<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-Q

(Mark One)

[X]   Quarterly report pursuant to Section 13 or 15 (d) of the Securities
      Exchange Act of 1934

                For the quarterly period ended March 31, 2004 or

[ ]   Transition report pursuant to Section 13 or 15 (d) of the Securities
      Exchange Act of 1934

      For the transition period from ________________ to

                          Commission File Number 1-7908

                         ADAMS RESOURCES & ENERGY, INC.
                         ------------------------------
             (Exact name of Registrant as specified in its charter)

           Delaware                                              74-1753147
---------------------------------                           ------------------
 (State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                             Identification No.)


               4400 Post Oak Pkwy Ste 2700 , Houston, Texas 77027
               ---------------------------------------------------
               (Address of principal executive office & Zip Code)

        Registrant's telephone number, including area code (713) 881-3600

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X]  NO [ ]

      Indicate by check mark whether the registrant is an accelerated filer as
defined in Rule 12b-2 of the Act. YES [ ]  NO  [X]

      A total of 4,217,596 shares of Common Stock were outstanding at May 13,
2004.

<PAGE>

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                    March 31,
                                                            ------------------------
                                                              2004            2003
                                                            ---------      ---------
<S>                                                         <C>            <C>
REVENUES:
     Marketing ........................................     $ 448,698      $ 462,556
     Transportation ...................................        10,066          9,010
     Oil and gas ......................................         2,551          1,724
                                                            ---------      ---------
                                                              461,315        473,290
                                                            ---------      ---------
COSTS AND EXPENSES:
     Marketing ........................................       445,777        458,138
     Transportation ...................................         9,104          8,011
     Oil and gas ......................................         1,570            512
     General and administrative .......................         1,603          1,441
     Depreciation, depletion and amortization .........         1,418          1,292
                                                            ---------      ---------
                                                              459,472        469,394
                                                            ---------      ---------

Operating earnings ....................................         1,843          3,896
Other income (expense):
     Interest income ..................................            16            155
     Interest expense .................................           (40)           (33)
                                                            ---------      ---------
Earnings from continuing operations before income taxes
   and cumulative effect of accounting change .........         1,819          4,018

Income tax provision ..................................           628          1,525
                                                            ---------      ---------

Earnings from continuing operations ...................         1,191          2,493
Loss from discontinued operations, net of tax benefit
     of $130 and $1,258, respectively .................          (253)        (2,053)
                                                            ---------      ---------
Earnings before cumulative effect of
     accounting change ................................           938            440
Cumulative effect of accounting change,
     net of tax of $57 ................................             -            (92)
                                                            ---------      ---------

Net earnings ..........................................     $     938      $     348
                                                            =========      =========

EARNINGS (LOSS) PER SHARE:
  From continuing operations ..........................     $     .28      $     .59
  From discontinued operations ........................          (.06)          (.49)
  Cumulative effect of accounting change ..............             -           (.02)
                                                            ---------      ---------
  Basic and diluted net earnings per common share .....     $     .22      $     .08
                                                            =========      =========

Dividends per common share ............................      $      -     $        -
                                                            =========      =========
</TABLE>

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

                                      -2-
<PAGE>

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               March 31,     December 31,
                                                                 2004           2003
                                                              ----------     ------------
<S>                                                            <C>            <C>
ASSETS

Current assets:
  Cash and cash equivalents ..............................     $  29,163      $  28,342
  Accounts receivable, net of allowance for doubtful
     accounts of $1,832 and $1,935, respectively .........       138,283        135,306
  Inventories ............................................         9,247          6,874
  Risk management receivables ............................         5,102          3,809
  Income tax receivable ..................................           974          1,310
  Prepayments ............................................         6,050          4,870
  Current assets of discontinued operation ...............             -          5,140
                                                               ---------      ---------
                      Total current assets ...............       188,819        185,651
                                                               ---------      ---------

Property and equipment ...................................        82,741         80,749

Less - accumulated depreciation,
       depletion and amortization ........................       (57,724)       (56,342)
                                                               ---------      ---------
                                                                  25,017         24,407
                                                               ---------      ---------

Other assets .............................................           184            203
                                                               ---------      ---------
                                                               $ 214,020      $ 210,261
                                                               =========      =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable .......................................     $ 148,071      $ 145,047
  Risk management payables ...............................         4,247          3,117
  Accrued and other liabilities ..........................         3,154          3,364
  Current liabilities of discontinued operation ..........             -          1,137
                                                               ---------      ---------
                      Total current liabilities...........       155,472        152,665

Long-term debt ...........................................        11,475         11,475

Other liabilities:
   Asset retirement obligations ..........................           725            706
   Deferred taxes and other ..............................         3,178          3,183
                                                               ---------      ---------
                                                                 170,850        168,029
                                                               ---------      ---------

Commitments and contingencies (Note 7)

Shareholders' equity:
  Preferred stock - $1.00 par value, 960,000 shares
      authorized, none outstanding .......................             -              -
  Common stock - $.10 par value, 7,500,000 shares
      authorized, 4,217,596 shares outstanding ...........           422            422
  Contributed capital ....................................        11,693         11,693
  Retained earnings ......................................        31,055         30,117
                                                               ---------      ---------
                      Total shareholders' equity..........     $  43,170      $  42,232
                                                               ---------      ---------
                                                               $ 214,020      $ 210,261
                                                               =========      =========
</TABLE>

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

                                      -3-
<PAGE>

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                        March 31,
                                                                  ----------------------
                                                                    2004          2003
                                                                  --------      --------
<S>                                                               <C>           <C>
CASH PROVIDED BY OPERATIONS:
  Earnings from continuing operations .......................     $  1,191      $  2,493
  Adjustments to reconcile net earnings to net
                  cash provided by operating activities -
       Depreciation, depletion and amortization .............        1,418         1,292
       Gains on property sales ..............................           (5)            -
       Impairment on non-producing oil and gas properties ...          167             -
       Other, net ...........................................           33           (77)
  Changes in operating assets and liabilities -
       Decrease (increase) in accounts receivable ...........       (2,977)      (48,431)
       Decrease (increase) in inventories ...................       (2,373)       (1,924)
       Risk management activities ...........................         (163)         (139)
       Decrease (increase) in tax receivable ................          336          (575)
       Decrease (increase) in prepayments ...................       (1,180)       (1,802)
       Increase (decrease) in accounts payable ..............        3,024        54,077
       Increase (decrease) in accrued liabilities ...........         (210)          675
                                                                  --------      --------

       Net cash provided by (used in) continuing operations .         (739)        5,589
       Net cash provided by (used in) discontinued operations        3,750        (2,334)
                                                                  --------      --------

Net cash provided by operating activities ...................        3,011         3,255
                                                                  --------      --------

INVESTING ACTIVITIES:
  Property and equipment additions ..........................       (2,195)       (1,761)
  Proceeds from property sales ..............................            5             -
                                                                  --------      --------

       Net cash used in investing activities ................       (2,190)       (1,761)
                                                                  --------      --------

FINANCING ACTIVITIES:
       Net borrowings under credit agreements ...............            -             -
                                                                  --------      --------

       Net cash used in financing activities ................            -             -
                                                                  --------      --------

Increase in cash and cash equivalents .......................          821         1,494

Cash at beginning of period .................................       28,342        27,262
                                                                  --------      --------

Cash at end of period .......................................     $ 29,163      $ 28,756
                                                                  ========      ========

Supplemental disclosure of cash flow information:

       Interest paid during the period ......................     $     40      $     13
                                                                  ========      ========

       Income taxes paid during the period ..................     $    177      $    764
                                                                  ========      ========
</TABLE>

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

                                      -4-
<PAGE>

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                               NOTES TO UNAUDITED
                        CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

      The accompanying consolidated financial statements are unaudited but, in
the opinion of the Company's management, include all adjustments (consisting of
normal recurring accruals) necessary for the fair presentation of its financial
position at March 31, 2004 and December 31, 2003 and its results of operations
for the three months ended March 31, 2004 and 2003 and its cash flows for the
three months ended March 31, 2004 and 2003. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to Securities and Exchange Commission rules and regulations.
Although the Company believes the disclosures made are adequate to make the
information presented not misleading, it is suggested that these consolidated
financial statements be read in conjunction with the financial statements, and
the notes thereto, included in the Company's latest annual report on Form 10-K.
The interim statement of operations is not necessarily indicative of results to
be expected for a full year.

Note 2 - Summary of Significant Accounting Policies

   Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of
Adams Resources & Energy, Inc., a Delaware corporation, and its wholly owned
subsidiaries (collectively, the "Company") after elimination of all significant
intercompany accounts and transactions. In addition, these statements include
the Company's share of oil and gas joint interests using pro-rata consolidation
and its interest in a 50% owned crude oil marketing joint venture using the
equity method of accounting. See Note (5) of Notes to Unaudited Consolidated
Financial Statements.

   Nature of Operations

      The Company is engaged in the business of crude oil, natural gas and
petroleum products marketing, as well as tank truck transportation of liquid
chemicals and oil and gas exploration and production. Its primary area of
operation is within a 500-mile radius of Houston, Texas.

    Cash and Cash Equivalents

      Cash and cash equivalents include any treasury bill, commercial paper,
money market fund or federal fund with maturity of 30 days or less. Included in
the cash balance at March 31, 2004 and December 31, 2003 is a deposit of $2
million to collateralize the Company's month-to-month crude oil letter of credit
facility.

   Inventories

      Crude oil and petroleum product inventories are carried at the lower of
cost or market value. Petroleum products inventory includes gasoline,
lubricating oils and other petroleum products purchased for resale and are
valued at cost determined on the first-in, first-out basis, while crude oil
inventory is valued at average cost. Materials and supplies are included in

                                      -5-
<PAGE>

inventory at specific cost, with a valuation allowance provided if needed. Due
to declining prices for crude oil during March 2003, the Company recognized a
combined $209,000 inventory valuation write-down during the first quarter of
2003. Components of inventory are as follows (IN THOUSANDS):

<TABLE>
<CAPTION>
                            March 31,  December 31,
                              2004        2003
                             ------    ------------
<S>                          <C>       <C>
Crude oil ...............    $6,420       $4,108
Petroleum products ......     2,230        2,192
Materials and supplies...       597          574
                             ------       ------

                             $9,247       $6,874
                             ======       ======
</TABLE>

   Property and Equipment

      Expenditures for major renewals and betterments are capitalized, and
expenditures for maintenance and repairs are expensed as incurred. Interest
costs incurred in connection with major capital expenditures are capitalized and
amortized over the lives of the related assets. When properties are retired or
sold, the related cost and accumulated depreciation, depletion and amortization
("DD&A") is removed from the accounts and any gain or loss is reflected in
earnings.

      Oil and gas exploration and development expenditures are accounted for in
accordance with the successful efforts method of accounting. Direct costs of
acquiring developed or undeveloped leasehold acreage, including lease bonus,
brokerage and other fees, are capitalized. Exploratory drilling costs are
initially capitalized until the properties are evaluated and determined to be
either productive or nonproductive. If an exploratory well is determined to be
nonproductive, the capitalized costs of drilling the well are charged to
expense. Costs incurred to drill and complete development wells, including dry
holes, are capitalized.

      Producing oil and gas leases, equipment and intangible drilling costs are
depleted or amortized over the estimated recoverable reserves using the
units-of-production method. Other property and equipment is depreciated using
the straight-line method over the estimated average useful lives of three to
twenty years for marketing, three to fifteen years for transportation and ten to
twenty years for all others.

      The Company is required to periodically review long-lived assets for
impairment whenever there is evidence that the carrying value of such assets may
not be recoverable. This consists of comparing the carrying value of the asset
with the asset's expected future undiscounted cash flows without interest costs.
Estimates of expected future cash flows represent management's best estimate
based on reasonable and supportable assumptions. Proved oil and gas properties
are reviewed for impairment on a field-by-field basis. Any impairment recognized
is permanent and may not be restored. In addition, management evaluates the
carrying value of non-producing properties and may deem them impaired for lack
of drilling activity.

                                      -6-
<PAGE>

   Revenue Recognition

      The Company's natural gas and crude oil marketing customers are invoiced
based on contractually agreed upon terms on a monthly basis. Revenue is
recognized in the month in which the physical product is delivered to the
customer. Where required, the Company also recognizes fair value or
mark-to-market gains and losses related to its natural gas and crude oil trading
activities. A detailed discussion of the Company's risk management activities is
included later in this footnote.

      Customers of the Company's petroleum products marketing subsidiary are
invoiced and revenue is recognized in the period when the customer physically
takes possession and title to the product upon delivery at their facility.
Transportation customers are invoiced, and the related revenue is recognized as
the service is provided. Oil and gas revenue from the Company's interests in
producing wells is recognized as title and physical possession of the oil and
gas passes to the purchaser.

   Earnings Per Share

      The Company computes and presents earnings per share in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share", which requires the presentation of basic earnings per share and diluted
earnings per share for potentially dilutive securities. Earnings per share are
based on the weighted average number of shares of common stock and common stock
equivalents outstanding during the period. The weighted average number of shares
outstanding averaged 4,217,596 for the three-month periods ended March 31, 2004
and 2003. There were no potentially dilutive securities during 2004 and 2003.

   Use of Estimates

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Examples of significant estimates used in the accompanying
consolidated financial statements include the accounting for depreciation,
depletion and amortization, income taxes, contingencies and price risk
management activities.

    Price Risk Management Activities

      SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS No. 137 and No. 138 establishes accounting and
reporting standards that require every derivative instrument (including certain
derivative instruments embedded in other contracts) to be recorded on the
balance sheet as either an asset or liability measured at its fair value, unless
the derivative qualifies and has been designated as a normal purchase or sale.
Changes in fair value are recognized immediately in earnings, unless the
derivatives qualify for and the Company elects cash flow hedge accounting. For
cash flow hedges the effected portion of the change in fair value will be
deferred in other comprehensive income until the related hedge item impacts
earnings. The Company had no contracts designated for hedge accounting under
SFAS No. 133 during any current reporting periods.

                                      -7-
<PAGE>

      The Company's trading and non-trading transactions give rise to market
risk, which represents the potential loss that may result from a change in the
market value of a particular commitment. The Company closely monitors and
manages its exposure to market risk to ensure compliance with the Company's risk
management policies. Such policies are regularly assessed to ensure their
appropriateness given management's objectives, strategies and current market
conditions.

      The Company's forward crude oil contracts are designated as normal
purchases and sales. Natural gas forward contracts and energy trading contracts
on crude oil and natural gas are recorded at fair value, depending on
management's assessments of the numerous accounting standards and positions that
comply with generally accepted accounting principles. The undiscounted fair
value of such contracts is reflected on the Company's balance sheet as risk
management assets and liabilities. The revaluation of such contracts is
recognized in the Company's results of operations. All mark-to-market gains and
losses on trading contracts are shown net in the statement of operations.
Current market price quotes from actively traded liquid markets are used in all
cases to determine the contracts' undiscounted fair value. Risk management
assets and liabilities are classified as short-term or long-term depending on
contract terms. The estimated future net cash inflow based on market prices as
of March 31, 2004 is $855,000, all of which will be received in 2004 and 2005.
The estimated future cash inflow approximates the net fair value recorded in the
Company's risk management assets and liabilities.

      The following table illustrates the factors impacting the change in the
net value of the Company's risk management assets and liabilities for each of
the periods ended March 31, 2004 and 2003 (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                                  2004        2003
                                                                  -----      ------
<S>                                                               <C>        <C>
Net fair value on January 1,................................      $ 692      $ (70)
Activity during 2004
 - Cash received from settled contracts.....................       (335)       (61)
 - Net realized gain from prior years' contracts ...........         31          -
 - Net realized (loss) from prior years' contracts..........          -       (120)
 - Net unrealized (loss) from prior years' contracts........        (27)         -
 - Net unrealized gain from prior years' contracts..........          -        210
 - Net unrealized gain from current year contracts..........        494        110
                                                                  -----      -----
Net fair value on March 31,.................................      $ 855      $  69
                                                                  =====      =====
</TABLE>

    New Accounting Pronouncements

      On January 1, 2003, the Company adopted SFAS No. 143 "Accounting for Asset
Retirement Obligations." The objective of SFAS No. 143 is to establish an
accounting model for accounting and reporting obligations associated with
retirement of tangible long-lived assets and associated retirement costs. SFAS
No. 143 requires that the fair value of a liability for an asset's retirement
obligation be recorded in the period in which it is incurred and the
corresponding cost capitalized by increasing the carrying amount of the related
long-lived asset. The liability is accreted to its then present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. If the liability is settled for an amount other than the recorded
amount, a gain or loss is recognized. The Company completed its assessment of
SFAS No. 143

                                      -8-
<PAGE>

and as of January 1, 2003, the Company estimated the present value of its future
Asset Retirement Obligations ("ARO") is approximately $672,000. The cumulative
effect of adoption of SFAS No. 143 and the change in accounting principal
resulted in a charge to net income during the first quarter of 2003 of
approximately $149,000 or $92,000 net of taxes.

      In June 2001, the FASB issued SFAS No. 141, "Business Combinations",
requiring the purchase method of accounting for business combinations initiated
after June 30, 2001, which eliminates the pooling-of-interests method. In July
2001, the FASB also issued SFAS No. 142, "Goodwill and Other Intangible Assets",
which discontinues the practice of amortizing goodwill and indefinite lived
intangible assets and initiates an annual review for impairment. Intangible
assets with a determinable useful life will continue to be amortized over that
period. The amortization provisions apply to goodwill and intangible assets
acquired after June 30, 2001. SFAS No. 141 and 142 clarify that more assets
should be distinguished and classified between tangible and intangible. The
Company did not change or reclassify contractual mineral rights included in oil
and gas properties on the balance sheet upon adoption of SFAS No. 142. The
Company believes the treatment of such mineral rights as tangible assets under
the successful efforts method of accounting for crude oil and natural gas
properties is appropriate. An issue has arisen regarding whether contractual
mineral rights should be classified as intangible rather than tangible assets.
If it is determined that reclassification is necessary, the Company's net
property, plant and equipment would be reduced by approximately $10.5 million
and $9.9 million and intangible assets would have increased by a like amount at
March 31, 2004 and December 31, 2003, respectively, representing unamortized
cost incurred since inception. The provisions of SFAS No. 141 and 142 impact
only the balance sheet and associated footnote disclosure, and reclassifications
necessary would not impact the Company's cash flows or results of operations.

Note 3 - Discontinued Operations

      During 2003, management decided to withdraw from its New England region
retail natural gas marketing business, which was included in the marketing
segment. This business unit had negative gross margins of $383,000 and
$3,311,000 and had after tax losses totaling $253,000 and $2,053,000 during the
three-month periods ended March 31, 2004 and 2003, respectively. Such losses
resulted from certain "full requirements" contracts with weather sensitive
end-use customers. Under these contracts, the Company bears the risk associated
with any differences between expected volumes and actual usage. The winter of
2003 was abnormally cold and due to strong demand conditions, natural gas prices
were elevated. As a result, during January, February and March of 2003, this
category of customer caused the Company to purchase supplemental quantities of
natural gas at prices greater than the contracted sales realization. Because of
the losses sustained and the desire to reduce working capital requirements,
management decided to exit this region and type of account. The New England
operation had no fixed assets or capitalized costs associated with intangibles.
Therefore, an impairment assessment of long-lived assets was not necessary.
Further, all contracts associated with this operation were initially recorded at
fair value pursuant to SFAS No. 133. As a result, a separate fair value analysis
was not needed in connection with the decision to discontinue New England
business. As of March 31, 2004, the Company has substantially completed its exit
from this business.

                                      -9-
<PAGE>

Note 4 - Segment Reporting

      The Company is primarily engaged in the business of marketing crude oil,
natural gas and petroleum products; tank truck transportation of liquid
chemicals; and oil and gas exploration and production. Information concerning
the Company's various business activities is summarized as follows (IN
THOUSANDS):

<TABLE>
<CAPTION>
                                                         Depreci-
                                                          ation,
                                                         Depletion    Property
                                            Segment        and          and
                                           Operating      Amorti-     Equipment
                               Revenues     Earnings      zation      Additions
                               --------    ---------     --------     ---------
<S>                            <C>          <C>          <C>          <C>
For the three months ended
March 31, 2004
     Marketing ...........     $448,698     $  2,544     $    377     $     93
     Transportation ......       10,066          415          547        1,176
     Oil and gas .........        2,551          487          494          926
                               --------     --------     --------     --------
                               $461,315     $  3,446     $  1,418     $  2,195
                               ========     ========     ========     ========

For the three months ended
March 31, 2003
     Marketing ...........     $462,556     $  3,977     $    441     $     90
     Transportation ......        9,010          499          500          529
     Oil and gas .........        1,724          861          351        1,142
                               --------     --------     --------     --------
                               $473,290     $  5,337     $  1,292     $  1,761
                               ========     ========     ========     ========
</TABLE>

      Identifiable assets by industry segment are as follows (IN THOUSANDS):

<TABLE>
<CAPTION>
                            March 31,   December 31,
                              2004         2003
                            --------    -----------
<S>                         <C>          <C>
Marketing .............     $152,749     $144,722
Transportation ........       15,461       14,564
Oil and gas ...........       14,073       13,817
Discontinued operations            -        5,140
Other .................       31,737       32,018
                            --------     --------
                            $214,020     $210,261
                            ========     ========
</TABLE>

      Intersegment sales are insignificant. Other identifiable assets are
primarily corporate cash, accounts receivable, and properties not identified
with any specific segment of the Company's business. All sales by the Company
occurred in the United States.

      Segment operating earnings include revenues net of operating costs and
depreciation, depletion and amortization. Segment earnings are reconciled to
earnings from continuing operations before income taxes and cumulative effect of
accounting change, as follows (IN THOUSANDS):

                                      -10-
<PAGE>

<TABLE>
<CAPTION>
                                             For the three months ended
                                                     March 31,
                                             --------------------------
                                                 2004          2003
                                             -----------   ------------
<S>                                          <C>           <C>
Segment operating earnings ...............     $ 3,446        $ 5,337
General and administrative expenses ......      (1,603)        (1,441)
                                               -------        -------
         Operating earnings ..............       1,843          3,896
Interest income ..........................          16            155
Interest expense .........................         (40)           (33)
                                               -------        -------
Earnings from continuing operations before
         income taxes ....................     $ 1,819        $ 4,018
                                               =======        =======
</TABLE>

Note 5 - Marketing Joint Venture

      Commencing in May 2000, the Company entered into a joint venture
arrangement with a third party for the purpose of purchasing, distributing and
marketing crude oil in the offshore Gulf of Mexico region. The intent behind the
joint venture was to combine the Company's marketing expertise with stronger
financial and credit support from the co-venture participant. The venture
operated as Williams-Gulfmark Energy Company pursuant to the terms of a joint
venture agreement. The Company held a 50 percent interest in the net earnings of
the venture and accounted for its interest under the equity method of
accounting. The Company included its net investment in the venture in the
consolidated balance sheet and its equity in the venture's pretax earnings was
included in marketing segment revenues in the consolidated statement of
earnings. Other than ordinary trade credit under standard terms, the joint
venture had no third party or other obligations. The participants
maintained management of cash flow and all cash flow requirements.

      Effective November 1, 2001, the joint venture participants agreed to
dissolve the venture pursuant to the terms of a joint venture dissolution
agreement. As part of the consideration for terminating the joint venture, the
Company was to receive a monthly per barrel fee to be paid by the former joint
venture co-participant for a period of sixty months on certain barrels purchased
by the participant in the offshore Gulf of Mexico region. While the co-venture
participant willingly paid this fee through January 31, 2002 activity, effective
with February 2002 business, the participant notified the Company of its intent
to withhold the fee until an audit of the previous joint venture activity was
completed. Subsequently, due primarily to credit constraints, the co-participant
substantially curtailed and ultimately ceased its purchase of crude oil in the
affected region.

      The co-venture participant initially conducted an audit of the joint
venture in June 2002 and management was led to believe the audit produced no
adverse findings. However, in April 2003, the Company received a demand for
arbitration seeking monetary damages of $11.6 million and a re-audit of the
joint venture activity for the period of its existence from May 2000 through
October 2001. Management believes the claims made are not consistent with the
terms of the joint venture agreement. Further, management does not believe a
re-audit or arbitration of this matter will have a significant adverse effect on
the Company's financial position or results of operations.

                                      -11-
<PAGE>

      The Company continues to implement the final wind-down and settlement of
open trade account items. As of March 31, 2004, the joint venture's remaining
trade accounts due totaled approximately $3.1 million and trade accounts payable
totaled approximately $7.3 million. As the venture either collects or funds cash
proceeds in settlement of such accounts, the Company will receive or pay its
pro-rata 50 percent share of such cash proceeds or requirements.

Note 6 - Transactions with Related Parties

      Mr. K. S. Adams, Jr., Chairman and President of the Company, is a limited
partner in certain family limited partnerships known as Sakco, Ltd. ("Sakco"),
Kenada Oil & Gas, Ltd. ("Kenada") and Kasco, Ltd. ("Kasco"). From time to time,
Mr. Adams individually, the family limited partnerships and Sakdril, Inc.
("Sakdril"), a wholly owned subsidiary of KSA Industries, Inc., (a major
stockholder of the Company, and controlled by Mr. Adams) participate as working
interest owners in certain oil and gas wells operated by the Company. In
addition, these entities may participate in non-Company operated wells where the
Company also holds an interest. Sakco, Kenada, Kasco, Sakdril and Mr. Adams
participated in each of the wells under terms no better than those afforded
other non-affiliated working interest owners. In recent years, such related
party transactions tend to result after the Company has first identified oil and
gas prospects of interest. Due to capital budgeting constraints, typically the
available dollar commitment to participate in such transactions is greater than
the amount management is comfortable putting at risk. In such event, the Company
first determines the percentage of the transaction it wants to obtain, which
allows a related party to participate in the investment to the extent there is
excess available. Such related party transactions are individually reviewed and
approved by a committee of independent directors on the Company's Board of
Directors. As of March 31, 2004, the Company owed a combined net total of
$770,000 to these related parties. In connection with the operation of certain
oil and gas properties, the Company also charges such related parties for
administrative overhead primarily as prescribed by the Council of Petroleum
Accountants Society ("COPAS") Bulletin 5. Such overhead recoveries totaled
$32,000 during the first quarter of 2004.

      David B. Hurst, Secretary of the Company, is a partner in the law firm of
Chaffin & Hurst. The Company has been represented by Chaffin & Hurst since 1974
and plans to use the services of that firm in the future. Chaffin & Hurst
currently leases office space from the Company. Transactions with Chaffin &
Hurst are on the same terms as those prevailing at the time for comparable
transactions with unrelated entities.

      The Company also enters into certain transactions in the normal course of
business with other affiliated entities. These transactions with affiliated
companies are on the same terms as those prevailing at the time for comparable
transactions with unrelated entities.

Note 7 - Commitments and Contingencies

      In April 2003, Gulfmark Energy Marketing, Inc. a wholly owned subsidiary
of the Company previously involved in a crude oil marketing joint venture,
received a demand for arbitration seeking monetary damages of $11.6 million and
a re-audit of the joint venture activity for the period of its existence from
May 2000 through October 2001. The claim is further described in Note (5) to
Notes to Unaudited Consolidated Financial Statements. Management

                                      -12-
<PAGE>

believes the claims made for the arbitration are not consistent with the terms
of the joint venture agreement. Further, management does not believe a re-audit
or arbitration of this matter will have a significant adverse effect on the
Company's financial position or results of operations.

      In March 2004, a suit styled Le Petit Chateau De Luxe, et. al. vs Great
Southern Oil & Gas Co., et. al. was filed in the Civil District Court for
Orleans Parish, Louisiana against the Company and its subsidiary, Adams
Resources Exploration Corporation, among other defendants. The suit alleges that
certain property in Acadia Parish, Louisiana was environmentally contaminated by
oil and gas exploration and production activities during the 1970s and 1980s. An
alleged amount of damage has not been specified. Management believes the Company
has consistently conducted its oil and gas exploration and production activities
in accordance with all environmental rules and regulations in effect at the time
of operation. Further, management believes it has adequate insurance coverage
against these claims. However, due to the recent filing of the suit for events
that occurred over 20 years ago, the Company's insurance carrier at the time has
not as yet acknowledged its obligation. In any event, management does not
believe the outcome of this matter will have a material adverse effect on the
Company's financial position or results of operations.

      From time to time as incident to its operations, the Company becomes
involved in various lawsuits and/or disputes. Primarily as an operator of an
extensive trucking fleet, the Company is a party to motor vehicle accidents,
worker compensation claims or other items of general liability as would be
typical for the industry. Except as disclosed herein, management of the Company
is presently unaware of any claims against the Company that are either outside
the scope of insurance coverage, or that may exceed the level of insurance
coverage, and could potentially represent a material adverse effect on the
Company's financial position or results of operations.

Note 8 - Guarantees

      Pursuant to arranging operating lease financing for truck tractors and
tank trailers, individual subsidiaries of the Company may guarantee the lessor a
minimum residual sales value upon the expiration of a lease and sale of the
underlying equipment. Aggregate guaranteed residual values for tractors and
trailers under operating leases as of March 31, 2004 are as follows: (IN
THOUSANDS)

<TABLE>
<CAPTION>
                          2004     2005     2006      2007     Thereafter     Total
                         -------  -------  ------    ------    ----------    -------
<S>                      <C>      <C>      <C>       <C>       <C>           <C>
Lease residual values...  $422     $762     $150     $    -     $  1,008     $2,342
</TABLE>

      Presently, neither the Company nor any of its subsidiaries have any other
types of guarantees outstanding that in the future would require liability
recognition under the provisions of Interpretation No. 45.

      Adams Resources & Energy, Inc. frequently issues parent guarantees of
commitments resulting from the ongoing activities of its subsidiary companies.
The guarantees generally result as incident to subsidiary commodity purchase
obligation, subsidiary lease commitments and subsidiary bank debt. The nature of
such guarantees is to guarantee the performance of the subsidiary companies in
meeting their respective underlying obligations. Except for operating lease
commitments, all such underlying obligations are recorded on the books of the
subsidiary companies and are included in the consolidated financial statements
included herein. Therefore,

                                      -13-
<PAGE>

none of such obligation is recorded again on the books of the parent. The parent
would only be called upon to perform under the guarantee in the event of a
payment default by the applicable subsidiary company. In satisfying such
obligations, the parent would first look to the assets of the defaulting
subsidiary company. As of March 31, 2004, the amount of parental guaranteed
obligations are approximately as follows: (IN THOUSANDS)

<TABLE>
<CAPTION>
                           2004        2005       2006       2007     Thereafter    Total
                          -------     ------     ------     ------    ----------   --------
<S>                       <C>         <C>        <C>        <C>       <C>          <C>
Bank Debt ...........     $     -     $1,434     $5,738     $4,303     $     -     $11,475
Operating leases ....       3,444      3,135      2,373      2,064       2,678      13,694
Lease residual values         422        762        150          -       1,008       2,342
Commodity purchases .      35,847          -          -          -           -      35,847
Letters of credit ...      28,185          -          -          -           -      28,185
                          -------     ------     ------     ------     -------     -------
                          $67,898     $5,331     $8,261     $6,367     $ 3,686     $91,543
                          =======     ======     ======     ======     =======     =======
</TABLE>

                                      -14-
<PAGE>


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Results of Operations

      -     Marketing

      Marketing division revenues, operating earnings and depreciation are
presented as follows (IN THOUSANDS):

<TABLE>
<CAPTION>
                             Three Months Ended
                                   March 31,
                       -------------------------------
                            2004               2003
                       -------------     -------------
<S>                    <C>               <C>
Revenues .........     $     448,698     $     462,556
Operating earnings     $       2,544     $       3,977
Depreciation .....     $         377     $         441
</TABLE>

      Supplemental volume and price information is as follows:

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                            March 31,
                                               -----------------------------------
                                                     2004                2003
                                               ---------------    ----------------
<S>                                            <C>                <C>
Wellhead Purchases - Per day (1)
       Crude oil - barrels .....                        76,000              91,000
       Natural gas - mmbtu .....                       298,000             308,000
Average Purchase Price
       Crude oil - per barrel ..              $          33.88    $          32.59
       Natural gas - per mmbtu .              $           5.43    $           6.31
</TABLE>

--------------

(1) Reflects the volume purchased from third parties at the wellhead level and
    pipeline pooling points.

      Commodity purchases and sales associated with the Company's natural gas
marketing activities qualify as derivative instruments under Statement of
Financial Accounting Standards No. 133. Therefore, natural gas purchases and
sales are recorded on a net revenue basis in the accompanying financial
statements. In contrast, substantially all purchases and sales of crude oil
qualify and have been designated as normal purchases and sales. Therefore, crude
oil purchases and sales are recorded on a gross revenue basis in the
accompanying financial statements. As a result, variations in gross revenues are
primarily a function of crude oil volumes and prices while operating earnings
fluctuate with both crude oil and natural gas margins and volumes.

                                      -15-
<PAGE>

      Marketing division revenues declined by $13,858,000 or 3 percent as a
result of reduced crude oil purchase and sales volumes. The Company has
concentrated its efforts on its higher margin business, and this coupled with
normal production declines, caused the volume reduction.

      Operating earnings are reduced by $1,433,000 or 36 percent due to three
factors. First, as a middleman wholesaler of gasoline and diesel, the Company
sustained losses when refined product supply costs increased faster than the
price to the Company's end market customers. This event caused a $546,000
reduction in comparative first quarter 2004 operating earnings. The second
factor was a $391,000 reduction in operating margins within the Company's
wholesale natural gas operation. During the first quarter of 2003, natural gas
prices escalated suddenly which afforded the Company improved natural gas margin
opportunities in last year's first quarter. The causative third factor was that
first quarter 2003 marketing earnings included $396,000 from the reversal of
previously recorded accrual items. Such additions to earnings resulted from the
final true-up of the accounting for certain open items. This item did not recur
in the first quarter of 2004. Also impacting first quarter 2004 marketing
operations was $548,000 of earnings that resulted from the Company liquidating
lower priced inventory into a relatively high value market as average sales
price realizations rose by over $4 per barrel during the quarter. As of March
31, 2004, the Company held 176,000 barrels of crude oil inventory at an average
cost of $36.44.

      -     Transportation

      Transportation revenues, operating earnings and depreciation are as
follows (IN THOUSANDS):

<TABLE>
<CAPTION>
                       Three Months Ended              Increase
                            March 31,                 (Decrease)
                       ------------------     -----------------------
                        2004        2003         Amount       Percent
                       -------     ------     -------------   -------
<S>                    <C>         <C>        <C>             <C>
Revenues ............  $10,066     $9,010     $       1,056       12 %
Operating earnings...  $   415     $  499     $         (84)     (17)%
Depreciation ........  $   547     $  500     $          47        9 %
</TABLE>

      Transportation revenues improved in the first quarter of 2004 as the
Company experienced increased demand from its petrochemical industry customer
base. Operating earnings were reduced, however, due to increased fuel and
insurance costs. Over the past 24 to 36 months, the Company has experienced a
high level of resistance against an increase in allowed freight rates. This
situation developed because the United States' economy and the chemical industry
in particular had been in a period of reduced activity. However, recent
improvements in demand spurred by increased manufacturing and retail sales
coupled with a reduced level of available competition have allowed the Company
to implement rate increases beginning in April 2004. The strong demand at higher
rates appears to be continuing into the second quarter of 2004.

                                      -16-
<PAGE>

      -     Oil and Gas

      Oil and gas division revenues and operating earnings are primarily a
function of crude oil and natural gas prices and volumes. Comparative amounts
for revenues, operating earnings and depreciation and depletion are as follows
(IN THOUSANDS):

<TABLE>
<CAPTION>
                                  Three Months Ended
                                       March 31,
                                  ------------------
                                  2004         2003
                                  ------     -------
<S>                               <C>        <C>
Revenues ......................   $2,551     $1,724

Operating earnings ............   $  487     $  861

Depreciation and depletion.....   $  494     $  351
</TABLE>

      Production volumes and price information is a follows:

<TABLE>
<CAPTION>
                                       Three Months Ended
                                              March 31,
                                 ----------------------------------
                                   2004                     2003
                                 -------               ------------
<S>                              <C>                   <C>
Crude oil

    Volume - barrels .......       17,000                    11,000

    Average price per barrel     $  33.99               $     33.61

Natural gas

    Volume - mcf ...........      348,000                   295,000

    Average price per mcf ..     $   5.69               $      4.58
</TABLE>

      Oil and gas revenues improved by $827,000 or 48 percent as a direct result
of increased crude oil and natural gas production volumes stemming from recent
successful drilling results together with commodity price increases. Operating
earnings were reduced, however, because $940,000 of exploration expense was
incurred in the first quarter of 2004 compared to $11,000 of exploration related
expenses occurring during the first quarter of 2003. Such 2004 exploration
expenses included a $167,000 impairment provision on non-producing properties
plus $696,000 of geological and geophysical costs. Depreciation also increased
during 2004 as a result of the amortization of 2003 property additions.

      During the first quarter of 2004, the Company participated in the drilling
of nine wells with six wells successfully completed, two dry holes and one well
presently drilling. In addition, one well that was in process at year-end
December 31, 2003 was successfully completed in 2004. Presently, nine additional
locations have been approved for drilling and are awaiting a drilling rig. Going
forward, in Calcasieu Parish, Louisiana, the Company will spud the first well
location identified by a large 3-D survey conducted in 2003. Numerous prospects
have been identified in this area for drilling in 2004. In Alabama, the Company
participated in a large recently completed 3-D survey. The data from this survey
is now being processed and will be evaluated before year-end.

                                      -17-
<PAGE>

      In Wharton and Colorado Counties, Texas the Company joined with partners
in the purchase of over 200 square miles of 3-D seismic data. This data will be
reprocessed using the latest techniques in an attempt to expand the success
experienced during 2003 on similar looking formations that exist in nearby Fort
Bend County, Texas. Two prospects have been identified and will be drilled in
the second or third quarter of 2004. Several other leads are expected to evolve
into drillable prospects before year-end.

      In the Central UK sector of the North Sea, the Company and its joint
interest partners are evaluating and reprocessing purchased seismic data on
their mutual interest in Block 21-1b. The reprocessing is currently on schedule
for completion by the end of the second quarter. If a drillable prospect is
identified, a third party participant will be sought to fund the drilling of the
first well.

      -     Discontinued operations

      During 2003, management decided to withdraw from its New England region
retail natural gas marketing business. This business unit sustained after tax
losses totaling $253,000 and $2,053,000 during each of the three-month periods
ended March 31, 2004 and 2003, respectively. Such losses resulted from certain
"full requirements" contracts with weather sensitive end-use customers. Under
these contracts, the Company retained the risk associated with any differences
between expected volumes and actual usage. The winter of 2003 was abnormally
cold and due to strong demand conditions, natural gas prices were elevated. As a
result, during January, February and March of 2003, this category of customer
caused the Company to purchase supplemental quantities of natural gas at prices
greater than the contracted sales realization. Because of the losses sustained
and the desire to reduce working capital requirements, management decided to
exit this region and type of account. First quarter 2004 losses were
substantially reduced from those incurred during the first quarter of 2003. This
result occurred because contractual volume requirements were substantially
reduced in 2004 as the Company had scaled back operation during 2003. As of
March 31, 2004, the Company has substantially completed its exit from this
business.

      -     Outlook

      With an improving transportation segment and anticipated continued
strength for the oil and gas segment, the outlook for 2004 earnings remains
favorable.

Liquidity and Capital Resources

      Management generally balances the cash flow requirements of the Company's
investment activity with available cash generated from operations. Over time,
cash utilized for property and equipment additions, tracks with the non-cash
provision for depreciation, depletion and amortization. A summary of this
relationship follows (IN THOUSANDS):

                                      -18-
<PAGE>

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
                                                                   --------------------
                                                                     2004         2003
                                                                   -------      -------
<S>                                                                <C>          <C>
Depreciation, depletion and amortization .....................     $ 1,418      $ 1,292

Property and equipment additions .............................      (2,195)      (1,761)
                                                                   -------      -------

Other (sources) of cash ......................................     $  (777)     $  (469)
                                                                   =======      =======
</TABLE>

      Presently, management intends to restrict investment decisions to
available cash flow. Significant, if any, additions to debt are not anticipated.

      During the first three months of 2004, net cash provided by operating
activities totaled $3,011,000. The Company's capital expenditures totaled
$2,195,000, including $93,000 for marketing equipment, $1,176,000 in
transportation operations and $926,000 in oil and gas drilling activities. The
remaining $816,000 of cash flow from operating activities was used to boost cash
reserves and generally improve liquidity.

      For the remainder of 2004, the Company anticipates spending approximately
$3.5 million on oil and gas exploration projects and approximately $915,000 on
tractor and trailer equipment additions as present lease financing arrangements
mature.

Banking Relationships

      The Company's primary bank loan agreement, with Bank of America, provides
for two separate lines of credit with interest at the bank's prime rate minus
1/4 of 1 percent. The working capital loan provides for borrowings up to
$7,500,000 based on 80 percent of eligible accounts receivable and 50 percent of
eligible inventories. Available capacity under the line is calculated monthly
and as of March 31, 2004 was established at $7,500,000. The oil and gas
production loan provides for flexible borrowings subject to a borrowing base
established semi-annually by the bank. The borrowing base was established at
$5,000,000 as of March 31, 2004. The line of credit loans are scheduled to
expire on October 29, 2005, with the then present balance outstanding converting
to a term loan payable in 8 equal quarterly installments. As of March 31, 2004,
bank debt outstanding under the Company's two revolving credit facilities
totaled $11,475,000.

      The Bank of America revolving loan agreement, among other things, places
certain restrictions with respect to additional borrowings and the purchase or
sale of assets, as well as requiring the Company to comply with certain
financial covenants, including maintaining a 1.0 to 1.0 ratio of consolidated
current assets to consolidated current liabilities, maintaining a 3.0 to 1.0
ratio of pre-tax net income to interest expense, and consolidated net worth in
excess of $34,103,000. Should the Company's net worth fall below this threshold,
the Company may be restricted from payment of additional cash dividends on the
Company's common stock.

      The Company's Gulfmark Energy, Inc. subsidiary maintains a separate
banking relationship with BNP Paribas in order to support its crude oil
purchasing activities. In addition to providing up to $40 million in letters of
credit, the facility also finances up to $6 million of

                                      -19-
<PAGE>

crude oil inventory and certain accounts receivable associated with crude oil
sales. Such financing is provided on a demand note basis with interest at the
bank's prime rate plus 1 percent. As of March 31, 2004, the Company had $3.2
million of eligible borrowing capacity under this facility. No working capital
advances were outstanding as of March 31, 2004. Letters of credit outstanding
under this facility totaled approximately $19.4 million as of March 31, 2004.
BNP Paribas has the right to discontinue the issuance of letters of credit under
this facility without prior notification to the Company.

      The Company's Adams Resources Marketing subsidiary also maintains a
separate banking relationship with BNP Paribas in order to support its natural
gas purchasing activities. In addition to providing up to $25 million in letters
of credit, the facility finances up to $4 million of general working capital
needs on a demand note basis. Such financing is provided on a demand note basis
with interest at the bank's prime rate plus 1 percent. No working capital
advances were outstanding under this facility as of March 31, 2004. Letters of
credit outstanding under this facility totaled approximately $8.8 million as of
March 31, 2004. Under this facility, BNP Paribas has the right to discontinue
the issuance of letters of credit without prior notification to the Company.

      Critical Accounting Policies and Use of Estimates

      -     Fair Value Accounting

      As an integral part of its marketing operation, the Company enters into
certain forward commodity contracts that are required to be recorded at fair
value in accordance with Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" and related
accounting pronouncements. Management believes this required accounting, known
as mark-to-market accounting, creates variations in reported earnings and the
reported earnings trend. Under mark-to-market accounting, significant levels of
earnings are recognized in the period of contract initiation rather than the
period when the service is provided and title passes from supplier to customer.
As it affects the Company's operation, management believes mark-to-market
accounting impacts reported earnings and the presentation of financial condition
in three important ways.

      1.       Gross margins, derived from certain aspects of the Company's
            ongoing business, are front-ended into the period in which contracts
            are executed. Meanwhile, personnel and other costs associated with
            servicing accounts as well as substantially all risks associated
            with the execution of contracts are expensed as incurred during the
            period of physical product flow and title passage.

      2.       Mark-to-market earnings are calculated based on stated contract
            volumes. A significant risk associated with the Company's business
            is the conversion of stated contract or planned volumes into actual
            physical commodity movement volumes without a loss of margin. Again
            the planned profit from such commodity contracts is bunched and
            front-ended into one period while the risk of loss associated with
            the difference between actual vs planned production or usage volumes
            falls in a subsequent period.

                                      -20-
<PAGE>

      3.       Cash flows, by their nature, match physical movements and passage
            of title. Mark-to-market accounting, on the other hand, creates a
            mismatch between reported earnings and cash flows. This complicates
            and confuses the picture of stated financial conditions and
            liquidity.

      The Company attempts to mitigate the identified risks by only entering
into contracts where current market quotes in actively traded, liquid markets
are available to determine the fair value of contracts. In addition,
substantially all of the Company's forward contracts are less than 18 months in
duration. However, the reader is cautioned to develop a full understanding of
how fair value or mark-to-market accounting creates differing reported results
relative to those otherwise presented under conventional accrual accounting.

      -     Trade Accounts

      Accounts receivable and accounts payable typically represent the single
most significant assets and liabilities of the Company. Particularly within the
Company's energy marketing and oil and gas exploration and production
operations, there is a high degree of interdependence with and reliance upon
third parties, (including transaction counterparties) to provide adequate
information for the proper recording of amounts receivable or payable.
Substantially all such third parties are larger firms providing the Company with
the source documents for recording trade activity. It is commonplace for these
entities to retroactively adjust or correct such documents. This typically
requires the Company to either absorb, benefit from, or pass along such
corrections to another third party.

      Due to (a) the volume of transactions, (b) the complexity of transactions
and (c) the high degree of interdependence with third parties, this is a
difficult area to control and manage. The Company manages this process by
participating in a monthly settlement process with each of its counterparties.
Ongoing account balances are monitored monthly and the Company attempts to gain
the cooperation of such counterparties to reconcile outstanding balances. The
Company also places great emphasis on collecting cash balances due and paying
only bonafide properly supported claims. In addition, the Company maintains and
monitors its bad debt allowance. A degree of risk remains, however, simply due
to the customs and practices of the industry.

      -     Oil and Gas Reserve Estimate

      The value of capitalized costs of oil and gas exploration and production
related assets are dependent on underlying oil and gas reserve estimates.
Reserve estimates are based on many subjective factors. The accuracy of reserve
estimates depends on the quantity and quality of geological data, production
performance data and reservoir engineering data, changed prices, as well as the
skill and judgment of petroleum engineers in interpreting such data. The process
of estimating reserves requires frequent revision of estimates (usually on an
annual basis) as additional information becomes available. Estimated future oil
and gas revenue calculations are also based on estimates by petroleum engineers
as to the timing of oil and gas production, and there is no assurance that the
actual timing of production will conform to or approximate such estimates. Also,
certain assumptions must be made with respect to pricing. The Company's
estimates assume prices will remain constant from the date of the engineer's
estimates, except for

                                      -21-
<PAGE>

changes reflected under natural gas sales contracts. There can be no assurance
that actual future prices will not vary as industry conditions, governmental
regulation and other factors impact the market price for oil and gas.

      The Company follows the successful efforts method of accounting, so only
costs (including development dry hole costs) associated with producing oil and
gas wells are capitalized. Estimated oil and gas reserve quantities are the
basis for the rate of amortization under the Company units of production method
for depreciating, depleting and amortizing of oil and gas properties. Estimated
oil and gas reserve values also provide the standard for the Company's periodic
review of oil and gas properties for impairment.

      -     Contingencies

      From time to time as incident to its operations, the Company becomes
involved in various accidents, lawsuits and/or disputes. Primarily as an
operator of an extensive trucking fleet, the Company is a party to motor vehicle
accidents, worker compensation claims or other items of general liability as
would be typical for the industry. In addition, the Company has extensive
operations that must comply with a wide variety of tax laws, environmental laws
and labor laws, among others. Should an incident occur, management will evaluate
the claim based on its nature, the facts and circumstances and the applicability
of insurance coverage. To the extent management believes that such event may
impact the financial condition of the Company, management will estimate the
monetary value of the claim and make appropriate accruals or disclosure as
provided in the guidelines of Statement of Financial Accounting Standards No. 5.

Quantitative and Qualitative Disclosures about Market Risk

      The Company is exposed to market risk, including adverse changes in
interest rates and commodity prices.

      -     Interest Rate Risk

      Total long-term debt at March 31, 2004 included $11,475,000 of floating
rate debt. As a result, the Company's annual interest costs fluctuate based on
interest rate changes. Because the interest rate on the Company's long-term debt
is a floating rate, the fair value approximates carrying value as of March 31,
2004. A hypothetical 10 percent adverse change in the floating rate would not
have had a material effect on the Company's results of operations for the three-
month period ended March 31, 2004.

      -     Commodity Price Risk

      The Company's major market risk exposure is in the pricing applicable to
its marketing and production of crude oil and natural gas. Realized pricing is
primarily driven by the prevailing spot prices applicable to oil and gas.
Commodity price risk in the Company's marketing operations represents the
potential loss that may result from a change in the market value of an asset or
a commitment. From time to time, the Company enters into forward

                                      -22-
<PAGE>

contracts to minimize or hedge the impact of market fluctuations on its
purchases of crude oil and natural gas. The Company may also enter into price
support contracts with certain customers to secure a floor price on the purchase
of certain supply. In each instance, the Company locks in a separate matching
price support contract with a third party in order to minimize the risk of these
financial instruments. Substantially all forward contracts fall within a 6-month
to 1-year term with no contracts extending longer than three years in duration.
The Company monitors all commitments, positions and endeavors to maintain a
balanced portfolio.

      Certain forward contracts are recorded at fair value, depending on
management's assessments of numerous accounting standards and positions that
comply with generally accepted accounting principles. The undiscounted fair
value of such contracts is reflected on the Company's balance sheet as risk
management assets and liabilities. The revaluation of such contracts is
recognized on a net basis in the Company's results of operations. Current market
price quotes from actively traded liquid markets are used in all cases to
determine the contracts' undiscounted fair value. Regarding net risk management
assets, 100 percent of presented values as of March 31, 2004 and December 31,
2003 were based on readily available market quotations. Risk management assets
and liabilities are classified as short-term or long-term depending on contract
terms. The estimated future net cash inflow based on year-end market prices is
$855,000, all of which will be received in 2004 and 2005. The estimated future
cash inflow approximates the net fair value recorded in the Company's risk
management assets and liabilities.

      The following table illustrates the factors that impacted the change in
the net value of the Company's risk management assets and liabilities for each
of the three months ended March 31, 2004 and 2003 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           2004      2003
                                                          -----      -----
<S>                                                       <C>        <C>
Net fair value on January 1, ........................     $ 692      $ (70)
Activity during 2004
  - Cash received from settled contracts ............      (335)       (61)
  - Net realized gain from prior years' contracts ...        31          -
  - Net realized (loss) from prior years' contracts .         -       (120)
  - Net unrealized (loss) from prior years' contracts       (27)         -
  - Net unrealized gain from prior years' contracts .         -        210
  - Net unrealized gain from current year contracts .       494        110
                                                          -----      -----
Net fair  value on March 31,.........................     $ 855      $  69
                                                          =====      =====
</TABLE>

      Historically, prices received for oil and gas production have been
volatile and unpredictable. Price volatility is expected to continue. From
January 1, 2004 through March 31, 2004, natural gas price realizations ranged
from a monthly low of $3.58 to a monthly high of $13.74 per mmbtu. Oil prices
ranged from a low of $34.30 per barrel to a high of $37.93 per barrel during the
same period. A hypothetical 10 percent adverse change in average natural gas and
crude oil prices, assuming no changes in volume levels, would have reduced
earnings by approximately $897,000 for the three-month period ended March 31,
2004.

                                      -23-
<PAGE>

Forward-Looking Statements--Safe Harbor Provisions

      This report for the period ended March 31, 2004 contains certain
forward-looking statements intended to be covered by the safe harbors provided
under Federal securities law and regulation. To the extent such statements are
not recitations of historical fact, forward-looking statements involve risks and
uncertainties. In particular, statements under the captions (a) Management's
Discussion and Analysis of Financial Condition and Results of Operations, (b)
Liquidity and Capital Resources, (c) Critical Accounting Policies and Use of
Estimates, (d) Quantitative and Qualitative Disclosures about Market Risk, among
others, contain forward-looking statements. Where the Company expresses an
expectation or belief to future results or events, such expression is made in
good faith and believed to have a reasonable basis in fact. However, there can
be no assurance that such expectation or belief will actually result or be
achieved.

      A number of factors could cause actual results or events to differ
materially from those anticipated. Such factors include, among others, (a)
general economic conditions, (b) fluctuations in hydrocarbon prices and margins,
(c) variations between crude oil and natural gas contract volumes and actual
delivery volumes, (d) unanticipated environmental liabilities or regulatory
changes, (e) counterparty credit default, (f) inability to obtain bank and/or
trade credit support, (g) availability and cost of insurance, (h) changes in tax
laws, and (i) the availability of capital, among others (j) changes in
regulations, (k) results of current items of litigation, (l) uninsured items of
litigation or losses, (m) uncertainty in reserve estimates and cash flows, (n)
ability to replace oil and gas reserves, (o) security issues related to drivers
and terminal facilities (p) commodity price volatility and (q) successful
completion of drilling activity. For more information, see the discussion under
Forward-Looking Statements in the annual report or Form 10-K for the year ended
December 31, 2003.

Disclosure Controls and Procedures

      The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the reports under the
Securities Exchange Act of 1934, as amended ("Exchange Act") are communicated,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Within the three-month period prior to the filing of this
report (the "Evaluation Date") an evaluation was carried out under the
supervision and with the participation of the Company's management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934).
Based upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that the design and operation of these disclosure controls and
procedures were effective. Since the Evaluation Date, there have not been any
significant changes in our internal controls or procedures or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

                                      -24-
<PAGE>

                           PART II. OTHER INFORMATION

Item 1. -

      In March 2004, a suit styled Le Petit Chateau De Luxe, et. al. vs Great
Southern Oil & Gas Co., et. al. was filed in the Civil District Court for
Orleans Parish, Louisiana against the Company and its subsidiary, Adams
Resources Exploration Corporation, among other defendants. The suit alleges that
certain property in Acadia Parish, Louisiana was environmentally contaminated by
oil and gas exploration and production activities during the 1970s and 1980s. An
alleged amount of damage has not been specified. Management believes the Company
has consistently conducted its oil and gas exploration and production activities
in accordance with all environmental rules and regulations in effect at the time
of operation. Further, management believes it has adequate insurance coverage
against these claims. However, due to the recent filing of the suit for events
that occurred over 20 years ago, the Company's insurance carrier at the time has
not as yet acknowledged its obligation. In any event, management does not
believe the outcome of this matter will have a material adverse effect on the
Company's financial position or results of operations.

      From time to time as incident to its operations, the Company becomes
involved in various lawsuits and/or disputes. Primarily as an operator of an
extensive trucking fleet, the Company is a party to motor vehicle accidents,
worker compensation claims or other items of general liability as would be
typical for the industry. Except as disclosed herein, management of the Company
is presently unaware of any claims against the Company that are either outside
the scope of insurance coverage, or that may exceed the level of insurance
coverage, and could potentially represent a material adverse effect on the
Company's financial position or results of operations.

Item 2. - None

Item 3. -None

Item 4. -None

Item 5. -None

Item 6.  Exhibits and Reports on Form 8-K

a.    Exhibits

31.1  Certification of Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

31.2  Certification of Chief Financial officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

                                      -25-
<PAGE>

32.1  Certification of Chief Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley of 2002

32.2  Certification of Chief Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002

b.    Reports on Form 8-K

      A report on Form 8-K dated March 18, 2004 was filed on March 24, 2004 to
      announce earnings for the fourth quarter and year ended December 31, 2003.

                                      -26-
<PAGE>


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



                                    ADAMS RESOURCES & ENERGY, INC.
                                    (Registrant)


Date:  May 13, 2004                 By  /s/ K. S. Adams, Jr.
                                        ------------------------------------
                                        K. S. Adams, Jr.
                                        Chief Executive Officer

                                    By  /s/ Richard B. Abshire
                                    -----------------------------------------
                                    Richard B. Abshire
                                    Chief Financial Officer

                                      -27-
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
-------           -------------------------------------------------------------
<S>               <C>
31.1              Certificate of Chief Executive Officer pursuant to Section 302
                  of the Sarbanes-Oxley Act of 2002

31.2              Certificate of Chief Financial Officer pursuant to Section 302
                  of the Sarbanes-Oxley Act of 2002

32.1              Certificate of Chief Executive Officer pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002

32.2              Certificate of Chief Financial Officer pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002
</TABLE>

                                      -28-