The main factor influencing demand for well services in the industry is the level of drilling activity by oil and natural gas companies, which, in turn, depends largely on current and anticipated future crude oil and natural gas prices and depletion rates. Current market indicators suggest an increasing demand for oil and natural gas coupled with a flat or declining production curve, which is believed should result in the continuation of historically high crude oil and natural gas commodity prices. For example, the Energy Information Agency of the U.S. Department of Energy, or EIA, forecasts that U.S. oil and natural gas consumption will increase at an average annual rate of 1.5% through 2025. Conversely, the EIA estimates that U.S. oil production will decline at an average annual rate of 0.5% and natural gas production will increase at an average annual rate of 0.6%.

It is anticipated that oil and natural gas exploration and production companies will continue to respond to sustained increases in demand and corresponding higher future crude oil and natural gas commodity prices by expanding their exploration and drilling activities through increased capital spending. According to RigData, weekly average onshore well permits issued in 2004 and 2003 were 1,122 and 961, respectively, an increase of 16.8%. Based upon Baker-Hughes rig count data, the 2004 and 2003 domestic onshore rig count averaged 1,095 and 924 rigs, respectively, an increase of 18.5%. While the number of domestic oil and natural gas wells drilled has increased in recent years, a corresponding increase in production has not been realized. It is believed that a continued increase in U.S. drilling and workover activity will be required for the oil and natural gas industry to meet the expected increased demand for oil and natural gas in the United States.

The Company’s fluid-based stimulation services include fracturing and acidizing, which are designed to improve the flow of oil and natural gas from producing zones. The main pieces of equipment used in the fracturing process are the blender, which blends the proppant into the fracturing fluid, and the pumping unit, which is capable of pumping significant volumes at high pressures. The Company’s fracturing pump units are capable of pumping slurries at pressures of up to 10,000 pounds per square, or psi, inch at rates of up to 100 barrels per minute. Acidizing services are performed to enhance the flow rate of oil and natural gas from wells with reduced flow caused by limestone and other materials that block the formation. The Company owns and operates a fleet of mobile acid transport and pumping units to provide acidizing services.

In addition to its fluid-based stimulation services, the Company also uses nitrogen, an inert gas, to stimulate wellbores. In addition, the Company uses nitrogen to foam cement slurries and to purge and test pipelines, boilers and pressure vessels.

The Company’s cementing services consist of blending high-grade cement and water with various solid and liquid additives to create a cement slurry. The Company has developed a series of proprietary slurry blends. The Company contracts with independent, third party regional laboratories to provide testing services to evaluate its slurry properties, which vary with cement supplier and local water properties. As a complement to its cementing services, the Company also sells casing attachments such as baffle plates, centralizers, float shoes, guide shoes, formation packer shoes, rubber plugs and wooden plugs.

The Company offers two types of down-hole surveying services — logging and perforating. The Company owns a fleet of 34 logging and perforating trucks and cranes through which it provides its down-hole surveying services.

The Company logging services involve the gathering of down-hole information to identify various characteristics of the down-hole rock formations, casing cement bond and mechanical integrity. The Company lowers specialized tools into a wellbore from a truck on an armored electro-mechanical cable, or wireline. The Company provides logging services from four different service centers: Wooster, Ohio; Bradford, Pennsylvania; Black Lick, Pennsylvania; and Hominy, Oklahoma.

The Company provides perforating services as the initial step of stimulation by lowering specialized tools and perforating guns into a wellbore by wireline. The specialized tools transmit data to the Company’s surface computer to verify the integrity of the cement and position the perforating gun, which fires shaped explosive charges to penetrate the producing zone. The Company provides perforating services from five different service centers: Wooster, Ohio; Mercer, Pennsylvania; Black Lick, Pennsylvania; Kimball, West Virginia; and Hominy, Oklahoma.

Cost of revenue increased 51.6% to $52.9 million for the year ended December 31, 2004, compared to $34.9 million for the year ended December 31, 2003.

Selling, General and Administrative expenses expenses were $12.9 million for the year ended December 31, 2004, compared to $8.3 million for the year ended December 31, 2003, an increase of 55%.

Operating income was $10.3 million for the year ended December 31, 2004, compared to $8.3 million for the year ended December 31, 2003, an increase of 24.1%.