As oil and gas prices have rebounded beginning in early 1999, total expenditures for all U.S. exploration and production activities have increased to an estimated $56 billion in 2003 and $62 billion in 2004 and are expected to reach $66 billion in 2005, according to Oil & Gas Journal in April 2005.

A survey of 16 U.S. major integrated and 102 independent oil and gas companies by World Oil Magazine projects the U.S. drilling activity in 2005 to be skewed more towards independent players, as the number of wells drilled by the major producers in 2005 is expected to increase 19.4%, whereas independent companies are expected to drill almost 50% more wells in 2005 than in 2004. This trend is primarily driven by the increased acquisitions of proved oil and gas properties by independent producers. When these types of properties are acquired, purchasers typically intensify drilling, workover and well maintenance activities to accelerate production from the newly acquired reserves.

Increased expenditures for exploration and production activities generally involve the deployment of more drilling and well servicing rigs. Rising oil and gas prices since early 1999 and the corresponding increase in onshore oil exploration and production spending have led to expanded drilling and well service activity, as the U.S. land-based drilling rig count and U.S. land-based workover rig count increased approximately 36% and 13%, respectively, from year-end 2002 to year-end 2003, and 11% and 10%, respectively, from year-end 2003 to year-end 2004, according to Baker Hughes.

The Company’s fluid services segment provides oilfield fluid supply, transportation and storage services. These services are required in most workover, drilling and completion projects and are routinely used in daily producing well operations. These services include transportation of fluids used in drilling and workover operations and of salt water produced as a by-product of oil and gas production;

sale and transportation of fresh and brine water used in drilling and workover activities; rental of portable frac tanks and test tanks used to store fluids on well sites; and operation of company-owned fresh water and brine source wells and of non-hazardous wastewater disposal wells.

This segment utilizes the Company’s fleet of fluid services trucks and related assets, including specialized tank trucks, portable storage tanks, water wells, disposal facilities and related equipment. The Company provides a full array of fluid sales, transportation, storage and disposal services required on most workover, drilling and completion projects.

The Company’s drilling and completion services segment provides oil and gas operators with a package of services that include niche pressure pumping, such as cementing, acidizing, fracturing, coiled tubing and pressure testing; cased-hole wireline services; and underbalanced drilling in low pressure and fluid sensitive reservoirs. This segment currently operates 31 pressure pumping units to conduct a variety of services designed to stimulate oil and gas production or to enable cement slurry to be placed in or circulated within a well.

The Company’s well site construction services segment employs an array of equipment and assets to provide services for the construction and maintenance of oil and gas production infrastructure. These services are primarily related to new drilling activities, although the same equipment is utilized to maintain oil and gas field infrastructure. The Company’s well site construction services segment includes preparation and maintenance of access roads; building of drilling locations; installation of small gathering lines and pipelines; and maintenance of production facilities.

Operating expenses increased 31% to $60.4 million in the three months ended March 31, 2005 from $46.0 million in the first quarter ended March 31, 2004

Depreciation and amortization expenses were $8.0 million for the three months ended March 31, 2005 and $6.3 million for the three months ended March 31, 2004.

Interest expense increased 47% to $3.1 million in the three months ended March 31, 2005 from $2.1 million in the same period during 2004.

Net income increased to $5.8 million in the three months ended March 31, 2005 from $2.7 million in the same period during 2004.