<PAGE>

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

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

                                    FORM 10-Q


<TABLE>
<CAPTION>
(Mark One)
<S>         <C>


    [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934
            FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006
                                       OR
    [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934
            FOR THE TRANSITION PERIOD FROM           TO
</TABLE>



                        COMMISSION FILE NUMBER: 001-31346

                            W-H ENERGY SERVICES, INC.
             (Exact name of registrant as specified in its charter)


<Table>
<S>                                         <C>

                   TEXAS                                    76-0281502
      (State or other jurisdiction of                      (IRS Employer
      incorporation or organization)                    Identification No.)
</TABLE>


                              10370 RICHMOND AVENUE
                                    SUITE 990
                              HOUSTON, TEXAS 77042
              (Address of principal executive offices and zip code)
                                 (713) 974-9071
              (Registrant's telephone number, including area code)

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

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

     As of November 1, 2006 there were outstanding 30,121,482 shares of common
stock, par value $0.0001 per share, of the registrant.

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

<PAGE>

                            W-H ENERGY SERVICES, INC.

                                      INDEX



<Table>
<Caption>
                                                                             PAGE
                                                                             ----

<S>      <C>                                                                 <C>


                           PART I FINANCIAL INFORMATION
Item 1.  Financial  Statements............................................     3
         Consolidated Balance Sheets -- September 30, 2006 and December
         31, 2005.........................................................     3
         Consolidated Statements of  Operations and Comprehensive
         Income -- Three and nine months ended September 30, 2006 and
         2005.............................................................     4
         Consolidated Statements of Cash Flows -- Nine months ended
         September 30, 2006 and 2005......................................     5
         Notes to Consolidated Financial Statements.......................     6
Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations............................................    14
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......    20
Item 4.  Controls and Procedures..........................................    21

                            PART II OTHER INFORMATION
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds......    21
Item 6.  Exhibits.........................................................    21
Signatures................................................................    22
</Table>




                                        2

<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            W-H ENERGY SERVICES, INC.

                           CONSOLIDATED BALANCE SHEETS



<Table>
<Caption>
                                                            SEPTEMBER 30,   DECEMBER 31,
                                                                 2006           2005
                                                            -------------   ------------
                                                                     (UNAUDITED)
                                                                (IN THOUSANDS, EXCEPT
                                                                 PER SHARE AMOUNTS)

<S>                                                         <C>             <C>


                                         ASSETS
Current Assets:
  Cash and cash equivalents...............................     $ 27,259       $  9,914
  Accounts receivable, net of allowance of $6,248 and
     $5,243, respectively.................................      196,592        152,348
  Inventories.............................................       75,783         55,142
  Deferred income taxes...................................        8,093          5,625
  Prepaid expenses and other..............................       14,637         11,149
                                                               --------       --------
     Total current assets.................................      322,364        234,178
Property and equipment, net...............................      311,347        257,286
Goodwill, net.............................................      119,628        113,569
Other assets, net.........................................       16,605         17,742
                                                               --------       --------
       Total assets.......................................     $769,944       $622,775
                                                               ========       ========

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accrued liabilities.....................................     $ 60,010       $ 43,401
  Accounts payable........................................       41,862         30,692
                                                               --------       --------
     Total current liabilities............................      101,872         74,093
Long-term debt............................................      150,000        165,000
Deferred income taxes.....................................       53,412         40,214
Other long-term obligations...............................        6,402          4,518
Commitments and Contingencies
Shareholders' Equity:
  Preferred stock, $0.01 par value per share, 10,000
     shares authorized, none issued and outstanding.......           --             --
  Common stock, $0.0001 par value per share, 100,000
     shares authorized, 30,115 and 28,826 shares issued
     and outstanding, respectively........................            3              3
Additional paid-in capital................................      269,539        235,392
Deferred stock compensation...............................           --           (280)
Other comprehensive income................................        9,688          7,852
Retained earnings.........................................      179,028         95,983
                                                               --------       --------
     Total shareholders' equity...........................      458,258        338,950
                                                               --------       --------
       Total liabilities and shareholders' equity.........     $769,944       $622,775
                                                               ========       ========

</Table>



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



                                        3

<PAGE>

                            W-H ENERGY SERVICES, INC.

         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME



<Table>
<Caption>
                                                  FOR THE THREE      FOR THE NINE MONTHS
                                                   MONTHS ENDED             ENDED
                                                  SEPTEMBER 30,         SEPTEMBER 30,
                                               -------------------   -------------------
                                                 2006       2005       2006       2005
                                               --------   --------   --------   --------
                                                              (UNAUDITED)
                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<S>                                            <C>        <C>        <C>        <C>


Revenues.....................................  $238,851   $161,343   $656,415   $461,060
Costs and expenses:
  Cost of revenues...........................   125,239     92,501    346,088    261,308
  Selling, general and administrative........    38,910     26,859    110,931     80,266
  Warehouse fire related costs...............        --         --         --      3,690
  Research and development...................     4,635      3,363     12,480     12,624
  Depreciation and amortization..............    15,624     14,367     45,924     42,132
                                               --------   --------   --------   --------
     Total costs and expenses................   184,408    137,090    515,423    400,020
                                               --------   --------   --------   --------
Operating income.............................    54,443     24,253    140,992     61,040
Other (income) expense:
  Interest expense, net......................     2,167      2,874      6,537      7,879
  Other (income) expense, net................       (58)        70         37        356
                                               --------   --------   --------   --------
     Income before income taxes..............    52,334     21,309    134,418     52,805
Provision for income taxes...................    20,837      8,487     51,373     20,053
                                               --------   --------   --------   --------
     Net income..............................  $ 31,497   $ 12,822   $ 83,045   $ 32,752
                                               ========   ========   ========   ========
Comprehensive income:
  Net income.................................  $ 31,497   $ 12,822   $ 83,045   $ 32,752
  Interest rate swap valuations..............    (1,990)     2,073        321      1,190
  Foreign currency translation adjustment....       412       (221)     1,515     (1,277)
                                               --------   --------   --------   --------
  Comprehensive income.......................  $ 29,919   $ 14,674   $ 84,881   $ 32,665
                                               ========   ========   ========   ========
Earnings per share:
  Basic......................................  $   1.05   $   0.45   $   2.81   $   1.17
  Diluted....................................  $   1.02   $   0.44   $   2.72   $   1.13
Number of shares used in calculation of
  earnings per share:
  Basic......................................    29,901     28,236     29,542     27,983
  Diluted....................................    30,753     29,285     30,501     28,897
</Table>



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



                                        4

<PAGE>

                            W-H ENERGY SERVICES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



<Table>
<Caption>
                                                                FOR THE NINE MONTHS
                                                                       ENDED
                                                                   SEPTEMBER 30,
                                                               --------------------
                                                                  2006       2005
                                                               ---------   --------
                                                                    (UNAUDITED)
                                                                  (IN THOUSANDS)

<S>                                                            <C>         <C>


Cash Flows from Operating Activities:
  Net income.................................................  $  83,045   $ 32,752
  Adjustments to reconcile net income to cash provided by
     operating activities --
     Depreciation and amortization...........................     45,924     42,132
     Provision for doubtful accounts.........................      1,920      1,176
     Gain on sales of equipment..............................    (13,971)    (8,969)
     Deferred tax provision..................................     12,037      2,536
     Share-based compensation................................      3,888        434
     Amortization of deferred financing costs................        382        352
     Excess tax benefit from share-based compensation........    (13,112)        --
     Changes in operating assets and liabilities, excluding
       effects of acquisitions --
       Accounts receivable, net..............................    (45,487)   (29,098)
       Inventories...........................................    (20,110)    (5,785)
       Prepaid expenses and other............................     (2,702)     2,544
       Other assets, net.....................................       (307)      (923)
       Accounts payable and accrued liabilities..............     40,610      9,425
                                                               ---------   --------
          Net cash provided by operating activities..........     92,117     46,576
                                                               ---------   --------
Cash Flows from Investing Activities:
  Acquisition of businesses, net of cash acquired............     (8,724)    (2,496)
  Additions to property and equipment........................   (103,022)   (66,487)
  Proceeds from sales of equipment...........................     20,901     16,237
                                                               ---------   --------
          Net cash used in investing activities..............    (90,845)   (52,746)
                                                               ---------   --------
Cash Flows from Financing Activities:
  Proceeds from the issuance of debt.........................     25,760     62,071
  Payments on debt...........................................    (40,760)   (57,876)
  Proceeds from the exercise of stock options................     16,538      8,255
  Excess tax benefit from share-based compensation...........     13,112         --
                                                               ---------   --------
          Net cash provided by financing activities..........     14,650     12,450
                                                               ---------   --------
Effect of exchange rate changes on cash......................      1,423       (330)
                                                               ---------   --------
Net increase in Cash and Cash Equivalents....................     17,345      5,950
Cash and Cash Equivalents, beginning of period...............      9,914     10,448
                                                               ---------   --------
Cash and Cash Equivalents, end of period.....................  $  27,259   $ 16,398
                                                               =========   ========

</Table>



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



                                        5

<PAGE>

                            W-H ENERGY SERVICES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  BUSINESS ORGANIZATION

  DESCRIPTION OF COMPANY

     W-H Energy Services, Inc., a Texas corporation, and its subsidiaries
(collectively, "W-H") is a diversified oilfield service company that provides
products and services used in connection with the drilling and completion of oil
and natural gas wells and the production of oil and natural gas. W-H has the
following primary lines of business: (1) drilling related products and services,
which include logging-while-drilling, measurement-while-drilling, directional
drilling, down-hole drilling motors, rental tools and drilling fluids; and (2)
completion and workover related products and services, which include cased-hole
wireline logging, perforating, tubing conveyed perforating and associated rental
equipment, coiled tubing, polymers and specialty chemicals and rental tools.

  BASIS OF PRESENTATION

     The unaudited Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and the instructions to Form 10-Q and Rule 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. For further information, refer to the
Consolidated Financial Statements and footnotes thereto included in W-H's Annual
Report on Form 10-K/A for the year ended December 31, 2005 filed with the
Securities and Exchange Commission ("SEC"). In the opinion of management, all
necessary adjustments (which include only normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and nine months ended September 30, 2006 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2006.

  ACCOUNTING POLICIES AND PROCEDURES

     Other than the adoption of Statement of Financial Accounting Standards
("SFAS") No. 123R "Share-Based Payment" ("SFAS No. 123R") as disclosed in Note
6, W-H has not added to or changed its accounting policies since December 31,
2005. For a description of these policies, refer to Note 2 of the Consolidated
Financial Statements in W-H's Annual Report on Form 10-K/A for the year ended
December 31, 2005.

     In June 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").
FIN 48 clarifies the application of SFAS No. 109, Accounting for Income Taxes,
by establishing a threshold condition that a tax position must meet for any part
of the benefit of that position to be recognized in the financial statements. In
addition to recognition, FIN 48 provides guidance concerning measurement,
derecognition, classification and disclosure of tax positions. FIN 48 is
effective for fiscal years beginning after December 15, 2006; accordingly, W-H
will adopt FIN 48 effective as of January 1, 2007. W-H has not yet determined
the impact that FIN 48 will have on its consolidated financial statements or on
its effective tax rate in future years.

     In September 2006, the Securities and Exchange Commission staff issued
Staff Accounting Bulletin ("SAB") No. 108 which provides guidance concerning the
effects of prior year misstatements in quantifying current year misstatements
for the purpose of materiality assessments. Specifically, entities must consider
the effects of prior year unadjusted misstatements when determining whether a
current year misstatement will be considered material to the financial
statements at the current reporting period and record the adjustment, if deemed
material. SAB No. 108 becomes effective for the first fiscal year ending after
November 15, 2006, with adoption in the first interim period of that year
encouraged. Upon adoption, entities may either restate the financial statements
for each period presented or record the cumulative effect of the error
correction as an adjustment to the opening balance of retained earnings at the
beginning of the period of adoption, and provide disclosure of each individual
error being corrected within the cumulative adjustment, stating when and how
each error arose and the fact that the error was


                                        6

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

previously considered immaterial. W-H does not expect the adoption of this
pronouncement to have a material impact on its financial position or results of
operations.

2.  ACQUISITION

     On July 24, 2006, a wholly-owned subsidiary of W-H acquired Mt. Pulaski
Products, Inc., including its related companies ("Mt. Pulaski"). Mt. Pulaski
supplies products used in various industrial applications including drilling
fluids. Total consideration for this acquisition of approximately $10.4 million
included $9.4 million in cash and 20,358 shares of W-H common stock.

3.  INVENTORIES

     The components of inventories as of September 30, 2006 and December 31,
2005 were as follows (in thousands):


<Table>
<Caption>
                                                      SEPTEMBER 30,   DECEMBER 31,
                                                           2006           2005
                                                      -------------   ------------

<S>                                                   <C>             <C>


Finished goods......................................     $65,016         $49,248
Work-in-process.....................................       6,821           3,658
Raw materials and supplies..........................      13,358           8,506
Inventory reserve...................................      (9,412)         (6,270)
                                                         -------         -------
  Inventories.......................................     $75,783         $55,142
                                                         =======         =======

</Table>


4.  CREDIT FACILITY

     W-H maintains a revolving credit facility with certain lenders to provide
for its cash, liquidity and other borrowing needs. The credit facility provides
for aggregate borrowings of up to $375.0 million and matures on May 5, 2010. As
of September 30, 2006, W-H had an outstanding loan balance of $150.0 million and
approximately $8.8 million in letters of credit issued under its credit
facility, resulting in an available borrowing capacity on such date of
approximately $216.2 million.

     Amounts borrowed under the credit facility bear interest, at W-H's
election, at either a variable rate equal to LIBOR, plus a margin ranging from
1.0% to 2.0%, depending upon W-H's leverage ratio, or an alternate base rate
equal to the higher of (1) the prime rate or (2) the federal funds rate plus
0.5%, plus a margin ranging from zero to 1.0%, depending upon W-H's leverage
ratio. As of September 30, 2006, borrowings under the credit facility bore
interest at LIBOR plus the then applicable margin of 1.0%.

     In May 2005, W-H entered into interest rate swap agreements with a total
notional amount of $150.0 million related to its credit facility. Under these
agreements, W-H receives interest at a floating rate equal to three-month LIBOR
and pays interest at a fixed rate of 4.24%. The three-month LIBOR rate as of
September 30, 2006 was approximately 5.4%.

     The credit facility is secured by a lien on substantially all of W-H's
property and assets, a pledge of all the capital stock of W-H's domestic
subsidiaries and a pledge of not greater than 65% of the capital stock of each
of W-H's top tier foreign subsidiaries. In addition, the credit facility is
guaranteed by all of W-H's domestic subsidiaries. The credit facility requires,
among other things, that W-H maintain certain financial ratios, including a
leverage ratio and an interest coverage ratio, and a specified net worth. The
credit facility limits the amount of capital expenditures W-H may make, the
amount of debt W-H may incur outside of the credit facility, the amount of
future investments W-H may make, the ability of W-H to pay dividends and the
ability of W-H to engage in certain business combination transactions.



                                        7

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

5.  LITIGATION

     W-H is from time to time a party or otherwise subject to legal proceedings,
claims, investigations and other proceedings in the ordinary course of its
business. These matters typically involve tort, workers compensation, commercial
and infringement and other intellectual property claims. Where appropriate, W-H
makes provision for a liability with respect to these claims in its financial
statements in accordance with generally accepted accounting principles. These
provisions are reviewed periodically and adjusted to reflect the impact of
negotiations, settlements, rulings, advice of legal counsel and events
pertaining to a particular case. Litigation is inherently unpredictable. Based
upon information currently available, management believes that the ultimate
liability with respect to these proceedings and claims will not materially
affect W-H's consolidated results of operations or financial position.

6.  SHARE-BASED COMPENSATION

     On May 10, 2006, W-H's shareholders approved W-H's 2006 Stock Awards Plan
(the "2006 Plan"). Under the 2006 Plan, W-H may grant equity-based awards
including stock options, stock appreciation rights, restricted stock, restricted
stock units, performance units and other stock-based awards. An aggregate of
1,100,000 shares of W-H's common stock are reserved for issuance under the plan,
subject to adjustments as described in the plan. The number of shares reserved
for issuance will be reduced only by the number of shares of common stock
delivered in payment or settlement of awards. Any shares of common stock issued
in connection with restricted stock, restricted stock units, performance units
or other full value awards will count against the limit of reserved shares as
1.7 shares of common stock for every one share of common stock issued. Shares of
common stock issued in connection with other types of awards will be counted
against the limit of reserved shares as one share of common stock for every one
share of common stock issued. Each award granted under the 2006 Plan is subject
to such terms and conditions as the compensation committee of W-H's Board of
Directors may approve.

     W-H does not intend to grant stock options in the near term. In lieu of
stock option awards, W-H intends to award restricted stock and utilize a cash
incentive plan for senior management and other key employees.

     On May 31, 2006, W-H awarded a total of 117,000 shares of restricted stock
under the 2006 Plan to certain employees and directors. The restricted stock
vests ratably over a four-year period, commencing on the grant date, in 25%
increments after each year of service has been completed. The fair value of the
restricted stock issued was approximately $6.6 million, and is being recognized
as compensation expense over the four-year vesting period.

     Under the 2006 Plan, W-H is no longer permitted to issue new awards under
its 1997 Stock Option Plan (the "1997 Plan"). As of September 30, 2006, options
to purchase 1,652,254 shares of W-H's common stock were outstanding under the
1997 Plan. The options currently outstanding under the 1997 Option Plan vest
ratably over a four-year period, commencing on the grant date, in 25% increments
after each year of service has been completed, and will expire ten years from
their respective grant dates. The terms of each option also provide that if an
optionee's employment terminates for any reason, the option may be exercised
during the three-month period following such termination, but only to the extent
vested at the time of such termination.

     On March 29, 1999, prior to its initial public offering, W-H issued options
to purchase 900,900 shares of W-H's common stock to its chief executive officer
under a separate non-statutory option plan. These options have a 10-year term
and an exercise price of $4.55 per share. As of September 30, 2006, the
remaining unexercised options to purchase 345,000 shares of common stock were
vested.

     Prior to January 1, 2006, W-H accounted for its stock-based compensation
under the recognition and measurement principles of Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations, the disclosure-only provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" and the disclosures required by SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure." In
accordance with APB Opinion No. 25, no stock-based compensation cost was
reflected in W-H's net income for grants of stock options to employees because
W-H granted stock options with an


                                        8

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

exercise price equal to the market value of its common stock on the date of
grant. The reported stock-based compensation expense, net of related tax
effects, for the three and nine months ended September 30, 2005 is disclosed in
the table below and represents the amortization of a grant of restricted stock
made in 2004.

     If compensation expense for the stock options granted to employees and
directors had been determined using the fair value method, net income and
diluted net income per share for the three and nine months ended September 30,
2005 would have been reduced to the following pro forma amounts (in thousands,
except per share amounts):


<Table>
<Caption>
                                                   THREE MONTHS          NINE MONTHS
                                                       ENDED                ENDED
                                                SEPTEMBER 30, 2005   SEPTEMBER 30, 2005
                                                ------------------   ------------------

<S>                                             <C>                  <C>


Net income, as reported.......................        $12,822              $32,752
Add: Total stock-based employee compensation
  expense included in reported net income, net
  of related tax effect.......................             55                  269
Deduct: Total stock-based employee
  compensation expense determined under fair
  value based method for all awards, net of
  related tax effect..........................           (783)              (1,715)
                                                      -------              -------
Pro forma net income..........................        $12,094              $31,306
                                                      =======              =======
Earnings per share:
  Basic, as reported..........................        $  0.45              $  1.17
  Diluted, as reported........................        $  0.44              $  1.13
  Basic, pro forma............................        $  0.43              $  1.12
  Diluted, pro forma..........................        $  0.41              $  1.08
Weighted-average fair value per share of
  options granted.............................        $    --              $ 11.63
</Table>


     Effective January 1, 2006, W-H adopted the fair value recognition
provisions of SFAS No. 123R using the modified prospective method. Under this
method, compensation cost for the nine months ended September 30, 2006 includes
the portion of any options vesting during the period for (1) all share-based
payments granted prior to, but not vested as of December 31, 2005, based on the
grant date fair value estimated in accordance with the original provisions of
SFAS No. 123 and (2) any share-based payments granted subsequent to December 31,
2005, based on the grant date fair value estimated using a binomial lattice-
based option valuation model. Before the adoption of SFAS No. 123R, pro forma
disclosures reflected the fair value of each option grant estimated on the date
of grant using the Black-Scholes option-pricing model. The following assumptions
were used for the historical option grants for the years ended December 31,
2005, 2004 and 2003: risk-free interest rates between 3.9% and 4.6%; dividend
rates of zero; expected lives between 5.6 years and 6.7 years; and expected
volatilities between 49.6% and 50.7%.

     Under the Black-Scholes option-pricing model, W-H estimated volatility
using only its historical share price performance over the expected life of the
option. Under SFAS No. 123R, however, W-H estimates expected volatility using a
blend of implied volatility based on market-traded options on W-H's common stock
and historical volatility of W-H's common stock over the contractual life of the
options. Results of prior periods do not reflect any restated amounts and W-H
had no cumulative effect adjustment upon adoption of SFAS No. 123R under the
modified prospective method. For awards with service conditions and a graded
vesting schedule only, W-H recognizes compensation expense on a straight-line
basis over the requisite service period for the entire award. W-H's policy is to
issue new shares of common stock to satisfy stock option exercises or grants of
restricted shares.

     For the nine months ended September 30, 2006, the adoption of SFAS No. 123R
decreased W-H's reported operating income and income before income taxes by
approximately $3.1 million, reported net income by $2.0 million and reported
basic and diluted net earnings per share by $0.07 per share. The share-based
compensation expense is reported in cost of revenues or selling, general and
administrative expense based on the classification of the optionees' cash
compensation expenses. The adoption of SFAS No. 123R resulted in a decrease in
reported cash


                                        9

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

flow from operating activities of $13.1 million offset by an increase in
reported cash flow from financing activities of $13.1 million for the nine
months ended September 30, 2006. W-H's adoption of SFAS No. 123R did not affect
operating income, income before income taxes, net income, cash flow from
operations, cash flow from financing activities or basic and diluted net
earnings per share in the comparable 2005 period.

     The fair value of each option award made after December 31, 2005 will be
estimated on the date of grant using a binomial lattice-based option valuation
model, which incorporates ranges of assumptions for inputs. The assumptions will
be determined as follows:

     - the expected volatility will be a blend of implied volatility based on
       market-traded options on W-H's common stock and historical volatility of
       W-H's stock over the contractual life of the options;

     - historical data will be used to estimate option exercise and employee
       termination behavior within the valuation model; separate groups of
       employees that have similar historical exercise behavior are considered
       separately for valuation purposes. The expected life of options granted
       will be derived from the output of the option valuation model and
       represents the period of time the options are expected to be outstanding;
       and

     - the risk-free interest rate will be based on the U.S. Treasury yield
       curve in effect at the time of grant for periods within the contractual
       life of the option.

     A summary of W-H's stock options from December 31, 2005 to September 30,
2006 is as follows:


<Table>
<Caption>
                                                                  WEIGHTED AVERAGE
                                   NUMBER OF   WEIGHTED AVERAGE       REMAINING         AGGREGATE
                                    OPTIONS     PRICE PER SHARE   CONTRACTUAL TERM   INTRINSIC VALUE
                                  ----------   ----------------   ----------------   ---------------
                                                                       (YEARS)         (AMOUNTS IN
                                                                                        THOUSANDS)

<S>                               <C>          <C>                <C>                <C>


Outstanding at December 31,
  2005..........................   3,167,666        $16.07
Granted.........................          --                              --
Exercised.......................  (1,152,287)        14.39
Expired/canceled................     (18,125)        20.87
                                  ----------
Outstanding at September 30,
  2006..........................   1,997,254         17.00               6.1             $48,869
                                  ==========
Exercisable at September 30,
  2006..........................   1,244,129         14.76               4.9             $33,236
                                  ==========

</Table>


     As of September 30, 2006, there was approximately $6.6 million of total
unrecognized compensation cost related to nonvested stock option awards that is
expected to be recognized over a weighted-average period of 1.9 years. The
intrinsic value for stock options is defined as the difference between the
current market value and the grant price. The total intrinsic value of options
exercised during the nine months ended September 30, 2006 was approximately
$38.1 million.

     During the nine months ended September 30, 2006, cash received from options
exercised was approximately $16.5 million, and the excess tax benefit from
share-based compensation totaled approximately $13.1 million.



                                       10

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

     A summary of W-H's restricted stock from December 31, 2005 to September 30,
2006 is as follows:


<Table>
<Caption>
                                                                 WEIGHTED AVERAGE
                                                     NUMBER OF      FAIR VALUE
                                                       SHARES        PER SHARE
                                                     ---------   ----------------

<S>                                                  <C>         <C>


Nonvested balance at December 31, 2005.............    50,000         $17.57
Granted............................................   117,000          56.34
Vested.............................................   (25,000)         17.57
Forfeited..........................................        --             --
                                                      -------         ------
Nonvested balance at September 30, 2006............   142,000         $49.51
                                                      =======         ======

</Table>


     The total grant-date fair value of shares vested during the nine months
ended September 30, 2006 was approximately $0.4 million. As of September 30,
2006, there was approximately $6.1 million of total unrecognized compensation
cost related to nonvested restricted stock awards that is expected to be
recognized over a weighted-average period of 3.7 years.

7.  EARNINGS PER SHARE

     Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding for the period. Diluted
earnings per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding for the period as adjusted for the
dilutive effect of stock options and restricted shares. For the three months and
nine months ended September 30, 2006 and 2005, there were no anti-dilutive stock
options, therefore, the effect of all stock options were included in the diluted
earnings per share calculation for all periods presented.

     The following reconciles basic and diluted weighted average shares
outstanding (in thousands):


<Table>
<Caption>
                                                FOR THE THREE      FOR THE NINE
                                                 MONTHS ENDED      MONTHS ENDED
                                                SEPTEMBER 30,     SEPTEMBER 30,
                                               ---------------   ---------------
                                                2006     2005     2006     2005
                                               ------   ------   ------   ------

<S>                                            <C>      <C>      <C>      <C>


Basic weighted average shares outstanding....  29,901   28,236   29,542   27,983
Dilutive effect of stock options and
  restricted shares..........................     852    1,049      959      914
                                               ------   ------   ------   ------
Diluted weighted average shares outstanding..  30,753   29,285   30,501   28,897
                                               ======   ======   ======   ======

</Table>


8.  OPERATING SEGMENTS

     Management has elected to aggregate W-H's business unit segments based on
the differences in each segment's customers, the products and services offered
and other economic characteristics. Based on these criteria, management has
identified the following reportable segments: (1) drilling related products and
services and (2) completion and workover related products and services. The
accounting policies of the operating segments are the same as those described in
the summary of significant accounting policies in W-H's Annual Report on Form
10-K/A for the year ended December 31, 2005.

  DRILLING RELATED PRODUCTS AND SERVICES

     The drilling segment provides products and services used by oil and natural
gas companies, drilling contractors and other oilfield service companies for the
drilling of oil and natural gas wells. These products and services are used
primarily throughout North America and in select international areas. This
segment includes the following business lines: (1) logging-while-drilling; (2)
measurement-while-drilling; (3) directional drilling; (4) down-hole drilling
motors; (5) drilling fluids and (6) rental tools.



                                       11

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

  COMPLETION AND WORKOVER RELATED PRODUCTS AND SERVICES

     The completion and workover segment provides products and services
primarily to customers onshore in the United States and offshore in the Gulf of
Mexico. These products and services include: (1) cased-hole wireline logging,
perforating, tubing conveyed perforating and associated rental equipment; (2)
coiled tubing; (3) polymers and specialty chemicals and (4) rental tools.

  SUMMARY INFORMATION

     W-H recognizes revenues, operating income, depreciation and amortization
expense, total assets and capital expenditures by segment. Interest expense and
other income (expense) are not monitored by segment. Summarized information for
W-H's reportable segments is contained in the following tables (in thousands):

     As of and for the three months ended September 30, 2006:


<Table>
<Caption>
                                         DRILLING   COMPLETION   CORPORATE     TOTAL
                                         --------   ----------   ---------   --------

<S>                                      <C>        <C>          <C>         <C>


Revenues...............................  $149,478    $ 89,373     $    --    $238,851
Operating income.......................    31,500      27,714      (4,771)     54,443
Depreciation and amortization..........     9,556       6,013          55      15,624
Total assets...........................   455,512     273,089      41,343     769,944
Capital expenditures...................    22,769      16,703          30      39,502
</Table>


     As of and for the three months ended September 30, 2005:


<Table>
<Caption>
                                         DRILLING   COMPLETION   CORPORATE     TOTAL
                                         --------   ----------   ---------   --------

<S>                                      <C>        <C>          <C>         <C>


Revenues...............................  $105,414    $ 55,929     $    --    $161,343
Operating income.......................    16,736      10,622      (3,105)     24,253
Depreciation and amortization..........     9,112       5,196          59      14,367
Total assets...........................   360,169     221,441      26,554     608,164
Capital expenditures...................     9,678       5,960          61      15,699
</Table>


     As of and for the nine months ended September 30, 2006:


<Table>
<Caption>
                                         DRILLING   COMPLETION   CORPORATE     TOTAL
                                         --------   ----------   ---------   --------

<S>                                      <C>        <C>          <C>         <C>


Revenues...............................  $413,135    $243,280     $     --   $656,415
Operating income.......................    82,628      71,704      (13,340)   140,992
Depreciation and amortization..........    28,299      17,433          192     45,924
Total assets...........................   455,512     273,089       41,343    769,944
Capital expenditures...................    61,048      41,903           71    103,022
</Table>


     As of and for the nine months ended September 30, 2005:


<Table>
<Caption>
                                         DRILLING   COMPLETION   CORPORATE     TOTAL
                                         --------   ----------   ---------   --------

<S>                                      <C>        <C>          <C>         <C>


Revenues...............................  $297,955    $163,105     $    --    $461,060
Operating income.......................    33,504      36,457      (8,921)     61,040
Depreciation and amortization..........    26,918      15,025         189      42,132
Total assets...........................   360,169     221,441      26,554     608,164
Capital expenditures...................    40,809      25,594          84      66,487
</Table>





                                       12

<PAGE>

                            W-H ENERGY SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

     W-H operates in the United States, the North Sea and other select
geographic regions. The following presents consolidated revenues by geographic
region (in thousands):


<Table>
<Caption>
                                             FOR THE THREE
                                                 MONTHS         FOR THE NINE MONTHS
                                          ENDED SEPTEMBER 30,   ENDED SEPTEMBER 30,
                                          -------------------   -------------------
                                            2006       2005       2006       2005
                                          --------   --------   --------   --------

<S>                                       <C>        <C>        <C>        <C>


United States...........................  $215,476   $141,286   $591,129   $410,296
North Sea...............................    10,764     10,376     29,388     24,457
Other...................................    12,611      9,681     35,898     26,307
                                          --------   --------   --------   --------
Total...................................  $238,851   $161,343   $656,415   $461,060
                                          ========   ========   ========   ========

</Table>


The following presents property and equipment, net, by geographic region (in
thousands):


<Table>
<Caption>
                                                      SEPTEMBER 30,   DECEMBER 31,
                                                           2006           2005
                                                      -------------   ------------

<S>                                                   <C>             <C>


United States.......................................     $275,254       $221,699
North Sea...........................................       12,524         14,603
Other...............................................       23,569         20,984
                                                         --------       --------
Total...............................................     $311,347       $257,286
                                                         ========       ========

</Table>





                                       13

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     In addition to historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that involve risks,
uncertainties and assumptions. The words "believe," "expect," "plan," "intend,"
"estimate," "project," "will," "could," "may," and similar expressions are
intended to identify forward-looking statements. Actual results may differ
materially from the results discussed in the forward-looking statements as a
result of important risk factors including, but not limited to, trends in oil
and natural gas prices, capital expenditures by customers, oil and natural gas
industry activity, difficulty in continuing to develop, produce and
commercialize technologically advanced products and services, weather conditions
in offshore and land markets, risks associated with events that result in
personal injuries, loss of life, damage to or destruction of property, equipment
or the environment and suspension of operations, unavailability of or costs
associated with insurance, our ability to attract and retain skilled workers,
the loss of key members of management, competition in our industry, compliance
with and developments in environmental and other governmental regulations, loss
of use of certain technologies, the concentration of customers in the energy
industry, our ability to successfully integrate future acquisitions, political
and economic risks including changes in tax laws, an impairment of goodwill, as
well as restrictions on our ability to raise additional funds. For additional
discussion of these risks, please see the discussion set forth under the heading
"Item 1A -- Risk Factors" contained in our most recent Annual Report filed on
Form 10-K with the Securities and Exchange Commission ("SEC").

OVERVIEW OF OUR PRODUCTS AND SERVICES

     We provide drilling related products and services and completion and
workover related products and services to major and independent oil and natural
gas companies, drilling contractors and other oilfield service companies. The
majority of our revenues are generated from charging our customers day rates,
based on the number of days our products and services are used. We also sell
certain products used in the exploration for and production of oil and natural
gas and receive revenues from our customers in connection with these sales. Our
primary expenses are salaries for our personnel and the costs associated with
expendable parts and supplies, research and development, repair and maintenance
of rental equipment and costs of products sold as well as general operational
costs. As a result of increased demand and competition for skilled personnel,
compensation costs to attract and retain employees have been increasing.

     Prices for oil and natural gas are subject to large fluctuations in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and a variety of other factors. Any prolonged
increase or decrease in oil and natural gas prices affects the levels of
exploration, development and production activity as well as the entire health of
the oil and natural gas industry. Demand for our drilling related products and
services is directly affected by the level of exploration, development and
production activity of, and the corresponding capital spending by, oil and
natural gas companies. Demand for our completion and workover related products
and services also depends on oil and natural gas production activity, which is
less immediately affected by changes in oil and natural gas prices.

     In July 2001, exploration and development activity levels in the United
States peaked and subsequently began to decline primarily as a result of lower
natural gas prices. This decline continued through April 2002, at which point
the United States drilling rig count levels reached a low of 738, which
consisted of 110 offshore rigs and 628 land rigs. As natural gas prices climbed
and remained relatively strong, rig count levels began to recover in 2003, and
this trend has continued through the third quarter of 2006. This increase,
however, resulted almost entirely from an increase in land-based rigs. According
to statistics published by Baker Hughes, the average number of rotary rigs
operating in the United States was 1,192, 1,383 and 1,628 for 2004, 2005 and the
first nine months of 2006, respectively. Of these figures, land rigs comprised
1,095, 1,290 and 1,537, respectively, and offshore rigs comprised 97, 93 and 91,
respectively, for the same periods. The offshore rig count has not improved in
2006 as compared to 2005 and remains well below the previous peak levels of
2001.


                                       14

<PAGE>

     We believe that the overall long-term outlook for domestic natural gas
exploration and development activity remains positive. First, despite
significant increases in drilling activity in 2005 and through three quarters of
2006, natural gas production is virtually unchanged. Second, industrial gas
consumption, electric power generation and a healthy economy continue to drive
domestic natural gas demand. We believe that these factors will keep upward
pressure on long-term natural gas prices. We do have a concern that the current
high storage levels of natural gas, predictions of a mild winter and recent
weakness of oil and natural gas prices could negatively impact drilling activity
in the near term. However, we believe any slowdown that may occur would be short
lived as long as the positive factors set forth above affecting long-term supply
and demand remain in place. As a result, we are focusing our capital expenditure
investments in locations which are attracting long-term investment in oil and
natural gas exploration and development.

  DRILLING RELATED PRODUCTS AND SERVICES

     Our drilling related products and services segment provided approximately
63% of our consolidated revenue for the nine months ended September 30, 2006.
Approximately 84% of our drilling segment revenue for this period was generated
in the United States, including the Gulf of Mexico. The remaining 16% was
generated in various international locations.

     As the improvement in drilling activity in the United States has been
onshore, we have sought to increase the content of our land-based services. In
October 2002, in response to this developing trend, we made the strategic
decision to enter the directional drilling business in North America. As a
result of this decision and the growth in the United States land rig count, we
have successfully leveraged our directional drilling business to effect an
increase in the utilization of our measurement-while-drilling tools and down-
hole drilling motor fleet. The increased utilization of our measurement-while-
drilling tools and down-hole drilling motor fleet has helped to offset the
slowdown in domestic offshore activity. However, our logging-while-drilling
revenues from the offshore market have outperformed the rig count numbers as a
result of performing more jobs with a higher content of our services, improved
pricing and an increase in our share of this market.

     Outside of the United States, the North Sea remains our largest market
segment. In 2007, we expect to see increasing drilling activity in the Middle
East and no significant change to the activity levels in the North Sea.

     A key challenge that our drilling related products and services segment
faces is the demand by our customers for more efficient and technologically
advanced services and tools. We have invested substantial time and capital into
developing and commercializing technologies that are of value to our customers
and that enable us to compete effectively with the major integrated oilfield
service companies. During the third quarter of 2004, we began to market our
PathMaker(R) 3-Dimensional Rotary Steerable line of tools. The 12  1/4"
PathMaker(R) tool became available in the third quarter of 2004. The 8  1/2"
PathMaker(R) tool has been available on a limited commercial basis since the
first quarter of 2006 with full commercial deployment of this tool expected to
occur during the first quarter of 2007. Other sizes of the PathMaker(R) tools
are currently in development. We expect commercialization of the 3-Dimensional
Rotary Steerable technology to improve the utilization of our logging-while-
drilling, measurement-while-drilling and directional drilling services, as our
customers are increasingly requiring this type of technology as a prerequisite
for submitting bids on a drilling project or contract.

     Our PathFinder Survivor(TM) series of logging-while-drilling and
measurement-while-drilling tools designed for use in high pressure (25,000 psi)
and high temperature (350 degrees F) conditions continue to be successfully
introduced on a commercial basis. In 2004, PathFinder introduced the first of
the Survivor(TM) tools with the commercialization of its dual frequency Array
Wave Resistivity tool. The Survivor(TM) tool series currently includes
Survivor(TM) HDS-1(TM) (a highly accurate directional survey tool), Survivor(TM)
DPM(TM) (Dynamic Pressure Module), Survivor(TM) DNSC(TM) (4  3/4" O.D. Slim
Density Neutron Standoff Caliper Tool) and Survivor(TM) SAWR(TM) (4  3/4" O.D.
dual frequency Slim Array Wave Resistivity Tool).

  COMPLETION AND WORKOVER RELATED PRODUCTS AND SERVICES

     Our completion and workover related products and services segment provided
approximately 37% of our consolidated revenue for the nine months ended
September 30, 2006. Revenues provided by this segment are almost entirely
generated from the United States, including the Gulf of Mexico. While revenues
from this segment are

                                       15

<PAGE>

affected by the level of oil and natural gas prices, activity in this segment is
moderately affected by drilling activity (discussed above). As a result, our
completion and workover related products and services segment has provided
stability during prolonged downturns in drilling activity.

     In response to the increase in land-based activity, we increased our
revenue capacity in this segment through acquisitions in 2002 and 2003. Since
that time, we have organically grown in these markets through capital spending,
which, when combined with our acquisitions, has strengthened and further
diversified our operations. Presently, we continue to grow our existing
operations and expand our geographic reach, particularly in areas of large
unconventional natural gas reserves. Continued growth in this segment will be
dependent upon, among other factors, industry activity levels, prices of oil and
natural gas, our capital expenditure program, delivery time for purchased
equipment and our ability to attract and retain qualified service personnel and
field engineers required to operate the specialized equipment used in this
business.

RESULTS OF OPERATIONS

     The following information should be read in conjunction with our
Consolidated Financial Statements and the accompanying notes presented elsewhere
in this Form 10-Q.

  THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE THREE MONTHS ENDED
  SEPTEMBER 30, 2005

     Revenues.  Revenues increased by $77.6 million, or approximately 48%, to
$238.9 million for the three months ended September 30, 2006 from $161.3 million
for the three months ended September 30, 2005. This increase was primarily
attributable to higher levels of activity and demand for certain of our products
and services, additional revenue capacity from our capital expenditure
investments and favorable pricing.

     Revenues from our drilling related products and services increased by $44.1
million, or approximately 42%, to $149.5 million for the three months ended
September 30, 2006 from $105.4 million for the three months ended September 30,
2005. We attribute the increase in revenues in this segment to:

     - an approximate 20% increase in the average number of rotary rigs
       operating in the United States, resulting in an increase in demand for
       our directional drilling services and technologically advanced services
       and tools, rental tools and drilling fluids products;

     - our larger asset base resulting from our capital expenditure investments;

     - improved pricing; and

     - an increase in our Gulf of Mexico market share, resulting from higher
       utilization of our existing logging-while-drilling tools and
       commercialization of certain of our new technologies discussed earlier.

     Revenues from our completion and workover related products and services
increased by $33.5 million, or approximately 60%, to $89.4 million for the three
months ended September 30, 2006 from $55.9 million for the three months ended
September 30, 2005. We attribute the increase in revenues in this segment to:

     - higher demand for our tools and services as a result of an overall
       increase in activity levels;

     - a rebound in offshore activity and a less active 2006 hurricane season;

     - an increase in our cased-hole wireline and coiled tubing fleets and other
       capital expenditure investments;

     - improved pricing; and

     - onshore geographic expansion.

     Cost of Revenues.  Cost of revenues increased by $32.7 million, or
approximately 35%, to $125.2 million for the three months ended September 30,
2006 from $92.5 million for the three months ended September 30, 2005. As a
percentage of revenues, cost of revenues decreased to 52% for the three months
ended September 30, 2006 from 57% for the three months ended September 30, 2005.
The decrease in cost of revenues as a percentage of revenues was primarily due
to a change in our revenue mix, improved utilization in both business segments
and improved pricing. In particular, our revenue mix was affected by revenue
increases in our higher margin logging-while-

                                       16

<PAGE>

drilling, measurement-while-drilling, directional drilling, coiled tubing,
wireline and rental tools operations. These margin improvements were partially
offset by higher employee compensation expenses and other operational costs.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased by $12.0 million, or approximately 45%, to
$38.9 million for the three months ended September 30, 2006 from $26.9 million
for the three months ended September 30, 2005. The increase was primarily
attributable to increased selling costs attributable to our revenue growth,
other personnel costs related to expansion efforts within all of our business
lines and higher share-based compensation expense due to adoption of SFAS No.
123R as of January 1, 2006. As a percentage of revenues, selling, general and
administrative expenses was 16% and 17% for the three-month periods ended
September 30, 2006 and 2005, respectively.

     Research and Development Expenses.  Research and development expenses
increased by $1.2 million, or approximately 35%, to $4.6 million for the three
months ended September 30, 2006 from $3.4 million for the three months ended
September 30, 2005. This increase was the result of increased personnel and
other costs to develop various PathFinder technologies, including our
PathMaker(R) 3-Dimensional Rotary Steerable line of tools.

     Depreciation and Amortization.  Depreciation and amortization increased by
$1.2 million, or approximately 8%, to $15.6 million for the three months ended
September 30, 2006 from $14.4 million for the three months ended September 30,
2005. This increase was principally the result of a larger depreciable asset
base resulting from our capital expenditure investments.

     Interest and Other Expense.  Interest and other expense for the three
months ended September 30, 2006 was $2.1 million, a decrease of $0.8 million, or
approximately 28%, from $2.9 million for the three months ended September 30,
2005. This decrease was principally due to decreased interest expense due to
lower outstanding borrowings under our credit facility.

     Provision for Income Taxes.  Our effective income tax rate for the three-
month periods ended September 30, 2006 and 2005 was 40%. We anticipate that the
effective income tax rate for the remainder of 2006 will range from 39% to 40%
assuming no discrete tax items. Beginning in 2007, changes to tax law in Texas
are expected to increase our overall effective tax rate.

  NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE NINE MONTHS ENDED
  SEPTEMBER 30, 2005

     Revenues.  Revenues increased by $195.3 million, or approximately 42%, to
$656.4 million for the nine months ended September 30, 2006 from $461.1 million
for the nine months ended September 30, 2005. This increase was primarily
attributable to higher levels of activity and demand for certain of our products
and services, additional revenue capacity from our capital expenditure
investments and favorable pricing.

     Revenues from our drilling related products and services increased by
$115.1 million, or approximately 39%, to $413.1 million for the nine months
ended September 30, 2006 from $298.0 million for the nine months ended September
30, 2005. We attribute the increase in revenues in this segment to:

     - an approximate 20% increase in the average number of rotary rigs
       operating in the United States, resulting in an increase in demand for
       our directional drilling services and technologically advanced services
       and tools, rental tools and drilling fluids products;

     - our larger asset base resulting from our capital expenditure investments;

     - improved pricing; and

     - an increase in our Gulf of Mexico market share, resulting from higher
       utilization of our existing logging-while-drilling tools and
       commercialization of certain of our new technologies discussed earlier.

     Revenues from our completion and workover related products and services
increased by $80.2 million, or approximately 49%, to $243.3 million for the nine
months ended September 30, 2006 from $163.1 million for the nine months ended
September 30, 2005. We attribute the increase in revenues in this segment to:

     - higher demand for our tools and services as a result of an overall
       increase in activity levels;

     - a rebound in offshore activity and a less active 2006 hurricane season;


                                       17

<PAGE>

     - an increase in our cased-hole wireline and coiled tubing fleets and other
       capital expenditure investments;

     - improved pricing; and

     - onshore geographic expansion.

     Cost of Revenues.  Cost of revenues increased by $84.8 million, or
approximately 32%, to $346.1 million for the nine months ended September 30,
2006 from $261.3 million for the nine months ended September 30, 2005. As a
percentage of revenues, cost of revenues decreased to 53% for the nine months
ended September 30, 2006 from 57% for the nine months ended September 30, 2005.
The decrease in cost of revenues as a percentage of revenues was primarily due
to a change in our revenue mix, improved utilization in both business segments
and improved pricing. In particular, our revenue mix was affected by revenue
increases in our higher margin logging-while-drilling, measurement-while-
drilling, directional drilling and coiled tubing operations. These margin
improvements were partially offset by higher employee compensation expenses and
other operational costs.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased by $30.6 million, or approximately 38%, to
$110.9 million for the nine months ended September 30, 2006 from $80.3 million
for the nine months ended September 30, 2005. The increase was primarily
attributable to increased selling costs attributable to our revenue growth,
other personnel costs related to expansion efforts within all of our business
lines and higher share-based compensation expense due to adoption of SFAS No.
123R as of January 1, 2006. As a percentage of revenues, selling, general and
administrative expenses was 17% for the nine-month periods ended September 30,
2006 and 2005.

     Warehouse Fire Related Costs.  On April 17, 2005, a Houston warehouse
facility operated by one of our subsidiaries was destroyed by a fire. For the
nine months ended September 30, 2005, we reported $3.7 million in costs
associated with this fire. This amount has been reflected in the Consolidated
Statements of Operations and Comprehensive Income under the caption "Warehouse
fire related costs" and as a reduction to operating income for the drilling
segment in Footnote 8 "Operating Segments" for the nine months ended September
30, 2005.

     Research and Development Expenses.  Research and development expenses
decreased by $0.1 million, or approximately 1%, to $12.5 million for the nine
months ended September 30, 2006 from $12.6 million for the nine months ended
September 30, 2005. The costs incurred in 2006 were for development of various
PathFinder technologies, including our PathMaker(R) 3-Dimensional Rotary
Steerable line of tools.

     Depreciation and Amortization.  Depreciation and amortization increased by
$3.8 million, or approximately 9%, to $45.9 million for the nine months ended
September 30, 2006 from $42.1 million for the nine months ended September 30,
2005. This increase was principally the result of a larger depreciable asset
base resulting from our capital expenditure investments.

     Interest and Other Expense.  Interest and other expense for the nine months
ended September 30, 2006 was $6.6 million, a decrease of $1.6 million, or
approximately 20%, from $8.2 million for the nine months ended September 30,
2005. This decrease was principally due to lower outstanding borrowings under
our credit facility.

     Provision for Income Taxes.  Our effective income tax rate for the nine-
month periods ended September 30, 2006 and 2005 was 38%. The 2006 period
included a non-recurring tax benefit of approximately $0.9 million related to
the write-off of deferred tax liabilities due to a new tax law enacted in Texas
during the period. The 2005 period included a $1.1 million tax benefit related
to settlement of a foreign tax audit. We anticipate that the effective income
tax rate for the remainder of 2006 will range from 39% to 40% assuming no
additional discrete tax items. Beginning in 2007, changes to tax law in Texas
are expected to increase our overall effective tax rate.

RECENT ACCOUNTING PRONOUNCEMENTS

     We adopted Statement of Financial Accounting Standards No. 123R, "Share-
Based Payment," ("SFAS No. 123R") as of January 1, 2006 using the modified
prospective method in which compensation cost is recognized based (1) on the
requirements of SFAS No. 123R for all share-based payments granted after January
1, 2006 and (2) on the requirements of SFAS No. 123 for all awards granted to
employees prior to January 1, 2006 that remain unvested on January 1, 2006. For
the nine months ended September 30, 2006, we recorded approximately $3.1 million
of pretax expense relating to this pronouncement for nonvested share-based
payments granted prior to

                                       18

<PAGE>

January 1, 2006. The Compensation Committee of our Board of Directors may award
additional stock options which would increase the amount of this expense
prospectively. See Note 6 to the Consolidated Financial Statements for
additional information.

     In June 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").
FIN 48 clarifies the application of SFAS No. 109, Accounting for Income Taxes,
by establishing a threshold condition that a tax position must meet for any part
of the benefit of that position to be recognized in the financial statements. In
addition to recognition, FIN 48 provides guidance concerning measurement,
derecognition, classification and disclosure of tax positions. FIN 48 is
effective for fiscal years beginning after December 15, 2006; accordingly, we
will adopt FIN 48 effective as of January 1, 2007. We have not yet determined
the impact that FIN 48 will have on our consolidated financial statements or on
our effective tax rate in future years.

     In September 2006, the Securities and Exchange Commission staff issued
Staff Accounting Bulletin ("SAB") No. 108 which provides guidance concerning the
effects of prior year misstatements in quantifying current year misstatements
for the purpose of materiality assessments. Specifically, entities must consider
the effects of prior year unadjusted misstatements when determining whether a
current year misstatement will be considered material to the financial
statements at the current reporting period and record the adjustment, if deemed
material. SAB No. 108 becomes effective for the first fiscal year ending after
November 15, 2006, with adoption in the first interim period of that year
encouraged. Upon adoption, entities may either restate the financial statements
for each period presented or record the cumulative effect of the error
correction as an adjustment to the opening balance of retained earnings at the
beginning of the period of adoption, and provide disclosure of each individual
error being corrected within the cumulative adjustment, stating when and how
each error arose and the fact that the error was previously considered
immaterial. We do not expect the adoption of this pronouncement to have a
material impact on our financial position or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

     Our primary uses for cash are capital expenditures, working capital,
research and development expenditures, acquisitions and principal and interest
payments on indebtedness. Our primary sources of liquidity are cash reserves,
cash generated by operations and amounts available to be drawn under our
revolving credit facility. To the extent our cash requirements exceed our
sources of liquidity, we will be required to fund our cash requirements through
other means, such as through debt and equity financing activities, or we will be
required to curtail our expenditures.

  CASH FLOW

     Working capital was $220.5 million as of September 30, 2006 and $160.1
million as of December 31, 2005. Net cash provided by operating activities was
$92.1 million for the nine months ended September 30, 2006 and $46.6 million for
the nine months ended September 30, 2005. The increase in working capital and
cash flow from operating activities was largely due to increases in activity
levels across all business lines.

     Net cash used in investing activities was $90.8 million for the nine months
ended September 30, 2006 and $52.7 million for the nine months ended September
30, 2005. The increase in net cash used in investing activities was principally
the result of increased capital expenditures which was partially offset by an
increase in proceeds from sales of equipment, which are primarily lost-in-hole
proceeds we receive from a customer when our rental equipment is involuntarily
damaged or lost-in-hole. Additionally, we invested $8.7 million in the 2006
period and $2.5 million in the 2005 period, net of cash acquired, to acquire
businesses.

     Net cash provided by financing activities was $14.7 million for the nine
months ended September 30, 2006 and $12.5 million for the nine months ended
September 30, 2005. Changes in net cash related to financing activities were the
result of net repayments of borrowings under our credit facility in the 2006
period compared to net borrowings under our credit facility in the 2005 period.
Additionally, the 2006 period included significantly higher proceeds from the
exercise of stock options and the related tax benefits.


                                       19

<PAGE>

     For the nine months ended September 30, 2006, we made capital expenditures,
primarily for rental equipment of $103.0 million, which included expenditures
for the replacement of rental equipment, including rental tools damaged or lost-
in-hole. In addition, we incurred $12.5 million in research and development
expenses for the nine months ended September 30, 2006.

  CAPITAL RESOURCES

  Credit Agreement

     As more fully described in Note 4 to the Consolidated Financial Statements,
we maintain a revolving credit facility to provide for our cash, liquidity and
other borrowing needs. This credit facility provides for aggregate borrowings of
up to $375 million and matures on May 5, 2010. As of September 30, 2006, we had
an outstanding loan balance of $150.0 million and approximately $8.8 million in
letters of credit issued under our credit facility, resulting in available
borrowing capacity on such date of approximately $216.2 million.

  Future capital requirements

     We anticipate that acquisitions of complementary companies, assets and
product lines will continue to play an important role in our business strategy.
Such transactions can be consummated quickly and may occur at any time.
Likewise, we will continue to need to make capital expenditures for rental
equipment and to make research and development expenditures to maintain and
improve the quality of our products and services. We currently estimate that we
will make capital expenditures of approximately $150.0 million in 2006 and will
make research and development expenditures of approximately $18.0 million in
2006.

     We believe that our internally generated cash flow combined with access to
our credit facility will be sufficient to meet the liquidity requirements
necessary to fund our operations, capital expenditures, research and development
and debt service requirements for at least the next 12 months. However, our
ability to maintain our credit facility and the sufficiency of our internally
generated cash flow can be impacted by economic conditions outside of our
control.

     The continuation of our acquisition strategy may require substantial
capital. We currently intend to finance future acquisitions through issuances of
our equity or debt securities, cash on hand and through borrowings under our
credit facility. Using debt to complete acquisitions could substantially limit
our operational and financial flexibility and using equity could dilute the
ownership interests of our existing shareholders. The extent to which we will be
able or are willing to use our common stock to make acquisitions will depend on
its market value from time to time and the willingness of potential sellers to
accept it as full or partial payment. If we are unable to obtain additional
capital on acceptable terms, we may be unable to grow through acquisitions.

  Off balance sheet arrangements

     With the exception of operating leases on real property and automobile
leases, we have no off-balance sheet debt or other off-balance sheet financing
arrangements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risks. Market risk is the potential loss arising
from adverse changes in market prices and rates. We have not entered into
derivative or other financial instruments for trading or speculative purposes.
Our market risk could arise from changes in interest rates and foreign currency
exchange rates.

     Interest Rate Risk.  We are subject to market risk exposure related to
changes in interest rates. To manage this risk, we have entered into interest
rate swap agreements with a total notional amount of $150.0 million related to
our credit facility. Under these agreements, we receive interest at a floating
rate equal to three-month LIBOR and pay interest at a fixed rate of 4.24%. The
three-month LIBOR rate as of September 30, 2006 was approximately 5.4%. Assuming
our current level of borrowings and considering the effect of the interest rate
swap agreements, a 100 basis point increase in the interest rate we pay under
our credit facility would have had no impact on our net interest expense for the
nine months ended September 30, 2006.


                                       20

<PAGE>

     Foreign Currency Exchange Risk.  Our earnings and financial position are
affected by foreign exchange rate fluctuations. We currently do not hedge
against foreign currency translation risks and we believe that foreign currency
exchange risk is unlikely to be significant to our operations.

     Stock Price Volatility.  Our ability to raise capital at a reasonable cost
of capital is, in part, affected by the market price of our common stock. The
market price of our common stock may be influenced by many factors including
variations in our earnings, variations in oil and natural gas prices, the level
of exploration, development and production activity of, and the corresponding
capital spending by, our customers, investor perceptions of us and other
oilfield service companies and the liquidity of the market for our common stock.

ITEM 4.  CONTROLS AND PROCEDURES

     Disclosure Controls and Procedures.  We maintain disclosure controls and
procedures, which are controls and procedures designed to ensure that the
information we are required to disclose in the reports we file with the SEC is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC. Based on an evaluation of our disclosure
controls and procedures as of the end of the period covered by this report
conducted by our management, with the participation of our Chief Executive
Officer and Chief Financial Officer, our Chief Executive Officer and Chief
Financial Officer believe that these controls and procedures are effective to
provide reasonable assurance that we are able to collect, process and disclose
the information we are required to disclose in the reports we file with the SEC
within the required time periods.

     Internal Control over Financial Reporting.  During the period covered by
this report, there were no changes in our internal control over financial
reporting that have materially affected or are reasonably likely to materially
affect our internal control over financial reporting.

     Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal control over financial reporting will prevent and/or detect all error
and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within our company have been
detected.

                                     PART II

                                OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     On July 24, 2006, one of our subsidiaries acquired Mt. Pulaski Products,
Inc. and related companies from three individuals for consideration consisting
of $9.4 million in cash and 20,358 shares of our common stock. Such common stock
issuance constituted a private placement that was exempt from the registration
requirements of Section 5 of the Securities Act of 1933 pursuant to Section 4(2)
of such act and pursuant to Regulation D thereunder. No underwriters
participated in such issuance.

ITEM 6.  EXHIBITS

     a.  Exhibits

     The documents listed on the Exhibit Index following the signature pages
hereto are filed with this Quarterly Report on Form 10-Q, and the contents of
such Exhibit Index are hereby incorporated herein by reference.




                                       21

<PAGE>

                                   SIGNATURES

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

                                        W-H ENERGY SERVICES, INC.

                                        By:     /s/ ERNESTO BAUTISTA, III
                                            ------------------------------------
                                                    Ernesto Bautista, III
                                             Vice President and Chief Financial
                                                           Officer
                                                (Principal Financial Officer)

Date: November 7, 2006


                                       22

<PAGE>

                                  EXHIBIT INDEX



<Table>
<S>    <C>  <C>


31.1*  --   Certification of Chief Executive Officer of W-H Energy Services, Inc.
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*  --   Certification of Chief Financial Officer of W-H Energy Services, Inc.
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*  --   Certification of Chief Executive Officer of W-H Energy Services, Inc.
            pursuant 18 U.S.C. Section 1350
32.2*  --   Certification of Chief Financial Officer of W-H Energy Services, Inc.
            pursuant 18 U.S.C. Section 1350
</Table>


--------

* Filed herewith



                                       23