the adoption of SFAS 121.
The expense in 1996 includes a provision for impairment of the
costs associated with the original application for the South Sulu
Sea Geophysical Survey and Exploration Contract of $318,840.
The Company recorded a provision for impairment of the
costs incurred to date as a result of the Philippine Government's
request to resubmit the application. The write down of the
Company's producing oil and gas properties in 1995 was
primarily due to the depressed natural gas prices in 1995.

General and Administrative Expenses. General and
administrative expense for the year ended June 30, 1996 were
$2,457,423 compared to $1,589,042 for the year ended June
30, 1995. General and administrative expense increased from
1995 to 1996 primarily as a result of an increase in broker
and shareholder relations expense to attempt to create a more
liquid trading market for the Company's common stock.

Stock Option Expense. Stock option expense has been
recorded for the years ended June 30, 1996 and 1995 of $293,125
and $1,508,750, respectively, for options granted
to certain officers, directors, employees and consultants at
option prices below the market price at the date of grant.

Minimum Royalty To Related Party. The minimum royalty
to related party represents the minimum royalty paid in 1995
and in 1996 pursuant to the terms of the agreement
with Ogle to acquire interests in three proved undeveloped
offshore Santa Barbara, California federal oil and gas units.
The purchase price of $8,000,000 is represented by a production
payment reserved in the documents of Assignment and Conveyance
and is payable out of three percent (3%) of the oil and gas
production from the working interests with a requirement for
minimum annual payment. Delta paid Ogle $250,000 in 1996 and
$250,000 in 1995 and is to pay a minimum of $350,000 annually
thereafter until the earlier of: 1) when the production
payments accumulate to the $8,000,000 purchase price; 2) when 80%
of the ultimate reserves of any lease have been produced;
or 3) 30 years from the date of the conveyance.

Interest on Recoupment Gas Obligation Expense. Imputed
interest expense on the recoupment gas obligation was $113,285
for the year ended June 30, 1995.

Interest on Notes Payable. Interest on notes payable
was $211,257 for the year ended June 30, 1996 compared to
$539,079 for the year ended June 30, 1995. Interest expense
includes interest on the Company's convertible note payable
issued in November 1992 until converted in June 1995 and interest
on the Snyder Note. Although the Company is not obligated
to make payments on the Snyder Note, the Company has recorded
interest expense pursuant to the terms of the note. This note
is non-recourse to the Company and, although there is no
assurance that it will occur, the Company expects the Note will
be discharged during the next twelve months through the sale by
UFG of its 888,063 Delta shares.

On May 22, 1995, a portion of a convertible promissory
note was transferred to Bion. During June 1995, the entire note
and related accrued interest was converted into 461,002
restricted shares of the Company's common stock.

Future Operations

The Company believes there is risk that UFG will be
unable to timely repay the Snyder Note which is currently in
default, and that the encumbered portion of the Amber shares
owned by Delta could be lost to Delta unless Delta is able to
make other arrangements to allow it to keep the shares and/or to
realize the equivalent value from UFG. On December 11, 1995,
UFG filed Chapter 11 bankruptcy protection with the Unites States
Bankruptcy Court for the Southern District of New York.
The Company holds certificates representing 888,063 shares
of Delta common stock which are in the name of UFG as collateral
pending the discharge of UFG's obligation to Snyder Oil
Corporation. As a result, the Company could cancel such
collateral shares and reduce the number of shares outstanding or
attempt to resell some or all of these shares and use the
proceeds therefrom to pay the debt owed by UFG encumbering the
Amber shares.

The loss of the encumbered Amber shares would reduce
Delta's ownership interest in Amber to 19.74%. Amber's oil and
gas revenue during the year ended June 30, 1996
amounted to approximately $555,000 which constituted
approximately 53% of the Company's consolidated oil and gas
revenues. Amber's proved oil and gas reserves attributable to
its onshore properties are estimated to be 5,300 Bbls of oil and
1.85 Bcf of gas. Amber's proved undeveloped oil and gas reserves
attributable to its offshore California properties are estimated
to be 10,162,000 Bbls of oil and 14.38 Bcf of gas. A loss of
the encumbered Amber shares would significantly reduce the
Company's oil and gas revenue and reserves and have a material
effect on the operations of the Company (see Note 4 to the
"Consolidated Financial Statements).

The Company's Offshore California proved undeveloped
reserves are attributable to its interests in four federal units
(plus one additional lease) located offshore California near
Santa Barbara. While these interests represent ownership of
substantial oil and gas reserves classified as proved
undeveloped, the cost to develop the reserves will be very
substantial. The Company may be required to farm out all or a
portion of its interests in these properties if it cannot fund
its share of the development costs. There can be no assurance
that the Company can farm out its interests on acceptable terms.
If the Company were to farm out its interests in these
properties, its share of the proved reserves attributable to the
properties would be decreased substantially. The Company may
also incur substantial dilution of its interests in the
properties if it elects to use other methods of financing the
development costs.

These units have been formally approved and are
regulated by the Minerals Management Service of the Federal
Government. However, due to a history of opposition to offshore
drilling and production in California by some individuals and
groups, the process of obtaining all of the necessary permits and
authorizations to develop the properties will be lengthy and even
after all required approvals are obtained, lawsuits may possibly
be filed to attempt to further delay the development of the
properties. While the Federal Government has recently attempted
to expedite this process, there can be no assurance that it will
be successful in doing so. The Company does not have a
controlling interest in and does not act as the operator of any
of the offshore California properties and consequently will not
control the timing of either the development of the properties or
the expenditures for development. Management and its independent
engineering consultant have considered the these factors relating
to timing of the development of the reserves in the preparation
of the reserve information relating to these properties. As
additional information becomes available in the future, the
Company's estimates of the proved undeveloped reserves
attributable to these properties could change, and such changes
could be substantial.

Recent Accounting Standards

Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" (SFAS No. 123), was
issued by the Financial Accounting Standards Board
in October 1995. SFAS No. 123 established financial accounting
and reporting standards for stock-based employee compensation
plans as well as transactions in which an entity issues its
equity instruments to acquire goods or services from
non-employees. The Company will include the disclosures required
by SFAS No. 123 in the notes to future financial statements.

ITEM 7. FINANCIAL STATEMENTS

Financial Statements and Supplementary Data are included
herein beginning on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.

The following table sets forth the names, ages and
positions held with respect to each Director and Executive
Officer of the Company who served during the period ended June
30, 1996, along with the period served as a Director.

Name Age Position(s) Period of
Service

Aleron H. Larson, Jr. 51 Chairman of the May 1987 to
Board, Chief Present
Executive Officer,
Secretary, Treasurer
and a Director

Roger A. Parker 34 President and May 1987 to
a Director Present

Terry D. Enright 47 Director November 1987
to Present

Don Mettler 72 Director May 1993 to
September 3, 1996*

* Mr. Mettler died on September 3, 1996. The remaining
directors of the Company are in the process of seeking a
replacement for Mr. Mettler to be appointed to serve until the
next shareholder's meeting.

All directors will hold office until the next annual meeting
of shareholders. There are no arrangements or understandings
between any director of the Company and any other person or
persons pursuant to which such director was or is to be selected
as a director.

All officers of the Company will hold office until the next
annual director's meeting of the Company. There is no
arrangement or understanding between any such officer or any
person pursuant to which such officer is to be selected as an
officer of the Company. There is no employee who is not a
designated officer or director who is expected to make any
significant contribution to the business
of the Company.

The following set forth biographical information as to the
business experience of each current officer and director of the
Company.

Aleron H. Larson, Jr., age 51, has operated as an investor
and an independent in the oil and gas industry individually and
through public and private ventures since 1978. From July of 1990
through March 31, 1993, Mr. Larson served as the Chairman,
Secretary, C.E.O. and a Director of Underwriters Financial Group,
Inc. ("UFG") (formerly Chippewa Resources Corporation), a public
company then listed on the American Stock Exchange which
presently owns approximately 17.75% of the outstanding equity
securities of Delta. Subsequent to a change of control, Mr.
Larson resigned from all positions with UFG effective March 31,
1993. Mr. Larson serves as Chairman, CEO, Secretary, Treasurer
and Director of Amber, a public oil and gas company which is a
majority-owned subsidiary of Delta. He has also served,since
1983, as the President and Board Chairman of Western Petroleum
Corporation, a public Colorado oil and gas Company which is now
inactive. During part of 1989 and part of 1990, he served as a
Director of Apex Operating Company, Inc. and P & G Exploration
(formerly Texco Exploration, Inc.). Mr. Larson has been
principally involved in the oil and gas business since 1978.
Mr. Larson practiced law in Breckenridge, Colorado from 1971
until 1974. During this time he was a member of a law firm,
Larson & Batchellor, engaged primarily in real estate law, land
use litigation, land planning and municipal law. In 1974, he
formed Larson & Larson, P.C., and was engaged primarily in areas
of law relating to securities, real estate, and oil and gas until
1978. Mr. Larson received a Bachelor of Arts degree in Business
Administration from the University of Texas at El Paso in 1967
and a Juris Doctor degree from the University of Colorado in
1970.

Roger A. Parker, age 34, served as the President, a Director
and Chief Operating Officer of Underwriters Financial Group from
July of 1990 through March 31, 1993. Mr. Parker resigned from
all positions with UFG effective March 31, 1993. Mr. Parker also
serves as President, Chief Operating Officer and Director of
Amber. He also serves as a Director and Executive Vice President
of P & G Exploration, Inc., a private oil and gas company
(formerly Texco Exploration, Inc.). Mr. Parker has also been the
President and a Director of Apex Operating Company, Inc. since
its inception in 1987. He has operated as an investor and an
independent in the oil and gas industry individually and through
public and private ventures since 1982. He was at various times,
from 1982 to 1989, a Director, Executive Vice President,President
and Shareholder of Ampet, Inc. He received a Bachelor of Science
in Mineral Land Management from the University of Colorado in
1983. He is a member of the Rocky Mountain Oil and Gas
Association and the Independent Producers Association of the
Mountain States (IPAMS).

Terry D. Enright, age 47, has been in the oil and gas
business since 1980. Mr. Enright was a reservoir engineer
until 1981 when he became Operations Engineer and Manager
for Tri-Ex Oil & Gas. In 1983, Mr. Enright founded and is
President and a Director of Terrol Energy, a private,
independent oil company with wells and operations primarily
in the Central Kansas Uplift and D-J Basin. In 1989, he formed
and became President and a Director of a related company, Enright
Gas & Oil, Inc. Since then, he has been involved in the drilling
of prospects for Terrol Energy, Enright Gas & Oil, Inc., and for
others in Colorado, Montana and Kansas. He has also participated
in brokering and buying of oil and gas leases and has been
retained by others for engineering, operations, and general oil
and gas consulting work. Mr. Enright received a B.S. in
Mechanical Engineering with a minor in Business Administration
from Kansas State University in Manhattan, Kansas in 1972, and
did graduate work toward an MBA at Wichita State University in
1973. He is a member of the Society of Petroleum
Engineers and a past member of the American Petroleum Institute
and the American Society of Mechanical Engineers.

Don E. Mettler, age 72 at the time of his death on September
3, 1996, served as a Director and Audit Committee member of
Underwriters Financial Group, Inc. (formerly Chippewa Resources
Corporation) from June 1991 until March 31, 1993. Mr. Mettler
was active in the oil and gas field for over 30 years. He
received a B.S. Degree in Geology/Engineering from Kansas State
University in 1948, and a M.S. Degree in Geology from Kansas
University in 1955. From 1951 to 1961, Mr. Mettler was a
Geologist and District Geologist at Shell Oil Company. From
1961-1963 he was a Geologist and then Chief Geologist from 1963
to 1968 for Davis Oil Co., Denver, Colorado. Mr. Mettler served
as Director/Vice President of Exploration for Petro Lewis
Corporation, Denver, Colorado from 1968 to 1973. Between 1971 to
1986, Mr. Mettler also served as Chairman of Trustees at
Randell-Moore Accelerated Schools. Between 1975-1978, Mr. Mettler
was Vice President of Exploration for Canus Petroleum, Inc.,
Denver, Colorado. From 1978 to 1985, Mr. Mettler was a
Chairman/Vice President of Exploration for Tri-Ex Oil & Gas,
Inc., Denver, Colorado. From 1982 to the present, Mr. Mettler has
served as Chairman/President and principal owner of Air Carrier
International Flight Academy, Denver, Colorado, a training school
for airline pilots.

There is no family relationship among or between any of the
Directors.

Messrs. Enright and Mettler served as the audit committee
and as the compensation committee. Messrs. Enright and Mettler
also constituted the Incentive Plan Committee for the Delta 1993
Incentive Plan for the Company.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION PERIOD SALARY(2) BONUS SARS(#) COMPENSATION($)

Aleron H. Year Ended
Larson, Jr. 6/30/96 $189,000 $55,000 75,000 (6) -0-
CEO, Director Year Ended
6 /30/95 180,000 -0- 177,500 (4) -0-
6 mos. ended
6/30/94 90,000 -0- -0- -0-
Year 1993 135,000(1) -0- 100,000(3) -0-

Roger A. Parker Year Ended
President, 6/30/96 $189,000 $55,000 75,000(6) -0-
Director Year Ended
6/30/95 180,000 -0- 177,500(4) $6,338(5)
6 mos. ended
6/30/94 90,000 -0- -0- 1,500(5)
Year 1993 135,000(1) -0- 100,000(3) 207(5)

(1) This table does not include compensation received during
these periods by Messrs. Larson and Parker as officers and
directors of UFG, the former parent of Delta.

(2) Includes reimbursement of certain expenses.

(3) Options to purchase shares of common stock at $3.75/share
until June 9, 2003 under the Delta 1993 Incentive Plan.

(4) Options to purchase 177,500 shares each of common stock at
$1.25/share until September 21, 2004 were granted to Aleron H.
Larson, Jr. and Roger A. Parker on September 21, 1994 under the
Delta 1993 Incentive Plan. On that date, the same parties each
surrendered for cancellation an equal number of Class D warrants
to purchase shares at $1.25 per share until August 8, 1995.

(5) These amounts represent imputed interest on a non interest
bearing advance to this officer with interest imputed at eight
percent (8%) per annum.

(6) Options to purchase 75,000 shares each of common stock at
$5.375/share until August 30, 2005 were granted to Aleron H.
Larson, Jr. and Roger A. Parker under the Delta 1993 Incentive
Plan.

AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUES

Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
at FY-End (#) at FY-End ($)
Shares Acquired Realized Exercisable/ Exercisable/
Name On Exercise (#) $ Unexercisable Unexercisable

Aleron H. -0- -0- 359,500 (1)/0 $1,454,063/0
Larson, Jr.,
CEO

Roger A. Parker -0- -0- 334,500(1)/0 $1,313,438/0
President

(1) Includes 177,500 options for Mr. Larson and 152,500 options
for Mr. Parker to purchase common stock exercisable at $1.25 per
share until September 21, 2004; 7,000 Class F warrants to
purchase common stock exercisable at $2.50 per share until August
8, 1995; 100,000 options to purchase common stock exercisable at
$3.75 per share until June 9, 2003; 75,000 options to purchase
common stock exercisable at $5.375 per share until August 30,
2005.

(a) Compensation of Directors.

The Company has committed to grant, on an annual basis, to
each non-employee director, options to purchase, on a pro rata
basis, 7,500 shares of the Company's common stock for services
performed during the previous 12 months at 50% of the yearly
Market prices in which the services were performed.

During 1996, the Company committed to grant 15,000 options
to purchase the Company's common stock to two non-employee
directors at $3.30 per share.

In addition, the outside directors Don E. Mettler and Terry
D. Enright were each paid $6,000 during the year ended June 30,
1996.

(b) Employment Contracts and Termination of Employment and
Change-in-Control Agreement.

On May 29, 1996, the Company's Compensation Committee
authorized the Company to enter into employment agreements with
the Company's Chairman and President which employment agreements
replaced and superseded the prior employment agreements with such
persons. (See Form 8-K dated June 27, 1996). Under the
employment agreements the Chairman and President each receive
a salary of $198,000 per year. The employment agreements have
five year terms and include provisions for cars, parking and
health insurance. Terms of the employment agreements also
provide that the employees may be terminated for cause but that
in the event of termination without cause or in the event of a
change in control of the Company, as defined in Delta's 1993
Incentive Plan, then the employees will continue to receive the
compensation provided for in the employment agreements for the
remaining terms of the employment agreements. Also in the event
of a change of control and irrespective of any resulting
termination the Company will immediately cause all
of each employee's then outstanding unexercised options to be
exercised by the Company on behalf of the employee with the
Company paying the employee's federal, state and local taxes
applicable to the exercise of the options and warrants.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL SHAREHOLDERS
AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners:

The following table presents information concerning persons
known by management to own beneficially 5% or more of the
Company's issued and outstanding voting securities of the Company
at August 28, 1996.

Name and Address Amount and Nature
Title of of Beneficial of Beneficial Percent
Class (1) Owner Ownership of Class (2)

Common Stock Aleron H. Larson, Jr. 1,423,041 shares(3) 27.10%
555 17th St., #3310
Denver, CO 80202

Common Stock Roger A. Parker 1,421,121 shares (4) 27.19%
555 17th St., #3310
Denver, CO 80202

Common Stock Aleron H. Larson, Jr. 1,910,621 shares(5) 34.20%
& Roger A. Parker
(as a group)
555 17th St., #3310
Denver, CO 80202

Common Stock Underwriters Financial 888,063 shares(6) 18.15%
Group, Inc.
80 Maiden Lane
New York, NY 10038

Common Stock Burdette A. Ogle 761,891 shares(7) 15.26%
1224 Coast Village Rd, #24
Santa Barbara, CA 93108

Common Stock Ronald Heck 250,000 shares 5.11%
Suite 104
1253 Coast Village Rd.
Santa Barbara, CA 93108

(1) Delta has an authorized capital of 300,000,000 shares of $.01
par value common stock of which 4,891,884 shares were issued and
outstanding as of August 28, 1996. Delta also has an authorized
capital of 3,000,000 shares of $.10 par value preferred stock of
which 160 shares of restricted Series C Convertible Preferred
stock was issued during the year ended June 30, 1996. Subsequent
to year end, the 160 shares of Series C Convertible Preferred
stock were converted into 306,103 shares of common stock which
is included in the outstanding common stock referenced above.
As of September 13, 1996, Delta had outstanding warrants and
options to purchase 887,000 shares at prices ranging from $1.25
per share to $8.50 per share. Additionally, Delta had
outstanding options which were granted to officers and employees
to purchase up to 917,350 shares of common stock at prices from
$1.25 to $9.75 per share.

(2) The percentage set forth after the shares listed for each
beneficial owner is based upon total shares outstanding of
4,891,884. The percentage set forth after each beneficial
owner is calculated as if any warrants and/or options owned
had been exercised by such beneficial owner and as if no other
warrants and/or options owned by any other beneficial owner had
been exercised. Warrants and options are aggregated without
regard to the class of warrant or option.

(3) Includes 130,000 shares owned by Mr. Larson's wife; 7,000
Options to purchase shares of common stock at $2.50 per share
until July 25, 2005; 100,000 options exercisable at a price of
$3.75 per share until June 9, 2003; 177,500 options exercisable
at a price of $1.25 per share until September 21, 2004; 75,000
options exercisable at a price of $5.375 per share until August
30, 2005; and 888,063 shares owned by Underwriters Financial
Group, Inc.; 20,000 shares owned by Bion Environmental
Technologies, Inc.; 5,178 shares owned by Willie Lee Lipsey;
13,000 shares owned by the Woolworth Fund, Inc.,; and 7,300
shares owned by the Gaylord-Woolworth Trust, for which Mr.
Larson has shared voting power with Mr. Parker but for which
he has no investment power. The durations of the voting
agreements affecting the aforementioned shares voted by Messrs.
Larson and Parker (unless the shares are sold to non-affiliates)
are as follows: Underwriters Financial Group, Inc. - until
December 31, 2002; Bion Environmental Technologies, Inc. - until
June 30, 2004; Willie Lee Lipsey - until December 31, 1997;
Woolworth Fund, Inc. - until December 31, 1997; Gaylord-Woolworth
Trust until December 31, 1997.

(4) Includes 153,080 shares owned by Mr. Parker directly; 7,000
Options to purchase shares of common stock at $2.50 per share
until July 25, 2005; 100,000 options exercisable at a price of
$3.75 per share until June 9, 2003; 152,500 options exercisable
at a price of $1.25 per share until September 21, 2004; 75,000
options exercisable at a price of $5.375 per share until August
30, 2005 and 888,063 shares owned by Underwriters Financial
Group, Inc.; 20,000 shares owned by Bion Environmental
Technologies, Inc.; 5,178 shares owned by Willie Lee Lipsey;
13,000 shares owned by the Woolworth Fund, Inc., and 7,300 shares
owned by the Gaylord-Woolworth Trust, for which Mr. Parker has
shared voting power with Mr. Larson but for which he has no
investment power. The durations of the voting agreements
affecting the aforementioned shares voted by Messrs. Larson and
Parker (unless the shares are sold to non-affiliates) are as
follows: Underwriters Financial Group, Inc. - until December 31,
2002; Bion Environmental Technologies, Inc. - until June 30,
2004; Willie Lee Lipsey - until December 31, 1997; Woolworth
Fund, Inc. - until December 31, 1997; Gaylord-Woolworth Trust
until December 31, 1997.

(5) Includes all warrants, options and shares referenced in
footnotes (3) and (4) above as if all warrants and options were
exercised and as if all resulting shares, including shares
covered by the above referenced voting agreements were voted
as a group.

(6) These shares are subject to a voting agreement referenced in
footnotes (3) and (4) above.

(7) Includes 635,264 shares owned by Mr. Ogle directly, 26,627
shares owned beneficially by Sunnyside Production Company, and
warrants to purchase 100,000 shares of common stock at $8.00 per
share until August 31, 1999 with a call provision whereby the
Company may repurchase any unexercised warrants for an aggregate
sum of $1,000 after the Company stock has traded for $10.00 per
share or greater for 30 consecutive trading days.

(b) Security Ownership of Management:

Amount and Nature
Title of Name of Beneficial of Beneficial Percent
Class (1) Owner Ownership of Class (2)

Common Stock Aleron H. Larson, Jr. 1,423,041 shares (3) 27.10%
Common Stock Roger A. Parker 1,421,121 shares (4) 27.19%
Common Stock Terry D. Enright 15,000 shares (5) 00.31%
Common Stock Don E. Mettler 10,000 shares (6) 00.20%
Common Stock Officers and Directors 1,935,541 shares (7) 28.35%
as a Group (4 persons)

(1) See Note (1) to preceding table
(2) See Note (2) to preceding table
(3) See Note (3) to preceding table
(4) See Note (4) to preceding table
(5) Includes 5,000 Class D Warrants to purchase shares of common
stock at $1.25 per share until the underlying shares are
registered, and includes 10,000 Class I warrants to purchase
stock at $3.50 per share until June 9, 2003.
(6) Includes 10,000 Class I warrants to purchase stock at $3.50
per share until June 9, 2003.
(7) Includes 888,063 shares owned by UFG ; 20,000 shares owned by
Bion Environmental Technologies, Inc.; 5,178 shares owned by
Willie Lee Lipsey; 13,000 shares owned by the Woolworth Fund,
Inc. as of August 28, 1996 which are voted by Messrs. Larson and
Parker under voting agreements described in footnotes (3) and
(4) above and includes all warrants and options referenced in
footnotes (1), (2), (3) and (4) above.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) Background and Reorganization

During the period from July, 1990 through October, 1992,
in a series of transactions, UFG acquired 1,437,340 shares of
common stock of Delta which represented approximately 89% of the
then outstanding shares of common stock of Delta.

In October 1992, Delta concluded a series of agreements
with UFG (collectively, the "UFG Agreement") to participate in a
plan to reorganize and recapitalize Delta (the "Plan
of Reorganization"). Under the terms of the UFG Agreement, UFG
transferred its oil and gas properties and certain other related
assets to Delta as a contribution to the capital of Delta. The
assets transferred included producing and non-producing oil and
gas properties, accounts receivable, oil field equipment, and
office furniture and equipment. UFG also transferred
4,110,660 shares of common stock of Amber to Delta. The shares
transferred represented an 88.09% interest in Amber.

The oil and gas properties and shares of common stock of
Amber received from Ogle were recorded at Ogle's predecessor cost
of approximately $45,000. The assets transferred
to Delta by UFG were recorded at the predecessor cost of the
assets to UFG, as adjusted. UFG followed the full cost method of
accounting for its oil and gas properties. The predecessor cost
of the producing properties transferred was adjusted to conform
to the Company's policy of accounting for oil and gas properties
under the successful efforts method of accounting. The
predecessor cost of each oil and gas property was further
adjusted, if necessary, to reduce the amount recorded to the
estimated fair value of the oil and gas reserves attributable to
the property, if less than the adjusted predecessor cost of the
property.

Under the terms of the UFG Agreement, UFG agreed to
assume certain existing liabilities of Delta and Amber totaling
$1,325,175. On April 14, 1993, the Company entered
into an agreement with UFG (the "Clarification Agreement") which
provided for the issuance by UFG of a non-interest bearing
promissory note payable to the Company in the amount of
$1,325,175 to evidence UFG's obligation to repay the Company for
the obligations UFG had assumed under the UFG Agreement. The
Clarification Agreement also provided for the pledge
of 556,289 shares of common stock of the Company held by UFG as
collateral for performance under the promissory note and
clarification and revision of certain other provisions of the UFG
Agreement. On February 23, 1995, the Company and UFG executed
and entered into a letter agreement dated February 22, 1995,
under which Delta agreed to convert $736,932 of principal
and interest due from UFG under its promissory note dated March
31, 1993 into 491,300 shares of UFG common stock. In addition,
UFG and Delta agreed that the remaining $736,932 owed
by UFG to Delta would be satisfied by the transfer of 92,117
shares of Delta common stock from UFG to Delta. Delta agreed to
file a registration statement covering the registration of the
remaining 888,063 shares of Delta common stock owned by UFG.
Upon the effectiveness of the registration statement, UFG will
have the right to sell all or some of the Delta shares
covered by the registration statement at a price of not less than
$6.875 or the bid price on the effective date, whichever is
higher. As of September 13, 1996, the registration statement had
not been declared effective. The agreement calls for an escrow
to be established for the 888,063 shares pending sale to assure
that the shares are sold pursuant to the terms of the agreement
and to assure that the first proceeds are used to discharge UFG's
promissory note to Snyder Oil Corporation ("SOCO") thereby
releasing to Delta the Amber common stock held by SOCO as
collateral for the promissory note.

Certain of the oil and gas properties transferred had
been pledged to secure existing indebtedness of UFG, which
indebtedness remained an obligation of UFG under the
terms of the UFG Agreement. To the extent the existing secured
indebtedness on a particular property exceeded its adjusted
predecessor cost, the transfer of the property was recorded in
the accompanying financial statements at its adjusted predecessor
cost and a liability was recorded in an amount equal to the asset
recorded. To the extent the existing secured indebtedness on a
particular property was less than the adjusted predecessor cost,
the property was recorded at its adjusted predecessor cost, the
related liability was recorded and the net amount was reflected
as a capital contribution by UFG. Subsequent payments by UFG are
recorded as a reduction of the liability and a capital
contribution.

3,357,003 shares of common stock of Amber transferred to
the Company by UFG are pledged to secure a note payable to Snyder
Oil Corporation (the "Snyder Note"). The balance due on the note
payable at the time of the transfer of the Amber shares to Delta
of $2,292,456 was recorded as a liability of Delta, because of
the uncertainty of the ability of UFG to fulfill its obligations
under the note.

The Company believes there is substantial risk that UFG
will be unable to timely repay the Snyder Note, which is
currently in default, and that the encumbered portion of the
Amber shares owned by Delta could be lost. The loss of the
encumbered Amber shares would reduce Delta's ownership interest
in Amber to 19.74%. Amber's revenue during the year ended
June 30, 1996 amounted to approximately $555,000 which
constituted approximately 53% of the Company's consolidated
revenues. Amber's proved oil and gas reserves attributable to
its onshore properties are estimated to be 5,100 Bbls of oil and
1.91 Bcf of gas. Amber's proved undeveloped oil and gas reserves
attributable to its offshore California properties are estimated
to be 10,582,000 Bbls of oil and 12.96 Bcf of gas. A loss of the
encumbered Amber shares would significantly reduce the Company's
oil and gas revenue and reserves and have a material
effect on the operations of the Company. (See "Financial
Statements"; Item 7 herein and "Management's Discussion and
Analysis or Plan of Operation"; Item 6.)

The UFG Agreement also contained provisions regarding
employment, voting agreements and consulting agreements for the
Company's executive officers, Aleron H. Larson,
Jr. and Roger A. Parker, and provided for the transfer to each of
Messrs. Parker and Larson 162,330 shares of the Company's
outstanding common stock owned by UFG in exchange for
certain securities of UFG.

Other Agreements/Transactions.

(a) On December 21, 1992, pursuant to the terms of an
agreement dated October 21, 1992 (see Exhibit 28.1 to Form 8-K
dated December 4, 1992), UFG executed a voting agreement (See
Form 8-K dated February 5, 1993; Exhibit 9.1) which voting
agreement gives to Aleron H. Larson, Jr., C.E.O. of Registrant,
and Roger A. Parker, President of Registrant, the right to vote
the 888,063 shares of Registrant's common stock presently owned
by UFG (unless sold to non-affiliates in the public market) until
December 31, 2002.

(b) Effective October 28, 1992, the Company entered
into a five year consulting agreement with Burdette A. Ogle and
Ronald Heck which provides for an aggregate fee to the two of them of
$10,000 per month. (See Form 8-K dated December 4, 1992; Exhibit 28.2.)
Messrs. Ogle and Heck own beneficially 15.26% and 5.11%, respectively,
of the Company's outstanding common stock. To the Company's best
knowledge and belief, the consulting fee paid to Messrs. Ogle
and Heck is comparable to those fees charged by
Messrs. Ogle and Heck to other companies owning interests in
properties offshore California for consulting services
rendered to those other companies with respect to their own
offshore California interests. It is the Company's understanding
that, in the aggregate, Mr. Ogle represents, as a consultant, a
significant percentage of all of the ownership interests in the
various properties that are located in the same general vicinity
of the Company's offshore California properties. Mr. Ogle also
consults and advises the Company relative to properties in areas
other than offshore California, relative to potential property
acquisitions and with respect to the Company's general oil and
gas business. It is the Company's opinion that the fees paid to
Messrs. Ogle and Heck for the services rendered are comparable to
fees that would be charged by similarly qualified non-
affiliated persons for similar services.

(c) As of June 30, 1996 the Company was owed $116,727
by affiliates (Apex Operating Company, Inc. and P & G
Exploration, Inc.) of its president, Roger A. Parker. Mr.
Parker, is an officer, director and greater than 10% shareholder
of both Apex Operating Company and P & G Exploration, Inc. No
interest is being charged by the Company on amounts owed by the
affiliates of Mr. Parker.

(d) Effective February 25, 1994, Burdette A. Ogle
("Ogle"), at the time a 21.44% shareholder of Delta, granted
Delta an option ("Option") to acquire working interests
in three proved undeveloped offshore Santa Barbara California,
federal oil and gas units ("Interests"). On August 31, 1994, in
an addendum to the February 25, 1994 Agreement
granting the Option, Ogle agreed to extend the period during
which the Option could be exercised until January 3, 1995 in
consideration of the issuance by Delta to Ogle of warrants to
purchase 100,000 shares of common stock at a price of $8.00 per
share until August 31, 1999 with a call provision whereby Delta
may repurchase any unexercised warrants for an aggregate
sum of $1,000 after the stock has traded at $10.00 per share or
greater for thirty consecutive trading days. On January 3, 1995,
the Company exercised its option to acquire these properties
from Ogle. Under the Purchase and Sale Agreement and related
assignment and conveyance of the interests, Ogle immediately
assigned and conveyed the Interests to Delta. The purchase price
of $8,000,000 is represented by a production payment reserved in
the documents of Assignment and Conveyance and is payable out of
three percent (3%) of the oil and gas production from the
working interests with a requirement for minimum annual payment.
Delta paid Ogle $250,000 in 1996 and $250,000 in 1995 and is to
pay a minimum of $350,000 annually thereafter until
the earlier of: 1) when the production payments accumulate to the
$8,000,000 purchase price; 2) when 80% of the ultimate reserves
of any lease have been produced; or 3) 30 years from the
date of the conveyance. Delta already owned other interests in
these same federal units.

The terms of the transaction with Mr. Ogle were arrived
at through arms-length negotiations initiated by management of
the Company. The Company is of the opinion that the
transaction is on terms no less favorable to the Company than
those which could have been obtained from non-affiliated parties.
No independent determination of the fairness and
reasonableness of the terms of the transaction was made by any
outside person. Management believes the terms are comparable to
terms that would have been negotiated in a transaction with
non-affiliates.

(e) On May 29, 1996, the Company's Compensation
Committee authorized the Company to enter into employment
agreements with the Company's Chairman and President,
which employment agreements replaced and superseded the prior
employment agreements with such persons. (See Form 8-K dated
June 27, 1996). The employment agreements have five
year terms and include provisions for cars, parking and health
insurance. Terms of the employment agreements also provide that
the employees may be terminated for cause but that
in the event of termination without cause or in the event of a
change in control of the Company, as defined in Delta's 1993
Incentive Plan, then the employees will continue to receive the
compensation provided for in the employment agreements for the
remaining terms of the employment agreements. Also in the event
of a change of control and irrespective of any
resulting termination the Company will immediately cause all of
each employee's then outstanding unexercised options to be
exercised by the Company on behalf of the employee with
the Company paying the employee's federal, state and local taxes
applicable to the exercise of the options and warrants. (See Item
10; "Executive Compensation", herein.)

(f) In a Voting Agreement dated June 26, 1995, Bion
Environmental Technologies, Inc. ("Bion") granted voting rights
for shares of the Company owned by Bion to the Company's
Chairman/CEO, Aleron H. Larson, Jr. and its President, Roger A.
Parker. Bion owned 20,000 shares of the Company's common stock
at August 28, 1996.

(g) In a Voting Agreement dated May 19, 1994,
LoTayLingKyur, Inc. ("LTLK") granted voting rights for shares of
the Company owned by LTLK to the Company's
Chairman/CEO, Aleron H. Larson, Jr. and its President, Roger A.
Parker. LTLK owned no shares of the Company's common stock at
August 28, 1996.

(h) On February 12, 1996, the Board of Directors
granted Aleron H. Larson, Jr. and Roger A. Parker, the Company's
Chairman and President, respectively, the right to
participate on a non-promoted basis in up to a five percent (5%)
working interest in any Delta well drilled, re-entered, completed
or recompleted by Delta on its acreage (provided that any
well to be re-entered or recompleted is not then producing
economic quantities of hydrocarbons). Messrs. Larson and Parker
shall pay to the Company the actual cost thereof as estimated by
the Company's consulting engineers prior to commencement of the
work.

(i) On September, 5 1995, the Company acquired certain
leases in Jackson County, Colorado from Sunnyside Production
Company, LLC ("Sunnyside"), a company in which Ogle is an
affiliate owner, for 26,627 shares of the Company's common stock.
This transaction was recorded at Sunnyside's predecessor cost for
the portion attributable to Ogle's interest.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

The Exhibits listed in the Index to Exhibits
appearing at Page 40 are filed as part of this report.

(b) Reports on Form 8-K.

Form 8-K June 27, 1996 Items 5 and 7

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

(Registrant) DELTA PETROLEUM CORPORATION

By (Signature and Title) /s/Aleron H. Larson, Jr.

Aleron H. Larson, Jr., Secretary,
Chairman of the Board, Treasurer
and Principal Financial Officer

By (Signature and Title) /s/Kevin K. Nanke

Kevin K. Nanke, Controller and
Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and on
the dates indicated.

By (Signature and Title) /s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr., Director

Date 9/26/96

By (Signature and Title) /s/Roger A. Parker
Roger A. Parker, Director

Date 9/26/96

By (Signature and Title) /s/Terry D. Enright
Terry D. Enright, Director

Date 9/26/96

INDEX TO EXHIBITS

(2) Plan of Acquisitions, Reorganization, Arrangement,
Liquidation, or Succession. Not applicable.

(3) Articles of Incorporation and By-laws. The Articles of
Incorporation and Articles of Amendment to Articles of
Incorporation and By-laws of the Registrant were filed as
Exhibits 3.1, 3.2, and 3.3, respectively, to the Registrant's
Form 10 Registration Statement under the Securities and Exchange
Act of 1934, filed September 9, 1987, with the Securities and
Exchange Commission and are incorporated herein by reference.
Statement of Designation and Determination of Preferences of
Series A Convertible Preferred Stock of Delta Petroleum
Corporation is incorporated by Reference to Exhibit 28.3 of the
Current Report on Form 8-K dated June 15, 1988. Statement of
Designation and Determination of Preferences of Series B
Convertible Preferred Stock of Delta Petroleum Corporation is
incorporated by reference to Exhibit 28.1 of the Current Report
on Form 8-K dated August 9, 1989.

(4) Instruments Defining the Rights of Security Holders.
Not applicable.

(9) Voting Trust Agreement. Not applicable.

(10) Material Contracts.

10.1 Exchange Agreement dated August 10, 1989.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated August 10, 1989.

10.2 Agreement between Daniel A. Sisk, Trustee of the
Roger A. Parker and Pamela E. Parker Trust and Delta Petroleum
Corporation dated December 7, 1989. Incorporated by reference
from Exhibit 28.1 to the Company's Form 8-K dated
February 9, 1990.

10.3 Agreement between Daniel A. Sisk, Trustee of the
Roger A. Parker and Pamela E. Parker Trust and Delta Petroleum
Corporation dated December 7, 1989. Incorporated by reference
from Exhibit 28.2 to the Company's Form 8-K dated February 9,
1990.

10.4 Letter Agreement between Enright Gas & Oil, Inc.
and Delta Petroleum Corporation dated January 22, 1990.
Incorporated by reference from Exhibit 28.3 to the Company's Form
8-K dated February 9, 1990.

10.5 Exchange Agreement dated February 16, 1990.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated February 20, 1990.

10.6 Purchase Agreement dated March 15, 1990.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated March 15, 1990.

10.7 Purchase Agreement dated March 15, 1990.
Incorporated by reference from Exhibit 28.1 to Form 8-K dated
March 20, 1990.

10.8 Agreement between Crestone Energy Corporation and
Delta Petroleum Corporation dated July 6, 1990. Incorporated by
reference from Exhibit 28.1 to Form 8-K dated July 12, 1990.

10.9 Agreement between Crestone Energy Corporation and
Delta Petroleum Corporation dated June 28, 1990. Incorporated by
reference from Exhibit 28.2 to Form 8-K dated July 12, 1990.

10.10 Agreement between Troy Bates and Delta Petroleum
Corporation dated July 2, 1990. Incorporated by reference from
Exhibit 28.3 to Form 8-K dated July 12, 1990.

10.11 Agreement between Channel Way Industries dated
7-12-90 and Delta Petroleum Corporation dated July 6, 1990.
Incorporated by reference from Exhibit 28.4 to
Form 8-K dated July 12, 1990.

10.12 Agreement between John C. Riley and Delta Petroleum
Corporation dated July 6, 1990. Incorporated by reference from
Exhibit 28.5 to Form 8-K dated July 12, 1990.

10.13 Minutes of the Board of Directors of Delta
Petroleum Corporation dated July 6, 1990. Incorporated by
reference from Exhibit 28.6 to Form 8-K dated July 12,
1990.

10.14 Exchange Agreement dated June 30, 1990, between
High Alpine Petroleum, Inc., and Delta Petroleum Corporation.
Incorporated by reference from Exhibit 28.7 to Form 8-K dated
July 12, 1990.

10.15 Exchange offer from Delta Petroleum Corporation to
Resources Acquisition, Inc. Incorporated by reference from
Exhibit 28.8 to Form 8-K dated July 12, 1990.

10.16 Agreement between Delta Petroleum Corporation and
Chippewa Resources Corporation dated August 1, 1990. Incorporated
by reference from Exhibit 28.1 to Form 8-K dated August 15, 1990.

10.17 Letter dated August 6, 1990 from Delta Petroleum
Corporation to Ridgewood Energy Industries, Inc. Incorporated by
reference from Exhibit 28.2 to Form 8-K dated August 15, 1990.

10.18 Amended Exchange Agreement dated June 30, 1990,
dated 8-15-90 between High Alpine Petroleum, Inc. and Delta
Petroleum Corporation (replacing the first page of Exhibit 28.7
to Form 8-K dated July 12, 1990.) Incorporated by reference
from Exhibit 28.3 to Form 8-K dated August 15, 1990.

10.19 Agreement dated September 30, 1990 between Apex
Operating Company and Delta Petroleum Corporation. Incorporated
by reference from Exhibit 28.1 to the Company's Form 8-K dated
October 12, 1990.

10.20 Addendum to Agreement dated June 28, 1990, between
Crestone Energy Corporation and Delta Petroleum Corporation.
Incorporated by reference from Exhibit 28.2 to Form 8-K dated
October 12, 1990.

10.21 Agreement dated February 18, 1991 between Chippewa
Resources Corporation and Delta Petroleum Corporation.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated February 26, 1991.

10.22 Addendum dated June 28, 1991 between Chippewa
Resources Corporation and Delta Petroleum Corporation.
Incorporated by reference from Exhibit 28.1 to the
Company's Form 8-K dated June 28, 1991.

10.23 UFG Agreement effective October 21, 1992.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated December 4, 1992.

10.24 Agreement effective October 28, 1992 between Delta
Petroleum Corporation, Burdette A. Ogle and Ron Heck.
Incorporated by reference from Exhibit 28.2 to the Company's Form
8-K dated December 4, 1992.

10.25 Agreement and Promissory Note effective November
20, 1992 between Delta Petroleum Corporation and Stonehenge
Capital Corporation. Incorporated by reference to Exhibit 28.3
to the Company's Form 8-K dated December 4, 1992.

10.26 Voting Agreement dated December 21, 1992.
Incorporated by reference from Exhibit 9.1 to the Company's Form
8-K dated February 5, 1993.

10.27 Employment Agreement with Aleron H. Larson, Jr.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated February 5, 1993.

10.28 Employment Agreement with Roger A. Parker.
Incorporated by reference from Exhibit 28.2 to the Company's Form
8-K dated February 5, 1993.

10.29 Professional Consulting Agreement with Market
Development Group, Inc. Incorporated by reference from Exhibit
28.3 to the Company's Form 8-K dated February 5, 1993.

10.30 Consulting Agreement with Stonehenge Capital
Corporation. Incorporated by reference from Exhibit 28.4 to the
Company's Form 8-K dated February 5, 1993.

10.31 Clarification Agreement effective March 31, 1993.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated April 14, 1993.

10.32 Option Amendment Agreement effective March 30,
1993. Incorporated by reference from Exhibit 28.2 to the
Company's Form 8-K dated April 14, 1993.

10.33 1993 Incentive Plan. Incorporated by reference from
Exhibit 28.1 to the Company's Form 8-K dated May 21, 1993.

10.34 Rio Pecos Documents. Incorporated by reference from
Exhibit 28.2 to the Company's Form 8-K dated May 21, 1993.

10.35 MDC Group, Inc. Amendment #3. Incorporated by
reference from Exhibit 28.1 to the Company's Form 8-K dated June
30, 1993.

10.36 MDC Group, Inc. Amendment #4. Incorporated by
reference from Exhibit 28.1 to the Company's Form 8-K dated
October 5, 1993.

10.37 Agreements and other documents relating to the
acquisition of properties. Incorporated by reference from
Exhibit 28.1 to the Company's Form 8-K dated November 3, 1993.

10.38 EL Paso Natural Gas Company Agreement, dated
November 18, 1994. Incorporated by reference from Exhibit 28.1 to
the Company's Form 8-K dated November 21, 1993.

10.39 Agreement between Delta Petroleum Corporation and
Burdette A. Ogle dated February 24, 1994 for offshore Santa
Barbara, California Federal oil and gas units. Incorporated by
reference from Exhibit 28.1 to the Company's Form 8-K
dated February 25, 1994.

10.40 Agreement between Delta Petroleum Corporation and
Mr. Hunt Walker for leasehold acres in the Piceance Basin of
Colorado dated January 25, 1994. Incorporated by reference from
Exhibit 28.2 to the Company's Form 8-K dated February 25, 1994.

10.41 Amendment #5 between Delta Petroleum Corporation
and MDC Group, Inc. effective December 30, 1993. Incorporated by
reference from Exhibit 28.3 to the Company's Form 8-K dated
February 25, 1994.

10.42 Addendum to agreement dated February 24, 1994
between Delta Petroleum Corporation and Burdette A. Ogle for
offshore Santa Barbara, California Federal oil and gas units.
Incorporated by reference from Exhibit 28.1 to the Company's
Form 8-K dated May 24, 1994.

10.43 LoTayLingKyur, Inc. agreement effective May 18,
1994. Incorporated by reference from Exhibit 28.2 to the
Company's Form 8-K dated May 24, 1994.

10.44 Amendment #6 and #7 between Delta Petroleum
Corporation and MDC Group, Inc. effective April 30, 1994 and May
24, 1994. Incorporated by reference from Exhibit 28.3 to the
Company's Form 8-K dated May 24, 1994.

10.45 Amendment #8 between Delta Petroleum Corporation
and MDC Group effective July 15, 1994. Incorporated by reference
from Exhibit 28.1 to the Company's Form 8-K dated July 15, 1994.

10.46 Addendum #2 to agreement dated February 24, 1994
between Delta Petroleum Corporation and Burdette A. Ogle for
offshore Santa Barbara, California federal oil and gas units.
Incorporated by reference from Exhibit 28.2 to the Company's
Form 8-K dated July 15, 1994.

10.47 Memorandum of Agreement between Delta Petroleum
Corporation and Underwriters Financial Group, Inc. and attached
Letter of Intent. Incorporated by reference from Exhibit 28.1 to
the Company's Form 8-K dated August 9, 1994.

10.48 Letter Agreement between Bion Environmental
Technologies, Inc. and Delta Petroleum Corporation. Incorporated
by reference from Exhibit 28.2 to the Company's Form 8-K dated
August 9, 1994.

10.49 Addendum #3 to agreement dated February 24, 1994
between Delta Petroleum Corporation and Burdette A. Ogle.
Incorporated by reference from Exhibit 28.3 to the Company's Form
8-K dated August 9, 1994.

10.50 Addendum #4 to agreement dated February 24, 1994
between Delta Petroleum Corporation and Burdette A. Ogle for
offshore Santa Barbara, California federal oil and gas units.
Incorporated by reference from Exhibit 28.1 to the Company's
Form 8-K dated August 31, 1993.

10.51 Employment agreement for Aleron H. Larson, Jr.
Incorporated by reference from Exhibit 28.1 to the Company's Form
8-K dated September 21, 1994.

10.52 Employment agreement for Roger A. Parker.
Incorporated by reference from Exhibit 28.2 to the Company's Form
8-K dated September 21, 1994.

10.53 Agreement dated June 15, 1995 with LoTayLingKyur,
Inc. to convert a portion of a promissory note to common stock.
Incorporated by reference to Exhibit 99.4 to the Company's Form
8-K dated November 18, 1994.

10.54 November 28, 1994 agreement between Amber Resources
Company (a 92% owned subsidiary of the Company) and El Paso
Natural Gas Company exchanging four Amber wells for satisfaction
of Amber's +967,911 recoupment gas obligation. Incorporated by
reference from Exhibit 28.1 to the Company's Form
8-K dated November 21, 1994.

10.55 Burdette A. Ogle "Assignment, Conveyance and Bill
of Sale of Federal Oil and Gas Leases Reserving a Production
Payment", "Lease Interests Purchase Option Agreement" and
"Purchase and Sale Agreement". Incorporated by reference
from Exhibit 28.1 to the Company's Form 8-K dated
January 3, 1995.

10.56 Bion Environmental Technologies, Inc. "Settlement
Agreement and General Release", "Letter Agreement" and
"Investment Representation Agreement". Incorporated by reference
from Exhibit 28.2 to the Company's Form 8-K dated January 3,
1995.

10.57 Troy Bates "Agreement and Assignment" and
"Investment Representation Agreement". Incorporated by reference
from Exhibit 28.3 to the Company's Form 8-K dated January 3,
1995.

10.58 Bruce Heafitz and Heafitz Energy Management, Inc.
"Agreement/Release", "Assignment and Conveyance" and "Investment
Representation Agreement". Incorporated by reference from
Exhibit 28.1 to the Company's Form 8-K dated January 23, 1995.

10.59 Letter Agreement between Delta Petroleum
Corporation and Underwriters Financial Group, Inc. dated February
22, 1995. Incorporated by reference from Exhibit 28.1 to the
Company's Form 8-K dated February 22, 1995.

10.60 Agreement between Delta Petroleum Corporation and
John Lefebvre, Shareholder Relations. Incorporated by reference
from Exhibit 28.2 to the Company's Form 8-K dated February 22,
1995.

10.61 Agreement between Corporate Relations Group and
Delta Petroleum Corporation effective August 10, 1995.
Incorporated by reference from Exhibit 99.1 to the
Company's Form 8-K dated August 18, 1995.

10.62 Agreements dated August 15, 1995 with Corporate
Relations Group, Inc. relating to the purchase of stock.
Incorporated by reference from Exhibit 99.2 to the
Company's Form 8-K dated August 18, 1995.

10.63 Agreement with Bion Environmental Technologies,
Inc. dated June 26, 1995 including an agreement to convert a
portion of a promissory note to common stock and a stock voting
agreement in favor of the Company's President and
Chairman. Incorporated by reference to Exhibit
99.3 to the Company's Form 8-K dated August 18, 1995.

10.64 Agreement between LoTayLingKyur, Inc. and Delta
Petroleum Corporation effective June 15, 1995. Incorporated by
reference to Exhibit 99.4 to the Company's Form 8-K dated August
18, 1995.

10.65 Agreement with Miller Financial Group, Inc. dated
August 3, 1995. Incorporated by reference to Exhibit 99.5 to the
Company's Form 8-K dated August 18, 1995.

10.66 Agreement with Howard Jenkins dated July 20, 1995
for purchase of warrant. Incorporated by reference to Exhibit
99.6 to the Company's Form 8-K dated August 18, 1995.

10.67 Agreement dated August 1, 1995 with David Castaneda
relating to employment. Incorporated by reference to Exhibit 99.8
to the Company's Form 8-K dated August 18, 1995.

10.68 Agreement with LoTayLingKyur, Inc. dated June 29,
1995 relating to note extension and option grant. Incorporated
by reference to Exhibit 99.9 to the Company's Form 8-K dated
August 18, 1995.

10.69 Agreement dated October 31, 1995 between Delta,
Melange Associates, Inc., Nautilus Oil and Gas Company and
Thorofare Resources, Inc. Incorporated by reference from Exhibit
99.1 to the Company's Form 8-K dated November 1, 1995.

10.70 Agreement between Delta and Sunnyside Production
Company, LLC. Incorporated by reference from Exhibit 99.2 to the
Company's Form 8-K dated November 1, 1995.

10.71 Copies of Aleron H. Larson, Jr. and Roger A. Parker
Employment Agreements. Incorporated by reference from Exhibit
99.1 to the Company's Form 8-K dated December 14, 1995.

10.72 Copy of the 1995 Non-employee Director Stock Plan.
Incorporated by reference from Exhibit 99.2 to the Company's Form
8-K dated December 14, 1995.

10.73 Wagner & Brown, Ltd. Moneta Hills Purchase and Sale
Agreement (without exhibits) and Assignment and Assumption
Agreement. Incorporated by reference from Exhibit 99.1 to the
Company's Form 8-K dated April 5, 1996.

10.74 C.A. Opportunidad stock purchase agreement.
Incorporated by reference from Exhibit 99.2 to the Company's Form
8-K dated April 5, 1996.

10.75 Employment and related agreements including Stock
Voting Agreement. Incorporated by reference from Exhibit 99.3 to
the Company's Form 8-K dated April 5, 1996.

10.76 Employment agreement. Incorporated by reference
from Exhibit 99.4 to the Company's Form 8-K dated April 5, 1996.

10.77 Statement of Designation and Determination of
Preferences of Series C Convertible Preferred stock of Delta
Petroleum Corporation. Incorporated by reference from Exhibit 4.1
to the Company's Form 8-K dated June 27, 1996.

10.78 Amendment to Corporate Relations Group, Inc. and
Delta Petroleum Corporation, Public Relations/Marketing Contract
dated August 10, 1995. Incorporated by reference from Exhibit
99.1 to the Company's Form 8-K dated June 27, 1996.

10.79 Investment Representation Agreement Regarding
Offshore Subscriptions for C.A. Opportunidad. Incorporated by
reference from Exhibit 99.2 to the Company's Form 8-K dated June
27, 1996.

10.80 Investment Representation Agreement Regarding
Offshore Subscriptions for Fondo de Adquisciones E Inversiones
Internacionales XL S.A. Incorporated by reference from Exhibit
99.3 to the Company's Form 8-K dated June 27, 1996.

10.81 Employment agreement with Aleron H. Larson, Jr.,
Chairman. Incorporated by reference from Exhibit 99.4 to the
Company's Form 8-K dated June 27, 1996.

10.82 Employment agreement with Roger A. Parker,
President. Incorporated by reference from Exhibit 99.5 to the
Company's Form 8-K dated June 27, 1996.

(11) Statement Regarding Computation of Per Share Earnings.
Not applicable.

(12) Statement Regarding Computation of Ratios. Not
applicable.

(13) Annual Report to Security Holders, Form 10-Q or
Quarterly Report to Security Holders. Not applicable.

(16) Letter re: Change in Certifying Accountants. Not
applicable.

(17) Letter re: Director Resignation. Not applicable.

(18) Letter Regarding Change in Accounting Principals. Not
applicable.

(19) Previously Unfiled Documents. Not applicable.

(21) Subsidiaries of the Registrant. Not applicable.

(22) Published Report Regarding Matters Submitted to Vote of
Security Holders. Not applicable.

(23) Consent of Experts and Counsel. Not applicable.

(24) Power of Attorney. Not applicable.

(27) Financial Data Schedule.

(99) Additional Exhibits. Not applicable.

Independent Auditors' Report

The Board of Directors and Stockholders
Delta Petroleum Corporation:

We have audited the accompanying consolidated balance sheets of
Delta Petroleum Corporation (the Company) and subsidiary as of
June 30, 1996 and 1995 and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Delta Petroleum Corporation and subsidiary as of June
30, 1996 and 1995 and the results of their operations and their
cash flows for the years then ended, in conformity with generally
accepted accounting principles.

As discussed in Notes 1 and 3 to the financial statements, the
Company adopted the provisions of Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of"
and Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity
Securities" in the year ended June 30, 1995.

KPMG Peat Marwick LLP

Denver, Colorado
September 20, 1996

DELTA PETROLEUM CORPORATION
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and 1995

1996 1995

ASSETS

Current Assets:
Cash $1,629,738 55,833
Trade accounts receivable, net of
allowance for doubtful accounts
of $48,722 in 1996 and 1995 377,260 327,185
Other current assets 12,100 2,100

Total current assets 2,019,098 385,118

Property and Equipment:
Oil and gas properties, at cost (using
the successful efforts method
of accounting) (Notes 2 and 10):
Undeveloped offshore California
properties 6,786,580 6,786,580
Undeveloped foreign properties - 318,840
Undeveloped onshore domestic properties 971,648 498,799
Developed onshore domestic properties 2,919,451 2,703,762
Office furniture and equipment 78,188 60,830
10,755,867 10,368,811

Less accumulated depreciation and depletion (1,787,443) (1,426,818)

Net property and equipment 8,968,424 8,941,993

Investment in Bion Environmental
Technologies, Inc. (Bion) (Note 3) 411,483 316,525

Accounts receivable from affiliates (Note 8) 116,727 83,137

$11,515,732 9,726,773

(Continued)

1996 1995

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Note payable (Note 5) $ 100,000
Accounts payable trade 304,050 602,738
Accrued interest payable - 8,000
Other accrued liabilities 68,297 182,998
Consulting fees payable to stockholders (Note 8) - 162,500
Royalties payable 649,835 911,074
Note and accrued interest payable
by Underwriters Financial Group (UFG)
(the Company's former parent) (Notes 2 and 4) 2,669,642 2,232,855

Total current liabilities 3,691,824 4,200,165

Stockholders' Equity (Note 6)
Preferred stock, $.10 par value;
authorized 3,000,000 shares, issued 160 shares
in 1996 16 -
Common stock, $.01 par value;
authorized 300,000,000 shares, issued 4,488,283
shares in 1996 and 3,550,882 shares in 1995 44,882 35,509
Obligation payable in common stock - 46,400
Additional paid-in capital 21,299,784 15,627,201
Unamortized consulting expense (105,000) -
Cumulative unrealized loss (Note 3) (255,184) (350,142)
Accumulated deficit (13,160,590) (9,832,360)

Total stockholders' equity 7,823,908 5,526,608

Commitments and contingencies (Notes 2, 8 and 9)
$11,515,732 9,726,773

DELTA PETROLEUM CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 1996 and 1995

1996 1995
Revenue:

Oil and gas sales, including recoupment gas of
$167,009 in 1995 (Note 1) $1,044,873 1,272,989
Gain on sale of oil and gas properties - 113,721
Other revenue 340,444 42,197

Total revenue 1,385,317 1,428,907

Expenses:

Lease operating expenses 439,805 369,683
Depreciation and depletion 341,813 542,979
Exploration expenses 116,681 23,811
Abandoned and impaired properties 375,301 559,445
Minimum royalty to related party 250,000 250,000
General and administrative 2,457,423 1,589,042
Stock option expense 293,125 1,508,750
Interest on notes payable 439,399 539,079
Interest on recoupment gas obligation - 113,285

Total expenses 4,713,547 5,496,074

Loss before extraordinary item (3,328,230) (4,067,167)

Extraordinary gain on settlement of recoupment
gas obligation (Note 1) - 493,850

Net loss ($3,328,230) (3,573,137)

Loss per common share:

Loss before extraordinary item ($0.81) (1.33)
Extraordinary gain on settlement of recoupment
gas obligation - 0.16
Net loss ($0.81) (1.17)

Weighted average number of common
shares outstanding 4,113,251 3,052,341

<TABLE>

DELTA PETROLEUM CORPORATION
AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity
Years ended June 30, 1996 and 1995
<CAPTION>

Obligation
Preferred Stock Common Stock payable in
Shares Amount Shares Amount common stock

Balance, July 1, 1994 - $ - 2,949,847 29,498 -

Cumulative effect of adoption of SFAS 115 (Note 3) - - - - -
Unrealized loss on equity securities (Note 3) - - - - -
Shares issued for cash - - 39,000 390 -
Capital contributions from UFG (Note 2) - - - - -
Shares issued for cash upon exercise of options (Note 6) - - 63,150 632 -
Shares issued for undeveloped oil and gas properties (Note 6)- - 90,000 900 -
Shares issued for services (Note 6) - - 20,000 200 -
Treasury stock contributed by UFG (Note 2) - - - - -
Retirement of treasury stock (Note 2) - - (92,117) (921) -
Stock options granted as compensation (Note 6) - - - - -
Shares to be issued to former employee under a
severance agreement - - - - 46,400
Shares issued for reduction of note payable and
accrued interest (Note 5) - - 461,002 4,610 -
Amortization of consulting expense (Note 6) - - - - -
Shares issued for settlement agreement (Note 8) - - 20,000 200 -
Net loss - - - - -

Balance, June 30, 1995 - - 3,550,882 35,509 46,400

Unrealized gain on equity securities (Note 3) - - - - -
Shares issued for cash -- preferred stock (Note 6) 160 16 - - -
Commission paid on issuance of preferred stock - - - - -
Shares issued for cash - common stock - - 140,478 1,405 -
Shares issued for cash-redeemable common stock (Note 6) - - 276,000 2,760 -
Commission paid on issuance of redeemable
common stock (Note 6) - - - - -
Capital contributions from UFG (Note 2) - - - - -
Shares issued for cash upon exercise of options (Note 6) - - 351,350 3,513 -
Shares issued for undeveloped oil and gas properties (Note 6)- - 31,127 311 -
Shares issued for developed oil and gas properties (Note 6) - - 5,000 50 -
Stock options granted as compensation (Note 6) - - - - -
Shares issued for services (Note 6) - - 127,046 1,270 -
Amortization of consulting expense (Note 6) - - - - -
Common stock issued for amortization of obligation payab - - 6,400 64 (46,400)
Net loss - - - - -

Balance, June 30, 1996 160 $16 4,488,283 44,882 -

</TABLE>
<TABLE>
Cumulative
Additional Unamortized unrealized
paid-in consulting Treasury gain Accumulated
capital expense stock (loss) deficit

Balance, June 30, 1994 11,465,704 (100,000) - - (6,259,043)

Cumulative effect of adoption of SFAS 115 (Note 3) - - - 266,666 -
Unrealized gain on equity securities (Note 3) - - - (616,808) -
Shares issued for cash 134,200 - - - -
Capital contributions from UFG (Note 2) 284,073 - - - -
Shares issued for cash upon exercise of options (Note 6) 269,331 - - - -
Shares issued for undeveloped oil and gas properties (Note 6)309,600 - - - -
Shares issued for services (Note 6) 68,800 - - - -
Treasury stock contributed by UFG (Note 2) 633,304 - (633,304) - -
Retirement of treasury stock (Note 2) (632,383) - 633,304 - -
Stock options granted as compensation (Note 6) 1,508,875 - - - -
Shares to be issued to former employee under a
severance agreement - - - - -
Shares issued for reduction of note payable and
accrued interest (Note 5) 1,516,697 - - - -
Amortization of consulting expense (Note 6) - 100,000 - - -
Shares issued for settlement agreement (Note 8) 69,000 - - - -
Net loss - - - - (3,573,317)

Balance, June 30, 1995 15,627,201 - - (350,142) (9,832,360)

Unrealized gain on equity securities (Note 3) - - - 94,958 -
Shares issued for cash -- preferred stock (Note 6) 1,599,984 - - - -
Commission paid on issuance of preferred stock (160,000) - - - -
Shares issued for cash -- common stock 637,710 - - - -
Shares issued for cash-redeemable common stock (Note 6) 747,240 - - - -
Commission paid on issuance of redeemable
common stock (Note 6) (75,000) - - - -
Capital contributions from UFG (Note 2) 62,098 - - - -
Shares issued for cash upon exercise of options (Note 6) 1,660,837 - - - -
Shares issued for undeveloped oil and gas properties (Note 6)115,290 - - - -
Shares issued for developed oil and gas properties (Note 6) 16,825 - - - -
Stock options granted as compensation (Note 6) 365,977 - - - -
Shares issued for services (Note 6) 655,286 (656,556) - - -
Amortization of consulting expense (Note 6) - 551,556 - - -
Common stock issued for amortization of obligation payable 46,336 - - - -
Net loss - - - - (3,328,230)

Balance, June 30, 1996 21,299,784 (105,000) - (255,184) (13,160,590)
</TABLE>

<TABLE>

Total

<S> <C>
Balance, June 30, 1994 5,136,159

Cumulative effect of adoption of SFAS 115 (Note 3) 266,666
Unrealized gain on equity securities (Note 3) (616,808)
Shares issued for cash 134,590
Capital contributions from UFG (Note 2) 284,073
Shares issued for cash upon exercise of options (Note 6) 269,963
Shares issued for undeveloped oil and gas properties (Note 6) 310,500
Shares issued for services (Note 6) 69,000
Treasury stock contributed by UFG (Note 2) -
Retirement of treasury stock (Note 2) -
Stock options granted as compensation (Note 6) 1,508,875
Shares to be issued to former employee under a -
severance agreement 46,400
Shares issued for reduction of note payable and -
accrued interest (Note 5) 1,521,307
Amortization of consulting expense (Note 6) 100,000
Shares issued for settlement agreement (Note 8) 69,200
Net loss (3,573,317)

Balance, June 30, 1995 5,526,608

Unrealized gain on equity securities (Note 3) 94,958
Shares issued for cash -- preferred stock (Note 6) 1,600,000
Commission paid on issuance of preferred stock (160,000)
Shares issued for cash -- common stock 639,115
Shares issued for cash-redeemable common stock (Note 6) 750,000
Commission paid on issuance of redeemable
common stock (Note 6) (75,000)
Capital contributions from UFG (Note 2) 62,098
Shares issued for cash upon exercise of options (Note 6) 1,664,350
Shares issued for undeveloped oil and gas properties (Note 6) 115,601
Shares issued for developed oil and gas properties (Note 6) 16,875
Stock options granted as compensation (Note 6) 365,977
Shares issued for services (Note 6) -
Amortization of consulting expense (Note 6) 551,556
Common stock issued for amortization of obligation payab -
Net loss (3,328,230)

Balance, June 30, 1996 7,823,908

</TABLE>

DELTA PETROLEUM CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1996 and 1995

1996 1995

Cash flows operating activities:
Net loss ($3,328,230) (3,573,317)
Adjustments to reconcile net loss
to cash (used in) provided by
operating activities:
Write-off royalties payable (288,954) -
Depreciation and depletion 341,813 542,979
Abandoned and impaired properties 375,301 559,445
Amortization of consulting expense 551,556 100,000
Stock option expense 365,977 1,508,875
Interest on note payable by UFG 436,787 371,094
Interest on recoupment gas obligation - 113,285
Recoupment gas revenue - (167,009)
Gain on sale of oil and gas properties - (113,721)
Stock issued to former employee under
severence agreement - 46,400
Common stock issued for services - 69,000
Common stock issued for settlement - 69,200
Extraordinary gain on settlement of
recoupment gas obligation - (493,850)
Net changes in current assets and
and current liabilities:
(Increase) decrease in trade accounts
receivable (50,075) (12,243)
(Increase) decrease in other
current assets (10,000) 19,066
(Decrease) increase in accounts
payable trade (236,590) 131,104
(Decrease) increase in accrued
interest payable (8,000) 146,985
(Decrease) Increase in other accrued
liabilities (114,701) 94,059
(Decrease) Increase in consulting
fees payable to stockholder (162,500) 60,000
Increase in royalties payable 27,715 35,358
Net cash provided by (used in) operating
activities (2,099,901) (493,290)

Cash flows from investing activities:
Additions to property and equipment (611,069) (373,556)
Proceeds from sale of oil and
gas properties - 369,588
Net cash provided by (used in) investing
activities (611,069) (3,968)

Cash flows from financing activities:
Borrowings (repayments) of notes payable (100,000) 100,000
Issuance of redeemable preferred stock
for cash 1,600,000 -
Commission paid on issuance of redeemable
preferred stock (160,000) -
Issuance of redeemable common stock
for cash 750,000 -
Commission paid on issuance of redeemable
common stock (75,000) -
Issuance of common stock for cash 639,115 134,590
Stock issued for cash upon exercise
of option 1,664,350 269,963
(Increase) decrease in accounts
receivable from affiliates (33,590) 41,678
Net cash provided by (used in) financing
activities 4,284,875 546,231

Net increase in cash 1,573,905 48,973

Cash at beginning of year 55,833 6,860

Cash at end of year $1,629,738 55,833

Supplemental cashflow information:
Cash paid for interest $10,612 20,796

Non-cash financing activities:
Common stock issued for properties $132,476 310,500

DELTA PETROLEUM CORPORATION
AND SUBSIDIARY

Notes to Consolidated Financial Statements
June 30, 1996 and 1995

(1) Summary of Significant Accounting Policies

Organization and Principles of Consolidation

Delta Petroleum Corporation (Delta) was organized December
21, 1984 and is principally engaged in acquiring, exploring,
developing and producing oil and gas properties. The
Company owns interests in undeveloped oil and gas properties
in Federal Units offshore California, near Santa Barbara, an
interest in a venture to explore an undeveloped property in
the Philippines, and developed and undeveloped oil and gas
properties in the continental United States.

At June 30, 1996, the Company owned 4,277,977 shares of the
common stock of Amber Resources Company (Amber),
representing 91.68% of the outstanding common stock of
Amber. Amber is a public company also engaged in
acquiring, exploring, developing and producing oil and gas
properties.

The consolidated financial statements include the accounts
of Delta and Amber (collectively, the Company). All
intercompany balances and transactions have been eliminated
in consolidation.

Cash Equivalents

Cash equivalents consist of money market funds. For
purposes of the statements of cash flows, the Company
considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

Property and Equipment

The Company follows the successful efforts method of
accounting for its oil and gas activities. Accordingly,
costs associated with the acquisition, drilling, and
equipping of successful exploratory wells are capitalized.
Geological and geophysical costs, delay and surface rentals
and drilling costs of unsuccessful exploratory wells are
charged to expense as incurred. Costs of drilling
development wells, both successful and unsuccessful, are
capitalized.

Upon the sale or retirement of oil and gas properties, the
cost thereof and the accumulated depreciation and depletion
are removed from the accounts and any gain or loss is
credited or charged to operations.

Depreciation and depletion of capitalized acquisition,
exploration and development costs is computed on the units-
of-production method by individual fields as the related
proved reserves are produced. Capitalized costs of unproved
properties are assessed periodically and a provision for
impairment is recorded, if necessary, through a charge to
operations.

Furniture and equipment are depreciated using the straight-
line method over estimated lives ranging from three to five
years.

Impairment of Long-Lived Assets

Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" (SFAS 121) was issued
in March 1995. This statement requires that long-lived
assets be reviewed for impairment when events or changes in
circumstances indicate that the carrying value of such
assets may not be recoverable. This review consists of a
comparison of the carrying value of the asset with the
asset's expected future undiscounted cash flows without
interest costs.

Estimates of expected future cash flows are to represent
management's best estimate based on reasonable and
supportable assumptions and projections. If the expected
future cash flows exceed the carrying value of the asset, no
impairment is recognized. If the carrying value of the
asset exceeds the expected future cash flows, an impairment
exists and is measured by the excess of the carrying value
over the estimated fair value of the asset. Any impairment
provisions recognized in accordance with SFAS 121 are
permanent and may not be restored in the future.

The Company's proved properties were assessed for impairment
on an individual field basis and the Company recorded
impairment provisions attributable to certain producing
properties of $56,461 and $411,791 for the years ended June
30, 1996 and 1995, respectively.

Prior to the adoption of SFAS 121 in fourth quarter of
fiscal 1995, the Company assessed its proved oil and gas
properties on an aggregate basis using undiscounted future
net revenue, calculated using constant prices and costs.

Gas Balancing

The Company uses the sales method of accounting for gas
balancing of gas production. Under this method, all
proceeds from production credited to the Company are
recorded as revenue until such time as the Company has
produced its share of the related estimated remaining
reserves. Thereafter, additional amounts received are
recorded as a liability.

As of June 30, 1996, the Company had produced approximately
82,000 Mcf more than its entitled share of production. The
undiscounted value of this imbalance is approximately
$140,000 using the lower of the price received for the
natural gas, the current market price or the contract price,
as applicable.

Recoupment Gas Obligation

Certain oil and gas properties were acquired by Amber
subject to a recoupment agreement with a gas purchaser.
Under the terms of the recoupment agreement, the gas
purchaser was entitled to receive up to 75% of future
production to recoup gas purchased in connection with the
settlement of a previous take or pay contract covering the
properties. The gas purchaser had recourse only to the
properties subject to the agreement.

The obligation under the recoupment agreement was accounted
for in a manner similar to a production payment. The
estimated present value of the obligation at the date of the
acquisition of the properties was recorded as a liability.
The liability was calculated based on remaining volumes of
gas due, using the price of gas at the date of the
acquisition of the properties, discounted at 15% over the
period the gas was expected to be recouped. The liability
was periodically increased by the accretion of the discount
and was reduced as the gas was delivered to the gas
purchaser. The gas produced and delivered to the gas
purchaser (recoupment gas) was recorded as revenue at the
then current price of natural gas. Any difference between
the revenue recorded for the recoupment gas and the
reduction in the recoupment obligation was accounted for as
an increase or decrease in interest expense.

The Company was responsible for royalties and for production
costs associated with the properties subject to the
recoupment agreement.

On November 18, 1994, the Company entered into an agreement
with El Paso Natural Gas Company ("El Paso") under which Amber
agreed to transfer to El Paso, Amber's interest in four
wells and the associated acreage in complete satisfaction of
Amber's recoupment gas obligation. As a result of this
agreement, the Company is no longer obligated to El Paso for
recoupment gas from the remaining wells originally subject
to the recoupment agreement. As a result of this
transaction, the Company recorded an extraordinary gain of
$493,850 in fiscal 1995.

Royalties Payable

Recoupment gas royalties, included in royalties payable,
represent estimated royalties due on recoupment gas produced
and delivered to the gas purchaser pursuant to the terms of
the recoupment agreement described above. The Company has
estimated an amount that may be due to the royalty owners
based on the market price of the gas during the period the
gas was produced and delivered to the gas purchaser.

Royalties payable also include estimated royalties payable
on other properties held in suspense. A significant portion
of the estimated royalties have not been paid pending a
determination of what amounts may have previously been paid
by the operator of the properties on behalf of the Company
and pending the outcome of litigation involving other
operators that may impact the calculations of the royalties.

The statute of limitation has expired for royalty owners to
make a claim for a portion of the estimated royalties that
had previously been accrued. Accordingly, this amount has
been written off and recorded as other income in 1996.

Income Taxes

The Company uses the asset and liability method of
accounting for income taxes as set forth in Statement of
Financial Accounting Standards No. 109 (SFAS No. 109),
Accounting for Income Taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted income tax
rates expected to apply to taxable income in the years in
which those differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax
assets and liabilities of a change in income tax rates is
recognized in the results of operations in the period that
includes the enactment date.

Income (Loss) Per Common Share

Income (loss) per share is computed by dividing the net
income or loss for the period by the weighted average number
of shares of common stock outstanding during the period.
Common stock options and warrants have not been considered
in the calculation of earnings per share as their effect is
antidilutive.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires Management
to make estimates and assumptions that aafect the reported
amoutns of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reported period actual. Actual
results could differ from these estimates.

Reclassifications

Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 financial statement
presentation.

(2) Plan of Reorganization

In October 1992, Delta concluded a series of agreements with
Underwriters Financial Group, Inc. ("UFG") (collectively,"the
UFG Agreement") to participate in a plan to reorganize and
recapitalize Delta (the "Plan of Reorganization"). Prior to
the reorganization, UFG owned approximately 89% of the
outstanding shares of Delta's common stock. Under the terms
of the UFG Agreement, UFG transferred its oil and gas
properties and certain other related assets to Delta as a
contribution to the capital of Delta. The assets trans-
ferred included producing and non-producing oil and gas
properties, accounts receivable, oil field equipment, and
office furniture and equipment. UFG also transferred
4,110,660 shares of common stock of Amber to Delta. The
shares transferred represented an 88.09% interest in Amber.

Also in connection with the Plan of Reorganization, Delta
issued 1,030,000 shares of common stock to Messrs. Burdette
A. Ogle and Ronald Heck (collectively,"Ogle") in exchange for
their working interests in two federal offshore California
oil and gas properties and 167,317 shares of common stock of
Amber.

The oil and gas properties and shares of common stock of
Amber received from Ogle were recorded at Ogle's predecessor
cost of approximately $45,000. The assets transferred to
Delta by UFG were recorded at the predecessor cost of the
assets to UFG, as adjusted. UFG followed the full cost
method of accounting for its oil and gas properties. The
predecessor cost of the producing properties transferred
was adjusted to conform to the Company s policy of
accounting for oil and gas properties under the successful
efforts method of accounting. The predecessor cost of each
oil and gas property was further adjusted, if necessary, to
reduce the amount recorded to the estimated fair value of
the oil and gas reserves attributable to the property at the
time of the transfer, if less than the adjusted predecessor
cost of the property.

The Clarification Agreement also provided for the pledge of
556,289 shares of common stock of the Company held by UFG as
collateral for performance under the promissory note and
provided for the clarification and revision of certain other
provisions of the UFG Agreement. In February 1995, UFG
transferred 92,117 shares of the Company's common stock, and
491,300 shares of UFG common stock to the Company in
satisfaction of amounts due under the note receivable from
UFG and, further, agreed that the remaining 888,063 shares
of the Company's common stock owned by UFG would be held
by Delta pending discharge of UFG's obligations to Snyder
Oil Corporation, described below. The note receivable from
UFG had not been previously recorded in the Company's
financial statements. The market value of the Company's
common stock received from UFG was accounted for as a
capital contribution and an increase in treasury stock. The
treasury stock was subsequently retired. Trading on UFG's
common stock has been suspended by the American Stock
Exchange and on December 11, 1995 UFG filed for Chapter 11
bankruptcy protection with the United States Bankruptcy
Court for the Southern District of New York. As a result,
the value of the 491,300 shares of UFG's common stock owned
by the Company is uncertain and the Company has not placed
any value on the shares received.

Certain of the oil and gas properties transferred had been
pledged by UFG to secure existing indebtedness of UFG, which
indebtedness remained an obligation of UFG under the terms
of the UFG Agreement. To the extent the existing secured
indebtedness on a particular property exceeded its adjusted
predecessor cost, the transfer of the property was recorded
in the accompanying financial statements at its adjusted
predecessor cost and a liability was recorded in an amount
equal to the asset recorded. To the extent the existing
secured indebtedness on a particular property is less than
the adjusted predecessor cost, the property was recorded at
its adjusted predecessor cost, the related liability was
recorded and the net amount was reflected as a capital
contribution by UFG. Subsequent payments by UFG which
reduce the liabilities recorded by the Company are accounted
for as a reduction of the liability and a capital
contribution. Amounts reflected as capital contributions by
UFG were $62,098 and $284,073 during the years ended June
30, 1996 and 1995.

3,357,003 shares of common stock of Amber transferred to the
Company by UFG are pledged to secure a note payable to
Snyder Oil Corporation (the "Snyder Note"). The balance due
on the note payable at the time of the transfer of the Amber
shares to Delta of $2,091,761 was recorded as a liability of
Delta, because of uncertainties regarding UFG s ability to
fulfill its obligations under the note.

The Company believes there is substantial risk that UFG will
be unable to repay the Snyder Note, which is currently in
default and that the encumbered portion of the Amber shares
owned by Delta could be lost. The loss of the encumbered
Amber shares would reduce Delta s ownership interest in
Amber to approximately 19.74%. Amber's oil and gas revenue
during the year ended June 30, 1996 amounted to
approximately $555,000 which constituted approximately 53%
of the Company s consolidated oil and gas revenue. A loss
of the encumbered Amber shares would significantly reduce
the Company's oil and gas revenue and reserves and have a
material affect on the financial condition and results of
operations of the Company (see note 4).

In connection with the Plan of Reorganization, UFG entered
into a voting agreement granting to Aleron H. Larson and
Roger A. Parker, officers of the Company, the right to vote
the shares of the Company s common stock owned by UFG until
December 31, 2002.

(3) Investments

On April 9, 1992, UFG issued a convertible promissory note
to Bion Environmental Technologies, Inc. ("Bion") in exchange
for 125,000 unregistered shares of common stock of Bion and
a warrant to purchase an additional 125,000 shares of common
stock of Bion for $10 per share. Bion is a publicly traded
company in the business of designing, marketing and over
seeing the installation of treatment systems for the bio-
conversion of wastewater. During 1992, UFG transferred the
shares of common stock of Bion to the Company in exchange
for 133,333 shares of the Company's common stock.

The shares of Bion received were recorded at UFG s
predecessor cost of $666,667. The Company subsequently
received 1,610 shares of common stock of Bion for rent and
other services provided by the Company. 1,610 of the
126,610 shares of common stock of Bion owned by the Company
are subject to certain restrictions on their transfer. The
shares of Bion represent approximately 7.5% of the
outstanding shares of Bion as of June 30, 1996.

The Company adopted Statement of Financial Accounting
Standards No. 115 (SFAS 115) as of July 1, 1994. The
Company's investment in Bion is classified as an available
for sale security and reported at its fair market value,
with unrealized gains and losses excluded from earnings and
reported as a separate component of stockholders' equity.
Prior to adopting SFAS 115, the Company's investment in Bion
was accounted for at the lower of cost or market.

The cost and estimated market value of the Company's
investment in Bion at June 30, 1996 and 1995 is as follows:

Estimated
Unrealized Market
Cost (Loss) Value

1996 $666,667 (255,184) 411,483

1995 $666,667 (350,142) 316,525

As of September 13, 1996 the estimated market value of the
Company's investment in Bion, based on the quoted bid price
of Bions common stock, was $475,000.

(4) Note Payable by UFG

At June 30, 1996 and 1995, the note payable by UFG
recorded in the accompanying consolidated financial
statements represents UFG s obligation under the Snyder
Note, which was recorded upon the transfer of the common
stock of Amber to the Company by UFG in connection with the
Plan of Reorganization (see note 2). The note payable
bears interest at 18% and was due January 15, 1994. The
note is currently in default. Past due amounts accrue
interest compounded at 18% per year. The note is secured
by 3,357,003 shares of common stock of Amber. The note has
been recorded in the accompanying consolidated financial
statements as a liability of the Company since a portion of
the common shares of Amber owned by the Company are pledged
to secure the note and because of the uncertainties
regarding UFG s ability to fulfill its obligations under
the note (see note 2).

Although the Company is not obligated to make payments on
the note, the Company has recorded interest expense
pursuant to the terms of the note. Payments of principal
and interest by UFG to Snyder are recorded as a reduction
of the note and accrued interest payable with a
corresponding adjustment to additional paid-in capital.
During the year ended June 30, 1995 payments to Snyder by
UFG amounted to $230,000.

As discussed in note 2, the Company believes there is
substantial risk that UFG will be unable to perform its
obligations under the note and, as a result, the encumbered
portion of the Amber shares could be lost, thereby reducing
the Company s interest in Amber to 19.74%.

The net assets and liabilities of Amber included in the
accompanying consolidated financial statements are
summarized as follow:

June 30, June 30,
1996 1995

Assets:

Current assets $ 152,697 103,809

Oil and gas properties:
Undeveloped offshore
California properties 5,007,086 5,007,086
Developed onshore
properties, net 702,473 776,046
5,709,559 5,783,132
Liabilities:

Current liabilities 1,314,410 1,189,557

Net assets $4,547,846 4,697,384

The revenue and expenses of Amber included in the
accompanying consolidated financial statements for the
years ended June 30, 1996 and 1995 are as follows:

1996 1995

Revenue $841,702 788,619
Expenses (991,240) (1,401,303)
Extraordinary
gain - 493,850

Net loss $(149,538) (118,834)

(5) Convertible Note Payable

Effective November 30, 1992, the Company acquired certain
oil and gas properties from a third party in exchange for
a convertible note payable in the amount of $1,250,000.
The note was unsecured and was payable on or before
November 20, 1999, with interest at 9% payable at
maturity.

On May 22, 1995, a portion of the convertible promissory
note was transferred to Bion.

During June 1995, the entire note and related accrued
interest was converted into 461,002 restricted shares of
the Company's common stock.

(6) Stockholders Equity

Preferred Stock

The Company has 3,000,000 shares of Preferred Stock
authorized, par value $.10 per share, issuable from time
to time in one or more series.

On May 9, 1996, the Company established a series of 1,000
shares of Convertible Preferred Stock designated Series
C. This stock converts into a number of shares of Common
Stock determined by a fraction the numerator of which is
$10,000 and the denominator of which is the lesser of
$4.50 or 65% of the previous five day average closing
price of the corporation's share reported by NASDAQ;
provided that if the five day average closing price is
less than $3.00 per share then the $3.00 shall be the
demoninator.

On May 17, 1996 and June 6, 1996 the Company sold a total
of 160 shares of Series C Convertible Preferred Stock to
certain unrelated individuals for $1,600,000.
Commissions paid on the sale of the preferred stock
amounted to $160,000.

Subsequent to year end, the 160 share of Series C
Convertible Preferred Stock were converted into 396,601
shares of the Company's common stock.

Common Stock

On August 18, 1995, the Company completed a sale of
231,000 shares of the Company's common stock to third
parties for $750,000 with net proceeds to the Company of
$675,000 after payment of certain fees. Under the
purchase agreement the Company has committed to register
the shares within 30 days or increase the number of
shares by 25,000 with an increase
of an additional 5,000 shares each 30 days thereafter
until the expiration of six months after which the
Company has agreed to repurchase all shares issued for
$750,000 and to deliver a promissory note therefore, with
interest payable at 15% per annum from the date funds
were received. During fiscal 1996, in a series of
transactions, the redeemable shares were sold privately
thereby waiving all rights of redemption. The Company
delivered a total of 276,000 shares
before the redeemable shares were sold privately. As a
result of the sale, $750,000 ($675,000 net of certain
commission) was credited to shareholders' equity.

During the year ended June 30, 1996, the Company raised
$639,115 through the issuance of 140,478 shares of the
Company's common stock in private transactions.

The Company received proceeds from the exercise of
options to purchase shares of its common stock of
$1,664,350 during the year ended June 30, 1996 and
$269,963 during the year ended June 30, 1995.

During the years ended June 30, 1996 and 1995, the
Company issued shares of its common stock in exchange for
oil and gas properties, for services, and in connection
with a settlement agreement. These transactions were
recorded at the estimated fair value of the common stock
issued, which was based on the quoted market price of the
stock at the time of issuance.

Incentive Stock Options

The Company's 1993 Incentive Plan (the "Incentive Plan")
was adopted by the Board of Directors on May 24, 1993 and
ratified and adopted by the shareholders on October 5,
1993. The Company has reserved 500,000 shares of common
stock (or 20% of the issued and outstanding shares of
common stock of the Company, whichever equates to a
greater number of shares during the term of the Incentive
Plan) for issuance upon the exercise of options granted
under the Incentive Plan. Options under the Company's
Incentive Plan are immediately exercisable upon issuance.

Incentive Stock Options

As of June 30, 1996, the following options were
outstanding:

Options Exercise Expiration
Outstanding Price Date

330,000 $1.250 9/21/04
14,000 2.500 7/25/05
200,000 3.750 6/09/03
30,000 5.500 7/25/05
25,000 5.625 8/01/00
223,350 5.750 8/30/05
20,000 5.750 9/26/96
50,000 7.000 1/31/02
25,000 9.750 8/30/98

On September 21, 1994, the Company's Incentive Plan
Committee granted to each of two officers options to
purchase 177,500 shares of common stock at $1.25 per share
under the Incentive Plan. The options are immediately
exercisable and expire September 21, 2004. Also on
September 21, 1994, each officer surrendered to the Company
177,500 warrants to purchase shares at $1.25 per share
owned by them. Stock option expense of $1,508,750 has been
recorded for the year ended June 30, 1995 based on the
difference between the option price and the quoted market
price on the date of grant for the options granted.

On July 25, 1995, the Company's Incentive Plan Committee
granted to each of the two officers options to purchase
7,000 shares of common stock at $2.50 per share under the
Incentive Plan. The Options are immediately exercisable and
expire July 25, 2005. Also on July 25, 1995, each officer
surrendered to the Company 7,000 Class D warrants to
purchase stock at $2.50 per share owned by them. Stock
option expense of $43,750 has been recorded for the year
ended June 30, 1996 based on the difference between the
option price and the quoted market price on the date of
grant for the options granted.

In July, 1995, the Company's Incentive Plan Committee
granted 1,500 options at $1.25 to an employee of the
Company. Stock option expense of $7,125 has been recorded
for the year ended June 30, 1996 based on the difference
between the option price and the quoted market price on the
date of grant for the options granted. The options were
exercised during the year ended June 30, 1996.

In addition to options outstanding under the Incentive
Plan, the following warrants and options were outstanding
as of June 30, 1996:

Number Exercise Expiration
Outstanding Price Date

7,000 $ 1.250 8/08/95 (1)
20,000 3.500 6/09/03
100,000 5.500 8/03/97
50,000 5.500 3/02/98
200,000 5.750 5/02/97
50,000 6.000 - (2)
50,000 6.000 9/30/97 (3)
150,000 6.600 8/10/96
60,000 6.875 2/15/97
100,000 8.000 8/31/99
100,000 8.500 8/03/97

(1) On August 7, 1995, the Company extended the expiration
date to thirty days after registration of the underlying
shares. The options are held by a director and unrelated
consultants. Stock option expense of $29,750 has been
recorded for the year ended June 30, 1996 based on the
difference between the option price and the quoted market
price on the date of the options were extended.

(2) On August 7, 1995, the Company extended the expiration
date of these options to thirty days after registration of
the underlying shares. The options are held by a director
and an unrelated consultant. Stock option expense of
$212,500 has been recorded for the year ended June 30, 1996
based on the difference between the option price and the
quoted market price on the date of the options were
extended.

(3) The 50,000 options granted at $6.00 expire on the later
of the original expiration date or thirty days after
registration of the underlying shares.

During fiscal 1996, the Company entered into employment
agreements with an employee to assist the Company in
assembling and disseminating public information about the
Company for a period through January 1997.

Under the terms of the agreements, the Company issued 47,500
shares of common stock for the above mentioned services.
The shares were placed in escrow and are released ratably as
services are rendered. The fair value of the common stock
issued of $287,608 was estimated based on the quoted market
price of the common stock at the time it was issued and was
charged to unamortized consulting expense. Unamortized
consulting expense was recorded as a component of
stockholders equity and is being amortized ratably as
services are performed.

Consulting Agreements

During 1992, the Company entered into an agreement with an
unrelated party to consult with the Company in assembling
and disseminating public information about the Company for
a period ending in December 1994.

The consultant exercised options to purchase 12,500 shares
during the year ended June 30, 1995 for total proceeds of
$59,375.

Under the terms of the agreement, the Company also issued
50,000 shares of common stock for services rendered in 1994.
The shares were placed in escrow and were released from
escrow in January 1995. The fair value of the common stock
issued of $200,000 was estimated based on the quoted market
price of the common stock at the time it was issued and was
charged to unamortized consulting expense. Unamortized
consulting expense was recorded as a component of
stockholders equity and amortized ratably over the calendar
year 1994.

During 1996, the Company entered into consulting agreements
with unrelated companies to provide investor and broker
services. The fair value of the common stock issued in
connection with the agreement of $368,750 was estimated
based on the quoted market price of the common stock at the
time it was issued and was charged to unamortized consulting
expense. Unamortized consulting expense was recorded as a
component of stockholders equity and amortized ratably over
the period services were provided during 1996.

(7) Income Taxes

At June 30, 1996 and 1995, the Company's significant
deferred tax assets and liabilities are summarized as
follows:

1996 1995
Deferred tax assets:
Net operating loss
carryforwards $5,098,000 4,173,000
Allowance for doubtful
accounts not deductible
for tax purposes 19,000 19,000
Consulting fees payable
to stockholders not
deductible until paid - 62,000
Gross deferred tax assets 5,117,000 4,254,000

Less valuation allowance ( 3,317,000) (2,354,000)
Net deferred tax assets 1,800,000 1,900,000
Deferred tax liabilities -
oil and gas properties,
principally due to
differences in basis and
depreciation and depletion (1,800,000) (1,900,000)

Net deferred tax asset $ - -

No income tax benefit has been recorded for the years ended
June 30, 1996 and 1995 since the benefit of the net
operating loss carryforward and other net deferred tax
assets arising in those periods has been offset by an
increase in the valuation allowance for such net deferred
tax assets.

At June 30, 1996, the Company had net operating loss
carryforwards for regular and alternative minimum tax
purposes of approximately $13,400,000 and $12,000,000,
respectively. If not utilized, the tax net operating loss
carryforwards will expire during the period from 1997
through 2011. Net operating loss carryforwards
attributable to Amber prior to 1993 of approximately
$4,100,000 are available only to offset future taxable
income of Amber and are further limited to approximately
$430,000 per year, determined on a cumulative basis.

(8) Related Party Transactions

Accounts Receivable from Officer and Affiliates

At June 30, 1996, the Company had $116,727 of receivables
from affiliates of an officer of the Company primarily for
production taxes and other expenses on wells owned by the
affiliates and operated by the Company. The amounts are
due on open account and are non-interest bearing.

Transactions with Directors

The Company has an agreement to grant, on an annual basis,
to each non-employee director options to purchase, 7,500
shares of the Company's common stock for services performed
during the previous 12 months. The options are granted at
an exercise price equal to 50% of the average market prices
for the year in which the services are performed.

Transactions with Other Stockholders

In connection with the transaction with Ogle described in
note 2, the Company entered into a consulting agreement
with Ogle effective December 1, 1992 which provides for a
monthly fee of $10,000 for a period of five years.

Effective February 24, 1994, Ogle granted the Company an
option to acquire working interests in three proved
undeveloped offshore Santa Barbara, California, federal oil
and gas units. In August 1994, the Company issued a warrant
to Ogle to purchase 100,000 shares of the Company's common
stock for five years at a price of $8 per share in
consideration of the agreement by Ogle to extend the
expiration date of the option to January 3, 1995.
On January 3, 1995, the Company exercised the option from
Ogle to acquire the working interests in three proved
undeveloped offshore Santa Barbara, California, federal oil
and gas units. The purchase price of $8,000,000 is
represented by a production payment reserved in the
documents of Assignment and Conveyance and will be paid out
of three percent (3%) of the oil and gas production from
the working interests with a requirement for minimum annual
payments. Delta paid Ogle $250,000 in 1996 and $250,000 in
1995 and is to pay a minimum of $350,000 annually
thereafter until the earlier of: 1) when the production
payments accumulate to the $8,000,000 purchase
price; 2) when 80% of the ultimate
reserves of any lease have been produced; or 3) 30 years
from the date of the conveyance. Under the terms of the
agreement, the Company may reassign the working interests
to Ogle upon notice of not more than 14 months nor less
than 12 months, thereby releasing the Company of any
further obligations to Ogle after the reassignment.
Until such time as the property has been developed and
placed into production, the Company is recording the
minimum annual payments under the agreement as an expense,
similar to the accounting treatment afforded a delay
rental. If and when the property is placed on production,
the Company intends to account for the royalty interest
retained by the seller in a manner similar to the treatment
afforded a royalty interest retained by a landowner.

On September 5, 1995, the Company acquired certain leases
in Jackson County, Colorado from Sunnyside Production
Company, LLC ("Sunnyside"), a company in which Ogle is a
stockholder, for 26,627 shares of the Company's common
stock. This transaction was recorded at Sunnyside's
predecessor cost for the portion attributable to Ogle's
interest.

Delta agreed to issue 20,000 shares of its restricted
common stock to Bion to induce Bion to enter into an
agreement with UFG wherein both Bion and UFG agreed to
release Delta and its officers from any claims that either
Bion or UFG might have against Delta.

(9) Commitments

The Company rents an office in Denver under an operating
lease which expires in March 1998. Rent expense, net of
sublease rental income, for the years ended June 30, 1996
and 1995 was approximately $69,000 and $62,000,
respectively. Future minimum payments under noncancelable
operating leases are as follows:

1997 $ 104,045
1998 83,933
1999 29,094
2000 8,839

(10) Disclosures About Capitalized Costs, Cost Incurred and
Major Customers

Capitalized costs related to oil and gas producing
activities are as follows:

June 30, June 30,
1996 1995
Undeveloped offshore
California properties $6,786,580 6,786,580
Undeveloped foreign
properties - 318,840
Undeveloped onshore
domestic properties 971,648 498,799
Developed onshore domestic
properties 2,919,451 2,703,762
10,677,679 10,307,981
Accumulated depreciation
and depletion (1,724,140) (1,366,770)

$8,953,539 8,941,211

Cost incurred in oil and gas producing activities for the
years ended June 30, 1996 and 1995 are as follows:

1996 1995

Unproved property
acquisition costs $472,849 310,500
Proved property
acquisition costs 16,875 71,935
Development costs 198,814 296,325
Exploration costs 116,681 23,811
$805,219 702,571

The Company's sales of oil and gas to individual customers
which exceeded 10% of the Company's total oil and gas sales
for the years ended June 30, 1996 and 1995 were:

1996 1995

A 34% 27%
B 27% 19%
C 17% -
D - 15%

(11) Information Regarding Proved Oil and Gas Reserves
(Unaudited)

Proved oil and gas reserves are the estimated quantities of
crude oil, natural gas, and natural gas liquids which
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known
reservoirs under existing economic and operating
conditions. Proved developed oil and gas reserves are those
expected to be recovered through existing wells with
existing equipment and operating methods. The
determination of oil and gas reserves is highly complex
and interpretive. The estimates are subject to continuing
changes as additional information becomes available.

The Company's Offshore California proved undeveloped
reserves are attributable to its interests in four federal
units (plus one additional lease) located offshore
California near Santa Barbara. While these interests
represent ownership of substantial oil and gas reserves
classified as proved undeveloped, the cost to develop the
reserves will be very substantial. The Company may be
required to farm out all or a portion of its interests in
these properties if it cannot fund its share of the
development costs. There can be no assurance that the
Company can farm out its interests on acceptable terms. If
the Company were to farm out its interests in these
properties, its share of the proved reserves attributable
to the properties would be decreased substantially. The
Company may also incur substantial dilution of its
interests in the properties if it elects to use other
methods of financing the development costs.

These units have been formally approved and are regulated
by the Minerals Management Service of the Federal
Government. However, due to a history of opposition to
offshore drilling and production in California by some
individuals and groups, the process of obtaining all of the
necessary permits and authorizations to develop the
properties will be lengthy and
even after all required approvals are obtained, lawsuits
may possibly be filed to attempt to further delay the
development of the properties. While the Federal
Government has recently attempted to expedite this process,
there can be no assurance that it will be successful in
doing so. The Company does not have a controlling interest
in and does not act as the operator of any of the offshore
California properties and consequently will not control the
timing of either the development of the properties or the
expenditures for development. Management and its
independent engineering consultant have considered these
factors relating to timing of the development of the
reserves in the preparation of the
reserve information relating to these properties. As
additional information becomes available in the future, the
Company's estimates of the proved undeveloped reserves
attributable to these properties could change, and such
changes could be substantial.

<TABLE>

DELTA PETROLEUM CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements
<CAPTION>

(11) Information Regarding Proved Oil and Gas Reserves (Unaudited) - Continued

A summary of changes in estimated quantities of proved reserves, net of recoupment gas, for the years en
and 1995 are as follows:

Onshore Offshore
GAS OIL GAS OIL
(MCF) (BBLS) (MCF) (BBLS)

<S> <C> <C> <C> <C>
Balance at July 1, 1995 8,945,853 142,609 37,534,993 32,426,179

Purchases of reserves in place - - 24,538,651 24,618,773
Extension and discoveries 6,502 13 - -
Revisions of quantity estimates (3,571,359) (9,545) - -
Sales of properties (635,267) - - -
Production (582,844) (12,261) - -
Balance at June 30, 1995 4,162,885 120,816 62,073,644 57,044,952

Purchases of reserves in place 1,320,058 25,273 - -
Extension and discoveries 64,727 - - -
Revisions of quantity estimates 255,700 12,381 366,607 943,768
Sales of properties (33,131) (3,565) - -
Production (499,294) (10,713) - -
Balance at June 30, 1996 5,270,945 144,192 62,440,251 57,988,720

Proved developed reserves:
June 30, 1994 4,658,634 61,590 - -
June 30, 1995 2,550,626 43,125 - -
June 30, 1996 3,146,357 47,021 - -

</TABLE>
<TABLE>
DELTA PETROLEUM CORPORATION
AND SUBSIDIARY

Notes to Consolidated Financial Statements, Continued

(11) Information Regarding Proved Oil and Gas Reserves (Unaudited) - Continued

Future net cash flows presented below are computed using year-end prices and costs.
Future corporate overhead expenses and interest expense have not been included.

Offshore
Onshore California Total

June 30, 1995:

<S> <C> <C> <C>
Future cash inflows $7,483,671 712,615,718 720,099,389
Future costs:
Production 3,043,357 134,494,357 137,537,714
Development 1,142,281 163,303,136 164,445,417
Income taxes - 136,491,549 136,491,549

Future net cash flows 3,298,033 278,326,676 281,624,709

10% discount factor 1,324,722 234,880,292 236,205,014

Standardized measure of discounted future
net cash flows $1,973,311 43,446,384 45,419,695

June 30, 1996:

Future cash inflows $10,384,701 779,833,105 790,217,806
Future costs:
Production 4,071,196 203,812,088 207,883,284
Development 1,250,413 166,640,928 167,891,341
Income taxes - 134,309,964 134,309,964

Future net cash flows 5,063,092 275,070,125 280,133,217

10% discount factor 1,819,295 216,969,625 218,788,920

Standardized measure of discounted future
net cash flows $3,243,797 58,100,500 61,344,297
</TABLE>

The principal sources of changes in the standardized measure of discounted
net cash flows during the years ended June 30, 1996 and 1995 are as follows:

<TABLE>

1996 1995

<S> <C> <C>
Beginning of year $45,419,695 32,574,879

Sales of oil and gas produced during the
period, net of production costs (605,068) (759,226)
Net change in prices and production costs (1,562,145) (124,704)
Changes in estimated future development costs (731,662) (133,136)
Purchase of reserves in place 701,476 22,899,681
Extensions, discoveries and improved recovery 77,312 4,616
Revisions of previous quantity estimates,
estimated timing of development and other 22,988,710 (5,757,236)
Net change in income taxes (9,422,283) (6,120,256)
Sales of reserves in place (63,708) (422,411)
Accretion of discount 4,541,970 3,257,488

End of year $61,344,297 45,419,695
</TABLE>

The standardized measure of discounted future net cash flows relating
to proved oil and gas reserve and the changes in standardized measure
of discounted future net cash flows relating to proved oil
gas reserves were prepared in accordance with the provisions of Statement
of Financial Accounting Standard No. 69. Future cash inflows were computed
by applying current prices at year-end to estimated future production.
Future production and development costs are computed by estimating the
the expenditures to be incurred in developing and producing the proved
oil and gas reserves at year-end, based on year-end costs and assuming
continuation of existing economic conditions. Future income tax expenses
are calculated by applying appropriate year-end tax rates to future
pre-tax net cash flows relating to proved oil and gas reserves, less the
tax basis of properties involved and tax credits and loss carryforwards
relating to oil and gas producing activities.
Future net cash flows are discounted at a rate of 10% annually to derive
the standardized measure of discounted future net cash flows.
This calculation procedure does not necessarily result
in an estimate of the fair market value or the present value of the
Company's oil and gas properties.

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,629,738
<SECURITIES> 0
<RECEIVABLES> 377,260
<ALLOWANCES> 48,722
<INVENTORY> 0
<CURRENT-ASSETS> 2,019,098
<PP&E> 10,755,867
<DEPRECIATION> (1,787,443)
<TOTAL-ASSETS> 11,515,732
<CURRENT-LIABILITIES> 3,691,824
<BONDS> 0
0
16
<COMMON> 44,882
<OTHER-SE> 7,779,010
<TOTAL-LIABILITY-AND-EQUITY> 11,515,732
<SALES> 1,044,873
<TOTAL-REVENUES> 1,385,317
<CGS> 0
<TOTAL-COSTS> 4,713,547
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,328,230)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,328,230)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,328,230)
<EPS-PRIMARY> (.81)
<EPS-DILUTED> 0

</TABLE>