SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

                           Commission File No. 0-18774


                            SPINDLETOP OIL & GAS CO.
             (Exact name of registrant as specified in its charter)


                 Texas                                         75-2063001
      (State or other jurisdiction                       (IRS Employer or ID #)
    of incorporation or organization)

 331 Melrose, Suite 102, Richardson, TX                           75080
(Address of principal executive offices)                        (Zip Code)


                                 (972) 644-2581
                (Company's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock par value $0.01 per share
                                (Title of Class)


     Indicate  by check  mark  whether  the  Company  (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 Company
was  required  to file such  reports),and  (2) has been  subject to such  filing
requirements for the past 90 days.

                  YES   X                           NO


As of March 31, 2002, 7,525,804 shares of the Company's common stock were issued
and  outstanding,  and the  aggregate  market  value of the voting stock held by
non-affiliates  of the  company  as of that  date is not  determinable  since no
significant  public trading market has been established for the Company's common
stock.

<PAGE>

                                     PART I

Item 1. Description of Business

(a) General Business Development
    ----------------------------

Spindletop  Oil & Gas  Co.  is  engaged  in  the  exploration,  development  and
production of oil and natural gas; the rental of oilfield equipment; and through
one of its  subsidiaries,  the  gathering and marketing of natural gas. The term
"Company"  is used  herein to refer to  Spindletop  Oil & Gas Co. and its wholly
owned subsidiaries, Prairie Pipeline Co. ("PPL") and Spindletop Drilling Company
("SDC").

The net crude oil and gas reserves of the Company as of December 31, 2001,  were
42,970 barrels of oil and condensate and 6,409,520 MCF (thousand  cubic feet) of
natural  gas.  The  Company  owns  rental   equipment,   including  natural  gas
compressors,  pumping units, natural gas dehydrators and other various pieces of
oilfield  production  equipment.  In addition,  the Company,  through PPL,  owns
approximately  26.1 miles of pipelines located in Texas,  which are used for the
gathering of natural gas. The Company's  principal executive offices are located
at 331 Melrose,  Suite 102,  Richardson,  Texas.  The telephone  number is (972)
644-2581.

                                   BACKGROUND

The Company is a Texas Corporation.  The Company was previously known as Prairie
States Energy Co.  ("PSE").  On July 13, 1990,  Spindletop Oil & Gas Co., a Utah
Corporation,  ("SOG  UTAH")  merged into PSE, and the name of PSE was changed to
Spindletop Oil & Gas Co., the Company herein.

The Company was originally  incorporated  in Colorado as Mid-America  Drilling &
Exploration, Inc., on August 9, 1978 as a wholly owned subsidiary of Mid-America
Petroleum,  Inc.("MAP").  The principal business of the Company at that time was
contract  drilling  of oil and gas wells.  The  initial  public  offering of the
Company  occurred by prospectus  dated  December 13, 1979. In January 1981,  the
shares  of the  Company  owned  by MAP were  distributed  as a  dividend  to the
shareholders   of  MAP.  The  Company's  name  was  changed  to  Prairie  States
Exploration,  Inc. on March 15, 1983.  Prairie States  Exploration,  Inc. became
insolvent  in late  1983,  and  filed for  protection  under  Chapter  11 of the
Bankruptcy Code on December 14, 1983.

Prairie States Exploration,  Inc. was successfully  reorganized under Chapter 11
of  the  Bankruptcy  Code,  and  the  Bankruptcy  Court  approved  the  plan  of
reorganization  on September 9, 1985.  Pursuant to the Plan,  the Company merged
into a wholly owned subsidiary,  Prairie States Energy Co., a Texas Corporation.
The Plan of Reorganization was proposed and funded by Paul E. Cash.

Since the  reorganization,  the  Company  has engaged in the general oil and gas
business, including exploration, development, and production of oil and gas, the
rental of oilfield  production  equipment and the ownership and construction and
operation of pipelines  for the gathering and marketing of natural gas. SOG Utah
was  incorporated  on August 15,  1975 as Main  Street  Equities,  Inc.,  a Utah
corporation. SOG Utah sold 5,000,000 shares of common stock in a public offering
in 1976. Until 1981, the business of the company  consisted of minor real estate
operations.  In October  1981 the name was changed to Aledo Oil and Gas Company,
and in January 1983 the name was changed to Spindletop Oil & Gas Co.
<PAGE>

The name  "Spindletop"  has been used by Paul E. Cash since 1975 in  conjunction
with several previous oil and gas businesses in which he was engaged.

On July 13, 1990,  SOG Utah was merged into PSE,  and the name of the  surviving
company was changed to  Spindletop  Oil & Gas Co., a Texas  corporation.  In the
merger,  each shareholder of PSE received  one-half share of the common stock of
the  surviving  company,  the Company,  for each share of PSE owned prior to the
merger.  Each  shareholder  of SOG Utah received one and one-half  shares of the
common stock of the surviving company, for each share of SOG Utah owned prior to
the merger.  After the merger, the Company had 44,922,564 shares of common stock
outstanding,  32,255,195  of which  were  owned by the  shareholders  of PSE and
12,667,369 by shareholders of SOG Utah. Shares issued to the former shareholders
of SOG Utah have not been registered with the Securities and Exchange Commission
but according to Rule 144-K these shares would automatically become free trading
three years from date of issuance.  The Company's  management  believes that all
shares  issued to the former  shareholders  of SOG Utah are now free  trading in
accordance with Rule 144-K. On January 31, 1997, the Company  effected a one for
six reverse stock split.  The Company reduced the authorized  common shares from
150,000,000  to  100,000,000  and increased the par value from $.001 to $.01 per
share.

Pursuant to a Stock  Purchase  Agreement  dated December 1, 1999 between Paul E.
Cash ("Mr.  Cash") and Giant Energy  Corp.,  ("Giant") a Texas  Corporation,  on
December 1, 1999, Giant purchased  controlling  interest in Spindletop Oil & Gas
Co.

Giant purchased  5,860,889 shares of the Registrant's  outstanding  Common Stock
from Mr. Cash.  After the  transaction,  Giant Energy owns 77.88  percent of the
Registrant's 7,525,804 shares of outstanding Common Stock. Giant Energy acquired
the above shares for $490,000 cash. Chris Mazzini, President and Chairman of the
Board of the Registrant, is sole owner of Giant.

Prior to the Stock Purchase Agreement, control of the Registrant was held by Mr.
Cash,  who owned 81.98  percent of the  Registrant's  outstanding  Common Stock.
Prior to the transaction Mr. Cash was President and Chairman of the Board of the
Registrant.  After the transaction,  Mr. Cash resigned as President and Chairman
of the Board of the Registrant, but he has remained a director of Registrant and
Mr.  Mazzini  assumed  the role of  President  and  Chairman of the Board of the
Registrant.

On December 1, 1999,  Registrant  acquired oil and gas  properties and equipment
from Mr. Cash and Double  River  Investment  Co.  (owned 100% by Mr. Cash) for a
total purchase price of $460,885.

                                PLAN OF OPERATION

The Company's  long-term  strategy is to build an oil and gas production company
through  a  strategic  combination  of  selected  property  acquisitions  and an
exploration program.  Additionally, the Company will continue to rework existing
wells in an attempt to increase production and reserves.

The Company  will  continue to generate  and  evaluate  prospects  using its own
staff. The Company intends to fund operations primarily from cash flow generated
by  operations.  The  Company's  primary  area of  operation  has  been and will
continue to be in Texas with an emphasis in the  geological  provinces  known as
the Ft. Worth Basin in Texas.
<PAGE>

The  Company  will  attempt to expand its  pipeline  system.  Expansion  will be
dependent upon success in its  exploration  programs,  since the majority of its
existing  pipelines  are  connected  to wells  that  the  Company  operates.  In
addition,  the  oilfield  rental  equipment  and  compression  business  will be
expanded  as needed,  but this  segment  also  depends  upon the  success of the
exploration and development program.


(b)   Financial information relating to Industry Segments
      ---------------------------------------------------
The Company has two identifiable business segments: exploration, development and
production  of oil and natural gas, and gas  gathering  and oil field  equipment
rental.  Footnote 14 to the Consolidated  Financial Statements filed herein sets
forth the relevant  information  regarding revenues,  income from operations and
identifiable assets for these segments.


(c)   Narrative Description of Business
      ---------------------------------
The Company and SDC are engaged in the  exploration,  development and production
of oil and natural gas, and the rental of oil and gas production equipment.  PPL
is engaged in the gathering and marketing of natural gas.


(i)  Principal Products, Distribution and Availability
     -------------------------------------------------
The  principal  products  marketed  by the Company are crude oil and natural gas
which  are  sold  to  major  oil  and  gas  companies,  brokers,  pipelines  and
distributors,  and oil and gas properties which are acquired and sold to oil and
gas development entities.  Reserves of oil and gas are depleted upon extraction,
and the Company is in  competition  with other entities for the discovery of new
prospects.

The  Company is also  engaged in the  gathering  and  marketing  of natural  gas
through  its  subsidiary  PPL.  The  Company  owns 26.1 miles of  pipelines  and
currently  gathers  approximately  496 MCF of gas per day. Gas is gathered for a
fee.  Substantially  all of the gas gathered by the Company is gas produced from
wells that the Company operates and in which it owns a working interest.

The Company is also  engaged in the  business  of rental of oilfield  production
equipment.  The  equipment  is  comprised  of pumping  units,  compressors,  gas
dehydrators  and  related  production  equipment.   Substantially  all  of  such
equipment  is located on wells that the Company  operates and in which it owns a
working interest.

<PAGE>

(ii) Patents, Licenses and Franchises
     --------------------------------
Oil and gas leases of the  Company  are  obtained  from the owner of the mineral
estate. The leases are generally for a primary term of 1 to 5 years, and in some
instances  as long as 10 years,  with the  provision  that such leases  shall be
extended into a secondary  term and will continue  during such secondary term as
long as oil and gas are produced in commercial  quantities  or other  operations
are  conducted  on such leases as  provided  by the terms of the  leases.  It is
generally  required  that a delay  rental be paid on an annual  basis during the
primary  term of the lease  unless the lease is  producing.  Delay  rentals  are
normally $1.00 to $5.00 per net mineral acre.

The Company currently holds interests in producing and non-producing oil and gas
leases. The existence of the oil and gas leases and the terms of the oil and gas
leases are important to the business of the Company because future  additions to
reserves will come from oil and gas leases  currently owned by the Company,  and
others that may be acquired, when they are proven to be productive.  The Company
is  continuing  to purchase oil and gas leases in areas where it  currently  has
production, and also in other areas.


(iii) Seasonality
      -----------
The  Company's  oil and gas  activities  generally are conducted on a year round
basis with only minor interruptions caused by weather.


(iv) Working Capital Items
     ---------------------
The Company  finances the majority of its operations,  including the purchase of
oil and gas leases,  the development of wells, the construction of pipelines and
acquisition of oil field rental  equipment from its internal  working capital as
well as some borrowings.


(v) Dependence on Customers
    -----------------------
The following is a summary of significant  purchasers of the oil and natural gas
produced by the Company for the three-year period ended December 31, 2001:

                                              Year Ended December 31, (1)
                                           --------------------------------
            Purchaser                      2001          2000         1999
----------------------------------       --------      --------      --------
TXU Processing / Cantera Resources          32%           23%          15%
Mitchell Marketing Co.                      41%           24%          23%

              (1)  Percent of Total Oil & Gas Sales


Gas is sold to numerous gas  purchasers  (such as Mitchell Gas  Services,  L.P.,
Cantera  Resources,  Reliant Energy and Duke Energy Field Services) under market
sensitive,  short-term contracts computed on a month to month basis. The Company
currently has no hedged contracts.

<PAGE>

(vi) Competition
     -----------
Numerous entities and individuals,  many of which have far greater financial and
other  resources  than  the  Company,  are  active  in the  exploration  for and
production of oil and gas. Substantial competition exists for leases,  prospects
and equipment, all of which are necessary for successful operations. Competition
is focused  primarily on the discovery of new prospects,  which can be developed
and made productive.

The market  prices  received for the  Company's  products  depend on a number of
factors beyond the control of the Company,  including consumer demand, worldwide
availability,   transportation   facilities,   and  United  States  and  foreign
government  regulation  of  exports,  imports,  production  and  prices.  Widely
fluctuating prices for oil and gas over recent years have had a direct effect on
the profitability of the Company's operations.


(vii) Development Activities
      ----------------------
The  Company's  primary oil and gas  prospect  acquisition  efforts have been in
known producing areas in the United States with emphasis devoted to Texas.

The Company  intends to use a portion of its available  funds to  participate in
drilling activities.  Any drilling activity is performed by independent drilling
contractors.  The Company does not refine or  otherwise  process its oil and gas
production.

Exploration  for oil and gas is normally  conducted  with the Company  acquiring
undeveloped oil and gas prospects,  and carrying out exploratory drilling on the
prospect  with the  Company  retaining  a  majority  interest  in the  prospect.
Interests in the property are sometimes  sold to key  employees  and  associated
companies at cost. Also, interests may be sold to third parties with the Company
retaining  an  overriding  royalty  interest,  carried  working  interest,  or a
reversionary interest.

A prospect is a geographical  area  designated by the Company for the purpose of
searching for oil and gas reserves and  reasonably  expected by it to contain at
least one oil or gas  reservoir.  The Company  utilizes its own funds to acquire
oil and gas leases covering the lands comprising the prospects. These leases are
selected by the Company and are obtained  directly from the landowners,  as well
as from landmen, geologists, other oil companies, some of whom may be affiliated
with the Company, and by direct purchase,  farm-in, or option agreements.  After
an initial test well is drilled on a property,  any  subsequent  development  of
such  prospect  will  normally  require  the  Company's  participation  for  the
development of the discovery.

(viii) Environmental Regulation
       ------------------------
The Company's oil and gas exploration  and production  activities are subject to
Federal,  State  and  environmental  quality  and  pollution  control  laws  and
regulations.  Such  regulations  restrict  emission and discharge of wastes from
wells,  may require permits for the drilling of wells,  prescribe the spacing of
wells and rate of production, and require prevention and clean-up of pollution.
<PAGE>

Although the Company has not in the past incurred substantial costs in complying
with  such  laws  and   regulations,   future   environmental   restrictions  or
requirements may materially increase the Company's capital expenditures,  reduce
earnings,  and delay or prohibit certain activities.  However, such restrictions
and  requirements  would  also  apply to the  Company's  competitors,  and it is
unlikely that  compliance by the Company  would  adversely  affect the Company's
competitive position.

(ix) Additional Government Regulation
     --------------------------------
In addition to environmental regulations, the production and sale of oil and gas
is subject to regulation by Federal,  State and local  governmental  authorities
and  agencies.  Such  regulations  encompass  matters  such as the  location and
spacing of wells,  the  prevention of waste,  the rate of  production,  the sale
price of certain oil and gas, conservation, and safety.


Oil Price Regulation
--------------------
Historically, regulatory policy affecting crude oil pricing was derived from the
Emergency  Petroleum  Allocation  Act of 1973,  as amended,  which  provided for
mandatory  crude  oil price  controls  until  June 1,  1979,  and  discretionary
controls through September 30, 1981. On April 5, 1979, President Carter directed
the Department of Energy to complete administrative procedures designed to phase
out, commencing June 1, 1979, price controls on all domestically  produced crude
oil by October 1, 1981. However,  on January 28, 1981,  President Reagan ordered
the  elimination  of  remaining  federal  controls on domestic  oil  production,
effective  immediately.  Consequently,  oil may currently be sold at unregulated
prices.

Gas Price Regulation
--------------------
The Natural Gas Act of 1938 ("NGA") regulates the interstate  transportation and
certain  sales for resale of natural  gas.  The  Natural  Gas Policy Act of 1978
("NGPA")  regulates  the maximum  selling  prices of certain  categories of gas,
whether sold in so-called  "first sales" in  interstate or intrastate  commerce.
These  statutes are  administered  by the Federal Energy  Regulatory  Commission
("FERC").  The NGPA established  various  categories of natural gas and provided
for  graduated  deregulation  of price  controls  for  first  sales  of  several
categories  of natural gas.  With  certain  exceptions,  all price  deregulation
contemplated  under the NGPA as  originally  enacted in 1978 has  already  taken
place.  Under  current  market  conditions,  deregulated  gas  prices  under new
contracts  tend to be  substantially  lower than most  regulated  price ceilings
prescribed by the NGPA.

On July 26, 1989,  the Natural Gas Wellhead  Decontrol  Act of 1989  ("Decontrol
Act") was enacted.  The  Decontrol Act amended the NGPA to remove as of July 27,
1989 both price and  non-price  controls from natural gas not subject to a first
sale  contract in effect on July 26, 1989.  The  Decontrol Act also provided for
the phasing out of all price regulation under the NGPA by January 1, 1993.

(x)  Special Tax Provisions
     ----------------------
See footnote 7 to Consolidated Financial Statements

<PAGE>

(xi) Employees
     ---------
The  Company,  on its own  account and through a  management  contract  with its
parent  corporation,  employs or  contracts  for the  services  of a total of 25
people. Six are full-time employees or contractors.  The remainder are part-time
contractors or employees.

(d)  Financial  information  about  foreign and domestic  operations  and export
sales.

All of the Company's business is conducted domestically, with no export sales.


Item 2. Properties

Oil and Gas Properties
----------------------
The following table sets forth pertinent data with respect to the  Company-owned
oil and gas  properties,  all located within the continental  United States,  as
estimated by the Company:

                                                  Year Ended December 31,
                                             -----------------------------------
                                                 2001       2000        1999
                                             ----------- ----------- -----------
Gas and Oil Properties, net (1):

  Proved developed gas reserves-Mcf (2)        5,311,830   2,204,137   1,683,667
  Proved undeveloped gas reserves-Mcf (3)      1,097,690     628,986    227,077
                                             ----------- ----------- -----------
    Total proved gas reserves-Mcf              6,409,520   2,833,123   1,910,744
                                             =========== =========== ===========
  Proved Developed Crude Oil and
    Condensate reserves-Bbls (2)                  42,970      18,971      22,562
  Proved Undeveloped crude oil and
    Condensate reserves-Bbls (3)                     -           -           -
                                             ----------- ----------- -----------
    Total proved crude oil and condensate
      Reserves-Bbls                               42,970      18,971      22,562
                                             =========== =========== ==========

                                                  Year Ended December 31,
                                             -----------------------------------
                                                 2001       2000        1999
                                             ----------- ----------- -----------
Present Value of Estimated Future
  Net Reserves from proved reserves (4)(5)
    Developed                                $ 3,365,450 $ 5,254,000 $ 1,394,000
    Developed and Undeveloped                  3,729,186   7,109,000   1,604,000


(1) The estimate of the net proved oil and gas  reserves,  future net  revenues,
and the present value of future net revenues.
<PAGE>

(2) "Proved Developed Oil and Gas Reserves" are reserves that can be expected to
be recovered  through  existing  wells with  existing  equipment  and  operating
methods.

(3) "Proved Undeveloped Reserves" are reserves that are expected to be recovered
from new wells on undrilled  acreage,  or from existing wells where a relatively
major expenditure is required for recompletion.

(4) "Estimated  Future Net Revenues" are computed by applying  current prices of
oil and gas, less the estimated future  expenditures (based on current costs) to
be incurred in developing and producing the proved reserves.

(5) "Present Value of Estimated  Future Net Revenues" is computed by discounting
the  Estimated  Future Net Revenues at the rate of ten percent (10%) per year in
accordance with the Securities and Exchange Commission Rules and Regulations.

The Company's  working  interests in exploration and development wells completed
during the years indicated were as follows:

                                                Year Ended December 31,
                                       -----------------------------------------
                                            2001          2000          1999
                                       ------------- ------------- -------------
                                        Gross   Net   Gross   Net   Gross   Net
                                       ------ ------ ------ ------ ------ ------
Exploratory Wells:
  Productive                              -      -      -      -      -      -
  Non-Productive                          -      -      -      -      -      -
                                       ------ ------ ------ ------ ------ ------
      Total                               -      -      -      -      -      -
                                       ------ ------ ------ ------ ------ ------

Development Wells:
  Productive                              -      -      -      -      -      -
  Non-Productive                          -      -      -      -      -      -
                                       ------ ------ ------ ------ ------ ------
      Total                               -      -      -      -      -      -
                                       ------ ------ ------ ------ ------ ------

Total Exploration & Development
Wells:
  Productive                              -      -      -      -      -      -
  Non-Productive                          -      -      -      -      -      -
                                       ------ ------ ------ ------ ------ ------
                                          -      -      -      -      -      -
                                       ====== ====== ====== ====== ====== ======


<PAGE>

The following  tables set forth additional data with respect to production from
Company-owned oil and gas properties, all located within the continental United
States:

                                           For the years ended December 31,
                                    --------------------------------------------
                                      2001     2000     1999     1998     1997
                                    -------- -------- -------- -------- --------
Oil and Gas Production, net:
   Natural Gas (Mcf)                 472,728  479,769  277,834  350,566  357,166
   Crude Oil & Condensate (Bbl)        9,229   10,111    6,986   13,304   14,998

Average Sales Price per Unit
Produced:
   Natural Gas ($/Mcf)               $  4.07  $  3.58  $  2.20  $  1.97  $  2.66
   Crude Oil & Condensate($/Bbl)     $ 25.19  $ 27.37  $ 16.70  $ 11.97  $ 20.29

Average Production Cost per
   Equivalent Barrel (1)(2)          $  9.15  $  8.09  $9.59    $  7.37  $  8.90

(1) Includes severance taxes and ad valorem taxes.

(2) Gas production is converted to equivalent barrels at the rate of six Mcf per
    barrel, representing relative energy content of natural gas to oil.

The Company owns producing  royalties and overriding  royalties under properties
located in Texas. The revenue from these properties is not significant.

Current Activities - March 31, 2002:
------------------------------------
     Gross Wells in Process of Drilling            -0-
     Net Wells in Process of drilling              -0-
     Waterfloods in Process of Installation-       -0-
     Pressure Maintenance Operations               -0-

The Company is not aware of any major  discovery  or other  favorable or adverse
event that is  believed  to have caused a  significant  change in the  estimated
proved reserves since December 31, 2001.

Office Space:
-------------

The Company leases office space as follows:

   Location                     Square Feet          Lease Expires
   ------------------           -----------        -----------------
   Richardson, Texas              3,833            February 28, 2003

Pipelines
---------

The Company owns,  through its  subsidiary  Prairie  Pipeline Co., 26.1 miles of
natural gas pipelines in Parker, Palo Pinto and Eastland Counties,  Texas. These
pipelines  are  steel  and  polyethylene  and  range in size  from 2 inches to 6
inches.  These pipelines primarily gather natural gas from wells operated by the
Company and in which the  Company  owns a working  interest,  but also for other
parties.

The Company  normally does not purchase and resell  natural gas, but gathers gas
for a fee.  The fees  charged in some cases are  subject to  regulations  by the
State of Texas and the  Federal  Energy  Regulatory  Commission.  Average  daily
volumes of gas gathered by the  pipelines  owned by the Company was 496, 697 and
410 MCF per day for 2001, 2000, and 1999 respectively.
<PAGE>

Oil Field Production Equipment
------------------------------

The Company owns various natural gas compressors, pumping units, dehydrators and
various other pieces of oil field production equipment.

Substantially all of the equipment is located on oil and gas properties operated
by the  Company  and in which it owns a working  interest.  The rental  fees are
charged as lease operating fees to each property and each owner.


Item 3.  Legal Proceedings

Neither the Registrant nor its  subsidiaries  nor any officers or directors is a
party to any material  pending legal  proceedings  for or against the Company or
its subsidiary nor are any of their properties subject to any proceedings.


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

None


                                     PART II

Item 5.  Market for the Company's Common Stock and Related Stockholder Matters.

No  significant  public trading  market has been  established  for the Company's
common stock.  The common stock of the Company is traded on an occasional  basis
in the over the counter  market.  The Company does not believe that  listings of
bid and asking  prices for its stock are  indicative of the actual trades of its
stock, since trades are made infrequently.

There is no amount of common  stock that is subject  to  outstanding  options or
warrants to  purchase,  or  securities  convertible  into,  common  stock of the
Company.  On January 31, 1997, the Company  effected a one for six reverse stock
split.  At that time,  the Company  reduced the  authorized  common  shares from
150,000,000  to  100,000,000  and increased the par value from $.001 to $.01 per
share.

The approximate  number of record holders of the Company's Common Stock on March
31, 2002, was 631.

The Company has not paid any dividends  since its  reorganization  and it is not
contemplated  that  it  will  pay  any  dividends  on its  Common  Stock  in the
foreseeable  future.  There are no financing  agreements in place which restrict
payment of dividends.

The Registrant currently serves as its own stock transfer agent and registrar.


<PAGE>

Item 6.  Selected Financial Data

The selected financial  information presented should be read in conjunction with
the consolidated financial statements and the related notes thereto.

                                   For the years ended December 31,
                     -----------------------------------------------------------
                        2001        2000        1999        1998        1997
                     ----------- ----------- ----------- ----------- -----------
Total Revenue        $ 2,610,000 $ 2,345,000 $ 1,072,000 $ 1,239,000 $ 1,685,000
Net Income (Loss)        776,000     849,000    (271,000)   (229,000)     83,000
Earnings per Share (1)     $ .10       $ .13      ($ .04)     ($ .03)      $ .01

                                         As of December 31,

Total Assets         $ 3,486,000 $ 2,909,000 $ 1,843,000 $ 1,793,000 $ 2,225,000
Long-Term Debt            55,000      46,000     308,000         -           -

(1)  After  the 1 for 6 stock  split  discussed  in  Note 2 to the  Consolidated
Financial Statements.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Liquidity and Capital Resources
-------------------------------
The Company's  operating  capital needs, as well as its capital spending program
are generally funded from cash flow generated by operations. Because future cash
flow is subject to a number of variables,  such as the level of  production  and
the sales price of oil and  natural  gas,  the Company can provide no  assurance
that its operations will provide cash  sufficient to maintain  current levels of
capital  spending.  Accordingly,  the Company may be required to seek additional
financing from third parties in order to fund its  exploration  and  development
programs.


Results of Operations:
----------------------

2001 Compared to 2000
---------------------
Oil and gas  revenues  increased  slightly  for the  year  2001.  Although  2001
production  ended up slightly less than in 2000,  the average price for gas sold
was $.49 per mcf higher in 2001.  The gas prices  decreased  throughout the year
from a high of over $8.00 per mcf in January, to a low of under $2.00 per mcf in
October and December.  The higher prices were applied to production in the first
part of the year that was slightly  higher than  production on some wells in the
last quarter of the year.

The decrease in revenue from lease operations was  substantially due to a change
in the company's  method of accounting for overhead  charges billed to the joint
accounts where the company is the operator of the properties.  In prior periods,
the company  recorded  the revenue  from the charges to the joint  account,  and
charged  lease-operating  expenses with its proportionate  share of the overhead
charges.  The company no longer records its proportionate  share of the overhead
income and related lease operating expense, but records as income the charges to
the non-operating interests.
<PAGE>

Gas gathering and  compression  fee income  increased due to a combination of an
increase in gas transported  through the Companies pipelines during the year, as
well as the addition of a contract with a major purchaser.  In this transaction,
the Company now  transports  100% of the gas from  certain  operate  properties,
charges a fee on an mcf basis, collects and distributes the revenue from sales.

Interest income is up due to the Company's policy of investing excess cash funds
in higher earning money market accounts as opposed to checking accounts, as well
as the higher  level of cash  balances  earning  interest in 2001 as compared to
2000.

Lease operating  expenses  increased due to an increase in work-over activity in
the first  half of the year as well as a general  inflationary  increase  in the
cost of repairs,  maintenance,  materials  and supplies for the year. As oil and
gas  prices  dropped  during  the  year,  the  cost of  drilling  and  operating
properties increased.

General  and   administrative   expenses   increased  due  to  several  reasons.
Approximately  $25,000 and $35,000 of the increase was due to an increase in the
number of full-time personnel and professional  contract employees  respectively
during the year. In addition, the management fee charged by an affiliated entity
represents an increase of  approximately  $20,000 during the year. The Company's
state  franchise  tax expense  increased by $33,000,  due to the increase in the
Company's taxable income position, which is now positive.

Interest  expense  increased  due to the  accelerated  amortization  of the Note
Discount that was caused by a substantial prepayment of principal on the note to
a related party.

The current  income tax  provision  increased  as a  substantial  portion of the
Company's net operating  loss  carryforward  expired or was used up during 2001,
and the Company now needs to provide  currently for federal  income taxes due on
its taxable net income.

2000 Compared to 1999
---------------------
Oil and gas revenues increased in 2000 due to two main factors.  One, properties
that the  Company  purchased  from  Paul E.  Cash on  December  1,  1999 were in
production for the entire year of 2000. This also was the primary reason for the
increase in lease  operating  expenses.  The second  reason oil and gas revenues
increased  was due to a dramatic  increase  in gas  prices.  An  increase in oil
prices also contributed to the increase.

Operator overhead decreased in 2000. Due to the purchase of properties mentioned
above,  the Company now owns a large  percentage of those well resulting in less
operator overhead billed out to outside third parties.

Interest income increased in 2000 due to the increase of cash on hand. This cash
is primarily in money market accounts and certificates of deposit.

General  and  administrative  expenses  decreased  in 2000.  Upon the  change in
control of the  Company at the end of 1999 there was a reduction  in staff.  The
resulting  salary  reductions  and related  employee  benefits  were the primary
reason that general and administrative expenses decreased.
<PAGE>

Certain Factors That Could Affect Future Operations
---------------------------------------------------
Certain  information  contained  in this  report,  as well as  written  and oral
statements  made or  incorporated  by reference from time to time by the Company
and its  representatives  in other  reports,  filings  with the  Securities  and
Exchange Commission, press releases, conferences,  teleconferences or otherwise,
may be deemed to be  'forward-looking  statements' within the meaning of Section
21E of the Securities  Exchange Act of 1934 and are subject to the 'Safe Harbor'
provisions of that section.

Forward-looking  statements  include  statements  concerning  the  Company's and
management's  plans,  objectives,  goals,  strategies and future  operations and
performance and the assumptions underlying such forward-looking statements. When
used  in  this  document,  the  words  "anticipates",   "estimates",  "expects",
"believes", "intends", "plans", and similar expressions are intended to identify
such  forward-looking  statements.  Actual results and developments could differ
materially  from those  expressed in or implied by such  statements due to these
and other factors.


Item 8. Consolidated Financial Statements and Schedules
        Index at page 20.


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

The accountants for the Company are Farmer, Fuqua & Huff, P.C., formerly Farmer,
Fuqua,  Hunt & Munselle,  P.C.,  who have  prepared  audit reports for the years
ended December 31, 1999, 2000, and 2001.

There have been no disagreements  between the Company and Farmer, Fuqua, & Huff,
P.C. on any matter of accounting  principles or practices,  financial  statement
disclosure, or auditing scope or procedure.


<PAGE>

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant

(a) and (b)  The Directors and Executive Officers of the Company and certain
information concerning them is set forth below:

         Name             Age                  Position
   --------------------   ---    ---------------------------------------
   Chris Mazzini           44    Chairman of the Board, Director and President
   Michelle Mazzini        40    Director, Vice President and Secretary
   Paul E. Cash            69    Director

All directors hold office until the next annual meeting of the  shareholders  or
until their  successors are duly elected and qualified.  Officers of the Company
serve at the discretion of the board of directors.

(c) Significant employees
    ---------------------
    Not applicable

(d) Family relationships
    --------------------
    Michelle Mazzini is the wife of Chris Mazzini

(e) Business experience
    -------------------
Chris Mazzini,  President graduated from the University of Texas at Arlington in
1979 with a Bachelor of Science  degree in geology.  Mr.  Mazzini  founded Giant
Energy Corp  ("Giant")  in 1985 and has served as President of Giant since then.
He has worked in the oil and gas industry  since 1978.  He joined the Company in
December 1999 when he purchased controlling interest from Mr. Cash.

Michelle   Mazzini,   received  her  Bachelor  of  Science  Degree  in  Business
Administration  (accounting major) from the University of Southwestern Louisiana
where she graduated  magna cum laude in 1985.  Ms. Mazzini earned her law degree
from Louisiana State  University  where she graduated Order of the Coif in 1988.
Ms. Mazzini serves as Vice President and General Counsel of the Company.

Paul E. Cash is a graduate of The University of Texas (B.B.A.-Accounting) and is
a Certified  Public  Accountant.  He has been active in the oil and gas industry
for over 25 years,  during which time he has served as financial  officer of two
publicly-owned  companies,  Texas Gas  Producing Co. and Landa Oil Co., and also
served  as  president  of  publicly-owned   Continental  American  Royalty  Co.,
Bloomfield  Royalty Co., Southern Bankers  Investment Co.,  Spindletop Oil & Gas
Co. (a Utah Corporation),  Double River Oil & Gas Co., and Loch Exploration Inc.
Mr. Cash has also been an officer and part owner of several  private oil and gas
companies and  partnerships.  Mr. Cash also formerly served as Mayor of the City
of Sunnyvale, Texas.
<PAGE>

(f) Involvement in certain legal proceedings
    ----------------------------------------
None of the directors or executive  officers of the Registrant,  during the past
five  years,  has been  involved  in any civil or  criminal  legal  proceedings,
bankruptcy  filings or has been the  subject of an order,  judgment or decree of
any Federal or State authority involving Federal or State securities laws.


Item 11.  Executive Compensation

(a) Cash Compensation
    -----------------
For the year ended  December 31, 2001,  Mr. Mazzini did not take any salary from
the  Company.   None  of  the  Company's   executive  officers  were  paid  cash
compensation  at an annual rate in excess of $100,000.  Mr. Cash receives $5,000
per year for three years as a consulting fee, beginning on July 1, 2000.

(b) Compensation Pursuant to Plan.
    ------------------------------
None

(c) Other Compensation
    ------------------
Key  employees of the Company,  may  sometimes  be assigned  overriding  royalty
interests and/or carried working interest in prospects  acquired by or generated
by the Company.  These interests  normally vary from one-half to one percent for
each  employee.  There is no set  formula  or policy for such  program,  and the
frequency and amounts are largely controlled by the economics of each particular
prospect.

(d) Compensation of Directors
    -------------------------
Directors are not currently  compensated  nor are there plans to compensate them
for their services on the board.

(e) Termination of Employment and Change of Control Arrangement
    -----------------------------------------------------------
There are no plans or  arrangements  for payment to officers or  directors  upon
resignation or a change in control of the Registrant.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

(a) & (b) Security ownership of certain beneficial owners and managers
          ------------------------------------------------------------
The table below sets forth the information  indicated regarding ownership of the
Registrant's   common  stock,  $.01  par  value,  the  only  outstanding  voting
securities, as of December 31, 2001 with respect to: (i) any person who is known
to the  Registrant  to be the  owner  of  more  than  five  percent  (5%) of the
Registrant's common stock; (ii) the common stock of the Registrant  beneficially
owned by each of the directors of the Registrant  and, (iii) by all officers and
directors  as a group.  Each person has sole  investment  and voting  power with
respect to the shares indicated,  except as otherwise set forth in the footnotes
to the table.

<PAGE>


                                                                 Pct Based On
                                                    Nature of    Outstanding
         Name and Address               Number      Beneficial    Percent of
        Of Beneficial Owner            of Shares    Ownership       Class
----------------------------------- -------------- -----------  ----------------
Chris Mazzini                          5,900,543     Direct          78%
331 Melrose, Suite 02
Richardson, Texas 75080

Paul E. Cash                             308,468     Direct           4%
331 Melrose, Suite 102
Richardson, Texas 75080

All officers and directors
as a group                             6,209,011       -             82%


(c) Changes in control
    ------------------
The  Company is not aware of any  arrangements  or pledges  with  respect to its
securities that may result in a change in control of the Company.


Item 13. Certain  Relationships and Related Transactions

(a) Transactions with management and others.

     None

(b) Certain Business Relationships

Key  employees of the Company,  may  sometimes  be assigned  overriding  royalty
interests and/or carried working interests in prospects acquired by or generated
by the Company.  These interests  normally vary from one-half to one percent for
each  employee.  There is no set  formula  or policy for such  program,  and the
frequency and amounts are largely controlled by the economics of each particular
prospect.
<PAGE>

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as part of this Report

    1. Independent Auditors' Report
       Consolidated Balance Sheets at December 31, 2001 and 2000
       Consolidated Statements of Income (Loss) for the years ended
          December 31, 2001, 2000, and 1999
       Consolidated Statements of Changes in Shareholders' Equity for the years
          ended December 31, 2001, 2000, and 1999
       Consolidated Statements of Cash Flows for the years ended
          December 31, 2001, 2000, and 1999
       Notes to Consolidated Financial Statements

    2. Financial Statement Schedules required to be filed by Item 8 and
          Paragraph (d) of this Item 14
       Schedule II  Valuation and Qualifying Accounts
          All other  schedules have been omitted because they are not applicable
          or required under the rules of Regulation S-X or the  information  has
          been  supplied  in the  consolidated  financial  statements  or  notes
          thereto. Such schedules and reports are at page 43 of this Report.

    3. The Exhibits are listed in the index of Exhibits Required by Item 601 of
          Regulation S-K at Item (c) below and included at page 44.

(b) No Form 8-K was filed during the period covered by this Report.

(c) The Index of Exhibits is included following the Financial Statement
          Schedules beginning at page 44 of this Report.

(d) The Index to Consolidated Financial Statements and Supplemental Schedules is
included following the signatures, beginning at page 20 of this Report.




<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                            SPINDLETOP OIL & GAS CO.



Dated March 31, 2002


                                              By /s/ Chris Mazzini
                                                 Chris Mazzini
                                                 President, Director


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




          Signatures                Capacity                     Date
  Principal Executive Officers:

/s/ Chris Mazzini
---------------------------------   President, Director     March 31, 2002
Chris Mazzini


/s/ Michelle Mazzini
---------------------------------   Secretary, Director     March 31, 2002
Michelle Mazzini


/s/ Paul E. Cash
---------------------------------   Director                March 31, 2002
Paul E. Cash





<PAGE>




                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
            Index to Consolidated Financial Statements and Schedules


                                                                           Page
                                                                           ----

Independent Auditors' Report................................................ 21

Consolidated Balance Sheets - December 31, 2001 and 2000................. 22-23

Consolidated Statements of Income (Loss) for the years
     Ended December 31, 2001, 2000 and 1999................................. 24

Consolidated Statements of Changes in Shareholders'
     Equity for the years ended December 31, 2001,
     2000, and 1999......................................................... 25

Consolidated Statements of Cash Flows for the
     years ended December 31, 2001, 2000
     and 1999............................................................... 26

Notes to Consolidated Financial Statements.................................. 27

Schedules for the years ended December 31, 2001, 2000 and 1999
     II - Valuation and Qualifying Accounts................................. 43


All other  schedules  have been  omitted  because they are not  applicable,  not
required,  or the  information has been supplied in the  consolidated  financial
statements or notes thereto.

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Spindletop Oil & Gas Co.

We have audited the accompanying consolidated balance sheets of Spindletop Oil &
Gas Co. (a Texas Corporation) and subsidiaries as of December 31, 2001 and 2000,
and  the  related   consolidated   statements  of  income  (loss),   changes  in
shareholders'  equity and cash  flows for each of the three  years in the period
ended  December  31,  2001.  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 U.S.  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  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
Spindletop Oil & Gas Co. and  subsidiaries as of December 31, 2001 and 2000, and
the  consolidated  results of their  operations and their cash flows for each of
the three years in the period ended  December 31, 2001, in conformity  with U.S.
generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial statements taken as a whole. The schedules listed in the
index of  consolidated  financial  statements  are  presented  for  purposes  of
complying with the Securities and Exchange  Commission's  rules and are not part
of the  basic  consolidated  financial  statements.  These  schedules  have been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
consolidated  financial  statements  and, in our opinion,  fairly state,  in all
material  respects,  the  financial  data  required  to be set forth  therein in
relation to the basic consolidated financial statements taken as a whole.

FARMER, FUQUA, & HUFF, P.C.



Plano, Texas
March 27, 2002


<PAGE>


                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                                     As of December 31
                                                 --------------------------
                                                     2001           2000
                                                 -----------    -----------
                          ASSETS

Current Assets
  Cash                                           $ 2,323,000    $ 1,585,000
  Accounts receivable                                175,000        340,000
  Accounts receivable, related parties                   -            8,000
  Prepaid income tax                                  89,000            -
                                                 -----------    -----------
    Total Current Assets                           2,587,000      1,933,000
                                                 -----------    -----------

Property and Equipment, at cost
  Oil and gas properties (full cost method)        3,224,000      3,202,000
  Rental equipment                                   397,000        405,000
  Gas gathering systems                              145,000        145,000
  Other property and equipment                        85,000         53,000
                                                 -----------    -----------
                                                   3,851,000      3,805,000
Accumulated depreciation and amortization         (2,952,000)    (2,829,000)
                                                 -----------    -----------
    Total Property and Equipment, net                899,000        976,000
                                                 -----------    -----------

Total Assets                                     $ 3,486,000    $ 2,909,000
                                                 ===========    ===========


        The accompanying notes are an integral part of these statements.





<PAGE>


                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS - (Continued)


                                                       As of December 31
                                                 --------------------------
                                                     2001          2000
                                                 -----------    -----------
           LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
  Accounts payable and accrued liabilities       $   358,000    $   472,000
  Notes payable, related party                       231,000         92,000
  Income tax payable                                     -           60,000
  Tax savings benefit payable                         97,000         97,000
                                                 -----------    -----------
    Total current liabilities                        686,000        721,000
                                                 -----------    -----------

Notes payable, related party                          55,000        246,000
                                                 -----------    -----------

Deferred income tax payable                          121,000         94,000
                                                 -----------    -----------

Shareholders' Equity
  Common stock, $.01 par value; 100,000,000
    Shares authorized; 7,525,804 shares
    Issued and outstanding at
    December 31, 2001 and 2000                        75,000         75,000
  Additional paid-in capital                         733,000        733,000
  Retained earnings                                1,816,000      1,040,000
                                                 -----------    -----------
    Total Shareholders' Equity                     2,624,000      1,848,000
                                                 -----------    -----------

Total Liabilities and Shareholders' Equity       $ 3,486,000    $ 2,909,000
                                                 ===========    ===========



        The accompanying notes are an integral part of these statements.

<PAGE>


                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)


                                             Years Ended December 31,
                                     ---------------------------------------
                                         2001          2000          1999
                                     -----------   -----------   -----------
Revenues
  Oil and gas revenue                $ 2,191,000   $ 1,994,000   $   729,000
  Revenue from lease operations           32,000        93,000       158,000
  Gas gathering, compression and
    Equipment rental                     219,000       161,000       128,000
  Interest income                         85,000        36,000         2,000
  Other                                   83,000        61,000        55,000
                                     ------------  -----------   -----------
     Total revenue                     2,610,000     2,345,000     1,072,000
                                     -----------   -----------   -----------

Expenses
  Pipeline and rental operations          36,000        29,000        50,000
  Lease operations                       930,000       729,000       457,000
  Depreciation and amortization          133,000       244,000       207,000
  General and administrative             438,000       310,000       551,000
  Loss on sale of securities                 -             -          78,000
  Interest expense                       111,000        30,000           -
                                     -----------   -----------   -----------
    Total Expenses                     1,648,000     1,342,000     1,343,000
                                     -----------   -----------   -----------
Income (Loss) Before Income Tax          962,000     1,003,000      (271,000)
                                     -----------   -----------   -----------

Current tax provision                    159,000        60,000           -
Deferred tax provision                    27,000        94,000           -
                                     -----------   -----------   -----------
                                         186,000       154,000           -
                                     -----------   -----------   -----------

Net Income (Loss)                    $   776,000   $   849,000   $  (271,000)
                                     ===========   ===========   ===========

Earnings (Loss) per Share of
  Common Stock                            $ 0.10       $  0.11       $ (0.04)
                                     ===========   ===========   ===========

Weighted Average Shares Outstanding    7,525,804     7,525,804     7,525,804
                                     ===========   ===========   ===========



        The accompanying notes are an integral part of these statements.
<PAGE>


                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2000, and 1999


                                                     Additional
                                  Common Stock        Paid-In
                               Shares      Amount      Capital     Earnings
                             ----------- ----------- ----------- -----------

Balance, January 1, 1999       7,525,804  $   75,000  $  733,000  $  462,000

Net Loss                             -           -           -      (271,000)
                             ----------- ----------- ----------- -----------
Balance, December 31, 1999     7,525,804      75,000     733,000     191,000

Net Income                           -           -           -       849,000
                             ----------- ----------- ----------- -----------
Balance, December 31, 2000     7,525,804      75,000     733,000   1,040,000

Net Income                           -           -           -       776,000
                             ----------- ----------- ----------- -----------
Balance, December 31, 2001     7,525,804      75,000     733,000   1,816,000
                             =========== =========== =========== ===========




        The accompanying notes are an integral part of these statements.



<PAGE>


                    SPINDLETOP OIL & GAS CO AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                Years Ended December 31,
                                          -----------------------------------
                                              2001        2000        1999
                                          ----------- ----------- -----------
Cash Flows from Operating Activities
  Net Income (Loss)                       $   776,000 $   849,000 $  (271,000)
  Reconciliation of net income (loss)
    to net cash provided by (used for)
    Operating Activities
      Depreciation and amortization           133,000     244,000     207,000
      Amortization of note discount           (27,000)     30,000         -
      Decrease in accounts receivable -
        related party                           8,000         -           -
      Changes in accounts receivable          165,000     (22,000)     (1,000)
      Changes in prepaid income tax           (89,000)        -           -
      Changes in accounts payable            (114,000)     33,000      13,000
      Changes in current taxes payable        (60,000)     60,000         -
      Increase in deferred taxes payable       27,000      94,000          -
      Other                                       -        10,000      (4,000)
                                          ----------- ----------- -----------
Net cash provided by (used for) operating
  activities                                  819,000   1,298,000     (56,000)
                                          ----------- ----------- -----------

Cash flows from Investing Activities
  Capitalized acquisition, exploration
    and development costs                     (23,000)    (61,000)        -
  Proceeds from sale of properties                -        64,000      44,000
  Proceeds from sale of other assets              -           -        16,000
  Purchase of property and equipment          (33,000)        -        (8,000)
                                          ----------- ----------- -----------
Net cash provided by (used for) Investing
   Activities                                 (56,000)      3,000      52,000
                                          ----------- ----------- -----------
Cash Flows from Financing Activities
  Repayment of notes payable to
    related party                             (25,000)        -           -
                                          ----------- ----------- -----------
Net cash provided by (used for) Financing
  Activities                                  (25,000)        -           -
                                          ----------- ----------- -----------

Increase (decrease) in cash                   738,000   1,301,000      (4,000)

Cash at beginning of period                 1,585,000     284,000     288,000
                                          ----------- ----------- -----------
Cash at end of period                     $ 2,323,000 $ 1,585,000 $   284,000
                                          =========== =========== ===========



        The accompanying notes are an integral part of these statements.
<PAGE>


                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION AND ORGANIZATION

Merger and Basis of Presentation
--------------------------------

On July 13, 1990, Prairie States Energy Co., a Texas corporation,  (the Company)
merged with Spindletop Oil & Gas Co., a Utah corporation (the Acquired Company).
The name of Prairie States Energy Co. was changed to Spindletop Oil & Gas Co., a
Texas corporation at the time of the merger.

Organization and Nature of Operations
-------------------------------------

The  Company  was  organized  as a  Texas  Corporation  in  September  1985,  in
connection with the Plan of Reorganization ("the Plan"),  effective September 9,
1985,  of  Prairie  States  Exploration,   Inc.,  ("Exploration"),   a  Colorado
Corporation, which had previously filed for Chapter 11 bankruptcy. In connection
with the Plan,  Exploration was merged into the Company,  with the Company being
the surviving  corporation.  After giving effect to the stock split discussed in
Note 2, up to a total of 166,667 of the Company's common shares may be issued to
Exploration's  former  shareholders.  As of December 31, 2001,  2000,  and 1999,
122,436 shares have been issued to former  shareholders  in connection  with the
Plan.

Spindletop  Oil & Gas  Co.  is  engaged  in  the  exploration,  development  and
production of oil and natural gas; the rental of oilfield equipment; and through
one of its subsidiaries, the gathering and marketing of natural gas.


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant  accounting  policies  consistently  applied in the
preparation of the accompanying financial statements follows:

Consolidation
-------------

The consolidated  financial  statements include the accounts of Spindletop Oil &
Gas Co. and its wholly owned  subsidiaries,  Prairie Pipeline Co. and Spindletop
Drilling Company.  All significant  intercompany  transactions and accounts have
been eliminated.

Oil and Gas Properties
----------------------

The  Company  follows  the full cost  method of  accounting  for its oil and gas
properties. Accordingly, all costs associated with acquisition,  exploration and
development  of oil and gas reserves are  capitalized  and accounted for in cost
centers,  on a  country-by-country  basis.  If  unamortized  costs within a cost
center  exceed the cost center  ceiling (as  defined),  the excess is charged to
expense during the year in which the excess occurs.

<PAGE>

Depreciation  and  amortization for each cost center are computed on a composite
unit-of-production  method,  based on estimated proven reserves  attributable to
the respective cost center. All costs associated with oil and gas properties are
currently  included in the base for  computation  and  amortization.  Such costs
include all acquisition, exploration and development costs. All of the Company's
oil and gas properties are located within the continental United States.

Gains and losses on sales of oil and gas  properties  are treated as adjustments
of capitalized costs. Gains or losses on sales of property and equipment,  other
than oil and gas properties, are recognized as part of operations.  Expenditures
for  renewals  and  improvements  are   capitalized,   while   expenditures  for
maintenance and repairs are charged to operations as incurred.

Property and Equipment
----------------------

The Company, as operator,  leases equipment to owners of oil and gas wells, on a
month-to-month basis.

The Company,  as operator,  transports gas through its gas gathering systems, in
exchange for a fee.

Depreciation is provided in amounts sufficient to relate the cost of depreciable
assets to  operations  over  their  estimated  service  lives (5 to 10 years for
rental equipment and gas gathering  systems, 4 to 5 years for other property and
equipment).  The  straight-line  method of  depreciation  is used for  financial
reporting purposes, while accelerated methods are used for tax purposes.

Inventory
---------

Inventory  consists of oil field materials and supplies,  stated at the lower of
average cost or market.

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

The Company  accounts  for income  taxes  pursuant  to  Statement  of  Financial
Accounting  Standards No. 109  "Accounting  for Income Taxes" (SFAS 109),  which
requires the recognition of deferred tax liabilities and assets for the expected
future tax  consequences  of events that have been  recognized  in the Company's
financial statements or tax returns. Under this method, deferred tax liabilities
and  assets  are  determined  based  on the  difference  between  the  financial
statement  carrying  amounts  and tax bases of  assets  and  liabilities,  using
enacted tax rates in effect in the years in which the  differences  are expected
to  reverse.  The  temporary   differences  primarily  relate  to  depreciation,
depletion and intangible drilling costs.

<PAGE>

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  amounts  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  period.
Actual results could differ from those estimates.

Stock Split
-----------

In December 1996 the Board of Directors  declared a 1-for-6  reverse stock split
on the Company's  common stock.  The record date was January 31, 1997. All share
and per share data as appropriate, reflect this split.


3.  ACCOUNTS RECEIVABLE
                                                     December 31,
                                             ----------------------------
                                                 2001            2000
                                             ------------    ------------

              Trade                          $     49,000    $     44,000
              Accrued receivable                  156,000         324,000
              Other                                   -             2,000
                                             ------------    ------------
                                                  205,000         370,000
              Less: Allowance for losses          (30,000)        (30,000)
                                             ------------    ------------
                                             $    175,000    $    340,000
                                             ============    ============


4.  ACCOUNTS PAYABLE
                                                     December 31,
                                             ----------------------------
                                                 2001            2000
                                             ------------    ------------

              Trade payables                 $     78,000    $    190,000
              Production proceeds payable         276,000         103,000
              Other                                 4,000         179,000
                                             ------------    ------------
                                             $    358,000    $    472,000
                                             ============    ============





<PAGE>

5.  NOTES PAYABLE-RELATED PARTY
                                                         December 31,
                                                  --------------------------
                                                      2001          2000
                                                  ------------  ------------

    Non-interest  bearing  note to  Paul  Cash,
    due  in  minimum  monthly  installments  of
    $3,333   beginning   January,   2001,  with
    unpaid   principal   due   November,   2008
    ($384,000   face   value   less   amortized
    discount   of  $98,000   and   $120,000  at
    December 31, 2001 and  2000,  respectively,
    based  on  an  effective  interest  rate of
    8.5%).   The note is not collateralized.(1)   $    286,000  $    264,000

    Non-interest  bearing  note  to  Paul Cash,
    due  June, 2001  ($77,000  face  value less
    amortized  discount of $10,000 at  December
    31,  2000  based  on an  effective interest
    rate of 8.5%).The note is not collateraized            -          74,000
                                                  ------------  ------------
                                                       286,000       338,000
   Less current maturities                             231,000        92,000
                                                  ------------  ------------
                                                  $     55,000  $    246,000
                                                  ============  ============

(1) This non-interest  bearing note is payable in monthly installments of $3,333
or 10 percent  of net oil and gas  revenue,  whichever  is  greater.  Management
cannot determine the actual monthly amounts due and payable because of variables
that affect net oil and gas revenues such as price and production.  For purposes
of calculating the principal  maturities below the Company is using the required
minimum  payments of $3,333.  Subsequent to year end a $200,000  prepayment  was
made on this note.  This  prepayment  caused the note discount to be adjusted to
$11,000, and the face amount adjusted to $297,000,  resulting in a note payable,
net of discount due at year-end of $286,000.

Principal maturities of notes payable as of December 31, 2001 are as follows:

                  Year Ended
                 December 31,                 Amount
                ------------              ------------
                    2002                  $    231,000
                    2003                        37,000
                    2004                        18,000
                    2005                           -
                    2006                           -
                 Thereafter                        -
                                          ------------
                                          $    286,000
                                          ============
<PAGE>

6. RELATED PARTY TRANSACTIONS

Beginning  December 1, 1999 Giant  Energy  charged the Company  $6,000 per month
management  fee which was increased to $10,000 per month  beginning on August 1,
2001.  Giant  Energy's  personnel  provide  services  to  the  Company  and  the
management  fee is  charged  to recoup  some of the costs  associated  with work
performed for the Company.

Included in the accompanying balance sheets are the following amounts related to
Mr. Cash:

                                                      December 31,
                                              ----------------------------
                                                  2001            2000
                                              ------------    ------------
   Notes Payable, non-interest bearing        $    286,000    $    338,000
                                              ============    ============

On August 30, 2001, the Company guaranteed a letter of credit with a bank issued
by an  affiliated  company in favor of the Railroad  Commission  of Texas.  This
letter of credit was issued in accordance with the filing of a P-5  Organization
Report as  required  by the Texas  Natural  Resources  Code in order to  perform
operations  within the  jurisdiction  of the Railroad  Commission of Texas.  The
letter of credit is dated  August 30, 2001 and  expires on February 1, 2003.  In
addition to the Company's guarantee,  this letter of credit is also secured by a
$100,000 certificate of deposit owned by the Company.


7.  INCOME TAXES

The Company  accounts  for income  taxes  pursuant  to  Statement  of  Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109
utilizes the liability method of computing deferred income taxes.

In connection  with the Plan  discussed in Note 1, the Company agreed to pay, in
cash, to Exploration's unsecured creditors,  as defined,  one-half of the future
reductions of Federal  income taxes which were  directly  related to any allowed
carryovers of  Exploration's  net operating  losses and  investment tax credits.
Such payments are to be made on a pro-rata  basis.  Amounts  incurred under this
agreement,  which are  considered  contingent  consideration  under APB No.  16,
totaled $ -0-,  $ -0-,  and $ -0- in 2001,  2000 and 1999,  respectively.  As of
December  31,  2001 the  Company  has not  received a ruling  from the  Internal
Revenue  Service  concerning  the  net  operating  loss  and  investment  credit
carryovers.  Until the tax savings  which result from the  utilization  of these
carryforwards is assured,  the Company will not pay to  Exploration's  unsecured
creditors any of the tax savings benefit.  As of December 31, 2001 and 2000, the
Company owes $97,000 respectively to Exploration's unsecured creditors.

In calculating tax savings benefits described above,  consideration was given to
the alternative minimum tax, where applicable,  and the tax effects of temporary
differences, as shown below:
<PAGE>


                                                Years Ended December 31,
                                          -----------------------------------
                                              2001       2000        1999
                                          ----------- ----------- -----------
     Intangible drilling costs            $       -   $       -   $    (4,000)
     Differences between book and tax
         depreciation, depletion and
         amortization                             -           -         4,000


Income tax  differed  from the amounts  computed by  applying  the U.S.  federal
income  tax rate of 35% to pretax  income in 2001,  2000 and 1999 as a result of
the following:

                                              2001       2000        1999
                                          ----------- ----------- -----------
     Computed expected tax expense        $   272,000 $   351,000 $       -
     Miscellaneous timing differences         (57,000)    (18,000)        -
     Net operating loss carryforward          (56,000)   (273,000)        -
                                          ----------- ----------- -----------
                                          $   159,000 $    60,000 $       -
                                          =========== =========== ===========


Deferred income taxes reflect the effects of temporary  differences  between the
tax bases of assets and liabilities and the reported amounts of those assets and
liabilities for financial reporting purposes. Deferred income taxes also reflect
the value of net  operating  losses,  investment  tax credits and an  offsetting
valuation  allowance.  The Company's total deferred tax assets and corresponding
valuation allowance at December 31, 2001 and 2000 consisted of the following:

                                                        December 31,
                                                ----------------------------
                                                    2001            2000
                                                ------------    ------------
  Deferred tax assets
    Investment tax credit carryforwards         $      1,000    $      1,000
    Depreciation, depletion and amortization         150,000         149,000
    Other, net                                         7,000           7,000
                                                ------------    ------------
      Total                                          158,000         157,000

  Deferred tax liabilities
    Expired leasehold                                (41,000)        (23,000)
    Intangible drilling costs                       (238,000)       (228,000)
                                                ------------    ------------
  Net deferred tax liability                        (121,000)        (94,000)

  Less: Valuation allowance                              -               -
                                                ------------    ------------
  Net deferred tax liability                        (121,000)        (94,000)
                                                ============    ============
<PAGE>


8.       CASH FLOW INFORMATION

The Company does not consider any of its assets to meet the definition of a cash
equivalent.

Net cash provided by operating activities includes cash payments for interest of
$ -0-, $ -0- and $ -0- in 2001, 2000, and 1999, respectively.  Also included are
cash  payments  for  taxes of  $284,000,  $-0- and $-0- in 2001,  2000 and 1999,
respectively.

Excluded  from the  Consolidated  Statements  of Cash Flows were the  effects of
certain non-cash investing and financing activities, as follows:

                                         2001          2000          1999
                                      -----------   -----------   -----------
  Purchase of equipment for note
      payable                         $       -     $       -     $    67,000
  Purchase of oil and gas properties
      For note payable                        -             -         240,000
  Retirement of fixed assets                  -         121,000           -


9.  EARNINGS PER SHARE

Earnings  per share  (EPS) are  calculated  in  accordance  with  Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128), which was
adopted  in 1997 for all years  presented.  Basic EPS is  computed  by  dividing
income available to common shareholders by the weighted average number of common
shares outstanding during the period.  Diluted EPS does not apply to the Company
due to the absence of dilutive  potential common shares.  All calculations  have
been  adjusted  for the  effects  of the stock  split  discussed  in Note 2. The
adoption of SFAS 128 had no effect on previously reported EPS.


10.  CONCENTRATIONS OF CREDIT RISK

As of December 31, 2001, the Company had approximately $151,000,  $1,618,000 and
$672,000 in accounts at three banks, respectively.

Most of the Company's business activity is located in Texas. Accounts receivable
as of December 31, 2001 and 2000 are due from both individual and  institutional
owners of joint  interests in oil and gas wells as well as purchasers of oil and
gas.  A portion  of the  Company's  ability  to  collect  these  receivables  is
dependent  upon  revenues  generated  from sales of oil and gas  produced by the
related wells.
<PAGE>


11. FINANCIAL INSTRUMENTS

The estimated fair value of the Company's financial  instruments at December 31,
2001 and 2000 follow:

                               --------- 2001 -------- --------- 2000 --------
                                 Carrying      Fair      Carrying      Fair
                                  Amount      Value       Amount      Value
                               ----------- ----------- ----------- -----------
  Cash                         $ 2,323,000 $ 2,323,000 $ 1,585,000 $ 1,585,000
  Accounts receivable              175,000     175,000     340,000     340,000
  Accounts receivable,
    Related party                      -           -         8,000       8,000
  Notes payable, related party     286,000     286,000     338,000     338,000


The fair  value  amounts  for each of the  financial  instruments  listed  above
approximate carrying amounts due to the short maturities of these instruments.


12.      COMMITMENTS AND CONTINGENCIES

In connection with the Plan of  Reorganization  discussed in Note 1, the Company
agreed to pay,  in cash,  to  Exploration's  unsecured  creditors,  as  defined,
one-half of the future  reduction of Federal  income  taxes which were  directly
related to any allowed  carryovers of  Exploration's  net  operating  losses and
investment tax credits existing at the time of the reorganization.

In June 1993,  Spindletop  Drilling  Company entered into an agreement with Loch
Exploration,  Inc.,  whereby the  parties  agreed to combine  their  talents and
resources  to  evaluate  and acquire  producing  and  non-producing  oil and gas
properties at various auctions.  Any such properties acquired under the terms of
this  agreement  were to be acquired by initial  assignment to the Company.  The
Company  agreed to provide Loch with a recordable  assignment  of its  interest,
such interest to be determined by the proportionate share of monies expended for
the acquisition of said properties. All costs are to be borne by the Company and
Loch in the  same  proportions  as their  respective  ownership  interests.  The
Company served as administrator for properties  acquired in connection with this
agreement,  and was entitled to an overhead  reimbursement  for  properties  for
which the Company served as operator.  This agreement had an initial term of six
months,  and was terminated when the Company purchased Loch's interests in these
properties in April, 2000.

In March 1994, the Company  entered into an agreement  with PGC Gas Company,  an
unaffiliated  entity,  under terms similar to those of the  agreement  with Loch
Exploration,  Inc.,  described above.  This agreement had an initial term of six
months,  to continue  month to month  thereafter  and was  cancelled in January,
2001.
<PAGE>

The Company's oil and gas exploration  and production  activities are subject to
Federal,  State  and  environmental  quality  and  pollution  control  laws  and
regulations.  Such  regulations  restrict  emission and discharge of wastes from
wells,  may require permits for the drilling of wells,  prescribe the spacing of
wells and rate of production, and require prevention and clean-up pollution.

Although the Company has not in the past incurred substantial costs in complying
with  such  laws  and   regulations,   future   environmental   restrictions  or
requirements may materially increase the Company's capital expenditures,  reduce
earnings, and delay or prohibit certain activities.

The Company has a $50,000  letter of credit with a bank in favor of the Railroad
Commission of Texas issued in accordance  with the filing of a P-5  Organization
Report as  required  by the Texas  Natural  Resources  Code in order to  perform
operations  within the  jurisdiction  of the Railroad  Commission of Texas.  The
letter of credit is dated August 30, 2001 and expires on February 1, 2003.  This
letter of  credit is  secured  by a  certificate  of  deposit  in the  amount of
$100,000 issued by the same bank that issued the letter of credit.  The $100,000
certificate  of deposit is also used as security for a $50,000  letter of credit
issued by an affiliated company in favor of the Railroad  Commission of Texas in
accordance..  with the filing of a P-5  Organization  Report as  required by the
Texas  Natural  Resources  Code  in  order  to  perform  operations  within  the
jurisdiction of the Railroad Commission of Texas.


13.      ADDITIONAL OPERATIONS AND BALANCE SHEET INFORMATION

Certain information about the Company's  operations for the years ended December
31, 2001, 2000, and 1999 follows.

Significant Oil and Gas Purchasers
----------------------------------

The  Company's  oil sales are made on a day to day  basis at  approximately  the
current  area  posted  price.  The loss of any oil  purchaser  would not have an
adverse  effect upon  operations.  The Company  generally  contracts to sell its
natural gas to purchasers pursuant to short-term contracts.  Additionally,  some
of the  Company's  natural gas not under  contract  is sold at the then  current
prevailing  "spot"  price on a month to month  basis.  Following is a summary of
significant oil and gas purchasers  during the three-year  period ended December
31, 2001.

                                                Year ended December 31,
                                          ----------------------------------
           Purchaser                         2001        2000        1999
  ------------------------------          ----------  ----------  ----------

  TXU Processing / Cantera Resources          32 %        23 %        15 %
  Mitchell Marketing Co.                      41 %        24 %        23 %


There are no other customers of the Company that individually accounted for more
than 10% of the  Company's  oil and gas  revenues  during the three  years ended
December 31, 2001.
<PAGE>

Certain  revenues,  costs and  expenses  related  to the  Company's  oil and gas
operations are as follows:

                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
  Capitalized costs relating to oil
  and gas producing activities:

    Unproved properties               $       -     $       -     $    93,000
    Proved properties                   3,224,000     3,202,000     3,112,000
                                      -----------   -----------   -----------
      Total capitalized costs           3,224,000     3,202,000     3,205,000

    Accumulated amortization           (2,436,000)   (2,334,000)   (2,128,000)
                                      -----------   -----------   -----------
      Total capitalized costs, net    $   788,000   $   868,000   $ 1,077,000
                                      ===========   ===========   ===========


                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000         1999
                                      -----------   -----------   -----------
  Costs incurred in oil and gas
  property, acquisition, exploration
  and development:
    Acquisition of properties         $    24,000   $    61,000   $   241,000
    Exploration costs                         -             -             -
    Development costs                         -             -             -
                                      -----------   -----------   -----------
              Total costs incurred    $    24,000   $    61,000   $   241,000
                                      ===========   ===========   ===========


                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
  Results of Operations from producing
  Activities:

    Sales of oil and gas              $ 2,191,000   $ 1,994,000   $   729,000
                                      -----------   -----------   -----------

    Production costs                      930,000       729,000       457,000
    Amortization of oil and gas
      Properties                          102,000       206,000       163,000
                                      -----------   -----------   -----------
      Total costs                       1,032,000       935,000       620,000
                                      -----------   -----------   -----------
         Total Net Revenue            $ 1,159,000   $ 1,059,000   $   109,000
                                      ===========   ===========   ===========
<PAGE>

                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
  Sales price per equivalent Mcf        $  4.15       $  3.69       $  2.20
                                      ===========   ===========   ===========

  Production costs per equivalent Mcf   $   1.76      $  1.35       $  1.59
                                      ===========   ===========   ===========

  Amortization per equivalent Mcf       $    .19      $   .38       $   .51
                                      ===========   ===========   ===========


                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
  Costs incurred in gas gathering and
  equipment rental:
    Acquisition of property & equip   $       -     $       -     $       -
                                      ===========   ===========   ===========


                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
  Results of Operations from gas
  gathering and equipment rental
  activities:

    Revenue                           $   219,000   $   161,000   $   128,000
                                      -----------   -----------   -----------

    Gas pipeline purchases                    -             -             -
    Operating expenses                     36,000        29,000        50,000
    Depreciation                           19,000        20,000        14,000
                                      -----------   -----------   -----------
      Total costs                          55,000        49,000        64,000
                                      -----------   -----------   -----------
         Total net revenue            $   164,000   $   112,000   $    64,000
                                      ===========   ===========   ===========

<PAGE>

14.      BUSINESS SEGMENTS

The Company's two business segments are (1) oil and gas exploration,  production
and operations and (2)  transportation and compression of natural gas, including
related equipment rental. Management has chosen to organize the Company into the
two segments  based on the  products or services  provided.  The  following is a
summary of selected  information  for these segments for the  three-year  period
ended December 31, 2001:

                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
Revenues: (3)
  Oil and gas exploration, production
    and operations                    $ 2,223,000   $ 2,087,000   $   887,000
  Gas gathering, compression and
    equipment rental                      219,000       161,000       128,000
                                      -----------   -----------   -----------
                                      $ 2,442,000   $ 2,248,000   $ 1,015,000
                                      ===========   ===========   ===========
Depreciation, depletion and
Amortization expense:
  Oil and gas exploration, production
    and operations                    $   114,000   $   206,000   $   163,000
  Gas gathering, compression and
    equipment rental                       19,000        20,000        14,000
                                      -----------   -----------   -----------
                                      $   133,000   $   226,000   $   177,000
                                      ===========   ===========   ===========
Income from operations:
  Oil and gas exploration, production
    and operations                    $ 1,179,000   $ 1,152,000   $   267,000
  Gas gathering, compression and
    equipment rental                      164,000       112,000        64,000
                                      -----------   -----------   -----------
                                        1,343,000     1,264,000       331,000
Corporate and other (1)                  (567,000)     (415,000)     (602,000)
                                      -----------   -----------   -----------
Consolidated net income (loss)        $   776,000   $   849,000   $  (271,000)
                                      ===========   ===========   ===========

Identifiable Assets:
  Oil and gas exploration, production
    and operations                    $   820,000   $   868,000   $ 1,077,000
  Gas gathering, compression and
    equipment rental                       80,000        98,000       118,000
                                      -----------   -----------   -----------
                                      $   900,000   $   966,000   $ 1,195,000
Corporate and other (2)                 2,586,000     1,943,000       648,000
                                      -----------   -----------   -----------
Consolidated total assets             $ 3,486,000   $ 2,909,000   $ 1,843,000
                                      ===========   ===========   ===========
<PAGE>

Note (1):  Corporate and other  includes  general and  administrative  expenses,
other non-operating income and expense and income taxes.

Note (2):  Corporate and other  includes  cash,  accounts and notes  receivable,
inventory, other property and equipment and intangible assets.

Note (3):  All reported revenues are from external customers.


15.      SUPPLEMENTARY INCOME STATEMENT INFORMATION

The following items were charged directly to expense:

                                              Year Ended December 31,
                                      ---------------------------------------
                                          2001          2000          1999
                                      -----------   -----------   -----------
     Maintenance and repairs          $    36,000   $    29,000   $   50,000
     Production taxes                     121,000       102,000       41,000
     Taxes, other than payroll and
         Income taxes                      40,000         9,000       12,000


<PAGE>

16.      SUPPLEMENTAL RESERVE INFORMATION (UNAUDITED)

The Company's net proved oil and gas reserves as of December 31, 2001,  2000 and
1999 have been  estimated by Company  personnel in  accordance  with  guidelines
established  by  the  Securities  and  Exchange  Commission.   Accordingly,  the
following  reserve  estimates  were based on  existing  economic  and  operating
conditions.  Oil and gas prices in effect at December 31 of each year were used.
Operating costs,  production and ad valorem taxes and future  development  costs
were based on current costs with no escalation.

There are numerous  uncertainties  inherent in  estimating  quantities of proved
reserves  and in  projecting  the  future  rates of  production  and  timing  of
development  expenditures.  The following reserve data represents estimates only
and should not be construed as being exact.  Moreover, the present values should
not be  construed  as the  current  market  value of the  Company's  oil and gas
reserves or the costs that would be incurred to obtain equivalent reserves.

Changes in Estimated Quantities of Proved Oil and Gas Reserves (Unaudited):

                                                  Crude Oil     Natural Gas
                                                    Bbls            Mcf
                                                ------------    ------------
Quantities of Proved Reserves:
------------------------------
  Balance December 31, 1998                           33,920       1,998,537
    Sales of reserves in place                        (7,856)            -
    Acquired properties                                  -           354,133
    Revisions of previous estimates                    3,484        (164,092)
    Production                                        (6,986)       (277,834)
                                                ------------    ------------
  Balance December 31, 1999                           22,562       1,910,744
    Sales of reserves in place                        (2,008)            -
    Acquired properties                                1,764         106,126
    Revisions of previous estimates                    6,764       1,296,022
    Production                                       (10,111)       (479,769)
                                                ------------    ------------
  Balance December 31, 2000                           18,971       2,833,123
    Sales of reserves in place                           -           (18,825)
    Acquired properties                                  -             5,350
    Revisions of previous estimates                   33,228       4,062,600
    Production                                        (9,229)       (472,728)
                                                ------------    ------------

  Balance December 31, 2001                           42,970       6,409,520
                                                ============    ============

Proved Developed Reserves:
--------------------------
  Balance December 31, 1999                           22,562       1,683,667
  Balance December 31, 2000                           18,971       2,204,137
  Balance December 31, 2001                           42,970       5,311,830

<PAGE>

16.  SUPPLEMENTAL RESERVE INFORMATION (UNAUDITED) - Continued

          Standardized Measure of Discounted Future Net Cash Flows and
             Changes Therein Relating to Proved Oil and Gas Reserves
                                   (Unaudited)

The Standardized Measure of Discounted Future Net Cash Flows and Changes Therein
Relating  to Proved  Oil and Gas  Reserves  ("Standardized  Measures")  does not
purport to present the fair market value of a company's oil and gas  properties.
An estimate of such value  should  consider,  among other  factors,  anticipated
future  prices  of oil and gas,  the  probability  of  recoveries  in  excess of
existing proved reserves,  the value of probable reserves and acreage prospects,
and perhaps  different  discount  rates.  It should be noted that  estimates  of
reserve quantities,  especially from new discoveries,  are inherently  imprecise
and subject to substantial revision.

Future net cash flows were  computed  using the  contract  price,  which was not
escalated.  Future production  includes  operating costs and taxes. No deduction
has  been  made  for  interest,  general  corporate  overhead,  depreciation  or
amortization.  Future  income tax  payable was not  computed  because of the net
operating  loss  carryforward  (See Note 7). The annual  discount  of  estimated
future  net cash  flows  is  defined,  for use  herein,  as  future  cash  flows
discounted at 10% per year, over the expected period of realization


Standardized  measure of  discounted  future  net cash  flows  related to proved
reserves:

                                            Year Ended December 31,
                                   ------------------------------------------
                                       2001           2000           1999
                                   ------------   ------------   ------------

  Future production revenue        $ 15,342,000   $ 16,488,000   $  4,643,000
  Future development costs             (621,000)      (253,000)      (110,000)
  Future production costs            (7,507,000)    (6,150,000)    (2,523,000)
                                   ------------   ------------   ------------
  Future net cash flow before
    Federal income tax                7,214,000     10,085,000      2,010,000
  Future income taxes                (2,453,000)    (1,513,000)           -
                                   ------------   ------------   ------------
  Future net cash flows               4,761,000      8,572,000      2,010,000
  Effect of 10% annual discounting   (1,032,000)    (1,463,000)      (406,000)
                                   ------------   ------------   ------------
  Standardized measure of
    Discounted net cash flows      $  3,729,000   $  7,109,000   $  1,604,000
                                   ============   ============   ============



<PAGE>


Changes in the standardized measure of discounted future net cash flows:

                                            Year Ended December 31,
                                   ------------------------------------------
                                       2001           2000           1999
                                   ------------   ------------   ------------

  Beginning of the year           $  7,109,000    $ 1,604,000    $  1,599,000
    Oil and gas sales, net of
      production costs              (1,261,000)    (1,265,000)       (272,000)
    Net change in prices, net of
      production costs              (2,700,000)     4,230,000        (317,000)
    Purchase of reserves in place       10,000         83,000         825,000
    Sales of reserves in place         (34,000)       (13,000)       (113,000)
    Revisions of quantity estimates    739,000      5,305,000        (171,000)
    Effect of income tax                23,000     (1,513,000)            -
    Accretion of discount              711,000        160,000         160,000
    Changes in production rates,
      Timing and other                (868,000)    (1,482,000)       (107,000)
                                  ------------   ------------    ------------
  End of year                     $  3,729,000   $  7,109,000    $  1,604,000
                                  ============   ============    ============


<PAGE>


                                                                  SCHEDULE II

                   SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999


                                Beginning   Costs &                  Ending
         Description             Balance    Expenses   Deductions    Balance
  ---------------------------  ----------  ----------  ----------  ----------
  Allowance for
    Doubtful Accounts

      December 31, 1999        $  250,000  $   50,000  $      -     $ 300,000
                               ==========  ==========  ==========   ==========

      December 31, 2000        $  300,000  $   30,000  $  300,000   $   30,000
                               ==========  ==========  ==========   ==========

      December 31, 2001        $   30,000  $      -    $      -     $   30,000
                               ==========  ==========  ==========   ==========

<PAGE>


                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES


                                Index to Exhibits
                                                                      PAGE



22.  Subsidiaries of the Registrant                                     45














<PAGE>



                    SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES




                           Subsidiaries of the Registrant


Prairie Pipeline Co.  incorporated June 22, 1983, under the laws of the State of
Texas, is a wholly owned subsidiary of Registrant.


Spindletop Drilling Company,  incorporated  September 5, 1975, under the laws of
the State of Texas, is a wholly owned subsidiary of the Registrant.