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

                                   FORM 10-KSB

(Mark One)
   [X]    Annual report under Section 13 or 15(d) of the Securities Exchange Act
          of 1934 for the fiscal year ended September 30, 2003

   [      ] Transition report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 (No fee required) for the transition period
          from ____________________ to_________________________.


     Commission file number: 000-09419
                             ---------

                       MATRIX ENERGY SERVICES CORPORATION
                  ---------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

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 Nevada                                                         84-0811647
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 (State or Other Jurisdiction                           (I.R.S. Employer
  of Incorporation or Organization)                         Identification No.)
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                  5416 Birchman Avenue, Fort Worth, Texas       76107
                  ---------------------------------------       ------
                 (Address of Principal Executive Offices)      (Zip Code)

                                 (817) 377-4464
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                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:
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Title of Each Class                   Name of each Exchange on Which Registered
-------------------                   -----------------------------------------
Common Stock ($0.002                                 None
               Par Value)
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Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 not 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 issuer's total consolidated revenues for the year ended September 30, 2003,
were $152,752.

The aggregate market value of the registrant's Common Stock, $0.002 par value
(the only class of voting stock), held by non-affiliates was approximately
$3,812,435 based on the average closing bid and asked prices for the Common
Stock on January 12, 2004.

At January 12, 2004, the number of shares outstanding of the registrant's Common
Stock, $0.002 par value (the only class of voting stock), was 45,071,402.







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                                TABLE OF CONTENTS

                                                                           PAGE
                                     PART I


Item 1.       Description of Business........................................4

Item 2.       Description of Property........................................10

Item 3.       Legal Proceedings..............................................13

Item 4.       Submission of Matters to a Vote of Security-Holders............13


                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters.......13

Item 6.       Management's Discussion and Analysis or Plan of Operation......15

Item 7.       Financial Statements...........................................19

Item 8.       Changes in and Disagreements With Accountants
                on Accounting and Financial Disclosure.......................45

                                    PART III

Item 9.       Directors and Executive Officers...............................45

Item 10.      Executive Compensation.........................................46

Item 11.      Security Ownership of Certain Beneficial Owners and Management.47

Item 12.      Certain Relationships and Related Transactions.................48

Item 13.      Exhibits and Reports on Form 8-K...............................48
















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FORWARD-LOOKING STATEMENTS

         THIS ANNUAL REPORT ON FORM 10-KSB INCLUDES "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE"SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (THE "EXCHANGE ACT"), WHICH CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS, "MAY," "BELIEVE," "EXPECT," "INTEND,"
"ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER
VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS FORM 10-KSB, INCLUDING WITHOUT
LIMITATION, THE STATEMENTS UNDER "BUSINESS," "PROPERTIES," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXPLORATION--LIQUIDITY AND CAPITAL RESOURCES" AND "MARKET FOR THE REGISTRANT'S
COMMON EQUITY AND RELATED SHAREHOLDER MATTERS" LOCATED ELSEWHERE HEREIN
REGARDING THE FINANCIAL POSITION AND LIQUIDITY OF MATRIX ENERGY SERVICES CORP.
("THE COMPANY"), THE VOLUME OR DISCOUNTED PRESENT VALUE OF ITS OIL AND NATURAL
GAS RESERVES, ITS ABILITY TO SERVICE ITS INDEBTEDNESS, ITS STRATEGIC PLANS
INCLUDING ITS ABILITY TO LOCATE AND COMPLETE ACQUISITIONS OF OIL AND NATURAL GAS
ASSETS, ITS ABILITY TO LIST ITS STOCK ON THE OVER THE COUNTER ELECTRONIC
BULLETIN BOARD (OTC-EBB) AND OTHER MATTERS, ARE FORWARD-LOOKING STATEMENTS.
ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH
FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH
EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS WITH RESPECT TO
ANY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING CERTAIN RISKS AND UNCERTAINTIES
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS FORM 10-KSB,
INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS FORM 10-KSB. IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS
HEREIN INCLUDE, BUT ARE NOT LIMITED TO, THE TIMING AND EXTENT OF CHANGES IN
COMMODITY PRICES FOR OIL AND NATURAL GAS, THE NEED TO DEVELOP AND REPLACE
RESERVES, ENVIRONMENTAL RISKS, DRILLING AND OPERATING RISKS, RISKS RELATED TO
EXPLORATION AND DEVELOPMENT, UNCERTAINTIES ABOUT THE ESTIMATES OF RESERVES,
COMPETITION, GOVERNMENT REGULATION AND THE ABILITY OF THE COMPANY TO MEET ITS
STATED BUSINESS GOALS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Business Development

         As used herein, the term "Company" refers to Matrix Energy Services
Corporation (formerly Power Exploration, Inc.), a Nevada corporation, and its
subsidiaries and predecessors, unless the context indicates otherwise.
Originally incorporated on October 31, 1979 in Colorado as Imperial Energy
Corp., the Company adopted its present name in May of 2002. During its history,
the Company has changed its name several times. At different times the Company
has been known as Imperial Energy Corp., Funscape Corp., Oil Retrieval Systems,
Inc., Titan Energy Corp., Inc. and Power Exploration, Inc. Current management
obtained controlling ownership of the Company in October of 1999. The Company
changed its domicile to Nevada on May 31, 1998 through a merger of Titan Energy
Corp., Inc., a Colorado Corporation, with a Nevada corporation bearing the name
Power Exploration, Inc.

         The Company, along with its wholly owned subsidiaries, is a
developmental resource company engaged in oil and gas exploration. In addition
to exploration and development of new properties, the Company redevelops
currently producing oil and gas fields.

Business of the Issuer

         Oil and natural gas are the principal products currently produced by
the Company. The Company does not refine or process the oil and natural gas that
it produces. The Company sells the oil it produces under short-term contracts at
market prices in the areas in which the producing properties are located,
generally at F.O.B. field prices posted by the principal purchaser of oil in
such areas.

         The Company focuses its exploration efforts on its holdings in Texas.
The Company is redeveloping existing fields in and around Corsicana, Texas and
other areas of the region where fields have been partially depleted by
conventional production methods, but where significant, proven reserves of oil
and gas still remain. These fields can become commercially viable and provide
long-term revenue streams utilizing the latest technology.

         Recovery methods employed by the Company have yielded positive results
in recent application tests. The first process involves the use of a controlled,
under-balanced horizontal drilling technique in retrieving secondary production
from fields whose depletion curves have flattened. This process has been used
extensively in the higher pressured environments, like the Austin-Chalk, however
it has not been widely applied to shallow depth, pressure depleted reservoirs.
The Company has difficulty pressurizing its shallow depth properties, but
continues to look for ways to create energy within the reservoir that would
facilitate movement of fluids to the well bore.

         On November 27, 2003, the Company, through its wholly-owned
partnership, Spartan Resource Partners, GP, executed a farm-out agreement with
Jerry Witte, a geologist, granting him the right to drill a test well on its
leasehold in Corsicana. The Company will retain a 10% carried working interest
in the well and has granted an additional area of mutual interest to the Farmee
for one thousand acres or 25 additional wells. Drilling is expected to commence
in February of 2004.

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On June 21, 2002, the Company purchased 2747.95 acres of mineral leases from J.
Rags Properties, LLC for 2,000,000 shares of newly issued shares of the
Company's common stock, restricted pursuant to Rule 144 of the Securities Act of
1933, valued at $1.00 per share. The mineral leases were originally sold by the
US Bureau of Land Management on Oct. 17, 2001 at public auction. The mineral
leases acquired by the Company are divided into 11 parcels and are all located
in the LBJ National Grasslands in northern Wise County, Texas. All leases are
for a term of 10 years with an effective date of 12-1-01. All of the mineral
leases are within the known boundaries of the Barnett Shale gas play with no
depth restrictions.

On August 6, 2002, the Company signed a Letter of Intent with TBX Resources,
Inc. and JADA Mineral Trust to sell an undivided 83.3333% participation in the
Company's BLM mineral leases. TBX and JADA would provide drilling funds for the
development drilling of approximately 70 wells on the BLM mineral leases
commencing in the 1st quarter of 2003.

On October 1, 2003, the Company cancelled the original contract to purchase the
BLM leasehold acreage from J. Rags Properties, LLC and cancelled the common
stock shares issued to J. Rags Properties, LLC in connection with the same
purchase. The Company encountered a problem with securing a natural gas pipeline
to transport natural gas from the referenced BLM leasehold. This problem has
resulted in the loss of drilling funds committed to the project through the TBX
/JADA agreement.

With respect to its future drilling operations, the Company plans to concentrate
on lower risk development-type properties generally consisting of drilling in
reservoirs from which production is or formerly was being obtained while also
drilling some wildcat and developmental wells. The drilling of development wells
is subject to the normal risk of dry holes or a failure to produce oil and
natural gas in commercial quantities. The degree of risk varies depending, among
other things, on the distance between the well and the nearest producing well,
other available geological information and the geological features of the area.
All drilling activities are subject to the risk of encountering unusual or
unexpected formations and pressures and other conditions that may result in
financial losses or liabilities to third parties or governmental entities, many
of which may not be covered by insurance. The number and type of wells drilled
by the Company will vary depending on the amount of funds available for
drilling, the cost of each well, the size of the fractional working interests
acquired by the Company in each well and the estimated recoverable reserves
attributable to each well.

The Company is currently negotiating with two sources of capital to fund its
future drilling operations as well as augment the development of its Corsicana
leasehold interests. These funding opportunities are based both on equity and
debt instruments of the Company. The Company hopes to raise $2 to $3 million,
however, no documents have been executed and both sources are in the process of
completing their respective due diligence efforts. The Company will make every
effort to secure funding for its future drilling opportunities.

As of September 30, 2003, the Company employed 5 persons all of whom are engaged
in office and administrative activities.

Exploration and Development Activities

Historically, the Company has financed its exploration and development
expenditures primarily through bank borrowing, equity capital from private sales
of stock, and promoted funds from industry partners. With respect to its
acquisition activities, the Company intends to shift its emphasis to smaller
scale acquisitions of producing properties with additional development and
exploration potential. Initially, the Company plans to use a combination of debt
and equity financing to fund these smaller acquisitions.

The Company made no exploration and development expenditures during the fiscal
years ended September 30, 2002, and 2003, respectively. The Company made net
lease acquisitions of $2,000,000 for proved and unproved properties during the
fiscal year-ended September 30, 2002. Total lease acquisition for both proved


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and unproved properties was zero during the fiscal year ended September 30,
2003. The Company's ability to continue to fund its exploration and development
activities depends upon cash flow and its ability to secure the necessary
financing for such activities.

Products, Markets and Revenues

Oil and natural gas are the principal products currently produced by the
Company. The Company does not refine or process the oil and natural gas that it
produces. The Company sells the oil it produces under short-term contracts at
market prices in the areas in which the producing properties are located,
generally at F.O.B. field prices posted by the principal purchaser of oil in
such areas.

The availability of a ready market for oil and natural gas and the prices of oil
and natural gas are dependent upon a number of factors that are beyond the
control of the Company. These factors include, among other things, the level of
domestic production and economic activity generally, the availability of
imported oil and natural gas, actions taken by foreign oil producing nations,
the availability of natural gas pipelines with adequate capacity and other
transportation facilities, the availability and marketing of other competitive
fuels, fluctuating and seasonal demand for oil, natural gas and refined products
and the extent of governmental regulation and taxation (under both present and
future legislation) of the production, refining, transportation, pricing, use
and allocation of oil, natural gas, refined products and substitute fuels.
Accordingly, in view of the many uncertainties affecting the supply and demand
for oil, natural gas and refined petroleum products, it is not possible to
predict accurately the prices or marketability of the oil and natural gas from
any producing well in which the Company has or may acquire an interest.

Oil prices have been subject to significant fluctuations over the past decade.
Levels of production maintained by the Organization of Petroleum Exporting
Countries ("OPEC") member nations and other major oil producing countries are
expected to continue to be a major determinant of oil price movements in the
future. As a result, future oil price movements cannot be predicted with any
certainty. Similarly, during the past several years, the market price for
natural gas has been subject to significant fluctuations on a monthly basis as
well as from year to year. These frequent changes in the market price make it
impossible for the Company to predict natural gas price movements with any
certainty.

The Company cannot provide assurance that it will be able to market all oil or
natural gas that the Company produces or, if such oil or natural gas can be
marketed, that favorable price and contractual terms can be negotiated. Changes
in oil and natural gas prices may significantly affect the revenues and cash
flow of the Company and the value of its oil and natural gas properties.
Further, significant declines in the prices of oil and natural gas may have a
material adverse effect on the business and financial condition of the Company.
(See "Management's Discussion and Analysis").

In certain areas in which the Company engages in oil and natural gas production
activities, the supply of oil and natural gas available for delivery from time
to time exceeds the demand. During such times, companies purchasing oil and
natural gas in such areas reduce the amount of oil and natural gas that they
will purchase or "take." If buyers cannot be readily located for newly
discovered oil and natural gas reserves, newly completed oil and natural gas
wells may be shut-in for various periods of time. As a result, the over-supply
of oil and natural gas in certain areas may cause the Company to experience
"take" problems or may adversely affect the Company's ability to obtain
contracts to market oil and natural gas discovered in wells in which the Company
owns an interest.

Competition

The oil and natural gas industry is highly competitive. The Company encounters
strong competition from other independent operators and from major oil companies
in acquiring properties, in contracting for drilling equipment and in securing
trained personnel. Many of these competitors have financial resources and staffs

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substantially larger than those available to the Company. Therefore, competitors
may be able to pay more for desirable leases and to evaluate, bid for and
purchase a greater number of properties or prospects than the financial or
personnel resources of the Company will permit.

Exploration and production of oil and natural gas is also affected by
competition for drilling rigs and the availability of tubular goods and certain
other equipment. While the oil and natural gas industry has experienced
shortages of drilling rigs and equipment, pipe and personnel in the past, the
Company is not presently experiencing any shortages and does not foresee any
such shortages in the near future. the Company is unable to predict how long
current market conditions will continue.

Competition for attractive oil and natural gas producing properties, undeveloped
leases and drilling rights is also strong, and the Company cannot provide
assurance that it will be able to compete satisfactorily in the acquisition of
such properties. Many major oil companies have publicly indicated their
decisions to concentrate on overseas activities and have been actively marketing
certain of their existing producing properties for sale to independent
producers. There can be no assurance that the Company will be successful in
acquiring any such properties.

Regulation

The Company's operations are affected from time to time in varying degrees by
political developments and federal and state laws and regulations. In
particular, oil and natural gas production, operations and economics are or have
been affected by price controls, taxes and other laws relating to the oil and
natural gas industry, by changes in such laws and by changes in administrative
regulations. The Company cannot predict how existing laws and regulations may be
interpreted by enforcement agencies or court rulings, whether additional laws
and regulations will be adopted, or the effect such changes may have on its
business or financial condition. Matters subject to regulation include discharge
permits for drilling operations, drilling and abandonment bonds or other
financial responsibility requirements, reports concerning operations, the
spacing of wells, unitization and pooling of properties, and taxation. There can
be no assurance that new laws or regulations, or modifications of or new
interpretations of existing laws and regulations, will not increase
substantially the cost of compliance or otherwise adversely affect the Company's
oil and natural gas operations and financial condition or that material
indemnity claims will not arise against the Company with respect to properties
acquired by or from the Company.

The Company's operations are subject to numerous laws and regulations governing
the discharge of materials into the environment or otherwise relating to
environmental protection. These laws and regulations require the acquisition of
a permit before drilling commences, restrict the types, quantities and
concentration of various substances that can be released into the environment in
connection with drilling and production activities, limit or prohibit drilling
activities on certain lands lying within wilderness, wetlands and other
protected areas, and impose substantial liabilities for pollution which might
result from the Company's operations. Moreover, the recent trend toward stricter
standards in environmental legislation and regulation is likely to continue.

For instance, legislation has been proposed in Congress from time to time that
would reclassify certain crude oil and natural gas exploration and production
wastes as "hazardous wastes" which would make the reclassified wastes subject to
much more stringent handling, disposal and clean-up requirements. If such
legislation were to be enacted, it could have a significant impact on the
operating costs of the Company, as well as the oil and natural gas industry in
general. Initiatives to further regulate the disposal of crude oil and natural
gas wastes are also pending in certain states, and these various initiatives
could have a similar impact on the Company. The Company could incur substantial
costs to comply with environmental laws and regulations. In addition to
compliance costs, government entities and other third parties may assert
substantial liabilities against owners and operators of oil and natural gas
properties for oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages, including damages caused by
previous property owners. As a result, substantial liabilities to third parties
or governmental entities may be incurred, the payment of which could reduce or
eliminate the funds available for project investment or result in loss of the
Company's properties.

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Although the Company maintains insurance coverage it considers to be customary
in the industry, it is not fully insured against certain of these risks, either
because such insurance is not available or because of high premium costs.
Accordingly, the Company may be subject to liability or may lose substantial
portions of properties due to hazards that cannot be insured against or have not
been insured against due to prohibitive premium costs or for other reasons. The
imposition of any such liabilities on the Company could have a material adverse
effect on the Company's financial condition and results of operations.

The Oil Pollution Act of 1990 ("OPA") imposes a variety of regulations on
"responsible parties" related to the prevention of oil spills. The
implementation of new, or the modification of existing, environmental laws or
regulations, including regulations promulgated pursuant to the Oil Pollution Act
of 1990, could have a material adverse impact on the Company. While the Company
does not anticipate incurring material costs in connection with environmental
compliance and remediation, it cannot guarantee that material costs will not be
incurred.

Legislation affecting the oil and natural gas industry is under constant review
for amendment or expansion, frequently increasing the regulatory burden. Also,
numerous departments and agencies, both federal and state, are authorized by
statute to issue and have issued rules and regulations binding on the oil and
natural gas industry and its individual members, compliance with which is often
difficult and costly and certain of which carry substantial penalties for the
failure to comply. The Company cannot predict how existing regulations may be
interpreted by enforcement agencies or the courts, nor whether amendments or
additional regulations will be adopted, nor what effect such interpretations and
changes may have on the Company's business or financial condition.

Historically, interstate pipeline companies generally acted as wholesale
merchants by purchasing natural gas from producers and reselling the natural gas
to local distribution companies and large end users. Commencing in late 1985,
the Federal Energy Regulatory Commission (the "FERC") issued a series of orders
that have had a major impact on interstate natural gas pipeline operations,
services, and rates, and thus have significantly altered the marketing and price
of natural gas. The FERC's key rule making action, Order No. 636 ("Order 636"),
issued in April 1992, required each interstate pipeline to, among other things,
"unbundle" its traditional bundled sales services and create and make available
on an open and nondiscriminatory basis numerous constituent services (such as
gathering services, storage services, firm and interruptible transportation
services, and standby sales and natural gas balancing services), and to adopt a
new rate making methodology to determine appropriate rates for those services.

To the extent the pipeline company or its sales affiliate makes natural gas
sales as a merchant in the future, it does so pursuant to private contracts in
direct competition with all other sellers, such as the Company; however,
pipeline companies and their affiliates were not required to remain "merchants"
of natural gas, and most of the interstate pipeline companies have become
"transporters only." In subsequent orders, the FERC largely affirmed the major
features of Order 636 and denied a stay of the implementation of the new rules
pending judicial review. By the end of 1994, the FERC had concluded the Order
636 restructuring proceedings, and, in general, accepted rate filings
implementing Order 636 on every major interstate pipeline. However, even through
the implementation of Order 636 on individual interstate pipelines is
essentially complete, many of the individual pipeline restructuring proceedings,
as well as Order 636 itself and the regulations promulgated thereunder, are
subject to pending appellate review and could possibly be changed as a result of
future court orders.

The Company cannot predict whether the FERC's orders will be affirmed on appeal
or what the effects will be on its business. In recent years the FERC also has
pursued a number of other important policy initiatives which could significantly
affect the marketing of natural gas. Some of the more notable of these
regulatory initiatives include (i) a series of orders in individual pipeline
proceedings articulating a policy of generally approving the voluntary
divestiture of interstate pipeline owned gathering facilities by interstate
pipelines to their affiliates (the so-called "spin down" of previously regulated
gathering facilities to the pipeline's nonregulated affiliate), (ii) the
completion of a rule making involving the regulation of pipelines with marketing
affiliates under Order No. 497, (iii) the FERC's ongoing efforts to promulgate
standards for pipeline electronic bulletin boards and electronic data exchange,
(iv) a generic inquiry into the pricing of interstate pipeline capacity, (v)

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efforts to refine the FERC's regulations controlling operation of the secondary
market for released pipeline capacity, and (vi) a policy statement regarding
market based rates and other non-cost-based rates for interstate pipeline
transmission and storage capacity.

Several of these initiatives are intended to enhance competition in natural gas
markets, although some, such as "spin downs," may have the adverse effect of
increasing the cost of doing business on some in the industry as a result of the
monopolization of those facilities by their new, unregulated owners. The FERC
has attempted to address some of these concerns in its orders authorizing such
"spin downs," but it remains to be seen what effect these activities will have
on access to markets and the cost to do business. As to all of these recent FERC
initiatives, the ongoing, or in some instances, preliminary evolving nature of
these regulatory initiatives makes it impossible at this time to predict their
ultimate impact on the Company's business.

The federal government may propose tax initiatives that affect the oil and
natural gas industry, including the Company. Due to the preliminary nature of
these proposals, the Company is unable to determine what effect, if any, the
proposals would have on product demand or the Company's results of operations.

The various states in which the Company conducts or may conduct activities
regulate the drilling, operation and production of oil and natural gas wells,
such as the method of developing new fields, spacing of wells, the prevention
and clean-up of pollution, and maximum daily production allowables based on
market demand and conservation considerations.

The Company's exploration, development and production of oil and gas, including
its operation of saltwater injection and disposal wells, are subject to various
federal, state and local environmental laws and regulations. Such laws and
regulations can increase the costs of planning, designing, installing and
operating oil and gas wells. The Company's domestic activities are subject to a
variety of environmental laws and regulations, including, but not limited to,
the Oil Pollution Act of 1990 ("OPA"), the Clean Water Act ("CWA"), the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
the Resource Conservation and Recovery Act ("RCRA"), the Clean Air Act ("CAA")
and the Safe Drinking Water Act ("SDWA"), as well as state regulations
promulgated under comparable state statutes.

The Company also is subject to regulations governing the handling,
transportation, storage and disposal of naturally occurring radioactive
materials that are found in its oil and gas operations. Civil and criminal fines
and penalties may be imposed for non-compliance with these environmental laws
and regulations. Additionally, these laws and regulations require the
acquisition of permits or other governmental authorizations before undertaking
certain activities, limit or prohibit other activities because of protected
areas or species and impose substantial liabilities for cleanup of pollution.

Under the OPA, a release of oil into water or other areas designated by the
statue could result in the Company being held responsible for the costs of
re-mediating such a release, certain OPA specified damages and natural resource
damages. The extent of that liability could be extensive, as set forth in the
statute, depending on the nature of the release. A release of oil in harmful
quantities or other materials into water or other specified areas could also
result in the Company being held responsible under the CWA for the cost of
remediation, and civil and criminal fines and penalties.

CERCLA and comparable state statutes, also known as "Superfund" laws, can impose
joint and several and retroactive liability, without regard to fault or the
legality of the original conduct, on certain classes of persons for the release
of a "hazardous substance" into the environment. In practice, cleanup costs are
usually allocated among various responsible parties. Potentially liable parties
include site owners or operators, past owners or operators under certain
conditions and entities that arrange for the disposal or treatment of, or
transport hazardous substances found at the site. Although CERCLA, as amended,
currently exempts petroleum, including, but not limited to, crude oil, gas and
natural gas liquids from the definition of hazardous substance, the Company's
operations may involve the use or handling of other materials that may be

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classified as hazardous substances under CERCLA. Furthermore, there can be no
assurance that the exemption will be preserved in future amendments of the act,
if any.

RCRA and comparable state and local requirements impose standards for the
management, including treatment, storage and disposal of both hazardous and
nonhazardous solid wastes. The Company generates hazardous and nonhazardous
solid waste in connection with its routine operations. From time to time,
proposals have been made that would reclassify certain oil and gas wastes,
including wastes generated during pipeline, drilling and production operations,
as "hazardous wastes" under RCRA which would make such solid wastes subject to
must more stringent handling, transportation, storage, disposal and clean-up
requirements. This development could have a significant impact on the Company's
operating costs. While state laws vary on this issue, state initiatives to
further regulate oil and gas wastes could have a similar impact.

Because previous owners and operators have conducted oil and gas exploration and
production, and possibly other activities, at some of the Company's properties,
materials from these operations remain on some of the properties and in some
instances require remediation. In addition, the Company has agreed to indemnify
Sellers of producing properties from whom the Company has acquired reserves
against certain liabilities for environmental claims associated with such
properties. While the Company does not believe the costs to be incurred by the
Company for compliance and re-mediating previously or currently owned or
operated properties will be material, there can be no guarantee that such costs
will not result in material expenditures.

Additionally, in the course of the Company's routine oil and gas operations,
surface spills and leaks, including casing leaks, of oil or other materials
occur, and the Company incurs costs for waste handling and environmental
compliance. Moreover, the Company is able to control directly the operations of
only those wells for which it acts as the operator. Notwithstanding the
Company's lack of control over wells owned by the Company but operated by
others, the failure of the operator to comply with applicable environmental
regulations may, in certain circumstances, be attributable to the Company. It is
not anticipated that the Company will be required in the near future to expend
amounts that are material in relation to its total capital expenditures program
by reason of environmental laws and regulations, but inasmuch as such laws and
regulations are frequently changed, the Company is unable to predict the
ultimate cost of compliance. There can be no assurance that more stringent laws
and regulations protecting the environment will not be adopted or that the
Company will not otherwise incur material expenses in connection with
environmental laws and regulations in the future.

Proposed Legislation

In the past, Congress has been very active in the area of natural gas
regulation. Legislative proposals are pending in various states which, if
enacted, could significantly affect the petroleum industry. The company cannot
predict which proposals, if any, may actually be enacted by Congress or any of
the state legislatures, and what impact, if any, such proposals may have on the
Company's operations.


ITEM 2.  DESCRIPTION OF PROPERTIES

Facilities

The Company leases approximately 2,500 square feet of office space in Fort
Worth, Texas, for its corporate offices. The month-to month lease requires a
monthly rental payment of $3,000. The Company considers this space adequate for
its present needs.



                                       10
<PAGE>


General Description of Oil and Gas Properties

The Company has leasehold interests in the Corsicana Field, located in South
Central Texas. The Corsicana Field is comprised of 875 existing wells on 67
leases of which the Company has a leasehold interest of approximately 8,000
acres in the underground minerals. Of these wells, there were only 215 active
wells, as of September 30, 2003. Of the 215 active wells, not all are regularly
producing wells.

Corsicana Field

On June 11, 1997, the Company acquired 650 oil wells, each approximately 800' to
1000' deep, situated on 4,500 acres of leases in the Corsicana Field, located in
Corsicana, Texas from Rife Oil Properties for 60,000 shares of restricted common
stock and a promissory note for $1,300,000, bearing 6% interest per annum and
due on November 11, 1997. The note was secured by 10,000 shares of newly-issued
common stock and held by an attorney as Trustee. The note for $1,300,000 plus
$43,381 in accrued interest was satisfied on December 15, 1997, by agreement of
the parties, with the shares of restricted common stock, which were held in
escrow. All of the wells are approximately 800 ft. to 1,000 ft. deep with 84.5
million gross barrels of oil in place. The Company has split the field into
small AMI's (Area of Mutual Interest) in order to facilitate fund raising for
the development of the field. All of these leases are production leases that
will continue in perpetuity so long as oil or gas is being produced on the
property subject to the lease. So long as the Company continues to produce oil
or gas from the leases in the Corsicana field, the leases will not expire.

Then on December 9, 1999, the Company issued 240,000 shares of its common stock
to acquire an additional 3,500 acres of leases in the Corsicana Field consisting
of 32 leases including 240 producing oil wells and 39 injection wells.

A reserve study was performed by Ultra Engineering & Consulting of Houston,
Texas. The study, which was performed as of September 30, 2001, estimated net
reserves of 16,381,058 recoverable barrels of oil. The value of future cash
flows, discounted at 10% to present value, was estimated to be $57,944,349. At
current commodity prices, the estimated future cash flow, discounted, is $206
million.

Production from the Corsicana Field has a virtually flat decline curve, thereby
holding the leases for the foreseeable future. The leases carry an average net
revenue interest of 80%.

Due to the Company's inability to raise capital sufficient to develop its proved
oil and gas reserves in the Corsicana Field, no reserve report was prepared for
the years ending September 30, 2002 or September 30, 2003. For the year ending
September 30, 2002 and 2001, less than an average of 6,400 barrels of oil were
produced annually. This lack of production or potential production led to the
Company suffering an impairment loss in its proved oil and gas properties in the
amount of $7,856,890 in 2001. This impairment loss lowers the carrying value of
the leases to management's estimation of the value of the leases if a sale was
made to an unrelated third party in an arms length transaction. No additional
impairment was made in 2002 or 2003.

As of this filing, no drilling operations have commenced.



                                       11
<PAGE>


Oil and Gas Reserves

As of September 30, 2003, the Company's oil and natural gas interests were
located in the State of Texas. The Company has no reserves offshore.

The following table summarizes the Company's reserves on September 30, 2000, and
September 30, 2001 and was prepared in accordance with the rules and regulations
of the Commission. As noted above, no reserve study was done in 2002 or 2003.
                                                              Oil (mbbls)
                                                              -----
                                                         2000           2001
                                                        -----           ------
           Proved Developed and Undeveloped Reserves

          Beginning of Year                              18,473.3     16,384.6
          Purchases of Minerals in Place
          Revisions of previous estimates                (2,078.7)         3.7
          Production                                        (10)          (7.2)
          End of Year                                    16,384.6     16,381.1
          Proved Developed Reserves:End of Year             324          320


Operating Activities

Where possible, the Company prefers to have Rife Oil Properties, Inc. act as
operator of the oil and natural gas properties and prospects in which it owns an
interest. M. O. Rife III, a Director of the Company, is the President of Rife
Oil Properties, Inc. Mr. Rife, through ownership in MOROIL, owns 15,740,000
shares or 36% of the Company. The operator of an oil and natural gas property
supervises production, maintains production records, employs field personnel and
performs other functions required in the production and administration of such
property. The fees for such services customarily vary from well to well,
depending on the nature, depth and location of the well being operated.
Generally, the operator of an oil and natural gas prospect is determined by such
factors as the size of the working interest held by a participant in the
prospect, a participant's knowledge and experience in the geological area in
which the prospect is located and geographical considerations. Independent
drilling contractors drill the Company's wells.

Title to Properties

As is common industry practice, little or no investigation of title is made at
the time of acquisition of undeveloped properties, other than a preliminary
review of local mineral records. Title investigations are made, and in most
cases, a title opinion of local counsel is obtained before commencement of
drilling operations. The Company believes that the methods it utilizes for
investigating title prior to the acquisition of any properties are consistent
with practices customary in the oil and gas industry and that such practices are
adequately designed to enable the Company to acquire good title to such
properties. Some title risks, however, cannot be avoided, despite the use of
customary industry practices.

The Company's leased properties are generally subject to customary royalty and
overriding royalty interests, liens incident to operating agreements, liens for
current taxes and other burdens and minor encumbrances, easements and
restrictions, and may be mortgaged to secure indebtedness of the Company. The
Company believes that none of these burdens either materially detract from the
value of such properties or materially interfere with their use in the operation
of the Company's business.


                                       12
<PAGE>


Sales of Producing Properties and Underdeveloped Acreage

The Company evaluates properties on an ongoing basis to determine the economic
viability of the property and whether such property enhances the objectives of
the Company. During the course of normal business, the Company may dispose of
producing properties and undeveloped acreage if the Company believes that such
disposition is in its best interests.


ITEM 3.  LEGAL PROCEEDINGS

There are no material pending cases involving the Company:

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

During the fiscal year ended September 30, 2003, no matters were submitted by
the Company to a vote of its shareholders.




                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS


Market Information

The Company's Common Stock is currently quoted on the Electronic Bulletin Board
under the symbol "MXES," but there is limited trading in the Common Stock. The
following table sets forth the high and low bid prices from October 1, 2001
through September 30, 2003, based upon quotations periodically published on the
OTC. All price quotations represent prices between dealers, without retail
mark-ups, mark-downs or commissions and may not represent actual transactions.

                                                        HIGH              LOW

Fiscal Year ended September 30, 2002
     October, November, & December, 2001               $ 0.75           $ 0.0
     January, February, & March, 2002                  $10.50           $ 2.625
     April, May,& June, 2002                           $ 6.75           $ 1.00
     July, August,& September, 2002                    $ 2.625          $ 0.3125

Fiscal Year ended September 30, 2003
     October, November, & December, 2002               $ 1.92           $ 0.25
     January, February, & March, 2003                  $ 0.49           $ 0.08
     April, May, & June, 2003                          $ 0.13           $ 0.01
     July, August, & September, 2003                   $ 0.07           $ 0.04


The bid price for the Common Stock was $0.13 on January 12, 2004. The above
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions.



                                     13
<PAGE>

Shareholders

According to the records of the Company's transfer agent, there were 2,512
holders of record who held 45,071,402 shares of the Company's Common Stock on
September 30, 2003 (including nominee holders such as banks and brokerage firms
who hold shares for beneficial holders).1

Dividends

The Company has not paid any cash dividends on its Common Stock, and does not
anticipate paying cash dividends on its Common Stock in the next year. The
Company anticipates that any income generated in the foreseeable future will be
retained for the development and expansion of its business. Future dividend
policy is subject to the discretion of the Board of Directors and will depend
upon a number of factors, including future earnings, debt service, capital
requirements, business conditions, the financial condition of the Company and
other factors that the Board of Directors deems relevant.

Recent Sales of Unregistered Securities

The following is a list of all securities sold by the Company within the period
covered by this report, including, where applicable, the identity of the person
who purchased the securities, title of the securities, and the date sold.

In July 2002, the Company acquired 10,000,000 shares of its common stock through
the issuance of a note payable to MOROIL, Inc., a company owned by M.O. Rife,
III, Director and Chairman of the Board of the Company, in the amount of
$286,366. These shares were held in escrow pursuant to an offshore stock
purchase agreement with First Chartered Capital Corporation, Inc., a British
Virgin Islands Corporation. As of September 30, 2002, 642,032 shares of the
10,000,000 treasury shares had been sold for $210,635.

From October 1, 2002 through May 28, 2003, the balance of the treasury shares
(9,357,968 shares) plus an additional 3,553,366 shares of the Company's common
shares had been sold by First Chartered Capital Corporation for $531,617 for a
total of 13,553,366 shares.





                                       14
<PAGE>


ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The Company's operations consist primarily of exploration and development of oil
and gas properties, and redevelopment of currently producing oil and gas fields.
While oil and natural gas are the principal products currently produced by the
Company, the Company does not refine or process the oil and natural gas that it
produces. The Company sells the oil it produces under short-term contracts at
market prices in the areas in which the producing properties are located,
generally at F.O.B. field prices posted by the principal purchaser of oil in
such areas.

Results of Operations

Revenues

The Company's oil and gas sales increased $44,172 or 41%, to $152,752 for the
fiscal year ended September 30, 2003 from $108,580 for the fiscal year ended
September 30, 2002. Revenues from the sales of oil and gas increased primarily
because of a sustained increase in oil prices.

Costs and Expenses
<TABLE>
<CAPTION>

                                                  2002             %              2001           %
<S>                                             <C>            <C>             <C>             <C>
The Company's general and                       ----------     -------         ----------      -------
administrative expenses increased
$849,269, or 56%, to $2,358,379 for
the fiscal year ended September 30,
2003 from $1,509,110 for the fiscal
year ended September 30, 2002. The
change in the dollar amount of general
and administrative expenses was due
primarily to increased consulting fees,
which accounted for 91% of all general
and administrative expenses in 2003.
The following summarizes the general and
administrative expenses:

     Consulting Fees                            $2,147,189      91.0           $1,106,413       73.3
     Corporate Directors Expense                        -        -                     -         -
     Legal Fees and Settlements                      8,473       0.4                4,010        -
     Salaries and Benefits                          86,640       3.7              233,120       15.4
     Other                                         116,077       4.9              165,567       11.3
                                                 ---------      ----            ---------      -----

                                                $2,358,379     100.0%          $1,509,110      100.0%
                                                ==========     ======           =========      ======
</TABLE>


In 2002, the Company used its common shares as payment to consultants for
services through March, 2004. The fair values of these shares resulted in
extremely large charges to operations. In 2003, the Company amortized $2,128,044
of these prepaid consulting fees. (see note 6 of the financial statements)

The lease operating expenses decreased by $17,714, or 7%, to $228,448 in 2003,
compared to $246,162 in 2002. The decrease was primarily due to a decrease in
insurance cost and repairs and maintenance costs.

In 2003, the interest expense decreased by $548,005, or 94% to $37,347, compared
to $585,352 in 2002. The decrease is primarily the result of a reduction in debt
in 2002, when the Company issued 8,500,000 shares of common stock valued at $.15
in payment of accounts payable, accrued liabilities, and notes payable to
related parties. The debt settlements were liquidated by issuance of the
Company's common stock.

                                       15

<PAGE>

Net Income (Loss)

Net loss for the fiscal year ended September 30, 2003 was $4,360,379, or $.09
per share, compared to a loss of $2,330,758, or $.11 per share, for the fiscal
year ended September 30, 2002. This $2,029,621 increase in loss was primarily
the result of the disposal of the BLM acreage (see note 11 to the financial
statements) and the increase in the amortization of prepaid consulting fees in
2003 (see note 6 to the financial statements). Net cash used in operating
activities was $186,337 for the fiscal year ended September 30, 2002, and
$326,796 for the fiscal year ended September 30, 2003.

Liquidity and Capital Resources

The Company's working capital deficit on September 30, 2003 was $479,440
compared to a surplus of $1,338,025 on September 30, 2002. This $1,817,465
decrease in working capital resulted primarily from the amortization of the
current portion of prepaid consulting fees (see note 6 of the financial
statements), for services to be rendered through March 2004.

Non Cash Transactions

During the year ended September 30, 2003, the Company cancelled 2,000,000 shares
of its common stock valued at $100,000. The Company issued the stock during the
year ended September 30, 2002 at a value of $2,000,000 for the acquisition of
Oil and Gas Properties. Because of this change in value, the cancellation of the
stock resulted in a $1,900,000 loss for the Company (see note 11 of the
financial statements).

On October 31, 2002, the Board authorized an amendment of the Company's Articles
of Incorporation to increase the authorized shares of common stock from
50,000,000 shares to 500,000,000 shares and to change the par value of the stock
from $.02 to $.002 per share.

Long-Term Debt

On September 30, 2003, the Company had no long-term debt. Although 88% of the
Company's assets are comprised of oil and gas properties that are not a current
asset, all of the Company's borrowings have been short term in nature. This has
aggravated the Company's cash position and produced lower measures of financial
performance than would otherwise be possible.

History of Losses

The Company had net losses of $4,360,379 and $2,330,758, for the years ended
September 30, 2003 and September 30, 2002, respectively. The Company may
continue to incur net losses and, to the extent that it remains without
operational funding, such losses may continue.


Need for Additional Financing for Growth

The growth of the Company's business will require substantial capital on a
continuing basis, and there is no assurance that any such required additional
capital will be available on satisfactory terms and conditions, if at all. There
is also no assurance that the Company will not pursue, from time to time,
opportunities to acquire oil and natural gas properties and businesses that may
utilize the capital currently expected to be available for its present
operations. The amount and timing of the Company's future capital requirements,
if any, will depend upon a number of factors, including drilling costs,
transportation costs, equipment costs, marketing expenses, staffing levels and
competitive conditions, and any purchases or dispositions of assets, many of
which are not within the Company's control. Failure to obtain any required
additional financing could materially adversely affect the growth, cash flow and
earnings of the Company. In addition, the Company's pursuit of additional
capital could result in the incurrence of additional debt or potentially
dilutive issuances of additional equity securities.

                                       16

<PAGE>

The Company's ability to meet any future debt service obligations will be
dependent upon the Company's future performance, which will be subject to oil
and natural gas prices, the Company's level of production, general economic
conditions and financial, business and other factors affecting the operations of
the Company, many of which are beyond its control. There can be no assurance
that the Company's future performance will not be adversely affected by such
changes in oil and natural gas prices and/or production nor by such economic
conditions and/or financial, business and other factors. In addition, there can
be no assurance that the Company's business will generate sufficient cash flow
from operations or that future bank credit will be available in an amount to
enable the Company to service its indebtedness or make necessary expenditures.
In such event, the Company would be required to obtain such financing from the
sale of equity securities or other debt financing. There can be no assurance
that any such financing will be available on terms acceptable to the Company.
Should sufficient capital not be available, the Company may not be able to
continue to implement its business strategy.

Acquisition Risks

The Company's business strategy includes focused acquisitions of producing oil
and natural gas properties. Any such future acquisitions will require an
assessment of the recoverable reserves, future oil and natural gas prices,
operating costs, potential environmental and other liabilities and other similar
factors. It generally is not feasible to review in detail every individual
property involved in an acquisition. Ordinarily, review efforts are focused on
the higher-valued properties. However, even a detailed review of all properties
and records may not reveal existing or potential problems; nor will it permit
the Company to become sufficiently familiar with the properties to assess fully
their deficiencies and capabilities. Inspections are not always performed on
every well, and potential problems, such as mechanical integrity of equipment
and environmental conditions that may require significant remedial expenditures,
are not necessarily observable even when an inspection is undertaken. Even if
problems are identified, the seller may be unwilling or unable to provide
effective contractual protection against all or part of such problems. There can
be no assurance that oil and natural gas properties acquired by the Company will
be successfully integrated into the Company's operations or will achieve desired
profitability objectives.

Drilling Risks

The Company's drilling involves numerous risks, including the risk that no
commercially productive natural gas or oil reservoirs will be encountered. The
Company must incur significant expenditures for the identification and
acquisition of properties and for the drilling and completion of wells. The cost
of drilling, completing and operating wells is often uncertain, and drilling
operations may be curtailed, delayed or canceled as a result of a variety of
factors, including unexpected drilling conditions, pressure or irregularities in
formations, equipment failures or accidents, weather conditions and shortages or
delays in the delivery of equipment. In addition, any use by the Company of
3-dimensional seismic and other advanced technology requires greater
pre-drilling expenditures than traditional drilling strategies. There can be no
assurance as to the success of the Company's future drilling activities.

Uncertainty of Estimates of Oil and Natural Gas Reserves

Numerous uncertainties are inherent in estimating quantities of proved oil and
natural gas reserves, including many factors beyond the control of the Company.
This Form 10-KSB contains an estimate of the Company's proved oil and natural
gas reserves and the estimated future net cash flows and revenue based upon
reports of the Company's independent petroleum engineers (Ultra Engineering).
Such reports rely upon various assumptions, including assumptions required by
the Securities and Exchange Commission (the "Commission"), as to constant oil
and natural gas prices, drilling and operating expenses, capital expenditures,
taxes and availability of funds and such reports should not be construed as the
current market value of the estimated proved reserves. The process of estimating
oil and natural gas reserves is complex, requiring significant decisions and
assumptions in the evaluation of available geological, engineering and economic
data for each reservoir. As a result, such estimates are inherently an imprecise
evaluation of reserve quantities and future net revenue. Actual future

                                       17

<PAGE>

production, revenue, taxes, development expenditures, operating expenses and
quantities of recoverable oil and natural gas reserves may vary substantially
from those assumed in the estimate. Any significant variance in these
assumptions could materially affect the estimated quantity and value of reserves
set forth in this Form 10-KSB. In addition, the Company's reserves may be
subject to downward or upward revision, based upon production history, results
of future exploration and development, prevailing oil and natural gas prices and
other factors.

Geographic Concentration of Operations

Virtually all of the Company's current operations are located in Texas. Because
of this concentration, any regional events that increase costs or competition,
reduce availability of equipment or supplies, reduce demand or limit production
will impact the Company more adversely than if the Company were geographically
diversified.

Concentration of Production

The Company's existing proved producing oil and natural gas reserves and its
production is located in a single field, which consists of 8,000 acres and
contains 875 wells. Accordingly, to the extent that the Company experiences any
operating difficulties in connection with such wells or that the estimated
proved reserves attributable thereto are less than those that are currently
estimated to exist, the Company could be adversely affected.

Inability to Develop Additional Reserves

The Company's future success as an oil and natural gas producer, as is generally
the case in the industry, depends upon its ability to find, develop and acquire
additional oil and natural gas reserves that are economically recoverable.
Except to the extent that the Company conducts successful development activities
or acquires properties containing proved reserves, the Company's proved reserves
will generally decline as reserves are produced. There can be no assurance that
the Company will be able to locate additional reserves or that the Company will
drill economically productive wells or acquire properties containing proved
reserves.

Certain Industry and Marketing Risks

The Company's operations are subject to the risks and uncertainties associated
with drilling for, producing and transporting of oil and natural gas. The
Company's future ability to market its natural gas and oil production will
depend upon the availability and capacity of natural gas gathering systems and
pipelines and other transportation facilities. Federal and state regulation of
oil and natural gas production and transportation, general economic conditions,
changes in supply and in demand all could materially adversely affect the
Company's ability to market its oil and natural gas production.

Effects of Changing Prices

The future financial condition and results of operations of the Company depend
upon the prices it receives for its oil and natural gas and the costs of
acquiring, developing and producing oil and natural gas. Oil and natural gas
prices have historically been volatile and are subject to fluctuations in
response to changes in supply, market uncertainty and a variety of additional
factors that are also beyond the Company's control. These factors include,
without limitation, the level of domestic production, the availability of
imported oil and natural gas, actions taken by foreign oil and natural gas
producing nations, the availability of transportation systems with adequate
capacity, the availability of competitive fuels, fluctuating and seasonal demand
for natural gas, conservation and the extent of governmental regulation of
production, weather, foreign and domestic government relations, the price of
domestic and imported oil and natural gas, and the overall economic environment.
A substantial or extended decline in oil and/or natural gas prices could have a
material adverse effect on the Company's estimated value of its natural gas and
oil reserves, and on its financial position, results of operations and access to
capital. The Company's ability to maintain or increase its borrowing capacity,
to repay current or future indebtedness and to obtain additional capital on
attractive terms is substantially dependent upon oil and natural gas prices.

                                       18
<PAGE>

The Company uses the full cost method of accounting for its investment in oil
and gas properties. Under the full cost method of accounting, all costs of
acquisition, exploration and development of oil and gas reserves are capitalized
into a "full cost pool" as incurred, and properties in the pool are depleted and
charged to operations using the unit-of-production method based on the ratio of
current production to total proved oil and gas reserves. To the extent that such
capitalized costs (net of accumulated depreciation, depletion and amortization)
less deferred taxes exceed the SEC PV-10 (present value discounted at 10% as
dictated by the SEC) of estimated future net cash flow from proved reserves of
oil and gas, and the lower of cost or fair value of unproved properties after
income tax effects, such excess costs are charged against earnings. Once
incurred, a write-down of oil and gas properties is not reversible at a later
date even if oil or gas prices increase.

Operating Hazards and Uninsured Risks

The Company's operations are subject to the risks inherent in the oil and
natural gas industry, including the risks of fire, explosions, blow-outs, pipe
failure, abnormally pressured formations and environmental accidents such as oil
spills, gas leaks, ruptures or discharges of toxic gases, brine or well fluids
into the environment (including groundwater contamination). The occurrence of
any of these risks could result in substantial losses to the Company due to
injury or loss of life, severe damage to or destruction of property, natural
resources and, equipment, pollution or other environmental damage, clean-up
responsibilities, regulatory investigation and penalties and suspension of
operations. In accordance with customary industry practice, the Company
maintains insurance against some, but not all, of the risks described above.
There can be no assurance that any insurance maintained by the Company will be
adequate to cover any such losses or liabilities. Further, the Company cannot
predict the continued availability of insurance, or availability at commercially
acceptable premium levels. The Company does not carry business interruption
insurance. Losses and liabilities arising from uninsured or under-insured events
could have a material adverse effect on the financial condition and operations
of the Company. From time to time, due primarily to contract terms, pipeline
interruptions or weather conditions, the producing wells in which the Company
owns an interest have been subject to production curtailments. The curtailments
range from production being partially restricted to wells being completely
shut-in. The duration of curtailments varies from a few days to several months.
In most cases the Company is provided only limited notice as to when production
will be curtailed and the duration of such curtailments. The Company is not
currently experiencing any material curtailment on its production.

Inflation and Changing Prices

The impact of inflation, as always, is difficult to assess. In 1997 and through
the first quarter of 1998, the Company has experienced a weakness in prices
received for its oil and natural gas production. In the year 2000, the Company
experienced a significant increase in the prices received for its oil and
natural gas production. The Company cannot anticipate whether the present level
of inflation will remain, however, a sudden increase in inflation and/or an
increase in operating costs or drilling costs coupled with a reversal of current
pricing could have an adverse effect on the operations of the Company.



ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following pages contain the audited financial statements and accompanying
notes as prepared by the Company's independent auditors.



                                       19
<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                                TABLE OF CONTENTS



                                                                           Page

Report of Independent Certified Public Accountants
   Killman, Murrell & Co., P.C.                                            F-2

Financial Statements

   Consolidated Balance Sheets as of September 30, 2003 and 2002           F-3

   Consolidated Statements of Operations for the Years
        Ended September 30, 2003 and 2002                                  F-5

   Consolidated Statements of Stockholders' Equity
        and Comprehensive Loss for the Years Ended
        September 30, 2003 and 2002                                        F-7

   Consolidated Statements of Cash Flows for the Years
        Ended September 30, 2003 and 2002                                  F-8

   Notes to Consolidated Financial Statements                              F-10




















                                       F-1







<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders
Matrix Energy Services Corporation and Subsidiaries
(Formerly Power Exploration, Inc. and Subsidiaries)
Fort Worth, Texas

We have audited the accompanying consolidated balance sheets of Matrix Energy
Services Corporation (formerly Power Exploration, Inc.) and Subsidiaries as of
September 30, 2003 and 2002, and the related consolidated statements of
operations, stockholders' equity and comprehensive loss, and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated financial position of Matrix
Energy Services Corporation (formerly Power Exploration, Inc.) and Subsidiaries
as of September 30, 2003 and 2002, and the consolidated results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and its limited capital resources raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are described in Note 9. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Killman, Murrell & Co., P.C.
KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
December 12, 2003

                                       F-2


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                           CONSOLIDATED BALANCE SHEETS

                           SEPTEMBER 30, 2003 AND 2002

                                     ASSETS
<TABLE>
<CAPTION>


                                                                                  2003                   2002
                                                                              -------------          --------
CURRENT ASSETS
<S>                                                                           <C>                    <C>
    Cash                                                                      $     15,396           $     11,077
    Current Portion of Prepaid Consulting - Note 6                                  93,750              2,128,044
                                                                              ------------           ------------

            TOTAL CURRENT ASSETS                                                   109,146              2,139,121
                                                                              ------------           ------------

OIL AND GAS PROPERTIES,
    FULL COST METHOD - Note 11                                                   1,000,000              3,000,000
        Less: Accumulated Depreciation, Depletion and
        Amortization                                                               (72,098)               (53,785)
                                                                              ------------           ------------

            NET OIL AND GAS PROPERTIES                                             927,902              2,946,215
                                                                              ------------           ------------

OFFICE  EQUIPMENT, Net of Accumulated
    Depreciation of $3,540 and $1,269                                                7,136                  3,758
                                                                              ------------           ------------

OTHER ASSETS
    Investments Available - For - Sale - Note 10                                         -                100,000
    Prepaid Consulting - Net of Current Portion - Note 6                                 -                 93,750
    Other                                                                            3,425                  6,037
                                                                              ------------           ------------

            TOTAL OTHER ASSETS                                                       3,425                199,787
                                                                              ------------           ------------

            TOTAL ASSETS                                                      $  1,047,609           $  5,288,881
                                                                              ============           ============
</TABLE>













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

                                       F-3


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

                           SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                  2003                   2002
                                                                              -------------          --------

CURRENT LIABILITIES
<S>                                                                          <C>                     <C>
    Accounts Payable and Accrued Expenses                                    $      160,009          $     169,207
    Accounts Payable - Related Parties                                               96,632                105,091
    Note Payable - Note 2                                                           250,000                250,000
    Notes Payable - Related Parties - Note 2                                         81,945                276,798
                                                                              -------------          -------------

            TOTAL CURRENT LIABILITIES                                               588,586                801,096
                                                                              -------------          -------------

COMMITMENTS AND CONTENGENCIES - Note 7                                                    -                      -

STOCKHOLDERS' EQUITY - Note 8
    Common Stock, $.002 par value, 500,000,000 Shares
        Authorized, 45,071,402 and 43,518,036 Shares Issued
            and Outstanding, respectively                                            90,143                 87,036
    Additional Paid-In Capital                                                   46,206,836             46,046,307
    Retained Deficit                                                            (40,817,956)           (36,457,577)
    Unrealized Loss on Securities
        Available-for-Sale - Note 10                                             (5,020,000)            (4,920,000)
    Treasury Stock - 9,357,968 Shares, at Cost                                            -               (267,981)
                                                                              -------------          -------------

            TOTAL STOCKHOLDERS' EQUITY                                              459,023              4,487,785
                                                                              -------------          -------------

            TOTAL LIABILITIES AND
                STOCKHOLDERS' EQUITY                                         $    1,047,609          $   5,288,881
                                                                              =============          =============
</TABLE>












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

                                       F-4

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>


                                                                                 2003                     2002
                                                                             --------------           --------

<S>                                                                          <C>                      <C>
REVENUE - Oil and Gas Sales                                                  $      152,752           $    108,580
                                                                             --------------           ------------

COST OF REVENUE
     Lease Operating                                                                228,448                246,162
     Production Taxes                                                                 7,072                  5,039
     Depreciation, Depletion and Amortization                                        18,313                 11,727
                                                                             --------------           ------------

         TOTAL COST OF REVENUES                                                     253,833                262,928
                                                                             --------------           ------------

            GROSS LOSS                                                             (101,081)              (154,348)
                                                                             --------------           ------------

EXPENSES
     General and Administrative                                                   2,358,379              1,509,110
     Interest Expense                                                                37,347                585,352
                                                                             --------------           ------------

         TOTAL EXPENSES                                                           2,395,726              2,094,462
                                                                             --------------           ------------

           LOSS BEFORE OTHER INCOME
(EXPENSES),INCOME TAXES AND
                 DISCONTINUED OPERATIONS                                         (2,496,807)            (2,248,810)

OTHER INCOME (EXPENSES)
     Other Income                                                                    25,000                      -
     Liability Settlement                                                            11,428                 39,252
     Loss on Disposal of Assets                                                  (1,900,000)                     -
                                                                             --------------           ------------

           LOSS BEFORE INCOME TAXES
                 AND DISCONTINUED OPERATIONS                                     (4,360,379)            (2,209,558)

INCOME TAXES- Note 4                                                                      -                      -
                                                                             --------------           ------------

           NET LOSS FROM CONTINUING
                 OPERATIONS                                                      (4,360,379)            (2,209,558)

DISCONTINUED OPERATIONS - Note 12
     Loss on Disposal of Discontinued Operations                                          -               (121,200)
                                                                             --------------           --------------

           NET LOSS                                                          $   (4,360,379)          $ (2,330,758)
                                                                             ==============           ==============
</TABLE>



                                   (Continued)
                                       F-5

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Continued)

                 FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>

                                                                                 2003                   2002
                                                                              -------------          -------

WEIGHTED AVERAGE NUMBER OF
<S>                                                                           <C>                    <C>
     SHARES OUTSTANDING                                                        46,000,833             21,730,344
                                                                              ===========            ===========

NET (LOSS) INCOME PER SHARE:
     Continuing Operations                                                    $        (.09)         $        (.10)
     Discontinued Operations                                                           (.00)                  (.01)
                                                                              -------------          -------------

         TOTAL LOSS PER SHARE                                                 $        (.09)         $        (.11)
                                                                              =============          =============
</TABLE>






























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

                                       F-6


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                        STATEMENT OF STOCKHOLDERS' EQUITY
                             AND COMPREHENSIVE LOSS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>


                                            Common Stock         Additional                 Unrealized
                                        ------------------
                                     Number of                   Paid-In       Treasury    Loss on       Retained
                                      Shares        Amount       Capital       Shares      Securities     (Deficit)        Total
                                     ---------     ----------    -----------  ---------    -----------    ---------       ---------


BALANCE, SEPTEMBER 30, 2001, as
<S>                                <C>             <C>           <C>          <C>          <C>           <C>            <C>
   Originally Reported                423,036      $    8,461    $33,753,508  $         -  $         -   $(34,126,819)  $  (364,850)


   Change Par Value Of Common
Stock From $.02 to $.002 - Note 1          -           (7,615)         7,615            -            -              -             -
                                      -------        --------     ---------     ---------    ---------    -----------     ---------


BALANCE, SEPTEMBER 30, 2001,
   As Restated                        423,036             846     33,761,123            -            -    (34,126,819)     (364,850)


   Issuance of Options for                  -               -      1,634,950            -            -              -     1,634,950
        Services
   Issuance of Shares for          13,595,000          27,190      1,605,310            -            -              -     1,632,500
        Services
   Issuance of Shares for
    Settlement Of Debt             25,500,000          51,000      1,224,000            -            -              -     1,275,000

   Issuance of Shares for
        Acquisition of              2,000,000           4,000      1,996,000            -            -              -     2,000,000
        Oil & Gas Property
   Investment in Career Worth,Inc.  2,000,000           4,000      5,016,000            -            -              -     5,020,000
   Purchase of 10,000,000
        Treasury Shares                     -               -             -      (286,366)           -              -      (286,366)

   Sale of 642,032 Treasury                 -               -        192,250       18,385            -              -       210,635
        Shares
   Contribution of Employee
        Compensation                        -               -        616,674            -            -              -       616,674

COMPREHENSIVE LOSS, Net of Tax

   Net Loss                                 -               -             -             -            -     (2,330,758)   (2,330,758)

   Unrealized Loss on Securities
    Available-for-Sale                      -               -             -             -   (4,920,000)             -    (4,920,000)

   Total Comprehensive Loss                 -               -             -             -            -              -    (7,250,758)
                                   ----------      ----------      --------     ---------    ---------    -----------    -----------


BALANCE, SEPTEMBER 30, 2002        43,518,036          87,036     46,046,307     (267,981)  (4,920,000)   (36,457,577)    4,487,785


   Sale of Shares                   3,553,366           7,107        168,908            -            -              -       176,015
   Shares Acquired in Disposal
of Oil & Gas Property - Note 11    (2,000,000)         (4,000)       (96,000)           -            -              -      (100,000)

   Sale of 9,357,968 Treasury              -                -         87,621      267,981            -              -       355,602
       Shares

COMPREHENSIVE LOSS, Net of Tax
   Net Loss                                -                -             -             -            -     (4,360,379)   (4,360,379)

   Unrealized Loss on Securities
     Available-for-Sale                    -                -             -             -     (100,000)             -      (100,000)
                                                                                                                         ----------

   Total Comprehensive Loss                -                -             -             -            -              -    (4,460,379)
                                   ----------       ---------      --------    ----------    ---------    -----------    ----------


BALANCE, SEPTEMBER 30, 2003        45,071,402      $   90,143    $46,206,836  $         -  $(5,020,000) $ (40,817,956)  $   459,023
                                   ==========       =========    ===========   ==========   ==========   ============    ===========
</TABLE>







                 The accompanying notes are an integral part of
                    these consolidated financial statements.
                                       F-7

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                             STATEMENT OF CASH FLOWS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>



                                                                                  2003                   2002
                                                                              --------------         -------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                           <C>                    <C>
     Net (Loss)                                                               $  (4,360,379)         $  (2,330,758)
     Adjustments to Reconcile Net (Loss) to Net Cash
         From Operating Activities
             Interest Expense                                                             -                553,474
             Depreciation, Depletion and Amortization                                20,584                 12,103
             Issuance of Shares for Services and
                Liability Settlements                                                     -              1,036,656
             Prepaid Consulting                                                   2,128,044                      -
             Loss on Disposal of Assets                                           1,900,000                      -
     Changes in Operating Assets and Liabilities
             Accounts Payable - Related Parties                                      (8,459)               288,867
             Accounts Payable and Accrued Expenses                                   (9,198)               192,604
             Other Assets                                                             2,612                      -
             Cash Overdraft                                                               -                 (5,426)
                                                                              -------------          -------------

                  NET CASH (USED) IN
                     CONTINUING OPERATIONS                                         (326,796)              (252,480)
                                                                              -------------          -------------

                  NET CASH PROVIDED BY
                     DISCONTINUED OPERATIONS                                              -                 66,143
                                                                              -------------          -------------

                  NET CASH (USED) IN
                     OPERATING ACTIVITIES                                          (326,796)              (186,337)
                                                                              -------------          -------------

CASH FLOW FROM INVESTING ACTIVITIES
             Purchase of Equipment                                                   (5,649)                (3,653)
                                                                              -------------          -------------

                  NET CASH (USED) BY
                     INVESTING ACTIVITIES                                            (5,649)                (3,653)
                                                                              -------------          -------------
</TABLE>







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

                                   (Continued)
                                       F-8

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                             STATEMENT OF CASH FLOWS
                                   (Continued)

                 FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>

                                                                                   2003                   2002
                                                                                -----------            -------

CASH FLOW FROM FINANCING ACTIVITIES
<S>                                                                           <C>                    <C>
             Loan Proceeds - Related Party                                    $      48,500          $           -
             Repayments of Borrowings -Related Parties                             (243,353)                (9,568)
             Proceeds From Sale of Common Stock                                     176,015                      -
             Proceeds from Sale of Treasury Shares                                  355,602                210,635
                                                                              -------------          -------------
                  NET CASH PROVIDED BY
                     FINANCING ACTIVITIES                                           336,764                201,067
                                                                              -------------          -------------

NET INCREASE IN CASH                                                                  4,319                 11,077

CASH AT BEGINNING OF PERIOD                                                          11,077                      -
                                                                              -------------          -------------

CASH AT END OF YEAR                                                           $      15,396          $      11,077
                                                                              =============          =============

SUPPLEMENTAL SCHEDULE OF CASH FLOW
     INFORMATION
             Cash Paid During the Period For:
                Interest                                                      $       8,665          $       5,125
                                                                              =============          =============
                Income Taxes                                                  $           -          $           -
                                                                              =============          =============

SUPPLEMENTAL SCHEDULE OF NONCASH
     INVESTING AND FINANCING ACTIVITIES:
             Purchase of Oil and Gas Properties                               $           -          $  (2,000,000)
             Investment in Securities Available-For-Sale                            100,000               (100,000)
             Reduction in Accounts Payable and
                Accrued Expenses                                                          -               (419,594)
             Issuance of Common Stock                                                     -              9,972,320
             Contribution of Wages to Capital                                             -                414,174
             Unrealized Loss on Securities Available-For-Sale                      (100,000)            (4,920,000)
             Acquisition of Treasury Shares                                               -               (286,366)
             Increase in Related Party Note Payable                                       -                286,366
             Decrease in Accounts Payable - Related Party                                 -               (695,106)
             Decrease in Related Party Note Payable                                       -                (30,000)
             Increase in Prepaid Consulting                                               -             (2,221,794)
             Disposal of Oil and Gas Property                                       100,000                      -
             Shares Acquired in Disposal of Oil and
                Gas Property                                                       (100,000)                     -
             Reduce Par Value of Common Stock                                      (783,324)                     -
             Increase Paid -in - Capital for Change in
                Par Value of Common Stock                                           783,324                      -
                                                                              -------------          -------------

                                                                              $           -          $           -
                                                                              =============          =============
</TABLE>


                 The accompanying notes are an integral part of
                    these consolidated financial statements.
                                       F-9

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Company is engaged primarily in the acquisition, development and exploration
for and sale of oil and gas in the state of Texas.

Basis of Consolidation

The consolidated financial statements include the accounts of Matrix Energy
Services Corporation (formerly Power Exploration, Inc.) and its 100% owned
subsidiaries, Spartan Resources Partners, G.P. ("Spartan"), Power Drilling
Services, Inc., ("PDS", formerly Oil Retrieval Systems, Inc.) and Power
Operating, Inc. ("POI", formerly Oil Seeps, Inc.) Accordingly, all references
herein to the "Company" include the consolidated results of its subsidiaries.
All significant intercompany accounts and transactions have been eliminated in
consolidation. PDS and POI ceased operations during 2002 and were not a part of
the consolidation for the year ended September 30, 2003.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.

Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas
properties. Accordingly, all costs associated with acquisition, exploration, and
development of oil and gas reserves, including directly related overhead costs,
are capitalized.

All capitalized costs of oil and gas properties, including the estimated future
costs to develop proved reserves, are amortized on the units-of-production
method using estimates of proved reserves. Investments in unproved properties
and major development projects are not amortized until proved reserves
associated with the projects can be determined or until impairment occurs. If
the results of an assessment indicate that the properties are impaired, the
amount of the impairment is added to the capitalized costs to be amortized.

In addition, the capitalized costs are subject to a "ceiling test", which
basically limits such costs to the aggregate of the "estimated present value,"
discounted at 10-percent interest rate of future net revenues from proved
reserves, based on current economic and operating conditions, plus the lower of
cost or fair market value of unproved properties.

Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in income.
Abandonments of properties are accounted for as adjustments of capitalized costs
with no loss recognized.

                                   (Continued)
                                      F-10

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Revenue Recognition

Revenues from the sale of oil and gas production are recognized when title
passes, net of royalties.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount 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 reporting date. Actual
results could differ from those estimates.

Depreciation and Amortization

Office equipment is stated at cost and is depreciated using the straight-line
method over their estimated useful lives of five (5) years. Office equipment and
accumulated depreciation for the years ended September 30, 2003 and 2002 are:

                                            2002               2003
                                          ---------          ---------
     Office Equipment Costs               $10,676            $ 5,027
     Accumulated Depreciation              (3,540)            (1,269)
                                          --------           --------

                                          $ 7,136            $ 3,758
                                          =======            =======

The costs of maintenance and repairs are charged to expense when incurred; costs
of renewals and betterments are capitalized. Upon the sales or retirement of
property and equipment, the cost and related accumulated depreciation are
eliminated from the respective accounts and the resulting gain or loss is
included in operations.

Fair Value of Financial Instruments

The Company's financial instruments consist of cash, accounts receivable,
accounts payable and short-term debt. The carrying amounts of cash, accounts
receivable, accounts payable and short-term debt approximate fair value due to
the relatively short maturity of these instruments.

Long - Lived Assets

Long - lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount may
not be recoverable. When required, impairment losses on assets to be held and
used are recognized based on the fair value of the assets, and long - lived
assets to be disposed of are reported at the lower of carrying amount or fair
value less cost to sell.

Financial Statement Presentation

Certain amounts in the 2002 consolidated financial statements have been
reclassified to conform to the 2003 presentation.

                                   (Continued)
                                      F-11

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount of
taxable income and pretax financial income and between the tax bases of assets
and liabilities and their reported amounts in the financial statements. Deferred
tax assets and liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled as prescribed in
FASB Statement No. 109, Accounting for Income Taxes. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.

Concentration of Credit Risk

The Company places its cash in what it believes to be credit-worthy financial
institutions. However, cash balances may exceed FDIC insured levels at various
times during the year.

Stock-Based Compensation

In October 1999, the Company adopted its 1999 Stock Benefit Plan ("Plan") under
which officers, employees, and individuals who management perceives to have
contributed to the success of the Company may be granted shares of common stock
or options to purchase common stock at a price determined by the administrators
of the Plan. The maximum number of shares of the Company's common stock
available for issuance under the Plan was 4,000,000. As of September 30, 2003,
the number of shares available for future grants under the Plan was 1,780,000.
The Company accounts for the issuance of these stocks and options pursuant to
the guidance set forth in Financial Accounting Standards Board Statement No. 123
(Accounting for Stock-Based Compensation) using the fair value method. There
were no shares issued from this Plan for the years ending September 30, 2003 and
2002. As of September 30, 2003, there were no stock options outstanding under
this plan.

In June 2002, the Company adopted its 2002 Stock Benefit Plan ("2002 Plan")
under which officers, employees, and individuals who management perceives to
have contributed to the success of the Company may be granted shares of common
stock or options to purchase common stock at a price determined by the
administrators of the 2002 Plan. The maximum number of shares of the Company's
common stock available for issuance under the Plan was 3,000,000. As of
September 30, 2003, the number of shares available for future grants under the
plan was 254,050. The Company accounts for the issuance of these stocks and
options pursuant to the guidelines set forth in Financial Accounting Standards
Board Statement No. 123 (Accounting for Stock-Based Compensation) using the fair
value method. The Company recorded $2,745,950 in expenses related to the
issuance of shares in the 2002 Plan for the year ended September 30, 2002.

Stock Options

During the year ended September 30, 2002, the Company authorized the granting of
options covering a total of 5,700,000 shares of the Company's common stock to
certain consultants of the Company. These options were valued on their grant
date using the Black-Scholes option-pricing model of $.28683 per share or
$1,634,950. These options were not exercised and expired on June 7, 2003. There
were no outstanding stock options at September 30, 2003.

                                   (Continued)
                                      F-12

<PAGE>



               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       Stock Options (Continued)
       ------------------------

A summary of the Company's outstanding stock option transactions is as follows:
<TABLE>
<CAPTION>

                                                                                 Year Ended September 30,
                                                                  --------------------------------------------------------
                                                                           2003                          2002
                                                                  ---------------------------   --------------------------
                                                                                   Weighted                     Weighted
                                                                                   Average                      Average
                                                                                   Exercise                     Exercise
                                                                      Shares         Price         Shares         Price
                                                                    ----------     -----------    ----------     -------
<S>                                                                  <C>            <C>           <C>           <C>
     Outstanding at Beginning of Year                                 5,700,000     $      -              -     $      -
       Granted                                                                -            -      1,900,000          .50
       Forfeited                                                     (5,700,000)           -              -            -
                                                                     -----------     -------      ---------     --------

     Outstanding at December 16, 2001                                         -            -      1,900,000          .50

     Effect of 3 for 1 Stock Split on
       June 17, 2002                                                          -            -             x3           /3
                                                                     -----------     --------      ---------     --------

     Outstanding at End of Year After Giving
       Effect to 3 for 1 Stock Split                                          -     $      -      5,700,000     $    .16
                                                                     ===========     ========      =========      =======

     Options Exercisable at End of Year                                       -     $      -      5,700,000     $    .16
                                                                     ===========     ========      =========      =======

     Weighted Average Fair Value of Options
       Granted During the Year                                              N/A                   $  .28683
                                                                     ===========                   =========
</TABLE>



The weighted average remaining contractual life of these options was .75 years
in 2002. The exercise price of outstanding options was $.16 as of September 30,
2002.

The fair value of each grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighed average
assumptions used for grants: dividend yield of zero percent (0%); expected
volatility of two hundred and forty four percent (244%); risk free interest
rates of five percent (5.0%) and expected lives nine months.



                                   (Continued)
                                     F - 13

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income

In June 1997, SFAS No. 130, "Reporting Comprehensive Income", was issued. This
statement establishes standards for the reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in the
financial statements. Statement No. 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. It does not require a
specific format for that financial statement but requires that an entity display
an amount representing total comprehensive income for the period in that
financial statement. Statement No. 130 had no impact on the financial condition
or results of operations of the Company, but required changes in the Company's
disclosure and presentation requirements. The principal change was the
disclosure of the components of and total comprehensive income within the
Consolidated Statements of Stockholders' equity.

Net (Loss) Per Share of Common Stock

Per share amounts have been computed based on the weighted average number of
common shares outstanding during the period. Potential common stock has been
excluded from the computation of earnings per share since the inclusion of
options and warrants would be anti-dilutive.

On November 4, 2002, the Company authorized, approved and adopted an amendment
to its Articles of Incorporation to increase the authorized shares of common
stock from 50,000,000 shares to 500,000,000 shares and to change the par value
of its common stock from $.02 to $.002 per common share. The change in par value
has been reflected as a retroactive change in the statement of stockholders'
equity as of September 30, 2001 and all subsequent transactions have been
restated to reflect this change in par value.

On June 17, 2002, the Company's Board of Directors authorized a 3-for-1 stock
split of its $.02 par value common stock effective on that day. Accordingly, all
references to the number of common shares and per share data in the accompanying
financial statements have been adjusted to reflect the stock split on a
retroactive basis.

Stockholders' equity reflects the stock split by reclassifying from "Common
Stock" to "Additional Paid - In Capital" an amount equal to the par value of the
shares split. All fractional shares are being rounded up. The effect on the
weighted average common shares outstanding at September 30, 2002 are as follows:

                                                                  September 30,
                                                                      2002

  Weighted Average Number of Common Shares
     Outstanding Prior to Stock Split                                 7,243,448

  3-For-1 Stock Split                                                14,486,896
                                                                     ----------

  Weighted Average Number of Common Shares
     Outstanding Subsequent to Stock Split                           21,730,344
                                                                     ==========
                                      F-14

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002

NOTE 2:  NOTES PAYABLE

Notes payable at September 30, 2003 and 2002 consist of the following:
<TABLE>
<CAPTION>


                                                                                  2003                   2002
                                                                               -----------            -----------

<S>                                                                            <C>                    <C>
     a) Note Payable - Business Exchange Investments, Inc.                     $  250,000             $  250,000
                                                                                ----------             ---------

     b) Note Payable - Related Party                                               33,445                276,798
     c) Note Payable - Related Party                                               48,500                      -
                                                                                ---------              ---------

                                                                                   81,945                276,798
                                                                                ----------             ---------

                                                                               $  331,945             $  526,798
                                                                                =========              =========
</TABLE>


         a)   The Company is indebted to Business Exchange Investment, Inc.
              under terms of a promissory note dated September 15, 1998. Terms
              of the note provide for interest at a rate of 10% per annum with
              an extended maturity date of September 15, 2004. The note is
              collateralized by 100% of the shares of POI.

         b)   The Company is indebted to MOROIL, Inc. under the terms of a
              promissory note dated July 16, 2002, in the amount of $33,445.
              Terms of the note provide for an interest rate of 5% per annum,
              with an extended maturity date of September 1, 2004.

         c)   The Company is indebted to Peric Consulting, LLC, which is managed
              by the Chief Financial Officer, under the terms of a promissory
              note dated March 15, 2003, in the amount of $48,500. Terms of the
              note provided for an interest rate of 6% per annum with a maturity
              date of March 15, 2004.

NOTE 3:  WARRANTS

As of September 30, 2002 there were 1,750 outstanding warrants to purchase 1,750
shares of the Company's common stock at prices ranging from $1.00 to $2.50. No
warrants were exercised during the year ended September 30, 2003 and as of that
date, all warrants had expired.








                                   (Continued)
                                      F-15

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002
<TABLE>
<CAPTION>

NOTE 4:  INCOME TAXES

The components of the provision for income taxes is as follows:

                                                                                        September 30,
                                                                                 ------------------------
                                                                                    2003                  2002
                                                                                 ----------             ------
     Current Tax Expense
<S>                                                                              <C>                    <C>
         U.S. Federal                                                            $       -              $       -
         State and Local                                                                 -                      -
                                                                                 ---------              ---------

             Total Current                                                       $       -              $       -
                                                                                 ---------              ---------

     Deferred Tax Expense
         U.S. Federal                                                            $       -              $       -
         State and Local                                                                 -                      -
                                                                                 ---------              ---------

             Total Deferred                                                      $       -              $       -
                                                                                 ---------              ---------

             Total Tax Provision from
                Continuing Operations                                            $       -              $       -
                                                                                 =========              =========
</TABLE>


The reconciliation of the effective income tax rate to the Federal statutory
rate is as follows:
<TABLE>
<CAPTION>


                                                                                    2001                   2000
                                                                                 ----------             -------

<S>                                                                                 <C>                    <C>
     Federal Income Tax Rate                                                        (34.0)%                (34.0)%
     Deferred Tax Charge (Credit)                                                       -                      -
     Effect of Valuation Allowance                                                   34.0 %                 34.0 %
     State Income Tax, Net of Federal Benefit                                           -                      -
                                                                                 ----------             ----------

     Effective Income Tax Rate                                                        0.0 %                  0.0 %
                                                                                 ==========             ==========
</TABLE>












                                      F-16

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002

NOTE 4:  INCOME TAXES (Continued)

At September 30, 2003, the Company had net carryforward losses of approximately
$31,739,000. A valuation allowance equal to the tax benefit for deferred taxes
has been established due to the uncertainty of realizing the benefit of the tax
carryforward.

Deferred tax assets and liabilities reflect the net tax effect of temporary
differences between the carrying amount of assets and liabilities for financial
reporting purposes and amounts used for income tax purposes. Significant
components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>


                                                                                    September 30,
                                                                              ------------------------------------
                                                                                 2003                   2002
                                                                              -------------          -------------
     Deferred Tax Assets:
<S>                                                                           <C>                    <C>
         Loss Carryforwards                                                   $  10,791,000          $   8,790,000
         Exploration Costs                                                          (23,000)               (23,000)
         Depreciation                                                               (29,000)               (29,000)
         Impairment Loss                                                          2,671,000              2,671,000
                                                                               -------------          -------------

                Net Tax Assets                                                   13,410,000             11,409,000
             Less: Valuation Allowance                                          (13,410,000)           (11,409,000)
                                                                               ------------           ------------

                Net Deferred Tax Assets                                       $           -          $           -
                                                                              =============          =============
</TABLE>


Net tax operating loss carryforwards expire in 2004 through 2023 as follows:


                         September 30,
                             2004                              $     18,000
                             2005                                     5,000
                             2007                                    65,000
                             2009                                    16,000
                             2010                                     3,000
                             2011                                    28,000
                             2012                                   303,000
                             2018                                 2,329,000
                             2019                                 3,901,000
                             2020                                17,612,000
                             2021                                   772,000
                             2022                                 2,330,000
                             2023                                 4,357,000
                                                                 ------------

                                                               $ 31,739,000


                                      F-17

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002

NOTE 5:  RELATED PARTY TRANSACTIONS

During the year ended September 30, 2003:

       a)     Rife Oil Properties, Inc. (Rife), a company owned by a Director is
              the operator of all oil and gas leases owned by the Company. For
              the year ended September 30, 2003, Rife charged the Company
              $228,448 for operating the Company's oil and gas wells.

       b)     The Company renewed its note payable to MOROIL, Inc., a company
              owned by a Director. The original loan in the amount of $286,366
              was used to purchase 10,000,000 treasury shares. At September 30,
              2003 the balance of the note was $33,445 including accrued
              interest of $779. Interest expense on this note was $4,947 for the
              year ended September 30, 2003.

       c)     A limited liability company managed by the Company's Chief
              Financial Officer loaned Spartan $48,500 at 6% interest due March
              15, 2004. Interest expense on this note was $4,165 for the year
              ended September 30, 2003.

       d)     The Company leases its office space from M.O. Rife, III Trust A, a
              Company owned by a Director. Rental expense for the year ended
              September 30, 2003 was $36,000.

       e)     The following amounts were either due to various related parties
              at September 30, 2003:

                                                                   Net
                                                                   Accounts
                                                                   Payable
                                                                   -------------
                Rife Oil Properties, Inc.                          $    20,307
                M.O. Rife, III Trust A                                  24,000
                MOROIL, Inc.                                            46,000
                Matrix Drilling                                          6,325
                                                                   -----------

                                                                   $    96,632

During the year ended September 30, 2002:

       a)     The Company issued 1,250,000 shares of its common stock to a
              consulting firm of a former Chief Financial Officer for consulting
              services. The value of the shares was $62,500.

       b)     The Company issued 25,500,000 shares of its common stock to
              MOROIL, Inc., a company owned by a director, in settlement of
              various notes and accounts payable aggregating $730,526, including
              $5,420 of interest expense. These shares were valued at $1,275,000
              on the date of issuance. The difference between the value of the
              stock and the liability was recorded as a charge to interest in
              the amount of $544,474.

       c)     The Company, through issuance of a note payable in the amount of
              $286,366, purchased 10,000,000 shares of its common stock from
              MOROIL, Inc., a company owned by a Director. Interest expense on
              this note was in $2,932 for the year ended September 30, 2002. The
              balance of the note was $276,798 at September 30, 2002.

                                      F-18


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 5:  RELATED PARTY TRANSACTIONS (Continued)


       d)     Rife Oil Properties, Inc., a company owned by a Director, is the
              operator of all oil and gas leases owned by the Company. For the
              year ended September 30, 2002, Rife charged the Company $246,162
              for operating the Company's oil and gas wells.

       e)     The Company leases its office space from M.O. Rife, III Trust A, a
              company owned by a Director. Rental expense for the year ended
              September 30, 2002 was $37,300.

       f)     The following amounts were either due to or due from various
              related parties at September 30, 2002:

                                                                    Accounts
                                                                    Payable

                Rife Oil Properties                                 $    71,974
                M.O. Rife III Trust A                                    15,364
                Nepal Consulting, Inc.                                   11,428
                Matrix Drilling                                           6,325
                                                                   -------------

                                                                    $   105,191


NOTE 6:  CONSULTING AGREEMENTS

During the year ended September 30, 2002, the Company issued 13,550,000 shares
of its common stock valued at $1,623,500 and 5,700,000 options to purchase the
Company's common stock valued at $1,634,950 in payment of various consulting
services. The shares of common stock were valued at the quoted market price on
the day the issuance of stock was authorized. The options were valued using the
Black-Scholes option-pricing model on the grant date. Included in the $3,258,450
of consulting fees was $2,221,794 recorded as prepaid consulting fees for future
services through March 1, 2004. These prepaid consulting fees have been
amortized and charged to expense during the years ended September 30, 2003 and
2002, in the amounts of $2,128,044 and $842,906, respectively, leaving a prepaid
consulting balance of $93,750 at September 30, 2003.







                                      F-19

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 7:  COMMITMENTS AND CONTINGENCIES

For the years ended September 30, 2003 and 2002, the Company expensed $2,297 and
$15,964 in equipment rental fees, respectively. As of September 30, 2003, the
Company had no future commitments on non-cancelable operating leases.

The Company has pledged 100% of the shares of Power Operating, Inc. (formerly,
Oil Seeps, Inc.), a wholly owned subsidiary, as collateral for a $250,000
promissory note due on September 15, 2004.

The Company carries no general liability insurance.


NOTE 8:  SUPPLEMENTAL DISCLOSURE OF COMMON STOCK ACTIVITIES

During the year ended September 30, 2003, the Company's common stock
transactions included:
<TABLE>
<CAPTION>


                                                                                   Number of
                            Reason For Issuance                                      Shares                  Fair Value
                ----------------------------------                              ---------------            -----------------
<S>                                                                               <C>                      <C>
                Sale of Common Stock                                                  3,553,366            $     176,015
                Sale of Treasury Shares                                               9,357,968                   87,622
                Shares Acquired in Disposal of an
                   Oil & Gas Property                                                (2,000,000)                (100,000)
                                                                                  -------------             -------------

                                                                                     10,911,334            $    (163,637)
                                                                                  =============             =============
</TABLE>



During the year ended September 30, 2002, the Company issued the following
shares of its common stock:
<TABLE>
<CAPTION>


                                                                                   Number of
                            Reason For Issuance                                      Shares                    Value
                ---------------------------------------------                     --------------           --------------

<S>                                                                                  <C>                   <C>
                Acquisition of Oil and Gas Properties                                 2,000,000            $    2,000,000
                Investment in Career Worth, Inc.                                      2,000,000                 5,020,000
                Compensation for Consulting Services and Fees                        13,595,000                 1,632,500
                Settlement of Related Party Debts                                    25,500,000                 1,275,000
                Sale of Treasury Shares                                                 642,032                   210,635
                                                                                     ----------              ------------

                                                                                     43,737,032            $   10,138,135
                                                                                     ==========            ==============
</TABLE>


The fair value of the shares issued was determined by using the reported trading
value on the date of issue.


                                      F-20

<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 9:  GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
the company will continue as a going concern. As of September 30, 2003, the
Company has a working capital deficit, net of prepaid charges, of $573,190 and
an accumulated deficit of $40,817,956. Based upon the Company's plan of
operation, the Company estimates that existing resources, together with funds
generated from operations will not be sufficient to fund the Company's working
capital deficit or any type of drilling program. The Company is actively seeking
additional equity financing. There can be no assurances that sufficient
financing will be available on terms acceptable to the Company or at all. If the
Company is unable to obtain such financing, the Company will be forced to scale
back operations, which would have an adverse effect on the Company's financial
condition and results of operation.


NOTE 10: INVESTMENT IN MARKETABLE SECURITIES

At September 30, 2003, marketable securities were comprised of 2,000,000 shares
of U.S. Home Properties, Inc.'s (formerly Career Worth, Inc.) equity securities
classified as available-for-sale. Marketable securities considered
available-for-sale are recorded in the financial statements at fair market
value, in accordance with SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities. The corresponding unrealized gain or loss in the
fair market value in relation to cost is accounted for as a separate item in the
stockholders' equity section of the balance sheet.

Following are the market value, original cost, and unrealized loss on marketable
securities available for sale as of September 30, 2003.
<TABLE>
<CAPTION>

                                              Market                              Unrealized
                                               Value                Cost            (Loss)
                                         -----------------         ----------      ---------

 U.S. Home Properties, Inc.
<S>                                        <C>                   <C>               <C>
   (formerly Career Worth, Inc.)           $           -         $ 5,020,000       $(5,020,000)
                                           =============         ===========       ===========
</TABLE>














                                      F-21


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


NOTE 11:  SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)

The following supplemental unaudited information regarding the Company's oil and
gas activities is presented pursuant to the disclosure requirements of Statement
of Financial Accounting Standards No. 69. The proved oil and gas properties have
been reduced to their estimated realizable value of the leases if a sale was
made to an unrelated third party in an arms length transaction; therefore, no
reserve information is being reported.
<TABLE>
<CAPTION>

                                                                                        September 30,
                                                                               ------------------------------------
                                                                                  2003                   2002
                                                                               ------------           -------------
     Capitalized Costs Relating to Oil and Gas
       Producing Activities at September 30:
<S>                                                                            <C>                    <C>
         Proved Oil and Gas Properties                                         $  1,000,000           $  1,000,000
         Unproved Oil and Gas Properties                                                  -              2,000,000
         Less: Accumulated Amortization and Impairment                              (72,098)               (53,785)
                                                                               ------------           ------------

             Net Capitalized Costs                                             $    927,902           $  2,946,215
                                                                               ============           ============

     Costs Incurred in Oil and Gas Producing Activities for
       the Year Ended September 30,
         Property Acquisition Costs:
             Proved                                                            $          -           $          -
                                                                               ------------           ------------

     Results of Operations for Oil and Gas Producing
Activities for the Years Ended September 30,
         Oil and Gas Sales                                                     $    152,752           $    108,580
         Production (Lifting) Costs and Production Taxes                           (235,520)              (251,201)
         Amortization Expenses                                                      (18,313)               (11,727)
                                                                               ------------           ------------

                  Net Loss                                                         (101,081)              (154,348)

     Income Taxes                                                                         -                      -
                                                                               ------------           ------------

     Results of Operations for Oil and Gas Producing
       Activities (excluding corporate overhead and
       financing costs)                                                        $   (101,081)          $   (154,348)
                                                                               ============           ============
</TABLE>


Due to the Company's failure to develop the BLM lease acreage acquired in 2002,
J. Rags Properties, LLC, ("Rags") the previous owner of the lease acreage,
requested that the Company return the lease acreage to Rags' ownership in
exchange for cancellation of the 2,000,000 shares of the Company's stock issued
in 2002. The difference in the fair value of the 2,000,000 shares of common
stock at the acquisition and disposal dates was $1,900,000 and this amount has
been recognized as a loss on disposal of assets at September 30, 2003. The
Company could not develop the lease acreage because of its inability to secure
adequate financing, due in part to problems encountered in securing a natural
gas pipeline connection.

                                   (Continued)
                                      F-22


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002

NOTE 11:  SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)
(CONTINUED)

The following summarizes reserve information and related standardized measure of
discontinued future net cash flows for the year ended September 30, 2001, the
last time the Company had a report prepared by an independent professional:

          Proved Developed and Undeveloped Reserves      16,381,700   bbls

          Proved Developed Reserves                         320,100   bbls

          Undiscounted Future Development Costs        $ 36,000,000
                                                       ============

          Standardized Measure of Discontinued
            Future Net Cash Flows Relating to
            Proved Oil and Gas Revenues                $ 38,243,165
                                                       ============


The Company's total investment in its oil and gas leases was $8,856,890 at the
time the report was prepared. The oil and gas leases were being held by
production; however, the lease operating expenses were exceeding the oil and gas
revenue and have exceeded revenue in all years since 2001.

As of September 30, 2001, the Company's management determined that its
investment in oil and gas leases was impaired due to its inability to earn a
profit on the operations of the leases and to raise the estimated $36,000,000
required to fully develop the leases. As a result, pursuant to FASB Statement
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", as of
September 30 ,2001, the Company recognized a loss on impairment of long-lived
assets of $7,856,890. The loss recognized was determined by the Company's
management based on an estimation of the value of the leases if a sale was made
to an unrelated third party in an arms length transaction.

To further reduce that value of the leases, the Company's management has
continued to recognize deprecation, depletion and amortization based on the
yearly oil production as compared to estimate proved developed reserves as of
September 30, 2001. Management believes that the reduction in value of the
leases is appropriate in light of the reduction in proved developed reserves.
The depreciation, depletion and amortization recognized as expense was $18,313
and $11,727 for the years ended September 30, 2003 and 2002, respectively.









                                      F-23


<PAGE>


               MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARIES

               (FORMERLY POWER EXPLORATION, INC. AND SUBSIDIARIES)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002

NOTE 12:  DISCONTINUED OPERATIONS

In 2000, the Company's management determined that the operations of Power
Drilling Services, Inc. (formerly Oil Retrieval Systems, Inc.) were no longer
viable; therefore, the manufacturer of oil and gas construction equipment
ceased. The Company disposed of all of the net assets of PDS during the year
ended September 30, 2002. The net assets of the discontinued operations were as
follows:

                                                                 2002

        Net Current Assets                                       $       -
        Net Property and Equipment                                       -
        Other Assets                                                     -
        Net Liabilities                                                  -
                                                                 ---------

        Net Asset of Discontinued Operations                     $       -
                                                                 =========


The results of discontinued operations for the years ended September 30, 2002,
were as follows:

                                                                 2002

         Pre Tax Income                                          $       -
         Provisions for Income Tax                                       -
                                                                 ---------

         Income from Operations of Discontinued
             Operations - Net of Tax                                     -
         (Income) Loss on Disposal of Discontinued
             Operations - Net of Tax                               121,200
                                                                 ---------

         Total Discontinued Operations                           $ 121,200
                                                                 =========













                                      F-24

<PAGE>



                       CONSENT OF INDEPENDENT ACCOUNTANTS




We hereby consent to the incorporation of our report dated December 12, 2003,
which is incorporated in this Annual Report on Form 10-K.



/s/ Killman, Murrell & Co., P.C.
--------------------------------
Killman, Murrell & Co., P.C.

January 13, 2004

































<PAGE>


                                    PART III

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

The Issuer has a 3-person board of directors, all of which positions are
currently filled. The Directors and Executive Officers of the Issuer, their ages
and present positions held with the Issuer are:

NAME                               AGE    POSITION HELD

M. O. Trey Rife III                63     Chairman of the Board & Director
Joe Bill Bennett                   56     Chief Executive Officer & Director
Mark S. Zouvas                     41     Chief Financial Officer & Director

The Issuer's Directors were elected October 5, 1999 and will serve in such
capacity until the next annual meeting of the Issuer's shareholders or until
their successors have been elected and qualified. There are no familial
relationships among the Issuer's officers and directors, nor are there any
arrangements or understandings between any of the officers or directors of the
Issuer or any other person pursuant to which any officer or director was or is
to be selected as an officer or director.

M.O. Rife III, Chairman/Director. Mr. Rife was born in Fort Worth, Texas in
1939. He is 63 years old. He was elected to the Company's Board of Directors in
May of 1997. Mr. Rife will serve as a Director until the next regularly held
shareholder's meeting, or until his successor is elected and qualified. He
currently serves as the Chairman of the Board. His family has been in the oil
industry for three generations. His grandfather retired from Gulf Oil as a
production superintendent and his father was an independent oil and gas operator
for over forty years. Mr. Rife attended Texas Christian University and began
working in the oil field when he was eighteen. He worked with his father for 15
years, then started his own company, Rife Oil Properties, Inc. For the past
twenty-five years, he has served as President and Chief Executive Officer of
Rife Oil Properties, Inc. He has been involved in the drilling, completion and
operating of over 500 wells throughout the mid-continent Region. Currently Rife
Oil Properties, Inc. operates over 800 wells in Texas.

Joe Bennett, Director, Chief Executive Officer. Mr. Bennett was born in Graham,
Texas in 1946. He is 56 years old. He was elected to the Company's Board of
Directors in May of 1997. Mr. Bennett will serve as a Director until the next
regularly scheduled shareholder's meeting, or until his successor is elected and
qualified. He currently serves as Chief Executive Officer of the Company after
stepping down as CEO for a short period from March 1, 2002 to September 20,
2002. He has worked for the Company since September of 1994. Prior to being
appointed Chief Executive Officer in September 1999, he served as a
Vice-President of the Company. His family has been involved in the oil industry
as independent oil and gas operators in North Texas for three generations. Mr.
Bennett attended the University of Texas at Austin studying petroleum
engineering. At the age of sixteen he began working summers in the oil field for
the family business. He has over 30 years of experience in developing
exploration projects, drilling and completing wells, and all phases of
operations. From 1976 to 1980 Mr. Bennett helped organize and start up an
aircraft overhaul business that employed over 100 people. As C.O.O., he was
responsible for all operations and marketing. In 1981 Mr. Bennett became
President and CEO of Bennett Resources, Inc. As head of the family business, he
directed the development of exploration projects in Texas, Oklahoma, Kansas,
Illinois, Kentucky and Tennessee. In 1994 Mr. Bennett joined Rife Oil
Properties, Inc. as VP Operations. His primary responsibilities were to oversee
the company's stripper well acquisition program and to manage all operations of
these properties using new production technology.

Mark S. Zouvas, Chief Financial Officer, Director. Mr. Zouvas was re-elected to
the Company's Board of Directors on May 29, 2003. He currently serves as Chief

<PAGE>

Financial Officer of the Company. Mr. Zouvas has previously held these positions
with the Company, and in order to facilitate further financing efforts, the
Board feels it requires his services. He will serve as a Director until the next
regularly scheduled shareholder's meeting, or until his successor is elected and
qualified. Mr. Zouvas has a BA from the University of California at Berkeley. As
a staff auditor with Price Waterhouse, he performed services for clients in the
banking and real estate industries. Mr. Zouvas has been involved in various
venture capital transactions over the past fifteen years. Mr. Zouvas' primary
responsibilities include fund raising, investor relations and corporate
compliance. He brings an increased experience level to the corporate finance
capability of the Company. His financial, accounting and banking experience are
well founded and are a necessity in today's ever-changing markets both
domestically and worldwide. Mr. Zouvas has had over fifteen years of experience
in creating investment summaries and has raised over $50 million through debt
and equity offerings. He has participated in various company presentations to
the investment community, both domestically and abroad.

Compliance with Section 16(a) of the Exchange Act

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, the
Company is not aware of any person who at any time during the fiscal year ended
September 30, 2003 was a director, officer, or beneficial owner of more than ten
percent of the Common Stock of the Company, and who failed to file, on a timely
basis, reports required by Section 16(a) of the Securities Exchange Act of 1934
during such fiscal year.

ITEM 10. EXECUTIVE COMPENSATION

Joe Bill Bennett has served as Chief Executive Officer since 1999. He received
no compensation during the fiscal year ended September 30, 2002. In the fiscal
year ended September 30, 2003, he received $52,200 in compensation, paid in the
form of salary, per diem and car allowance.

Mark S. Zouvas has served as Chief Financial Officer since his re-appointment in
May of 2003 and has received no compensation for his services during the period
ending September 30, 2003.

Compensation of Directors

M. O. Rife III, Chairman of the Board/Director since 1999 was not compensated
for his services during the fiscal year ending September 30, 2002. For the year
ended September 30, 2003, he was paid $2,250 as compensation for his services on
the board of directors.

Joe Bill Bennett, CEO/Director since 1999, received no additional compensation
for his services as a director for the years ending September 30, 2003 and 2002.

Mark S. Zouvas, CFO/Director since his re-appointment in May of 2003, received
no compensation for his services as a director for the year ended September 30,
2003.



<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the ownership of
the Company's Common Stock as of January 9, 2004, with respect to: (i) each
person known to the Company to be the beneficial owner of more than five percent
of the Company's Common Stock; (ii) all directors; and (iii) directors and
executive officers of the Company as a group. The notes accompanying the
information in the table below are necessary for a complete understanding of the
figures provided below. As of January 9, 2004, there were 45,071,402 shares of
Common Stock issued and outstanding.
<TABLE>
<CAPTION>

                                                                   Amount and Nature of
      Title of Class         Name and Address of Beneficial        Beneficial Ownership         Percent of class
      --------------         -------------------------------       --------------------         ----------------
                                          Owner
                                          -----

<S> <C>                     <C>                                         <C>                          <C>
       Common Stock                 Joe Bill Bennett                       2,664                     0.006%
    ($0.002) par value                5416 Birchman
                                  Fort Worth, TX 76107

       Common Stock                  M. O. Rife, III                       1,860                     0.004%
    ($0.002) par value                5601 El Campo
                                 Fort Worth, Texas 76107

       Common Stock                  Mark S. Zouvas                         456                      0.001%
    ($0.002) par value             5416 Birchman Ave.
                                  Fort Worth, TX 76107

       Common Stock         Directors and Executive Officers               4,980                      0.01%
    ($0.002) par value         as a Group (3 individuals)

       Common Stock                   MOROIL, Inc.                      15,740,000                    34.9%
    ($0.002) par value             5416 Birchman Ave.
                                  Fort Worth, TX 76107


       Common Stock                    Cede & Co.                        6,480,584                    14.4%
    ($.002) par value                  PO Box 222
                                  Bowling Green Station
                                   New York, NY 10274


       Common Stock                   Howard Pence                       4,209,000                     9.3%
    ($.002) par value               4612 Rockland Dr.
                                   Arlington, TX 76016


       Common Stock              Benchmark Equity Group                  3,113,073                    6.9%
    ($0.002) par value                 700 Gemini
                                  Houston, Texas 70058
</TABLE>





<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended September 30, 2003:

(a)   Rife Oil Properties, Inc. ("Rife") is owned by the M. O. Rife III Trust A,
      which is controlled by M.O. Rife III, a Director of the Company. Rife is
      the operator of all oil and gas leases owned by the Company. For the year
      ended September 30, 2003, Rife charged the Company $228,448 for operating
      the Company's oil and gas wells.

(b)   The Company, through issuance of a note payable in the amount of $286,366,
      purchased 10,000,000 shares of its treasury stock from MOROIL, Inc., a
      company owned by M.O. Rife III during the fiscal year ended September 30,
      2002. The note was paid down during the fiscal year ended September 30,
      2003 and was renewed September 1, 2003 in the amount of $33,445.

(c)   The Company borrowed $48,500 from Peric Consulting, LLC, a company managed
      by Mark Zouvas, Chief Financial Officer and director of the Company, at an
      interest rate of 6% with a maturity date of March 15, 2004.

None of the other directors, executive officers or senior officers of the Issuer
or any subsidiary, or any associates or affiliates of any of them, is or has
been, indebted to the Issuer at any time since the beginning of the last
completed financial year of the Issuer.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits. Exhibits required to be attached by Item 601 of Regulation S-B
      are listed in the Index to Exhibits beginning on page 26 of this Form
      10-KSB, which is incorporated herein by reference.

(b)   Reports on Form 8-K. The Company filed 1 report on Form 8-K during the
      third quarter of the fiscal year ending September 30, 2003.



<PAGE>


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 13th day of January 2004.


                       Matrix Energy Services Corporation

                       Joe Bennett, President and Chief Executive Officer
                       ------------------------------------------------------



In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


Signature               Title                                  Date

/s/Joe Bill Bennett
---------------------
Joe Bill Bennett        Chief Executive Officer/Director       January 13, 2004


/s/Mark Zouvas
---------------------
Mark Zouvas             Chief Financial Officer/Director       January 13, 2004




<PAGE>


                                INDEX TO EXHIBITS

-------------- -------- -------------------------------------------------------
Exhibit No.    Page     Description
               No.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
2.1            *        Plan of Reorganization  and Change of Situs by which
                        Titan Energy Corp., and Power Exploration, Inc. Changes
                        Its Place of Incorporation
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
2.2            *        Agreement and Plan of Merger Between Power  Exploration,
                        Inc. (Nevada) and Power  Exploration, Inc. (Colorado)
                        . August 1, 1998
-------------- -------- -------------------------------------------------------
2.3            *        Articles of  Incorporator.  Election of  Officers  and
                        Directors  of Power  Exploration,  Inc. (Nevada)
                        . May 31, 1998
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
2.4            *        Action  by  Incorporator.  Election  of  Officers  and
                        Directors  of Power  Exploration,  Inc.(Nevada)
                        . May 1998
-------------- -------- -------------------------------------------------------
-------------------------------------------------------------------------------
2.5            *        Special  Action by the Executive  Committee of Power
                        Exploration,  Inc. dated January 11, 1999
                        (Incorporated herein by reference from Exhibits to the
                        Company's Form 8-K field January 19, 1999).
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.1            *        Articles of Incorporation of Imperial Energy dated
                        October 31, 1979.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.2            *        Amendment to Articles of Incorporation dated June 26,
                        1984.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.3            *        Amendment to Articles of Incorporation dated September
                        25, 1996.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.4            *        Minutes of Special Shareholders Meeting Changing Name
                        to Oil Retrieval Systems,  Inc. dated May 14, 1997
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.5            *        Amendment to Articles of  Incorporation  dated June 15,
                        1997,  Changing  Name to Oil  Retrieval Systems, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.6            *        By Laws of the Corporation
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.7            *        Articles of Incorporation of Power Exploration, Inc.
                        (Nevada) dated May 14, 1998
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.8            *        By Laws of Power Exploration, Inc. (Nevada dated June 1,
                        1998
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.1           *        Acquisition  Agreement  dated  December 8, 1999 between
                        Power  Exploration,  Inc. and Rife Oil Properties,  Inc.
                        (Incorporated  herein by reference  from Exhibits to the
                        Company's  Form 8-K filed December 13, 1999).
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.2           *        Agreement to Extend Repayment  Obligation Between Power
                        Exploration,  Inc. and Trident III LLC dated May 1,
                        1999.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.3           *        Advisory  Agreement  entered into between  Power
                        Exploration,  Inc. and Ronald  Welborn  dated October
                        21, 1999.
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
10.4           **       Compromise  Settlement  Agreement  and Mutual  Release
                        dated  December 20, 1999 between  Power Exploration,
                        Inc. and Benchmark Equity Group,  Inc., Rife Oil
                        Properties,  Inc. and Jeffery W. Tomz.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.5           **       Compromise  Settlement  Agreement  and Mutual  Release
                        dated  December 20, 1999 between  Power Exploration,
                        Inc. and Trident III, LLC.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.6           **       Compromise  Settlement  Agreement  and Mutual  Release
                        dated  December 20, 1999 between  Power Exploration,
                        Inc. and Benchmark Equity Group, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.7           **       Purchase  Agreement  dated  December 20, 1999 between
                        Power  Exploration,  Inc. and  Benchmark Equity Group,
                        Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.8           **       Purchase  Agreement  dated December 20, 1999 between
                        Power  Exploration,  Inc. and Trident III, LLC.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.9           *        Fee  Agreement for Legal  Services  between Power
                        Exploration,  Inc. and Richard  Surber dated
                        March 24, 2000.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.10          *        Contract for Financial Public Relations Services between
                        Power Exploration, Inc. and Interwest Associates dated
                        September 15, 2000.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.11          *        Advisory  Agreement  dated  September  21, 2000 between
                        Power  Exploration,  Inc and Howard A. Pence.

-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.12          *        Agreement  between Power  Exploration,  Inc. and Genesis
                        Capital Corp.  dated February 9, 2000, for the
                        acquisition of Lincoln Health Fund, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
<PAGE>

10.13          *        Agreement for Sale of Property  owned by Lincoln Health
                        Fund, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.14          *        Advisory  Agreement  entered into between  Power
                        Exploration,  Inc. and Ronald  Welborn  dated
                        December 8, 1999.
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
10.15          *        Advisory  Agreement  entered into between  Power
                        Exploration, Inc. and Allen Z. Wolfson dated
                        December 8, 1999.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.16          *        Merger and Acquisition Agreement dated March 20, 2000
                        (Pepin Oil Company, Inc. Acquisition.
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
21.1           *        Subsidiaries of the Issuer
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
23             *        Consent of Auditor
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
27             *        Financial Data Schedule ACE
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
99.1           *        Oil Lease Information Per Industry Guide for Corsicana
                        Field Near Dallas, Texas
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
99.2           *        Oil Lease Information Per Industry Guide for Polk
                        County, Texas Leases
-------------- -------- -------------------------------------------------------

*  Previously filed and incorporated herein by reference from the Form 10-KSB
   field January 14, 2000 by the Company.

** Previously filed and incorporated herein by reference from the Form 10-QSB
   field February 22, 2000 by the Company.



<PAGE>